FCA makes mini-bond marketing ban permanent, BitMEX launching services for corporate customers and more…| Crypto Market News
Thrilling market news with CoinMetro’s CEO, Kevin Murcko in This Week in Crypto!
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We’ve actually been looking at this because of our bond projects that are going to be released into the market. So what happened is that they’re centering around unregistered securities, securities that aren’t traded on a broader market — which unfortunately is right where any tokenized securities will fall. The UK right now has basically had a temporary ban since January, and they were looking to make the ban permanent.
This means that the ability to advertise, and solicit investors into unregistered securities in the UK, is in question. Not the best news for a bond offering. However, these things aren’t always what they seem to be at first glance. Many times there are ways to go ahead and market your product, but there may be some extra hoops to jump through. And that is something that we are looking into.
BitMEX obviously have been in and out of the news over the past couple of years now, ever since they launched. They have only been able to onboard individual users until this point, at least publicly. Now they are talking about publicly onboarding corporate.
It’s normal that companies will move from standard/retail-only individual accounts, into institutional, or just accounts for entities. That’s normal. Same progression that CoinMetro has had. Onboarding the majority individuals, and eventually onboarding some corporates as well.
BitMEX though, obviously has some issues ongoing, in the US and elsewhere. Some civil class action lawsuits have been filed against them. They’ve been in the news for some not-so-great things over the past months.
But it just shows that there is appetite. It shows that in the retail sector, and even in the institutional sector in crypto, there definitely is appetite for accounts for entities. Which is generally a good thing. It probably means that individuals are starting to look to see how they can optimize their tax situation when it comes to crypto, and that more people are looking to add more volume through exchanges.
Kevin read this one. The header image they used on their PR release, was identical to the header image of the Tangible website.
You are going to see these news stories from all over the world, many times, over the next couple of months and into the next couple of years. The digitalization of markets began years ago. Tokenization using blockchain/DLT is going to be the next foresight for all financial markets.
Always read those stories with a grain of salt, mainly because a lot of these companies are simply recreating the issues that the current traditional market has, o-nchain. They’re just transporting problems off-chain to o-nchain. Creating segmented markets, markets just for certain countries or regions. They’re not thinking about that blockchain can be that link, the connecting layer, that can allow for cross-border transactions. And they usually get hung up on regulation. And that’s something that Ignium, along with CoinMetro, is trying to pull away from, in terms of showing that the greatest thing about this technology is that it can actually solve problems — not just create new digital problems.
So this particular company doesn’t seem much focused on cross-border, or realtime, or anything else that can actually solve problems from the traditional market. They’re just taking the problems from the traditional market and putting it on-chain.
Yeah, how else are they supposed to make money. Think about it — not saying that it’s the right thing to do — but if you set up a trust, and the only thing the trust does, is buy Bitcoin. The trust doesn’t trade it, doesn’t have any way to make additional volume. It simply gets your money, and buys Bitcoin. And that’s it.
They obviously get performance fees. Performance fees are great. Yearly management fees, 2% fee on assets under management, 20% high watermark. Kevin is not sure what exactly Grayscale charges, but assuming it’s somewhere in that traditional range.
So what happens in those years when they are not making any money, because there is no price appreciation? They make money on transaction fees, but the only transactions they have are people coming in, and people selling out. So they have to make substantial amounts of money on those fees, to make sure that the trust itself is actually profitable even in years with falling prices.
During the initial price runs, many people didn’t pay attention to fees. They bought in at a price and at the end of the year, it was 2 times as much, and they didn’t pay attention to those transaction fees. But when people lose money, they look at fees. When making money, most people don’t.
The only thing a trust does, is buying and holding. That’s difficult to find in any market. Even things like money market accounts, ETFs, have a strategy.
Kevin would say that the vast majority of companies in crypto that are doing something that people may see as innovative, are generally just porting over the same traditional problems onto blockchain.
Kevin mentioned last week that he had a call with PayPal. PayPal had a pilot program for the past 3 years with Coinbase allowing you to withdraw to PayPal, but not deposit. The pilot went well, and they are now looking to allow deposits. So they have had withdrawals for quite some time. Pundi X probably does a good amount of volume.
This is both big and small. Obviously PayPal is a well known company, so there is a bit of a credibility transfer. Pundi X is not that big of a company, and not that well known, except for in crypto. So this is a credibility transfer for people that trust PayPal, they might now trust Pundi X. Merchants may say “I already accept PayPal, maybe I’ll accept Pundi X to get crypto, since I can still withdraw to PayPal”. So, that’s pretty big.
Why is it small? Because in the scope of the things, who really cares. PayPal became a huge business for one reason only. eBay launched, and could not onboard credit card merchants because of the huge risk of fraud. So they created PayPal. That’s it. It was created as the sole and only way for merchants to get money through credit cards. PayPal since then has grown leaps and bounds. But there are a million ways where you quickly can set up and accept credit cards.
You can already offramp through multiple fiat gateways with many other crypto companies. Like CoinMEtro for example. But that PayPal credibility transfer can be quite large.
What they’re saying is that as a crypto business, they’re not going to just close the door on your face. And you can keep the same tax benefits that other Swiss entities already take advantage of.
It’s funny that the Swiss government is now saying this. There was a push after Corona for businesses in Zug, asking for help for the government. And they denied the Zug crypto council. And now the government wants to help out. They should probably have helped out back then, rather than trying to help out now, because now they’re just trying to get new businesses that won’t be complaining about Corona.
Switzerland is a great place, beautiful, but in terms of financial business, it’s usually a land of exemptions, not a land of legislation, laws or regulation. And it usually centers around the Swiss/German/Austrian economy. But Kevin doesn’t really see this to be the crypto hub that they are claiming to be.
That’s kinda funny. To Kevin it seems like they had a million other reasons why they couldn’t launch, and they came up with a nice excuse, that they’re going to use blockchain.
There is not much reason to use blockchain if you are a traditional market player. Unless you are using a blockchain that can interconnect you, and actually increase liquidity. If you are only blockchain because it saves you a few pennies per transaction and you have a new database and you can get yourself into a few news stories, then it’s probably a waste of time.
Kevin thinks there is more information here that is not being sent out to the public, and that there is a myriad of other reasons as to why they are delaying.
No it could not. PayPal has 325 000 000 users. Imagine if 10% of those users tried to make a Bitcoin payment all at the same time. You want to wait to see the network fees and network times? Goodluck. Bitcoin will never be a mainstream payment option, because it is not a payment vehicle. It’s too slow, it’s too latent, it’s too expensive.
Bitcoin should never be touted as a payment instrument or a payment vehicle. If you really classify what’s good about Bitcoin, you can say it’s a speculative investment, you can say it’s a store of value if you believe it is, but you can’t say it’s a payment rail.
What PayPal will do is more than likely allow you to buy Bitcoin that you can’t actually send anywhere. You are basically buying a CFD or a future, based on Bitcoin price. And people will realise that, find out that they’re probably overpaying on commission, do a bit of research, and find an exchange.
This one is funny. Kevin remembers a few stories from the past — China saying that Bitcoin is a property, and a few other countries did the same thing. Kevin said that the only reason they’re classifying it as a property is it so that they can seize it from you, legally.
This is a precedent probably made by a single judge. When it changes, people will tout this story, and say that the government is doing the right thing. In reality, Russia is going to realise real quick that the next time they arrest somebody for money laundering, drugs, terrorism, whatever — and they happen to have a Bitcoin address on their computer, they’re not going to be able to legally seize it.
Kevin expects that within the next 120 days, there will be a news story that says Russian court has decided that Bitcoin is property.
Kevin doesn’t know how much Ethereum spends on development, but Ethereum has pretty much peaked. Until Ethereum 2.0 comes out, or until Ethereum makes drastic changes, Ethereum has done pretty well for itself.
Chainlink has yet to peak. Chainlink has to keep up with the fact that mainstream institutions are realising that data off-chain is really needed to make blockchain protocols more advantageous to the average business users. Now they have to make the decision whether they want to partner with someone like Chainlink for long term and pay fees, or simply recreate what Chainlink has done, for their own uses. So Chainlink needs to make sure they’re always one step ahead of that thought process, and that’s going to require a lot of R&D and lots of investments.
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