Crypto Long & Short: Bitpanda’s Raise Is About More Than Market Infrastructure

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The pace of startup funding raises in the crypto industry, especially for businesses involved in building or operating crypto market infrastructure, has passed from a gentle canter to what feels like a gallop. I keep note of the raises CoinDesk reports on and did some counting this morning: 14 in January, 24 in February and so far this month – with a week and a half still to go – we’re at 32. That’s acceleration.

While most funding raises are under $10 million, so far this year there have been four (that I am aware of) that were greater than $100 million. Two of them were this week. One was crypto custodian Fireblocks, which raised $133 million. The other was a $170 million Series B round for a crypto market-infrastructure player that I confess had not been on my radar as much as it probably should have been.

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I’m talking about Bitpanda, a crypto exchange and card issuer headquartered in Vienna that, with this raise, is now valued at $1.2 billion. This makes it one of Europe’s largest crypto platforms and Austria’s first unicorn ever. Let’s take a moment to appreciate that Austria’s first unicorn is a crypto company.

This raise is worth looking at a bit more closely in that it embodies some deeper trends that will most likely continue to get noisier as the year progresses.

One is the self-reinforcing impact of crypto price movements. Increasing crypto prices lead to increasing revenue at market-infrastructure providers, which leads to more investment, which develops better on-ramps, which leads to more investors coming into the market, which leads to increasing crypto prices. And so on.

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This is evident in the amount raised. For context, Revolut’s Series B was roughly one-third the size. What’s more, Bitpanda’s raise came just six months after a $52 million Series A, when the average time between rounds is 18 months.

Related: When Currencies Fail: ‘Bitcoin’ Google Searches in Turkey Rise 400% as Lira Crashes

Bitpanda has been profitable for four years, according to CEO Eric Demuth, so it doesn’t really need the funds. This raise highlights a notable ambition: “to become ‘the’ investment platform for all of Europe.”

But wait, Europe has a slow and fragmented regulatory approach to finance and innovation, right? It doesn’t even yet have full capital markets union, so how can there be a pan-European crypto investment platform?

This is the second intriguing development highlighted in the Bitpanda funding round: upcoming European legislation that aims to create a unified approach to crypto industry oversight. This is potentially a very big deal.

Opening doors

Published in September 2020, the European Union’s “Markets in Crypto-Assets Regulation” (MiCA) aims to implement clear-cut rules and long-term legal certainty in the regulation of crypto assets. As usual in the European Union, however, clear-cut rules are usually anything but, as each member state has some leeway in the interpretation and implementation. And MiCA’s text is not yet finalized.

There does seem to be momentum, however, and not just because of the intensifying interest from all types of investors. Just this week the European Securities and Markets Authority issued a reminder about crypto asset risk. The momentum is also propelled by concern over the threat that privately issued cryptocurrencies could pose to financial stability. MiCA would also regulate stablecoins.

MiCA will bring a unified policy to crypto asset services, clarifying the regulatory status of crypto assets and their market-infrastructure providers. What’s more, it will enable crypto services in one member country to legally operate in any other.

And crypto asset service providers will be subject to requirements regarding capital needs, insurance coverage and more. This will instill greater institutional confidence in service providers’ legality and financial soundness. Greater legal certainty around market development will attract both investors and builders, accelerating the emergence of regulated crypto services.

In terms of institutional investment, the U.S. will continue to dominate the global financial stage. It has the world’s largest capital market and the largest funds. But Europe has so far shown itself to be more forward-thinking about the eventual fusion of traditional and crypto markets. A handful of stock exchanges list crypto-backed products. Some are developing entire token ecosystems. Two European crypto asset managers are now listed companies. Traditional banks are offering crypto trading and custody.

What’s more, Bitpanda’s sights appear to be on more than just being the biggest crypto exchange in Europe. Demuth told TechCrunch this week that the company was “shifting to become a pan-investment platform, not just a crypto broker.”

Its Mifid II license gives it scope to eventually trade other types of assets. According to reports, the company will add fractional trading of traditional shares in April. And, given their new war chest, it’s unlikely the expansion of offerings will stop there.

Given the investment and regulatory interest in helping platforms like Bitpanda achieve those goals, it could be that Europe is where the merging of traditional and crypto finance takes shape first.

But whether the U.S. or Europe takes the lead in crypto market progress over the next few years really doesn’t matter in the grand scheme of things. What matters is that the progress is accelerating and becoming almost tangible. It’s morphing from vague futuristic ideas to real rules guiding real platforms that offer real products to a changing market. And progress in one hemisphere will support development in the other.

It’s becoming increasingly apparent that the rapid change in crypto market infrastructure that we’ve seen over the past year was just the warm-up.

Momentum and gateways

This week, CNBC’s report that Morgan Stanley was allowing its financial advisers to put client funds into bitcoin sent ripples through the wealth management industry.

The firm, one of the largest asset managers in the world with over $4 trillion AUM, will give clients access to three bitcoin funds via its platform. Two of these funds are managed by Galaxy Digital, and the third is overseen by FS Investments and NYDIG.

For now, the bitcoin funds are only available to clients with accounts that have been active for at least six months and are worth over $2 million ($5 million for investment firms), and there is a limit of 2.5% of a client’s net worth.

Nevertheless, the move is significant for the whole market for the signals it sends:

Clients are demanding bitcoin exposure. We knew this anyway, but here’s more proof.

Bitcoin is now officially investment grade. Morgan Stanley’s acceptance of bitcoin’s liquidity, custody and market integrity is a loud stamp of approval. This signals to financial advisers of all types that this market is worth thinking about with an open mind.

These signals won’t just reach investors. They will also reach other investment houses and financial advisers, who will probably scramble to offer similar services rather than be seen as overly conservative in a low-yield market that is pushing investors further along the risk curve.

CHAIN LINKS

“There are plenty of things that people want and value highly that have no intrinsic value. How about a painting or a diamond or a bar of gold?” – Howard Marks, in a video interview.

“For speculative investment opportunities to rise to the level of an investable asset class that can play a role in diversified investment portfolios requires transformational progress on both the supply and demand sides. With cryptocurrency, we think that threshold is being reached.” – Morgan Stanley Wealth Management, in a report released this week.

“Importantly, small changes in investors’ overall perceptions about bitcoin can have a large impact on its price, especially because relatively few bitcoins are in circulation. So, if several pension funds or large asset managers with trillions of dollars decide to allocate a few basis points of their portfolios in a cryptocurrency, it can have a very large impact.” – Deutsche Bank Research, in a report released this week.

SEC Commissioner Hester Peirce gave a speech this week at the British Blockchain Association’s conference in which she discussed her view on the regulator’s inconsistent reasons for rejecting previous bitcoin exchange-traded fund (ETF) applications:

“Rather than applying the fairly straightforward standard that we have typically applied in approving other [exchange-traded product] filings –including for precious metals like palladium and platinum – we have insisted on increasingly sophisticated analyses of the relationship between the underlying spot market and the futures market to determine the susceptibility of these markets to fraud and manipulation. Not only is it unclear whether prior non-crypto ETP filings could have passed muster under this more rigorous approach, the ever-shifting goalposts are unfair to innovators who spend ever-increasing amounts of money on attorneys and quantitative experts only to find that they have failed to hit a target that has moved once again.”

She also pointed out the SEC stance has heightened risk for retail investors rather than protected them:

“The SEC’s reluctance to permit traditional investment vehicles to hold bitcoin or bitcoin futures has contributed to investors seeking more expensive, less convenient or less direct substitutes, but it also has heightened the stakes of any regulatory approval for a mainstream retail product we might one day grant. By waiting we also have magnified the first-approved advantage in the bitcoin ETP or registered fund space. Moreover, because we have comported ourselves like merit regulators, investors might view any approvals as an official blessing by the Commission about the quality of the products we approve. That would be the wrong inference to draw.”

Speaking of ETFs, the SEC acknowledged the ETF application submitted by VanEck, formally kicking off its 45-day window to make an initial decision on the proposal. TAKEAWAY: If approved, the ETF would be the first bitcoin ETF in the U.S., and its approval would send a strong signal to the global investment community that the market has “grown up” and now passes the SEC’s rigorous (albeit contentious) standards.

First Trust Advisors and SkyBridge Capital, the hedge fund run by Anthony Scaramucci, have filed an S-1 with the SEC for the “First Trust SkyBridge Bitcoin ETF Trust,” to trade on NYSE Arca. TAKEAWAY: They join WisdomTree, NYDIG, Valkyrie and VanEck in the queue, with Grayscale (a subsidiary of CoinDesk parent DCG) hiring ETF positions.

Grayscale Investments (a subsidiary of CoinDesk parent DCG) has launched five new trusts based on decentralized application tokens chainlink (LINK), decentraland (MANA), Brave’s basic attention token (BAT), filecoin (FIL) and livepeer (LPT). TAKEAWAY: This is a meaningful nudge to institutional investors to look a bit further down the market cap rankings for potential – and the inflows this is likely to produce will send not just funding but also more mainstream attention to innovative platforms and use cases.

Trading platform eToro will become a publicly traded company via a merger with special purpose acquisition company (SPAC) FinTech Acquisition Corp. V. The combined entity will have an implied equity value of about $10.4 billion, reflecting an implied enterprise value for eToro of about $9.6 billion, according to the company. TAKEAWAY: This adds to the list of crypto market infrastructure companies to go public, boosting our access to financial statements and a better understanding of the business dynamics of the industry.

Kraken could also soon contribute to that list. The crypto exchange, which has been trading since 2011, is reported to be considering a direct stock exchange listing in 2022. TAKEAWAY: Kraken is a key player in the industry, offering not only one of the leading exchanges, but also the first regulated “crypto bank” after receiving a bank charter from the state of Wyoming. While those would be some financial statements I would love to take a look at, it’s possible that an eventual listing, should it materialize, would be for only part of the growing company’s business lines.

SBI Crypto – a subsidiary of Japanese conglomerate SBI Holdings – is opening access to its mining pool for both institutional and retail customers. TAKEAWAY: This is part of what seems like an emerging trend to bring greater liquidity to bitcoin mining as an investment asset, and follows just one week after North American mining firm Foundry (a subsidiary of CoinDesk parent DCG) opened up its mining pool to institutional customers.

The latest survey by Bank of America shows inflation fears have replaced the pandemic impact as fund managers’ biggest worry, and that “long bitcoin” is still the second-most crowded trade, behind “long tech.” TAKEAWAY: “Most crowded” does not mean “unadvisable.” It does warn investors that, should sentiment turn, the stampede toward the exit could be nasty.

An Investopedia survey showed 20% of respondents have added bitcoin to their portfolios, while 60% believe it is in bubble territory. TAKEAWAY: The U.S. financial website’s editor in chief, Caleb Silver, said respondents’ concerns were based on good reason because bitcoin’s price has risen without any specific catalyst other than growing institutional demand. I’m perplexed as to why that wouldn’t be considered a catalyst.

Hong Kong-listed software firm Meitu has bought another 16,000 ETH valued at around $28.4 million and 386.086 BTC valued at approximately $21.6 million. TAKEAWAY: Could this be another corporation on its way to becoming an ETF-by-proxy? These purchases more than double the previous investment earlier this month. The company’s share price did not noticeably react to the first announcement, but has picked over the past couple of days. I haven’t seen the 2020 balance sheet, nor am I clear on the distribution of the crypto holdings among subsidiaries, but we can probably conclude that $90 million is starting to feel more material for shareholders than the previous investment of $40 million. Also, given that Meitu’s main business line appears to be social media apps, this could end up being part of a strategic business pivot.

Crypto markets largely listless but Harmony latest to moon

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Crypto markets are in search of direction today after Bitcoin made an abortive run at getting back over $US60,000 over the weekend.

The original cryptocurrency traded as high as $US59,693 ($77,275) at 12.30am on Sunday, according to Coincap.io, but then rapidly lost steam, sinking to $US56,000 on Sunday night.

As of 4.13pmAEDT, BTC had recovered somewhat to trade at $US57,479, up 0.7 per cent from 24 hours ago, according to Coincap.

Other websites were calculating things a bit differently, with Nomics and Coinmarketcap showing Bitcoin had slightly declined in value in the past 24 hours. Whichever was the case, it hadn’t made much of a move.

Of the top 100 crypto-assets listed on Coingecko, 68 were shown as having appreciated in the past 24 hours (including Bitcoin), while 30 had lost value.

But none of the losses and only eight gains were in the double digits, which counts as subdued for the normally volatile crypto market.

The top gainer was Harmony (One), which an all-time high of US19.05c just before lunchtime. At 4.29pm AEDT it was up 52.6 per cent to US17.78c.

The sharding protocol with a built-in bridge to Ethereum was strongly recommended by crypto YouTube influencer CoinBureau on Friday.

should sell this as an NFT titled “Biggest Mistake In His Life” $ONE pic.twitter.com/Z1tFLgdOBp — Barry B Benson.one (@das_ist_barry) March 19, 2021

I started tweeting non-stop about $one Harmony since the start of 2021. That was when it was priced at 0.006 and i was confused why people had not discovered this project then. Now, we are in mid-March and $one is at 0.11c and sooner rather than later $one will be at $1 USD 🔥🔥 — PACO.one (@PacoG2021) March 19, 2021

Terra (Luna), Reserve Rights Token, Bitmax Token, Theta Network, VeChain, Kusama and Helium are the other top 100 assets to hit all-time highs in the past 24 hours, according to Coingecko.

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Licensed Crypto Exchange “UnitEx” Launches In Estonia

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TALLINN, ESTONIA , March 22, 2021 (GLOBE NEWSWIRE) – Crypto exchange “UnitEx” was launched in Estonia, one of the leading European countries in developing the cryptocurrency market. The trading platform is registered according to the regulations in Estonia and has obtained a Virtual Currency Service Provider license by the National Financial Intelligence Unit RAB. The license covers exchange operation of crypto-fiat and crypto-crypto, as well as cryptocurrency wallet management.

The “UnitEx” trading platform listed the most liquid digital coins, such as bitcoin (BTC), ethereum (ETH) and EOS. Also, it listed the tokens of the Cryptounit blockchain: backed stablecoin USDU, utility token UNTB and token CRU that can be traded in pairs with USDU, BTC, ETH и EOS. Users also can purchase stablecoins USDU for fiat – US dollars and euro.

USDU has been chosen as the first stablecoin to be listed on the exchange as it is backed in USDC stablecoins, the emitent of which regularly passes audit and operates under the US jurisdiction. A guarantor for tokens liquidity and security of the deposit is a Swiss financial company GTI NET AG with an asset management license. Apart from that, one of the key USDU advantages is that it has no commission for transactions. The advantage is apparent in contrast with increased transaction fees in other stablecoins: up to $25 for a transaction in USDT and up to $15 for a transaction in USDC.

The stablecoin USDU operates on the Cryptounit blockchain that was launched on the 2nd February 2021 based on the EOS programming code. The backed stablecoin is a product of the Swiss financial group UGPay Group AG registered in Zug, Switzerland. The company invests in 20 industry sectors, including precious metals mining, synthetic diamonds basalt manufacturing, construction, innovative transport, telecom, IT, culture and science, real estate, media, and cryptocurrencies and other assets.

In the nearest months, more cryptocurrencies pairs will be listed in the Unit Exchange.

One of the key goals of the Unit Exchange is to become number one in STO market. “UnitEx” team will provide clients who would like to tokenize their assets with technical support in new token issuance on the Cryptounit blockchain as well as a reliable and fully legal trading platform. As of today, a company has started the process of further extension of the obtained license that will allow Unit Exchange to list security-tokens under the country regulations.

Contact info:

E-mail: info@unitex.one support@unitex.one

This news has been published for the above source. UnitEx [ID=17447]

Disclaimer: The information does not constitute advice or an offer to buy. Any purchase made from this story is made at your own risk. Consult an expert advisor/health professional before any such purchase. Any purchase made from this link is subject to the final terms and conditions of the website’s selling. The content publisher and its distribution partners do not take any responsibility directly or indirectly. If you have any complaints or copyright issues related to this article, kindly contact the company this news is about.

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