Grayscale Investments Registers Tripled Inflows in Q3 Led by Institutional Investors

Digital asset management Grayscale Investments, which offers investors access to Bitcoin and other cryptocurrencies in the form of shares, has published on Tuesday its third quarter inflows for 2019, marking a record of over $254 million in total investment into its products.

Accordingly, Grayscale provided details on the inflows in its Digital Asset Investment Report for Q3 2019 for the time period from July 1st 2019 to September 30th 2019.

The New York-based investment firm stated in the report that Q3 inflows amounted to $254.9 million, which is triple the $85 million it posted the previous quarter.  As such, inflows over the past year hit a record $412.M. In total, the firm manages over $2 billion on behalf of institutional investors, wealthy individuals, and hedge funds.

The report further shows that 84% of the new funds came from hedge funds and other institutional investors. Notably, total investments into Grayscale products from January 1st 2019 through September 30th 2019 reached $382.3 million, while the figure over the past 12 months is $412.3 million. Compared to previous quarters, the assets managed in the funds, excluding its flagship GBTC product, grew in total by $107M in the third quarter.

Currently, the digital investment giant operates a total of 10 funds tied to the cryptocurrency market, including ones tied to ZCash, Ethereum Classic (ETC), and its Grayscale Digital Large Cap Fund, which on Monday received clearance from FINRA to trade openly in the over-the-counter (OTC) market. Seemingly, this enables the first publicly quoted security based on a selection of digital currencies in the U.S.

Furthermore, the report shows that 67% of third quarter investments went into the company’s Bitcoin Trust shares, while virtually all the rest went to shares of other cryptocurrencies, Ethereum and Ethereum Classic.  As reported in July, Grayscale Bitcoin trust outperformed indices in the first half of 2019, up almost 300% on the year at the time.

Grayscale’s managing director Michael Sonnenshein attributed recent asset growth to the company’s #DropGold campaign, which launched in May and called on U.S. investors to abandon precious metals and join the Bitcoin movement. He further noted that the asset growth was being driven by traditional funds as well as investors, who decided to make digital currencies part of their portfolio mix.

“Most of our institutional investors are actually not crypto hedge funds,” he said. “It really runs the gamut — we have tons of global macros funds who maybe look at digital assets as a way to be short fiat money or thinking about all the economic and political turmoil going on globally.” 

Following the success of the previous campaign, Sonnenshein stated that a similar capaign will be launched within the near future.

Binance Announces Investment in Crypto Chinese Media Outlet Mars Finance

Cryptocurrency exchange giant Binance Holdings Ltd. has made a strategic investment in a Chinese media cryptocurrency and blockchain-focused news website Mars Finance.

According to news, the investment amount has not been disclosed; however it scored the company a valuation of $200 million.

The startup has previously raised two funding rounds and is backed by IDG Capital and the venture subsidiaries of OKCoin and Huobi. Aside from Binance, the latest funding round has included other investors such as included Ceyuan Ventures and Matrixport, the financial services startup created by Bitmain Technologies Ltd. co-founder Wu Jihan.

Following the news, Binance CEO Changpeng Zhao tweeted to confirm the news, expressing the company’s willingness to support the industry. He stated:

“Let’s make more news, and less FUD. Invest in the industry.”

This marks Binance’s first strategic investment in China since its withdrawal from the market back in 2017. At that time, the exchange withdrew its operations due to the ban on digital currency trading. Founder “CZ” Zhao Changpeng has stated that Mars Finance has rapidly expanded its influence since launch.

Mars Finance was founded by local entrepeneur Wang Feng in 2018, and the news platform serves as a Chinese-language crypto news service. According to the firm’s website, it is indicated that the startup provides as well market reports  and it has also launched its own venture fund called Consensus Lab, which has invested in nearly 50 high-quality blockchain projects such as  Hong Kong-based Coinsuper, Quark, Bumo, Celer, Certik, Bitforex, and Bgogo.

Prior to Mars Finance, Wang co-founded Linekong Interactive Group Co. in 2007, which is a mobile game developer and publisher that went public in Hong Kong in 2014.

Currently, the Chinese version of Mars Finance, with the domain huoxing24.com, has around 124,000 monthly visits, with a 70,947 rank in China, according to website traffic tool SimilarWeb. The English-language version of the website, however, appears to be relatively inactive since early January 2019.

The news follows as Binance’s new U.S. platform prepares to onboard customers in preparation for live trading. Last week, Binance US announced that it would open registration and deposits on September 18th, after which it will roll out a number of Binance products across the U.S.

Alan Howard Behind the $1 Billion Crypto Hedge Fund

Elwood Asset Management, a UK-based investment firm owned and founded by hedge-fund billionaire Alan Howard, is planning to launch a $1 billion venture in the cryptocurrency hedge fund space, according to a report published by The Financial Times on August 30th.

Elwood Chief Executive Officer Bin Ren disclosed to the Financial Times that the firm was working on a platform that would tailor portfolios of cryptocurrency funds for institutional investors.

According to the report, the new platform aims to address the volatility and security risks often associated with the crypto hedge funds. CEO Ren claimed that the objective was to provide investors with a selection group of vetted crypto funds have passed robust due diligence so that market participants can avoid “blow outs.”

Whilst the details of the new venture have yet to be finalized, it is noted that the platform would allow investors to specify their terms such as the risk level they are willing to take, the returns they expect, as well as their liquidity terms. In addition to that, it will also determine the potential correlation with other assets owned by the investors. As a result, investors will get portfolios specifically tailored to their needs.

Besides the fees the investors need to pay to access the underlying funds, they would also have to pay a certain fee to Elwood for using the new platform.

“I see this as a very big growth opportunity,” Ren said, adding that the new platform-style product could ultimately manage over $1 billion of assets.

Meanwhile, Elwood has been screening crypto hedge funds and has already identified up to 50 that “probably satisfy our due diligence.”

The new platform builds on Elwood’s previous work in the crypto space. Earlier this year, the investment firm launched the Elwood Blockchain Global Equity Index. The index, which is calculated by index provider Solactive AG, stimulates investment into both crypto and blockchain projects.

Elwood had also indicated it was planning to increase its cryptocurrency offerings as it announced the launch of a blockchain exchange-traded fund in partnership with Invesco, which would be listed on the London Stock Exchange.

Last month, Invesco Japan launched the Japanese domestic ‘Invesco Global Blockchain Equity Fund’, offering Japanese investors exposure to digital assets and blockchain technology. The fund will track the performance of the Elwood Blockchain Global Equity Index.

Prior to this, there had been other reports that also suggested Elwood was planning to launch a range of cryptocurrency products targeting institutional investors. Moreover, Alan Howard himself has a host of crypto investments under his belt, including in EOS developer Block.one as well as the ICE-owned digital assets platform Bakkt.

The new venture follows other billion-dollar-plus investments in the space. For reference, Telegram’s blockchain, TON, which is expected to be released in the coming months, raised over $1.7 billion.

SEC Delays Three Bitcoin ETF Proposals Again

The United States Securities and Exchange Commission (SEC) announced that it delays its decision on three Bitcoin (BTC) exchange-traded fund (ETF) proposals.

The ETFs, proposed earlier in the year came from Bitwise Asset Management, VanEck/SolidX and Wilshire Phoenix, and filed with exchanges NYSE Arca and Cboe BZX. The applicants are hopeful that there will be some progress on the ETF front hoping to become the first asset manager to offer a regulated investment vehicle based on Bitcoin.

The SEC decision for listing VanEck has been delayed to October 18, while Bitwise’s proposal on NYSE Arca will know its fate on October 13. The Wilshire Phoenix’s United States Bitcoin and Treasury Investment Trust will be the most recent decision announcement on September 29. The SEC shared the same statement for each of them:

“The Commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider this proposed rule change.”

Exchange traded funds (ETF) are a type of security that tracks a basket of assets proportionately represented in the fund’s shares. The SEC approval is highly anticipated by the community, as this would make Bitcoin exposure for institutional investors much more accessible.

The VanEck proposal was filed in January, while Bitwise’s current application was filed in February. The Wilshire Phoenix proposal was published on July 1, 2019. Attempts for Bitcoin ETF approvals have been consistently rebuffed by the SEC over the last couple of years, the main reason being fear of market manipulation that can’t be monitored by the agency.

Today’s news marks the latest in a series of delays on a Bitcoin ETF. The SEC had previously delayed its decision on VanEck and Bitwise’s ETF applications in March, and again in May.

Following the May decision, the SEC decided to publish a set of questions, available to the public, in order to gather more information and opinions about VanEck’s proposal.

The SEC has the right to postpone its decision (usually up to 3 instances) on proposed financial products in order to gather information or further analyze a rule change that would allow the listing.

Coinsquare Enters the ATM Market with Just Cash Acquisition

Canadian-based cryptocurrency exchange platform Coinsquare has announced the acquisition of a controlling stake in the United States-based Fintech startup Just Cash, according to a press release.

The acquisition was aimed to get ahold of the proprietary software developed by Just Cash, whose tech enables traditional ATMs to sell cryptocurrency, with no hardware installations or modifications required. In addition to that, there are no additional costs to the operator.

Following this acquisition, Coinsquare will now be able to offer users the chance to utilize their debit cards on ATMs to make digital currency transactions.

The technology works similarly to any other debit card transaction. After the consumer inserts their debit card into the ATM, they are given the option to withdraw cash or to purchase one of several cryptocurrencies, including BTC. Upon approval of the transaction, the ATM prints out a receipt with a public key, a private key, and a QR code.

Coinsquare CEO Cole Diamond believes crypto-friendly ATMs are key to making digital assets accessible to the masses. He claims there is a lack of mainstream cryptocurrency assimilation at the moment due to the fact that many are intimidated by the process needed to acquire it.

“By using the millions of existing ATMs around the world, we can now bridge the gap and give new users the easiest and most familiar experience to purchase cryptocurrency. Bitcoin is new and unfamiliar to many, but ATMs are not. By tapping into the existing global ATM network, cryptocurrency can finally reach the masses. We are bringing that familiar and trusted process into the cryptocurrency world, and vice versa, for the first time.”

He further stated that the company is hoping to license its software to the millions of ATMs around the world.

The exchange platform stated that it plans to launch the service globally, starting with the U.S. The company claims it has partnered with three major producers of non-bank ATMs – which remain undisclosed. There are approximately 250,000 non-bank ATMs that can be potentially upgraded with this feature. Coinsquare believes this will open the doors to installing the service on some 170,000 machines, or half of all the non-bank ATMs across the US by the end of next year.

“We will outnumber the total number bitcoin ATMs within a year,” Diamond said.

CEO Diamond further claimed that this feature will bridge the gap between traditional banking and the crypto industry; however he does not expect to integrate the software with bank partners anytime soon.

Meanwhile, Just Cash will continue to operate independently under the Coinsquare. The news follows reports that Vancouver is considering a ban of Bitcoin ATMs due to their ties with money laundering. Earlier this year, Coinsquare announced the launch of its own stablecoin – eCAD – pegged to the Canadian dollar.