Crypto Asset Manager Grayscale Reports Increased Institutional Activity in 2019

Crypto asset management giant Grayscale Investment has reported an impressive 2019, with more than $600 million from investors throughout the year.

According to a 2019 digital asset investment report released by Grayscale, the digital giant has managed to raise over $607.7 million in investments throughout 2019, with most of the record-breaking figures coming from institutional investors. As stated in the report, the 2019 numbers have exceeded cumulative amount from 2013 to 2018, and bringing the total amount to $1.17 billion.

The New York-based digital asset giant specializes in providing their customers with up-to-date market information, investment exposure, and diversification, as well as a range of investment products that meet the needs of today’s ever-expanding class of digital assets.

In a comprehensive document, the company has reported a record breaking amount in Q4 of 2019, raising $225.5 million into its investment products.

The company’s leading investment products – Bitcoin Trust – has managed to garner more than $470 million in 2019, with $193 million of which was accumulated in the Q4 alone – the largest quarterly raise since its establishment. In addition to that, the product earns a weekly investment average of over $9 million.

Moreover, Grayscale’s total weekly investments for Q4 averaged $17.3 million – a stark comparison to the weekly $11.7 million throughout 2019.

In the meantime, Grayscale has managed to expand its investment base by 24% in 2019, which brought in a total of $146.9 million in investment funding. The remaining $460.8 million came from their existing investors, of which 36% have now diversified their holdings across multiple investment product issued by the company.

The report further revealed that a total of 71% of Grayscale’s total investment numbers came from institutional investors, primarily hedge funds, and thus marking a steady increase from 66% in 2018.

Following the news, managing director Michael Sonnenshein has stated:

“We saw record-breaking investment into Grayscale’s family of products, illustrating continued demand from investors for digital currency access products and with a majority of investment coming from institutions, it’s clear that we’re experiencing institutional adoption.” 

On the other hand, communications director Marissa Arnold has pointed out the shift from traditional investors towards the digital industry, stating:

 “As the largest digital currency asset manager, we feel that our numbers are indicative of broader market sentiment and institutional flows into digital currency.” 

In addition to that, she believes that Q4 is proof that showcased what carried on the investor demand.

Whilst 2019 may not have been the best year for digital assets, Grayscale has managed to raise an impressive amount of capital through investment, thus proving that there is a bright future for digital investments.

Although it’s still too early to say how well the company will fare in Q1 of 2020, if the company keeps this pace up, then more significant numbers are expected from Grayscale in the coming months.

CME Group Launches Highly Anticipated Bitcoin Futures Options

The Chicago Mercantile Exchange (CME) – the world’s largest futures exchange – has announced the launch of its new Bitcoin (BTC) futures options.

After having been granted the necessary regulatory approval, the new BTC futures options is as of January 13 live on the company’s official website. The news follows the company’s initial plans , which were first announced in November 2019. Accordingly, the new product came to be in response to the growing interest in digital assets as well as customer demand for tools to manage BTC exposure.

The new BTC futures options will be added to the exchange’s repertoire and hopefully appease the growing interest of the investors on the platform. Due to the increased demand, CME had also filed to double its monthly BTC futures open positions limit to 10,000 BTC in September of last year.

In the meantime, the new product will allow traders to use alternate strategies as well as allowing them to save on margins by using margin offsets. The options will have a tick size of $5 per BTC and therefore, given that the contracts are 5 BTC, the options will move in increments of $25.

Furthermore, CME said that the fees for options on BTC futures will match the BTC futures according to the CME Fee Schedule. In addition to that, the firm plans to introduce a market maker program to support the on-screen market development of BTC futures options.

Tim McCourt, global head of equity index and alternative investment products at CME Group, stated that options had been a product that’s been in high demand from customers ever since they launched futures back in December 2017.

Upon the announcement of the new product, McCourt expressed excitement at having brought this new risk management tool to the market. He further explained that a lot of companies who use futures contracts, look to use strategies unique to option trading.

“It allows people to precisely manage the price risk associated with Bitcoin. You can deploy overriding strategies by selling calls, you can buy downside protection. These are things you can’t necessarily do with a linear one delta future,” said McCourt.

He further noted that lots of people are looking to deploy similar benefits and use cases for Bitcoin that they’re doing for other asset classes.

Meanwhile, the announcement comes amidst BTC futures traders reportedly generating at least $20 billion in daily volume last week. According to data from analyst Skew Markets, global futures trading volume alone exceeded $20 billion on January 8th.

CME is the third global derivatives exchange to launch trading for options on Bitcoin futures. Digital assest platform Bakkt – backed by the Intercontinental Exchange (ICE) – was the first exchange to launch Bitcoin options in the United States. Bakkt was then followed by cryptocurrency derivatives exchange FTX that quietly launched Bitcoin options trading on January 11.

Circle Continues Sell-Off with Its OTC Desk Moving Under Kraken

San Francisco-based cryptocurrency exchange platform Kraken has announced that it has acquired Circle’s over-the-counter (OTC) desk.

The exchange revealed the new acquisition via a blog post, stating that Kraken has acquired one of the most recognized OTC desks in the industry.

The San Francisco-based exchange believes the new acquisition will boost their services and expand their reach by providing to traders around the world, particularly in Asia. Moreover, it will provide deeper liquidity and tighter spreads across all supported assets as well as improve automation and offer advanced tools to streamline the trade process from quote to settlement.

Kraken’s head of OTC desk, Nelson Minier, will now be in charge of the Circle Trade division, which he plans to expand further by adding twenty more staff.  Minier joined the firm in 2018 and brought with him 20 years of experience on Wall Street, having previously held positions at JPMorgan, Credit Suisse and Bear Sterns.

In the meantime, Circle co-founders Sean Neville and Jeremy Allaire have confirmed the sale of its OTC business, stating:

“We have known and admired Jesse and his team at Kraken for many years, and we have every confidence and expectation that Circle Trade customers and partners will continue to find best-in-class OTC liquidity service and responsiveness through Kraken going forward. Circle Trade represents an enormous success for the industry as well as for Circle, and we’re excited to see Kraken grow it further.”

Founded in 2013, Circle is one of the earliest players in the digital assets industry and its OTC desk was once known as one of the most profitable businesses in the market. Initially, the OTC desk was set up to provide the much-needed liquidity for Circle’s Bitcoin (BTC) payment app. However, given the massive demand in counterparties, its presence grew significantly.

According to sources, Circle has been looking for a buyer for its OTC desk since the summer. The firm had seen a notional volume of $24 billion in 2018. However, the company hit a rough patch in 2019.

In September, it put its research and development entity, Circle Research, on halt and ceased its digital currencies payments app, Circle Pay, to focus on developing its cryptocurrency stable coin project USD Coin (USDC). Earlier this year, Circle laid off around ten percent (10%) of its workforce, citing regulatory uncertainties.

Notably, co-founders Neville and Allaire stated that the sale of Circle’s OTC desk was part of its sharpened 2020 product roadmap, in which the company expressed that it needed to focus effectively on its stablecoin platforms by reducing complexity, tightening its product portfolio, and reorganizing its teams to execute with greater agility.

Cryptocurrency Mining Giant Bitmain Announces South America Partnerships

Cryptocurrency mining giant Bitmain has announced that is expanding its distribution in South America by partnering with two digital asset mining consulting firms.

In a press release from December 12th, Bitmain confirmed the appointment of Fastblock and Bit5ive – two cryptocurrency mining firms – as the official Antminer distributors in South America.

According to the news, Fastblock will serve as the primary distributor in Brazil. Founded in 2013, the firm provides major crypto mining services, including selling, hosting and supporting crypto mining hardware.

Bernardo Schucman, co-founder and CEO of Fastblock, has expressed great excitement at the opportunity to work alongside Bitmain, stating:

“We are excited to be bringing our blockchain knowledge from managing over 20 mining plants since 2014 to Antminer customers in the region. We are also able to guarantee the best prices and have a highly skilled team that can advise on the most cost-effective solutions for any mining project.”

Meanwhile, Miami-based Bit5ive will be distributing Antminers to over 30 countries in Latin and Central America as well as the Caribbean.

Robert D. Collazo Jr, Bit5ive co-founder and chief executive, stated that that the official distributor license will help strengthen the trust South American miners have in Antminer’s sales process. He further added that the team at Bit5ive looked forward to its partnership with Bitmain.

Following the announcement, Bitmain excecutive Irena Gao commented on the new partnerships and its decision to expand in the South American market, explaining:

“South America continues to be an important region for the cryptocurrency mining sector. Our collaboration with Fastblock and Bit5ive will help us to build on the relationships we have with the mining community on-the-ground and instill trust in the sales process of Antminers.”

Based in China, Bitmain is the largest manufacturer of ASIC-based Bitcoin mining chips. In addition to that, it is also the only company making the 7 nano-meter-based mining chip which is considered to be very efficient.

In the meantime, following multiple failed attempts in Hong Kong, Bitmain filed for an initial public offering (IPO) in the United States.

The news comes amidst new reports, which reported that Bitmain’s market share by hashrate had dropped from around 70% to 66% from June to early December 2019. The figures were reported in a study, called “The Bitcoin Mining Network” published by London-based digital asset manager CoinShares. Concurrently, Bitmain’s own estimations allege that the company’s market share accounted for 75% of the global crypto hardware market as of 2017.

LedgerX Places Two Co-Founders on Administrative Leave

LedgerX – a U.S. regulated Bitcoin (BTC) derivatives exchange and clearinghouse – has announced today that both of its co-founders, Paul and Juthica Chou, have been placed on administrative leave effective immediately.

According to a statement released by the parent company Ledger Holdings Inc. on Monday, both co-founders will be replaced by Larry E. Thompson, who will act as interim CEO and lead director of Ledger Holdings. Thompson joins the firm following a 30-year career on Wall Street, where he served in a variety of senior-level roles, including serving as vice-chair of the Depository Trust & Clearing Corporation (DTCC).

The firm gave no reasons as to why this change had occurred. However, Juthica Chou, came onto social media platform Twitter, explaining that no real reasons for the administrative leave had been given, citing long-lasting disagreements with the board about the firm’s vision and direction of business as a possible motive. Paul Chou used to serve as the firm’s CEO, whilst Juthica was the president and chief risk officer.

LedgerX serves as a platform for financial swap trading for both retail and institutional investors, with at least $10 million in assets. Prior to this, the exchange catered strictly to institutional investors.

The announcement comes months after its BTC physically-delivered futures product launch went south.  At that time, the exchange had announcement the launch of a new physically-delivered Bitcoin futures product, targeted at retail investors, which went live on the Omni trading platform on July 31st.

However, at the beginning of August, the United States Commodity Futures Trading Commission (CFTC) claimed that LedgerX’s announcement could be neither true nor possible as the physically-delivered Bitcoin futures product hadn’t been approved by the agency.

At that time, derivative expert Thomas G. Thompson pointed out that “the CFTC does not show any futures contracts certified by” the firm. A day later LedgerX pulled back on the announcement, which included as well the launch of its new retail platform Omni. However, Paul Chou took to Twitter to take aim at the CFTC in several expletive-laden tweets.

“Also breaking, i’ve decided to sue the CFTC for anti competitive behavior, breach of duty, going against the regs, etc.,” one tweet noted. 

Another controversy involving LedgerX and the CFTC arose in September, when the exchange claimed that former chairman Christopher Giancarlo, had obstructed the approval of its amended Derivates Clearing Organization registration, citing personal bias against LedgerX CEO Paul Chou as a reason.