November 12 – 18, 2018 | Swiss ETP, Central Bank Digital Currencies & More Crypto News
3iQ Research Group consolidates the top five cryptoasset stories of interest
to investment advisors and our investors.
Major Swiss Stock Exchange Lists First Multi-Crypto ETP
November 17 – SIX Swiss Exchange, Switzerland’s leading stock exchange with a market capitalization of $1.6 trillion USD, will list the world’s first multi-crypto exchange-traded product (ETP) next week. The product is backed by the Swiss startup Amun AG. The first multi-crypto ETP will be listed under the index ticker HODL, and will track five major cryptocurrencies. Bitcoin is expected to take up half of the ETP’s assets, with ether taking up 16.7% and litecoin taking 3%. According to a leading Swiss news agency Finews.com, the Amun ETP index will be managed by the German index unit of the major investment management firm, VanEck. Back in September 2018, a subsidiary of VanEck called Mv Index Solutions (MVIS) joined with Amun Technologies Ltd. to launch their own price tracking index, called the Amun Crypto Basket Index. The new ETP will use the Amun Crypto Basket Index as its underlying investment.
“The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments,” said Hany Rashwan, Amun’s co-founder and chief executive.
November 17 – Fidelity Investments’ president and chief executive officer Abigail Johnson has opened up to crypto in a recent interview. The company is one of the world’s largest asset managers and has been reportedly exploring cryptocurrency projects for several years. Back in June 2018, there had been speculation that Fidelity may be entering cryptocurrency market through a cryptocurrency fund, or through the creation of an exchange. The company has been trying to get associates thinking about the future and start acting on the next big thing in technology.
“One of the things we do to try to get people in the organization thinking about the future and get past just thinking about the next incremental thing is scenario-planning exercises. We get different people from different parts of the organization together in a team to tackle some crazy scenario. We did a series of these a while ago, and one of them was what would happen to our business if capital markets became completely frictionless. Right after that, about 2010 I think, Bitcoin started getting a little bit of visibility. A few of us were like, ‘Oh, this is kind of actually what we were just talking about in our crazy scenario plan. Maybe we were onto something.’”
SEC Settles Securities Registration Charges Against ICO Startups
November 16 – The U.S. Securities and Exchange Commission (SEC) has settled charges with two crypto startups that had sold tokens through Initial Coin Offerings (ICOs) last year. The companies got charged by the SEC for running their ICOs despite the regulator previously defining such offerings as unlicensed securities as per its DAO Report of Investigation. The two startups that were charged by the SEC are Airfox and Paragon Coin, which sold $15 million and $12 million USD worth of tokens respectively. The companies have agreed to settle the case without admitting or denying findings that the SEC found. Each company agreed to pay a $250,000 USD fine and compensate investors who had purchased the tokens. Both startups’ tokens are required to be filed as securities and provide periodic reports to the SEC.
“We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities,” said Stephanie Avakian, the co-director of the SEC’s Enforcement Division. “These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets.”
IMF Chief Wants More Exploration of Digital Currencies
November 14 – Christine Lagarde, the International Monetary Fund (IMF) Chair, has called for the world’s central banks to consider issuing Central Banks Digital Currencies (CBDC). Lagarde spoke at the Singapore Fintech Festival on November 14, and praised digital currencies despite the IMF’s usual disposition toward digital assets. Lagarde sparked hopes that regulators and other institutions around the world are finally getting closer to building a framework to support the widespread adoption of cryptocurrencies.
Lagarde stated that CBDC could lower the risk of global financial instability because they eliminate the psychological motivation behind bank runs. During a bank run, customers rush to make withdrawals before they think the bank’s funds get depleted. CBDC could remove this risk by distributing money in ways that can far exceed cash in terms of security, geographical reach, and speed. “This setup would be good for users, bad for criminals, and better for the state, relative to cash. Of course, challenges remain. My goal, at this point, is to encourage exploration,” said Lagarde.
Depository Trust & Clearing Corporation Enters Test Phase of Distributed Ledger “Replatforming” With Major Banks
November 16 – The major market infrastructure company Depository Trust & Clearing Corporation (DTCC) has announced that it has entered the test phase of its attempts to replatform its Trade Information Warehouse (TIW) to use distributed ledger technology (DLT) from a blockchain. The switch to a blockchain is an ambitious project, mostly because the TIW accounts for 98% of derivatives transactions worldwide. The DTCC and its subsidiaries have also “processed securities transactions valued at more than U.S. $1.61 quadrillion.”
The DTCC is working with 15 of the world’s leading banks to test the new replatforming of the TIW. Only Barclays bank is the known participant of test, which leaves the other 14 banks anonymous. JPMorgan, Credit Suisse, Citi, and Bank of America had all previously participated in the 2016 proof-of-concept by the DTCC; however, it is not known if those banks are still engaged with the project. “We are pleased to be working with DTCC, our partners and colleagues on this exciting project to bring distributed ledger technology to life in a demonstrable way that will enhance efficiencies and lower costs and risks for the industry,” said Lee Braine of Barclays.
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