One of the world’s leading cryptocurrency exchanges, Coinbase, with 16 acquisitions, is the most active dealmaker in the space. This was confirmed by a research report titled ‘Barbarians on the Blockchain’ by crypto-data and research platform, TokenData, which found that Coinbase is the powerhouse of mergers and acquisitions [M&A].
Coinbase’s M&A strategy mainly consists of “acquihires and technology tuck-ins,” it said. Additionally, the platform has also engaged in two significant acquisitions such as Earn, which is worth $100 million, and Xapo’s custody business which is worth $55 million. TokenData tweeted,
“Trading is crypto’s first killer-app providing big exchanges with cash and networks to engage in acquisitions. Unsurprisingly, Coinbase [16 deals ] leads the pack and engages in all types of deals [industry consolidation, regulatory plays, talent].”
Following Coinbase’s suit is San Francisco-based Kraken and Canada-based Coinsquare with 7 and 5 deals, respectively. Kraken recently acquired the $100 million-worth Cryptofacilities, a regulated cryptocurrency derivatives exchange
Binance, on the other hand, has engaged in only three public acquisitions; the latest one being Mumbai-based WazirX.
Within TokenData’s research, another interesting point worth noting is that it estimated a total deal value of $4 billion since 2013, with $2.8 billion of M&A activity recorded in 2018 and $700 million in 2019. While the figures seem impressive, this is small, when compared to the total network valuation of cryptocurrency networks which is worth over $200 billion and the M&A value of other tech sectors, which is understandable because not many platforms are over 5 years old.
Additionally, investment funds and cryptocurrency exchanges are the most active acquirers that jointly represent more than half of all deal activity and deal value, according to the study. Moreover, cryptocurrency exchanges have leveraged increasing prices, positive market sentiment, and annualized volatility above 100%, providing each of these platforms the necessary cash reserves and networks to engage in acquisitions.
Coinbase Product Manager: DeFi to change market interactions; how will Ethereum benefit?
At the Coinbase Winter 2019 hackathon, the company’s product manager Jacob Horne described DeFi as an opportunity that could change how individuals interact with markets. In a tweet, Coinbase said that the hackathon itself focused on building DeFi-related tools:
“DeFi, or decentralized finance, is an essential part of an open financial system. DeFi tools are censorship-resistant, unbiased, programmable, and available to anyone with a smartphone. For this hackathon, we’re focusing on bringing DeFi to the world.”
$657 million locked in DeFi, mostly platforms built on Ethereum
According to DeFi Pulse, a site that analyzes and ranks DeFi platforms, the total value locked in DeFi has reached $657 million in Ethereum. It is up by more than 38 percent since October, within a two-month span.
Considering the rapid growth of the space, Horn said:
“DeFi is an opportunity to build financial infrastructure that spans the world, is open to everybody, and starts to change how we interact with markets.”
In essence, DeFi works similarly to existing financial products and banking services that allow individuals to receive and provide loans in exchange for compensation. However, with decentralized platforms, all transactions are processed in a peer-to-peer manner through the use of smart contracts on the Ethereum network.
Other areas like decentralized exchanges (DEXes), derivatives, and assets pooled together with major markets like lending form the foundation of DeFi. The sector itself has significant room to grow, as most of the capital locked in DeFi derives from lending and derivatives.
Developers have found it difficult to make DEXes and decentralized payment platforms as seamless as centralized alternatives, which have led other aspects of DeFi to struggle. In that regard, progress with scalability on major blockchain networks like Ethereum that prioritize smart contracts could pave a path for DeFi to grow over the long-term.
Explosive growth, but what needs to improve?
Over the past two years, the DeFi market grew from $10 million to nearly $660 million in Ethereum value alone.
Still, there are significant risks involved in DeFi since all platforms are decentralized. Usability wise, practical scalability solutions have to be adopted by Ethereum to allow decentralized applications to run more seamlessly. In the upcoming months, developers and companies are expected to continue building on top of the existing DeFi infrastructure, based on the recent trend.
IDEG, Coinbase Custody Launch Bitcoin Trusts in Apparent First for Asia
Digital asset manager IDEG is launching what it claims are Asia’s first Bitcoin (BTC) trusts.
The two new funds — Asia Bitcoin Trust I and Atlas Mining Trust I — were officially announced in a press release on Dec. 8, confirming an earlier disclosure from the firm in Hong Kong in late November.
Coinbase Custody will act as custodian for both trusts, with Asia-based Profound Trust Company acting as trustee. The combined size of the two trusts is $200 million.
Bringing old money to a new sector
The first of the two funds, Asia Bitcoin Trust I, is an actively managed investment vehicle and as such, is being pitched by the firm as a contrast to Grayscale’s flagship Bitcoin Trust , which has seen consistent year-on-year appreciation, outstripping many traditional investments.
Whereas Grayscale’s trust is passively managed, IDEG is setting its approach apart from that of its predecessor, as the firm’s CEO Kevin Yang states:
“As the investment manager of the Trust, IDEG will apply a range of hedging and arbitrage strategies in order to gain more Bitcoin for the investors and meanwhile effectively control the risk of drawdowns.”
IDEG is aiming to further drive traditional investors to include
In his statement, IDEG founder Raymond Yuan claimed that the firm is seeing solid return ratios on its mining activities because of its focus on capex, opex, operational and risk management strategies, as well its capacity to invest in hardware and infrastructure.
“Individual miners are dropping out because institutional miners like us can improve in almost every aspect,” he claimed.
As reported, Grayscale’s highly-successful Bitcoin Trust (GBTC) has recently filed a Form 10 with the United States Securities and Exchange Commission (SEC) in a bid to become the first crypto fund to report to the regulator.
If approved, this would designate the fund as an SEC reporting company and require it to register its shares under the country’s Exchange Act. Ostensibly, given that many institutions hinder investors from considering trusts that lack SEC-approval, Grayscale’s eligible investor base could widen considerably should the filing be successful.
As Cointelegraph reported in September, another U.S.-based investment management firm VanEck has also launched its own Bitcoin trust, but gained relatively low traction in the first week of its operations.
DAI is now a Supported Asset on the Coinbase Card
Coinbase continues to explore its options in the cryptocurrency space. That also includes adding support for digital assets in any way possible.
As far as the Coinbase Card is concerned, it has now received DAI stablecoin functionality.
A DIFFERENT ASSET FOR THE COINBASE CARD
It is the first time any stablecoin is supported on this payment card issued by the popular company.
One could argue there are far more popular coins on the market, such as Tether’s USDT.
However, that currency is not suited for the Coinbase card for a variety of reasons.
The main reason being how it is not supported by Coinbase or any of its platforms and services right now.
In the blog post,
As is the case with stablecoins, they are designed to always maintain their peg to the US Dollar.
Especially now that Christmas shopping is on the horizon, this stablecoin support can be rather interesting to explore among Coinbase Card holders.
It is interesting to note how this card has supported for a fair few digital assets right now.
One has to wonder if other crypto debit cards will receive stablecoin support as well in the future.
This development creates a very intriguing precedent for the cryptocurrency industry as a whole.