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Robinhood Makes Hiring Efforts Ahead of UK Expansion



According to a report by Techcrunch, Robinhood, the zero fee trading company based in the United States, is making plans to open an office in London and it has started recruiting to that effect.

Various sources in and within London’s FinTech market have confirmed that Robinhood, which was launched back in 2013 and is valued at $5.6 billion, has been working towards the launch of its London office, with recruitment activities covering departments such as hiring and recruitment, public relations, marketing, customer support, and others.

The startup is also looking at hiring executives for product and compliance positions, which is extremely wise for a company that plans to get multiple licenses from the UK’s financial watchdog, the Financial Conduct Authority (FCA).

Robinhood’s expansion into the United Kingdom puts them in direct competition with similar fintech startups that have won the hearts of British traders offering “fee-free” trades, same way Robinhood won the hearts of Americans. One of such firms is London-based Freetrade, which offers “fee-free” trades executed at the close of business each day, for instant execution of trades, the startup charges as low as £1 per trade.

Another fintech startup that should be in Robinhood’s crosshairs is Revolut, the London based startup, that recently announced plans to offer Robinhood commission-free trading to its customers via its banking app.

Both companies have a bit of history, and it will be interesting to see how this battle shapes up. Launching a division in the U.K. will put Robinhood in direct competition with locally-based FinTech companies, and the success of the company in the United States is reportedly the reason why a lot of new entrants in Britain have gone ahead to launch their fee-free trading platforms.

Last month, Robinhood launched a savings and checking account for its American customers, offering users a “fee-free, commitment-free and surprise-free” account that pays them 3 percent interest for every deposit made into the account.

The company had said via a blog post, at the time:

“Currently, traditional checking and savings accounts cost more for people who make less, are riddled with unfair and hidden fees, and earn you minimal returns on your savings. We believe you should earn more on your money, and shouldn’t be charged fees to access it.”

The accounts will come with a debit card, which will be personalized and can be used in over 75,000 ATMs across the U.S. for withdrawals. However, some few days after it announced its plan to launch the accounts, the Securities Investor Protection Corporation (SIPC), the agency in charge of brokerage accounts, said Robinhood didn’t consult the agency about its plans before making the announcement.

SIPC CEP Stephen Harbeck said Robinhood would be using a model that goes above what they can protect and as such, they promptly reported the startup to the Securities and Exchange Commission.

“Robinhood would be buying securities for its account and sharing a portion of the proceeds with their customers, and that’s not what we cover. I’ve never seen a single document on this. I haven’t been consulted on this.”

Source. ccn


Crypto Futures and Institutional Interest: Looking in the Wrong Place



Noelle Acheson is a veteran of company analysis and member of CoinDesk’s product team.

The following article originally appeared in Institutional Crypto by CoinDesk, a newsletter for the institutional market, with news and views on crypto infrastructure delivered every Tuesday. Sign up here.

Last week, the Cboe let its traders know that it would not be renewing its futures contracts on bitcoin.

This was taken by many as a sign that expectations of institutional interest in crypto assets were misplaced, and by some as a nail in the crypto coffin.

If a significant venue like the Cboe doesn’t see a future in offering a product that institutional investors allegedly require, then obviously there’s no demand, right? And if the institutions don’t bring their money and legitimacy into the market, where is the much-needed liquidity going to come from?

As usual, the reactions are overblown. The news is neither significant nor bad for the sector’s outlook. It does, however, shine a light on the recurring role of misplaced expectations in driving market narratives.

Natural selection

Cboe was the first traditional institution to offer bitcoin futures, launched in December 2017. It was followed a week later by a similar product from the CME. In the end, although volumes have been declining at both, institutional traders seemed to prefer the CME’s product. Let’s look at why.

First, the CME is larger than the Cboe Futures Exchange, and in commoditized markets, size matters. Brokers would logically prefer to trade on a platform where they already have connectivity.

Second, settlement methods are important, since they determine a position’s profitability.

Cboe used the Gemini auction price to determine the value of its contracts – a price determined once a day on thin volume. The CME relied on an index comprised of data from a handful of liquid exchanges. Although the reliability of this pricing method has also been questioned, it seems that institutional traders saw the index as the less manipulable of the two options.

The suspension of one particular type of bitcoin futures contract usually says more about product structure than the underlying commodity and is far from an isolated incident.

By some estimates, more than half of futures launches fail to reach critical mass, and simply fade away.

No big deal

The withdrawal of this product is unlikely to make a noticeable impact on trading strategies. Volumes were low, and since the CME has stated its intention to continue offering its version, those that used the Cboe can relatively easily switch to the more liquid contract.

What’s more, the utility of cash-settled derivatives to hedge bitcoin positions is a contentious point. Many claim that what the market needs is regulated physically-settled bitcoin futures. These will supposedly make the market more robust by providing a more reliable and less manipulable hedge.

With cash-settled futures, the value of the product depends on market information, which – in a relatively illiquid market – can be manipulated. With physically-settled futures, you take delivery of the underlying bitcoin. You can then hold on to the asset, or sell it in the market at a “real” price.

The eventual launch of Bakkt and ErisX, which plan to offer physically-settled bitcoin futures, will bring an alternative product into the institutional toolbox.

But those that expect physically-delivered futures to be the trigger that brings institutional players into the market in volume are likely to be as disappointed as those that expected cash-delivered futures to perform that feat.

Looking for signs

That is the main takeaway from this news: that there is no “key” to institutional involvement. And no matter how many of us agree that we have identified the missing piece, we will be wrong.

The narrative that institutions would get involved has been constant – the supposed trigger, however, has swung from derivative products to custody solutions to regulation (and I might be missing a few steps in there), and will no doubt pivot to something else as legal clarity continues to emerge without a corresponding price bump.

In looking for something simple to grasp and monitor, we are trying to fit the birth of a new asset class into a convenient linear progression. We are trying to fit a five-dimensional concept into a unidimensional construct – and, yes, it is as impossible as it sounds.

Identifying narratives is a necessary step, though, that enables us to separate signal from noise, and to shape investment theses and production decisions.

The narrative that institutions are interested in crypto assets is a sound one. Many are already investing in this market. Family offices and traditional hedge funds have been dipping their sizeable toes in for some time now, and we are even seeing old-school institutions such as pension funds and endowmentsstarting to take this new asset class seriously.

Where we get it wrong is in expecting institutions to wait for a specific green light. In reality, they are waiting for a matrix of signals that does not conform to our linear way of thinking.

As even a cursory glance at CoinDesk’s headlines will reveal, the shift is happening, in both subtle and obvious ways. The technology is progressing, regulators are working hard to figure out the right strategy, and investors of all types are learning and experimenting.

This progress may seem slow, but it is steadily building the base for an acceleration. Thinking that we can predict when that will happen is ambitious.

To steal a phrase from Hemingway, the involvement of institutional investors in crypto assets will happen “gradually, then suddenly.” As almost all profound changes do.




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The Crypto ‘Trichotomy’



imothy Enneking is the founder and the primary principal of Digital Capital Management, LLC (DCM).

The crypto space ain’t what it used to be.

In the good old days when bitcoin was the only “cryptocurrency” around, life was much simpler. Then, a few other “currencies” came along, followed by ICOs and things rapidly got much more complex.

Somewhere along the line, folks started paying as much or more attention to the technology underlying bitcoin as to bitcoin itself. Distributed ledger technology (DLT) or the “blockchain” suddenly became household words (well, with slight exaggeration…).

In the roaring months of 2017, crypto pundits, analysts and funds developed various taxonomies of the rapidly diversifying crypto space: exchange tokens, utility tokens, payment tokens, asset-backed tokens, etc. (My personal favorite was Tetras Capital’s, but there were many.)

However, the blockchain and asset-backed tokens were still part and parcel of the crypto space. I believe that is no longer the case. In fact, I would argue that the crypto space has split into three different spaces (hence “trichotomy”) and that the term “crypto” no longer applies to all of them.

I label these three spaces “trading tokens,” “blockchain” and “asset-back tokens.” Except for the first, I realized that there’s nothing even vaguely innovative about the names. The most important takeaway is probably that the latter two (and certainly the last one) have nothing to do with what most people think of as “crypto.”

As for first, “trading token” is really a more accurate label for what most people refer to as “cryptocurrencies.”

The word “currency” was actually never really applicable to the technology. (In fact, I published an articleon this very theme in July of 2017; “token” is much more appropriate. The word token is hardly new; it’s over 2,000 years old). We often forget where “token” came from in history: amusement parks, subways and, more recently, token rings, LANs, etc.

In IT, a “token” is basically an information packet which is optimized for transfer between computers. If someone feels (hopes) that the data packet has exogenous value, that person may try to sell it.

Others may feel a given token has no such value – even in an identical sector. (So, tZERO tries to sell its near-real-time trade settlement token, but NASDAQ does not.) Hence, the ICO was born. (For more on this topic, in particular on external drivers of price formation, see an article I wrote on that subject).

Of course, whether a crypto token is traded externally or not, it still relies on the blockchain (or a blockchain) or generally similar protocol consensus algorithm. Regardless, these mechanisms all record tokens’ existence, movements and changes. However, the growing percentage of blockchain projects (the largest of which may be the IBM-Maersk effort) do not rely on trading tokens.

This means that they have not identified an independent driver of price formation (among other things) for their token, but readily acknowledge the manifold advantages of the trust and reliability of DLT (blockchain) technology.

Because of this, most DLT investments must be made in seed/VC/PE (“early stage equity”) form, not in the form of trading tokens. This change radically affects the structure of, investment in and returns from (in terms of type, timing and amount) “ICO” (now “STO” or Security Token Offerings – and even the newer IEO or Initial Exchange Offering) v. “blockchain” projects.

So radically in fact, that the DLT/blockchain space is essentially totally separate from the trading token space. It’s the second prong of our crypto “trichotomy”. (And note that “crypto” no longer even really applies to this second space.)
The third space is asset-backed tokens.

This space is quite interesting because, in reality, tokenization is simply another form of securitization which has no inherent relationship to “crypto” per se. One could have tokenized (“atomized”) ownership in this fashion at any time in
the past and done so without the blockchain. The constraints weren’t legal – and, in fact, there might have been few or no constraints other than cost – but DLT certainly makes it easier and more viable.

Now we come to the truly interesting part: scale.

It seems quite clear that trading tokens will reach an aggregate value of single-digit trillions (in US dollars). In December of 2017, the total trading token space (as measured by market capitalization) reached about 80% of that level. It will probably reach it in 2020 or thereabouts. I have my doubts that it will ever (and if so, not soon), reach 11 digits (US$10 trillion or more).

The blockchain, however, seems destined to easily reach double-digit trillions in value. If one simply looks at the value of logistics chains being put on the blockchain, one reaches well over half of that value. The provenance of virtually every asset where determining provenance is important (from diamonds and art to wine and all types of collectibles) will easily put one over the top.

Adding financial transactions to the mix blows through 11 digits quite easily. Triple-digit trillions may be possible but, again, not any time soon, if ever.

Asset-back tokens – which, as you may recall, used to be a single, rather orphaned category of cryptocurrencies (orphaned because their value was actually tied to something while the value of other ICOs and tokens seemed to limited only by human imagination and foolishness) – may actually end up being the large of the three branches, easily reaching triple-digit trillions.

Real estate alone, much of which seems to be destined for the blockchain, hits that value. If a material portion of financial assets (securities of all types) come tokenized, it’s a no-brainer to reach 12 digits. And notice that one can discuss asset-backed tokens without ever once using the word “crypto.”

The child will clearly outgrow its parent.

The one potential flaw in the analysis is the potential for double counting between the second and third categories. Title to real estate (and probably all real estate) will almost certainly be recorded on the blockchain. Much (but not all) of it may also be tokenized. If we count the value of real estate in both categories, the second will, perforce, exceed the first.

In the end, it doesn’t really matter how the taxonomy is specifically developed, the main point is the same: “crypto” has already given rise to technology and concepts that are much bigger than “cryptocurrencies” ever were and it is probably impossible to overestimate the importance that the blockchain and the tokenization of real assets will have on our world – any negative connotation which “crypto” has picked up recently be damned


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SBI Holdings Latest Crypto Venture Will See It Make Mining Chips



Japanese financial services giant SBI Holdings has established a new subsidiary to manufacture cryptocurrency mining chips and systems.

The new venture, SBI Mining Chip Co. (SBIMC), is a part of SBI’s strategy on digital assets-related businesses, according to an announcement on Friday

SBIMC will be carrying out the development and manufacturing of cryptocurrency miners in partnership with an unnamed “large” semiconductor enterprise in the U.S., said SBI.

The new venture will be led by former NASA veteran Adam Traidman, who has a “high level of expertise in the field of leading-edge semiconductors and other electronics.”

Traidman has a total experience of over 20 years and has served as CEO of Chip Estimate (acquired by Cadence Design Systems, Inc. in 2008) and WearSens (Wearable device developer specialized in dietary monitoring) in the past. He also served as CEO of BRD, in which SBI Group has invested, according to the announcement.

SBI Group, through its subsidiary SBI Crypto, started a mining pool for bitcoin cash (BCH) last year, but is no longer mining the cryptocurrency.

The group first revealed its interest in the cryptocurrency industry back in 2017. At the time, the firm said it is looking to acquire cryptocurrencies directly, including through mining, as well as establishing ways of using cryptocurrencies and providing investment opportunities.

Over the years, the firm has ventured into several areas within the industry, including establishing regulated cryptocurrency exchange VCTRADE last June, and launching blockchain-based money transfer app MoneyTap in partnership with Ripple back in October.

Earlier this year, the group invested $15 million in Swiss startup Tangem, maker of a slimline hardware wallet for cryptocurrencies. It also recently formed a joint venture with blockchain consortium startup R3 to boost the adoption of R3’s Corda platform in Japan and beyond.


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