Blockchain Weekly Front Page: Bitcoin Bulls & Bears have a very noisy party & bring back that famous volatility


Last week our theme was “Bullish Signals during the Blockchain Bear Market.”

Our theme for this week is “Bitcoin Bulls & Bears have a very noisy party & bring back that famous volatility.

For more about the Front Page Weekly CXO Briefing, please click here.

This has been a rough week for the entire cryptocurrency market. A few days ago, Bitcoin hit its lowest this year, dropping as low as $5,244, before bouncing back to the $5,500 mark.

The voice of uncertainty has rekindled the fear and doubt, and rumors have been surfaced that Bitcoin will hit $2,000 – $3,000, before the bloodbath is over. The price drop forced many retail investors and long term hodlers, to give up their positions. The $6,000 level has been considered to be Bitcoin’s floor. This week’s drop below that threshold, raised concerns about the viability the most popular cryptocurrency.

Other crypto markets also suffered huge losses, with all major cryptocurrencies showing double-digit losses. Ethereum (ETH) dropped as much as 13% and Ripple (XRP) by 15%. Bitcoin’s market cap has fallen below $100 billion for the first time since October 2017. The entire market declined from a total value of $210 billion to almost $180 billion.

Yet, Circuit Capital Index shows that adoption is rising, even though the price hasn’t. According to an article in Forbes, the founders of Circuit Capital, a new San Francisco-based cryptocurrency hedge fund, believe that the poor performance of digital asset prices during 2018 has made difficult to observe the ever-rising interest in the cryptocurrencies, by consumers and investors. Circuit has developed an index that measures mainstream adoption of the blockchain, the technology behind digital assets. The index shows crypto adoption is on an upward trend, even though prices have been heading in the exact opposite direction.


Another story this past week that’s been on everyone’s radar has been the Bitcoin Cash (BCH) hard fork. The fourth-largest cryptocurrency split on Thursday, November 15, 2018. Bitcoin Cash split into two different coins, “Bitcoin Cash ABC” (BCH ABC) and “Bitcoin Cash SV” (BCH SV). So far, the Bitcoin Cash ABC chain has more accumulated proof of work, and its native currency, BCH ABC, and is trading higher on exchanges. The Bitcoin Cash ABC camp feel they’ve won, though Bitcoin Cash SV has not yet conceded.

While the hard fork caused prices of the forked coins to fluctuate, many think that it also caused Bitcoin (BTC) to plummet to its lowest price this year, after several months of relative stability. As things develop. we’ll see if it will continue to drive the price of BTC even lower.

The last 10 months, it’s been a big party for the bears. But has the time come for the bears to hibernate, and for the next bull stampede to start?

The biggest hope for the next bull run is institutional money. But for institutional traders to directly access crypto, they need to be able to trade, settle and store assets in an institutional-grade environment.

I think we are near the end of the tunnel. But a few things need to happen , before we see the market swing upward.

What still remains in play for the bulls, is the hope for the SEC’s upcoming decision to finally approve a Bitcoin ETF, set for December 29. This would open up Bitcoin to institutional traders, and give it an air of legitimacy.

And it’s not just the SEC’s Bitcoin ETF approval that everybody is anxiously awaiting. Bakkt, the big endorsement by the owners of the NYSE, could boost Bitcoin and the entire cryptocurrency market in 2019. Bakkt plans to make Bitcoin a secure offering for financial institutions, and open it’s accessibility in mutual funds, 401K’s and other pension funds. This would pave the way for widespread adoption of crypto-backed debit cards and crypto-based retail payments, with the eventual replacement of credit cards with Bitcoin.

I am excited for 2019 and the direction of the market, with all the positive developments and regulatory clarity underway. While we don’t know where the market will bottom out, we should consider that the bear market may last a little longer than expected.

If you are truly bullish about crypto and blockchain, the current prices are irrelevant. Bitcoin’s true nature is as an instant way to pay for things anywhere in the world, its not about money. We could see a cashless world sooner than we imagine. Bitcoin and the ideas it represents are here to stay. As the number of people using it increases, it will eventually spread exponentially just like the Internet.

Bitcoin’s price volatility will stabilize as everything develops, but for now we should prepare for the worst, while we work to build the best.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

The To Do List for Security Token Platform operators


Sheldon Freedman will return next week with the last of his 4-parter on Security Tokens. Today’s post is stepping back and looking at the motivations on both sides of the table. What do entrepreneurs and investors want and how do their needs offer a To Do List to Security Token platform operators?

Innovation comes from deep pain meeting disruptive technology. Security Tokens can tokenise just about any asset. Our thesis is that the early adoption traction will happen in early stage stock, because that is a big broken market where there is deep pain on both sides of the table.

The deep pain of entrepreneurs raising money from Legacy VC has been detailed many times, including here in our first take on ICOs in March 2017. During the ICO bubble of 2017, the pendulum swung too far in the other direction (evidenced by raising $100m+  in hours without even a working product). Now the pendulum needs to swing back a bit towards investors (but not as far as it used to be before the Token revolution started).

Investor Pain

The other side of the table – the investors – also suffer pain based on having a lousy set of options:

  • Public Equity Markets. Investors have an ugly choice of IPO valuations of tech growth stocks at nosebleed valuations or more conservatively valued old companies that are badly impacted by disruption (e.g do you invest in AirBnB at high valuation at IPO or in conservatively valued Hotel stocks that will be disrupted by AirBnB?).
  • VC Funds. Investors who want equity much earlier than IPO have the option of buying into sub par VC funds, when the lion’s share of returns goes to a few top tier funds that are not accepting new investors.
  • Direct Angel Investing. investing in early stage deals directly is risky when there is almost no price discovery, liquidity, or portfolio construction ability and a lot of Due Diligence overhead.

To Do List for Security Token platform operators

These are the 5 things that Investors want from a good Security Token platform. This the To Do List for Security Token platform operators:

  • Basic quality filtering to create a short list for investors. 
  • Price discovery & liquidity. 
  • Portfolio construction ability. 
  • Co-Investors.
  • A network of service providers.

Basic quality filtering to create a short list for investors.

It is NOT hard to get Security Token issuers (aka entrepreneurs). They will be lining up at the doors of Security Token platform operators. Within the crowd of entrepreneurs lining up at the door will be a mix of:

  • Really great ventures in their early days (what every investor wants).
  • Ventures that do OK, make some money for investors but not a lot 
  • Ventures that go smash with money back for investors from something like an Acquire Hire deal
  • Honest Ventures that go smash with zero back.
  • Scam Ventures that go smash with zero back.

The last two are similar in terms of returns but the last one is relatively easy in most cases to get via a fairly crude filter (but not all, think big public market failures like Enron and Worldcom). Basic quality filtering should deliver a short list to Investors and the platform needs to ensure that the ecosystem of investors, advisers and service providers are compensated well to do that filtering job.

Basic quality filtering only delivers a short list to investors. Then the hard work starts. Without that basic filtering the job is well nigh impossible – meaning investors ignore the platform and eventually entrepreneurs desert the platform. That is why basic quality filtering is Job No 1.

Price discovery & liquidity.

The public equity markets are excellent at delivering price discovery & liquidity. Private markets (where all early stage deals are done) are totally opaque. Valuation/price is set in bilateral negotiations behind closed doors. There is no price discovery via shorting (which explains the historically bizarre inversion where private stock has higher valuations than public stock).  The hope for Security Tokens is that markets develop that bring price discovery & liquidity to these opaque private markets for early stage equity. The question is how that price discovery & liquidity will come about. I can only see two scenarios:

  1. Centralised exchange dominance. We get something similar to the NYSE/NASDAQ duopoly plus a lot of second tier regional exchanges.
  2. A more decentralised data feed driven ecosystem, where aggregation can be done by whoever takes the data feed.

I reckon that two is more likely for one simple reason. In the Legacy Finance era we had one dominant geographic market (USA) and so it was natural for NYSE/NASDAQ to rise to dominance. We now live in a multipolar world and the Token market is naturally global. The promise of the Token market is that a great team anywhere can raise capital. That requires a decentralised data feed driven ecosystem. This means that aggregation can happen by whoever takes the data feed. So there will be competition to add value at this level. 

This data feed is also what enables a portfolio construction ability. 

Portfolio construction ability 

Classic portfolio diversity means getting ventures that are diversified across geography, domain, stage and business model.

Investors in early stage stock have two options if they want to follow prudential norms for risk management through portfolio diversity:

  • Delegate portfolio construction to a Fund and pay them 2 and 20. You accept their model for  portfolio construction.
  • Use a data feed to construct your own portfolio.

That is relatively easy to do if we get a decentralised data feed driven ecosystem. All the platform operator needs to do is make sure that Security Token issuers fill in a basic form detailing geography, domain, stage and  business model and make that data available in a data feed.

A more sophisticated form of risk management will be enabled by a platform operator that insists that entrepreneurs report financials using XBRL (see this post for more). Imagine, for example, being able to see total cash position and cash burn across a portfolio of early stage stock.

Geographic diversity is a particular issue for early stage equity. It is an axiom of early stage equity that entrepreneurs and investors must be close enough to meet regularly (the  famous “one tank of gas in a Ferrari” for Silicon Valley VC). That problem is solved by having co-investors who trust each other. 


This is where the interests of entrepreneurs and investors align. The biggest fear of both is the venture running out of cash – that is how ventures fail in practice.

If you are limited to investing in local ventures, your pool of investors is small (unless you are in Silicon Valley). This is where investors need to build relationships with co-investors in other locations. For example, lets say you are in London but you see a good deal in Dubai. If you know a good investor in Dubai, you bring that deal to him/her. He/she does the same for you if they see a deal in London. The same can happen by domain and business model. In some deals you are a Lead, in others you Follow.

A network of service providers 

Investors need Lawyers, Accountants, Domain Experts and other experts. Due Diligence is a critical step in investing. A winning platform will have a good  network of service providers who are vetted and rated.

What entrepreneurs want from a Security Token platform

Entrepreneurs raising money are always in a hurry. They see a window of opportunity and want some cash in the bank so that they can execute on a plan. Investor conviction needs to take time – it should be hard. It is the next bit that should be easy. The mantra is schmooze offline, transact online. Once you have a lead investor it should be easy to close the round. It is not easy today. This is a deep pain point for entrepreneurs. These entrepreneurs will be highly enthusiastic early adopters of Security Token platforms that will make the step from finding a lead investor to closing the round and getting cash in bank. What entrepreneurs want is a simple way for everybody who wants to invest to do it online.  Execution of what we all want should be easy. You know, all those boring bits from “yes I want to invest, to money in the bank”. Shaving say 10% off a boring process like that is…boring. Taking a 90% axe to processes like that is exciting and game-changing. Security Tokens can enable that. This is win/win for investors and entrepreneurs – nobody likes this cost/delay.

If we get Security Token platforms that deliver on this To Do List, it will be great for entrepreneurs and investors and for everybody else who benefit from good jobs and wealth creation from the increase in innovation. I am an optimist because a) none of the things on that To Do List is rocket science and b) the prize for a platform operator who gets it right is very big. 

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech. 

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The rise of Tokenized assets – the bridge between the old and the new capital markets

Most people in Blockchain whom I talk to, feel tokenizing real world assets is an amazing concept with huge potential. I have often thought that the real difference that tokenizing offered, as an economic model, is the ability to tag a number value to something abstract. Like attention, brand value, popularity, karma etc.,


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There have been no lack of attempts to tokenize platforms that act as market places for creating abstract value. In the last year or so, I have come across several firms that act as market places for people to help each other, give and receive points and eventually turn them to tokens.

However, as we create this new value system using Blockchain, it has to be through a logical roadmap. One has to walk before running. And, cryptos have struggled to answer the question “Whats your intrinsic value?” – there are several consensus based answers, but the traditional world typically don’t recognize that. And when the market collapses, the talk about creation of value digitally, often times look baseless.

However, as the Blockchain era turns a new page, we will need security tokens to act as the bridge between the old and the new capital markets.

I still believe value can be created digitally, and there is a market for that. We are at a point, where most of the world agree that Blockchain as a new economic paradigm is here to stay. As institutions plan their entry into this space, the economic model should stand its ground even in a quasi-traditional sense. Security tokens are exactly enabling that. They are beneficial across several dimensions, and some of them are:

  • Inclusion: Tokenizing a fund focused on Manhattan properties could allow people across the world take part in a vehicle, which would have in the past been accessible only to the ultra rich.
  • Liquidity: I can buy and flip a property wholly or partially if it is tokenized. Liquidity has always been a major concern with real estate, venture capital and private equity investments, and tokenizing would change the risk profile of these asset classes
  • Efficiency: Just the speed of execution and settlement that smart contracts offer makes it a very efficient system.

We have had several headlines over the last few months on real world assets backed tokens. Especially from emerging market countries and their central banks. I am closely following India especially. But, Singapore is perhaps the world leader when it comes to their position on tokenized assets.

Earlier this week, the Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) announced that the Delivery vs Payments (DvP) app they were prototyping was working successfully. I had written about it earlier on Daily Fintech too, and was looking forward to this announcement.

“Based on the unique methodology that SGX developed to enable real-world interoperability of platforms, as well as the simultaneous exchange of digital tokens and securities, we have applied for our first-ever technology patent,”

– Tinku Gupta, Head of Technology, SGX

Through this prototype, the consortium of MAS, SGX, Deloitte and Nasdaq have tested the functionality where financial institutions can exchange and settle tokenized assets across different Blockchain platforms.

Most of these prototypes are conducted in a controlled environment with minimal risk. Thats because the technology and its viability in a global enterprise still needs to mature. But the concept of tokenising assets, and allowing access to a global consumer base would create new business models (and regulatory headaches).

Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer and a podcast host.

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Insurtech Front Page Weekly CXO Briefing – P&C InsurTech trends


The Theme last week was agitation in the industry.

The Theme this week is P&C InsurTech trends. The P&C (Property & Casual) segment of Insurance, especially personal lines, are going through a profound change. Changes are made both by tech ventures and incumbents.

For more about the Front Page Weekly CXO Briefing, please click here.

For this week we bring you three stories illustrating the theme of P&C InsurTech trends.

Story 1: Emerging Technology in Personal Lines

Extract, read more on Insurance Thought Leadership:

“Five technologies have emerged as “power players” for personal lines insurers, based on insurer activity and the potential for transformation.

They are AI, Drones, IoT, New User Interaction and New Payment Technologies.”

We heard a lot about AI, IoT, a little about Drones. New User Interaction and New Payment Technologies, which are responsible for the communication of customers are relatively new.

Story 2: The Switzerland of Mobility

Extract, read more on Coverage:

“Transit, a Canadian startup that offers a mobile app to simplify urban mobility by combining modes of transportation, has raised $17.5m in a series B round from Accel, Alliance Ventures, Jaguar Land Rover’s InMotion Ventures, and Real Ventures, bringing the company’s total funding to date to $26.6m.”

Transit is working towards building a car-free future. Public transportation, ride hailing, bike sharing and scooter sharing are its weapons. Car insurance will be impacted if they succeed.

Story 3: Personal Home Maintenance Service Setter Raises Series A

Extract, read more on Coverage:

“Setter, a personal home maintenance service from Canada, has announced a $10m Series A round co-led by Sequoia Capital and NFX, with participation from Hustle Fund, to expand across North America. This brings the company’s total funding to date to $12m following a $2m seed round from Sequoia, Hustle Fund and Avichal Garg last year.”

With the help of home maintenance platforms like Setter, home insurers can know better about their customers’ homes. Potential improvements for pricing and claims.

Editors Note: interesting to see 2 out of 3 coming from Canada, America’s northern neighbour.

Property & Casualty insurance is shaped by the way people move and live. When they change, P&C will have to keep the pace and change together. Sooner better than later.

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Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

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Fintech Postcard from Athens – Philosophising on Mental Money Models

Visiting the Oracle at Delphi

It may be one of the few western countries where cash still rules, however things are slowly changing in Greece, the birthplace of western civilisation.

This week I’m writing to you from Athens, having flown 15,317 km from Sydney, Australia to run a gruelling 42.195 km in The Authentic Athens Marathon, this Sunday past. Bizarre, I know, but lots of fun.

It only seemed right then to learn a little about the changes and digital transformation happening in Greece, and try and capture a fleeting snapshot of how the local community is attempting to rouse its innovative spirit, and drive out the economic demons of its recent past. It won’t be easy – the socialised cost of the global financial crisis is still very evident in Greece – from anarchy in Exarcheia to a melting pot of cultures, communities and refugees across the city. In many ways, these are all the ingredients you need for a hotbed of innovation. So what is the firestarter?

In September Efi Pylarinou looked at the necessity for policy reform on the regulatory front to foster the emergence of more fintech activity. In a similar vein, a 2017 report, The Impact Of Digital Transformation In The Financial Services Industry: Insights From An Open Innovation Initiative In Fintech In Greece, from researchers at two Greek universities confirmed this, bluntly stating that ‘the Greek regulation and taxation system prevents the rapid growth of fintech in our country.’

It should be noted however that the government has had some success with regulatory reform to date on the payments front, successfully mandating the implementation of card machines on around 400,000 businesses across the country. The law came into force in full in July 2018, and a consequent rise in VAT revenues was reported. I must selfishly admit its now far easier spending money as a tourist than it was ten years ago, so that has to be somewhat of a good thing.

While a move to cards is a step in the right direction, given fintech is so new in Greece it does seem like a golden opportunity to bypass the plastic money revolution of decades gone and leapfrog to the new world of digital money, as China and emerging economies in Africa and South East Asia have proven to be so successful at, putting the rest of us in the west to shame.

Or maybe there is a chance to leapfrog them again?

Today marks the kick off of Decentralised, a blockchain conference run by the University of Nicosia – the first academic institution in the world to offer a postgraduate degree in digital currency. Efi from Daily Fintech will be speaking on Friday in the morning fintech stream, and she has some fabulous insights and ideas on how blockchain can be unlocked at an infrastructure level to achieve exactly that sort of leapfrog moment.

And as I spend time wandering the Acropolis, the streets of Plaka and the ruins of the magical Delphi, I can’t help but wonder how the innovative philosophical inquiry baked into the bones of this magical country can be reawakened and applied to our creaking monetary systems. So much of fintech today is a boring but slightly better way of doing what our banks already do. We are on the cusp of revolutionising what money really is, and blockchain has in many ways given us the tools to start that revolution. But we still lack coherent mental money models to use the tools wisely.

You never know, maybe out of the ashes of economic despair can come the intellectual seeds of a new money philosophy, from a new breed of Greek philosophers. Maybe in 1000 years we’ll call Greece not just the birth of western civilisation, but the birth of the new money. If anyone can change the way the world thinks, my bet is on the Greeks.

Daily Fintech Advisers provides strategic consulting to organizations with business and investment interests in Fintech. Jessica Ellerm is a thought leader specializing in Small Business and the Gig Economy and is the CEO and Co-Founder of Zuper, a new superannuation startup in Australia.

Build, Invest, Transact: Blockchain4Finance at the CV Competition

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Annual thematic Blockchain competitions are a staple at the CryptoValley Summit. Last year, it was Blockchain for Insurance and this year Blockchain for Finance. The next theme is Blockchain for Real Estate.

CryptoValley Labs are growing not only in size but more importantly in connecting with the broader innovation ecosystem through partnerships. From various tech accelerators, angel networks, and incubators to corporates. They have rebranded to CV VC to include more of their activities: The summit, the competition, the new VC recently launched, the co-working space, the incubator, and ecosystem research.

Blockchain4Finance: the 2nd CV Competition

Native and non-native cryptocurrencies are already being treated as investments. Some argue that they are solely speculative and others (consciously or not) are into the new Boglism[1] that is now called HODLism.

Blockstate, ShufflUp and BlockKeeper are Blockchain4Finance finalists that are focused on Digital assets as investments. Orion Vault is close to this subcategory, as they are effectively opening up the digital art market and creating a new investable asset class.

The European Parliament this summer asserted that cryptocurrencies can be used as an alternative to money. Ambrpay, the winner of the Blockchain4Finance competition at the CV Summit, Wala and Pigzbe; are focused on crypto and payments.

Capexmove, EnigioTime, and MyBit are B2B tech companies providing tools to Build.

The ten finalists in brief

Ambrpay, the winner, came out of F10 accelerator and is solving the problem of subscription and recurring payments with crypto via smart contracts. Ambray is a decentralized payment gateway. Merchants will not have to deal with crypto (if they don’t want to) and can choose their currency of payment.

Capexmove came out of Level39 in 2017 and this year was accepted at the FCA sandbox. The focus is on business lending by using a blockchain-based debt management and automated loan payment service. From digitizing mortgages, to Bills of laiden, and Wills etc.

EnigioTime out of Sweden is aiming to solve parts of the complex problem of data monopolies by using DLT technology. Starting with a Digital Notary service, a solution of archiving and managing digital data in a decentralized and safe way, to proof of ownership and authentication.

Blockcstate is another Swiss company offering a Smart infrastructure stack that covers the financial product lifecycle. They are issuing Exchange Traded Notes that are fully compliant with Swiss and EU regulation. The first product on the Blockstate stack, called CTF15, is a passive ETN for institutional investors with the largest 15 crypto assets.

ShufflUp out of India has a crypto investment focus. They have started with a retail actively managed product that allows people to invest in a strategy that takes advantage of arbitrage opportunities in cryptocurrencies. They are also developing two other strategies.

BlockKeeper out of Germany, is an open source protocol with an app that can be used to track all blockchain based digital assets and transactions. It is an account aggregator dashboard with very strong customization features.

Orion Vault is a Swiss venture launched by ex-Google engineers, utilizing DLT for digital art, starting with photos. They aim to bring trust, transparency and liquidity to this market with a specific focus on Digital Art as a store of value. They use Ether for transacting. Later they aim to grow into the music and IP segments.

MyBit is another Swiss venture that enables developers to build, test and deploy wealth management apps efficiently (3 weeks!). Their SDK is open source. Some of the apps available are, wallets, automating token/stocks option distribution, decentralized bill splitting, Wills for distributing assets etc.

Pigzbe is out of Chiasso, Switzerland and currently at Kickstarter accelerator. It is an app to educate children about money by using a digital currency called Wollo. Parents can provide incentives to their children and they, in turn, earn rewards.

Wala out of Africa, is a zero-fee money app using the Dala digital currency. Operating already in 7 African countries. Listen to my interview with Tricia Martinez, CEO of Wala , No more fee-driven business models for the unbanked .

[1] Boglism is a derivative word that I’ve coined. Bogle is the founder of Vanguard that has built an empire on the premise of passive investing. Listen to my standup comedy at Cryptomountains Rock side event on this topic (from minute 7:30+)

Efi Pylarinou is the founder of Efi Pylarinou Advisory and a Fintech/Blockchain influencer.

Get fresh daily insights from an amazing team of Fintech thought leaders around the world. Ride the Fintech wave by reading us daily in your email.

Blockchain Weekly Front Page: 3 Bullish Signals during the Blockchain Bear Market.


Last week our theme was “Top VCs investing during crypto bear market.”

Our theme for this week is “3 Bullish signals during the Blockchain bear market.”

For more about the Front Page Weekly CXO Briefing, please click here.

On November 12th, the price of Bitcoin was at $7,195 and dropped to $5,975. This was the last drop before we saw its big bull run, a 228.9% increase, reaching an all-time high of $19,655 on December 17th.

The days of Bitcoin’s crazy volatility are over and Bitcoin has been as flat as it can be. Since June, it has had three dips between 9–10%, with its price hovering around the $6,500 mark for almost two months. This has been very unusual for one of the most volatile assets in history.

Bitcoin has matured to the point that it can be compared to traditional stock, fiar currencies, or commodities. Data from the CBOE, indicates that Bitcoin (BTC) is less volatile than the publicly-traded stocks, like Amazon (AMZN) , Netflix (NFLX), and Nvidia (NVDA), while its 20-day volatility is nearing that of Apple (APPL).

There are many signals that indicate a possible bull market:

JPMorgan is exploring a relationship with Bakkt. The article, suggests that while the bank may not be a first mover in Bitcoin, JPMorgan’s clients will eventually gain access to Bitcoin through Bakkt. Fundstrat’s Lee tweeted: “Great article on @jpmorgan potential use of Bakkt infrastructure. Highlights how Bakkt is providing the security/compliance/reputation needed to truly attract large financial institutions to crypto, previously concerned about reputation risk.”

Stellar, the nonprofit organization behind Stellar (XLM), announced on Tuesday that they will be doing the largest airdrop in crypto history. The airdrop will consist of $125 million worth of Stellar Lumens (XLM) to be distributed to users of the popular Blockchain. Blockchain’s blog post says the reason for the XLM giveaway is to thank the company’s “30M Wallet users” and to celebrate the addition of “full support for XLM in the Blockchain Wallet.”

Bitfury raised $80 million in closed funding round. Led by Korelya Capital, the private placement was joined by Macquarie Capital, Asian financial institution Dentsu Inc., European investment company Armat Group, European fund managers Jabre and Lian Group, Argenthal Capital Partners, insurance group MACSF and Mike Novogratz’s digital asset merchant bank Galaxy Digital.

Goldman Sachs, has started to sign up a small number of customers for its upcoming Bitcoin trading product. Citing a source familiar with the matter, The Block reports that the bank is on-boarding a “small number of clients” to actively trade the derivative, a futures contract but does not trade on an exchange. Additionally, the bank continues to consider launching custody services for crypto assets.

Fidelity, the 5th largest asset management company in the world, revealed its plan to offer custody services on cryptocurrency investments.

Again, Mike Novogratz made bullish predictions, that BTC could reach $9,000 by the end of 2018. but for Bitcoin to reach achieve this, it will need to pass $6,800. Indicators, like the relative price index, that measures speed and price changes, have jumped to 59.04, the highest level since September. 4th, showing Bitcoin to be more and more bullish.

The CBOE is planning on launching Ethereum futures later this year. Bitcoin Futures, in late 2017, had a important impact Bitcoin’s price spike. An Ethereum futures product could help solidify the mainstream adoption of crypto as investment vehicles.

Despite an enormous amount of bullish news the price of Bitcoin has remained flat for months now. Many think that Bitcoin’s price is being artificially kept low, so big players can get in the market.

While no one really knows if we are exiting the bear market, over the last year we’ve seen a lot of progress both in terms of regulations and  investments from institutional investors. The upcoming launch of Bakkt and the SEC’s decision on the pending Bitcoin ETF could trigger the next bull run.

The impact of these signals is highly speculative, but potentially they could affect Bitcoin and crypto trading, and drive more money to the market. Please keep in mind that this is not financial advice, just my opinion, but I think its safe to say that Bitcoin and the crypto market is looking more bullish and its only a matter of time before the bulls are loose again.

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Ilias Louis Hatzis is the Founder & CEO at Mercato Blockchain Corporation AG. He writes the Blockchain Weekly Front Page each Monday.

Entrepreneurs try flying the Security Tokens plane while the plane is still being built


This post, the 3rd in a series of 4, is written by Sheldon Freedman, a fintech and funds lawyer at Hassans in Gibraltar. Click here for last week’s post in this series

Editors note: the question of jurisdiction is in many entrepreneurs’ minds as we read headlines such as “SEC Charges EtherDelta Founder Over ‘Unregistered Securities Exchange”. Entrepreneurs (and the incumbents thinking about how to disrupt before being disrupted) know that timing matters and that Security Tokens are coming. They also know that flying the Security Tokens plane while the plane is still being built is scary and dangerous.

A security token is issued digitally on the blockchain, backed by tangible assets such as shares in a company, real estate or rights to cash flows. Security tokens are digital assets subject to securities regulation, with compliance required in the issuer jurisdictions as well as in investor jurisdictions – from initial offering by the issuer to all secondary trades among investors.  The path to issuing a security token is a long, uncertain, innovative process with advisors, lawyers, exchanges, platforms and regulators, as issuers are breaking into new regulatory territory, applying conventional securities laws to revolutionary security tokens. The regulatory situation currently is confusing because the incipient security token ecosystem is evolving. Regulators who are trying to find their way lack experience, with no model example to look to.

Editors note: in law, precedence is everything. It is very tough to be guided by precedence when everything is changing as something totally new and disruptive such as Blockchain appears.

The task of securities regulators is well known to facilitate the orderly, productive functioning of securities markets and to protect investors with fairness practices, disclosure and qualification thresholds. However, with the advent of electronic financial systems, global finance has become comprehensively regulated by laws and procedures pertaining to anti-money laundering, sanctions and anti-terrorist funding.

Editors note: some might see regulation as designed to protect consumers/retail investors. That is what it says on the tin. Some might cynically say regulators have been captured by incumbents who seek protection from disruptive new entrants (i.e. that regulation is designed to prevent innovation). Sheldon points to the concern of regulators – anti-money laundering, sanctions and anti-terrorist funding.

To appreciate the sheer comprehensiveness of this regulation, one need only remember one example – the experience of banking organization HBSC, which this writer represented as counsel. Originally known in 1865 as “The Hongkong and Shanghai Bank”, HSBC Holdings plc is today the largest bank in Europe, a global roll-up of banks headquartered in London.  Operating out of 3,900 offices in 67 countries, HBSC is the world’s 17th-largest public company, with the Americas, Asia Pacific and Europe each representing approximately one-third of its business. HSBC is the largest bank in Hong Kong and prints most of Hong Kong’s local currency in its own name. HSBC has frequently been named the world’s most valuable banking brand by industry rankers.

In the early 2000’s, as HBSC and other major institutions embarked on sprees of acquisitions of valuable global banking businesses, compliance with the relatively new anti-money laundering laws was not primarily on the minds of acquirers, who were in fact acquiring regulatory liabilities with businesses they were acquiring.  In 2012 HSBC was the subject of anti-money laundering enforcement hearings in the United States Senate Permanent Subcommittee on Investigations. HBSC was investigated for deficiencies in its anti-money laundering practices, which gave HBSC a permanent hangover from years of acquisition partying. The Senate subcommittee found HSBC had transferred $7 billion in drug crime-related funds from its Mexican to its US subsidiary, was disregarding terrorist financing links and was circumventing U.S. safeguards to block transactions involving terrorists, drug lords and rogue regimes. In one instance, “two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion through HBSC’s U.S. affiliate accounts without disclosing the transactions’ links to Iran. The Justice Department charged, “HBSC officials repeatedly ignored internal warnings that its monitoring systems were inadequate”, exposing the U.S. financial system to “a wide array of money laundering, drug trafficking, and terrorist financing.” 

The Senate subcommittee also found HBSC provided financing and services to banks in Saudi Arabia and Bangladesh that were tied to terrorist organizations, while also clearing $290 million in “obviously suspicious travelers cheques” that benefitted Russians “who claimed to be in the used car business.”

Furthermore, the investigation showed how the bank’s regulator, the Office of the Comptroller of the Currency (OCC) failed to take a single enforcement action against HSBC despite numerous violations by the international bank.  Among them, failing to monitor $60 trillion in wire transfer and account activity, a backlog of 17,000 unreviewed account alerts regarding potentially suspicious activity, and a failure to conduct anti-money laundering due diligence before opening accounts for HSBC affiliates.

Editor’s note: incumbents, thinking about how to disrupt before being disrupted, are even more nervous than entrepreneurs about falling foul of regulators. Banks are licensed by governments. Having that license taken away is an existential threat.

Dozens of countries now adhere to their own anti-money laundering directives, and are additionally obligated by muscular international instruments and standards deploying sophisticated IT systems for anti-money laundering data collection and analysis, such as United Nations conventions against narcotic drug trafficking, organized crime and corruption, and FATF (the Financial Action Task Force on Money Laundering) formed by the G7 countries.

Editors note: in an era of increasing protectionism and nationalism, expect these regulators to get tougher. I will carbon date myself by saying I have an old passport, pre-Thatcher era, which has a stamp in it saying that I was approved by the Bank of England to take GBP50 out of the country. That story won’t sound so strange to our subscribers in China or India or other countries with exchange controls.

Security tokens and blockchain technology, with their opaque digital representations, high speed of transacting and decentralized record-keeping, present fierce challenges to anti-money laundering, anti-terrorist financing and economic sanctions efforts, demanding even higher standards of regulation than conventional securities. 

Due to the stigma that has attached to a stampede of low quality ICOs to date (most ICOs have been cryptocurrencies), there is an apparent emerging convention to term the issuance of security tokens “STOs” to distinguish issuances of security tokens from issuances of cryptocurrencies and utility tokens. 

Jurisdictions regulate STOs under their existing securities regimes, which are not sufficiently comprehensive or evolved to provide clarity to issuers, investors and regulators.  Innovation and improvisation are now the domain of intrepid issuers aiming to fashion a regulatory path with regulators, or to stealthily rely on existing exemptions.  Prof. Bhaskar Krishnamachari of the University of Southern California observes: “We are flying an airplane while we are still building it”. 

Editors note: entrepreneurs seeking to seize the day with early-mover advantage want to know whether the plane lacks seat-back entertainment (boring but safe) or lacks hydraulics (will crash unless pilot is really good and a bit lucky). The short answer is a) all startups have risk b) get good navigators to minimise that risk.

The US Securities and Exchange Commission (SEC), recognized global leader in securities regulation, has not offered anything regarding security tokens.  Security token issuers are attempting to effect conventional registrations with the SEC or to rely on Reg D exemptions and new crowdfunding provisions. It is not surprising the SEC has been slow to act.  A large organization with six independent divisions and 25 offices, sharing financial regulation with several other US agencies (CFTC, FINCEN, IRS, state regulators, etc), the SEC simply has not yet addressed security token offering regulation.  However, the SEC recently announced on October 18 the establishment of The FinHub, the SEC’s Strategic Hub for Innovation and Financial Technology tasked to address new distributed ledger-enabled securities. The FinHub replaces and builds on the work of several internal SEC working groups and is intended to serve as a resource for public engagement on the SEC’s FinTech-related issues and initiatives, including STOs. 

The FinHub will be staffed by top industry experts, led by Valerie A. Szczepanik, Senior Advisor for Digital Assets and Innovation and Associate Director in the SEC’s Division of Corporation Finance.

The current situation is confusing and the ecosystem itself is evolving. Jurisdictions are trying to find their way, while there is no example to look to.

A small number of STOs are taking place in USA, such as:

  • Indiegogo – shares in Colorado resort (Aspen Coin)
  • Spin – electric scooter offering 125 million for investors to share in revenue
  • Blackmoon Financial Group -security token which tracks its lending fund

In the EU, similar to USA, STO issuers are seeking registrations and relying on conventional exemptions.  In the EU, exemption may be available for offerings of less than 1mm Euro per year, offerings to less than 150 people per member state, and to qualified sophisticated investors.

A UK example of a current STO is The Elephant (tokenized private equity platform).

A small number of STO’s are taking place in light-touch regulatory jurisdictions, such as Switzerland and Singapore, but these are smaller markets and their rules are not widely accepted by major countries.  Examples of STOs being carried out in Switzerland:

  • SwissRealCoin – Switzerland’s first real estate coin
  • Nexo – fiat loans
  • Lykke – offering security tokens representing equity in Lykke (which is building a financial asset marketplace)

An STO example in Germany is Brille 24 (eyewear).

An STO example in Lithuania is security tokens representing equity in Desico (which is building a financial asset marketplace)

Surprisingly absent in security tokens is South Korea. Despite being innovators in so many areas of blockchain, South Korean regulators currently seem more focused cracking down on bad ICOs than enabling compliant STOs.

Editor’s note: the Etherum ICO in 2014 was the Napster moment for the Securities business. Napster was free and illegal. Then in 2017, entrepreneurs went for the ICO gold rush, using the Ethereum platform. Like with Napster, the regulators cracked down. But market demand finds a way to leverage disruptive technology. The STO market awaits something like iTunes or Spotify – cheap (not free) and legal. It hears the music and wants to buy it.

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Bernard Lunn is a Fintech deal-maker, investor, entrepreneur and advisor. He is the author of The Blockchain Economy and CEO of Daily Fintech.

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Africa’s M-Pesa’s landmark deal with Western Union and their global ambitions


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Africa’s poster child for financial inclusion, Safaricom’s M-Pesa, signed a landmark deal with Western Union earlier this week. The deal would give M-Pesa access to Western Union’s mighty distribution network and banks across 200 countries.

M-Pesa’s journey started in 2007 when Safaricom launched the product for its customers in Kenya. It has seen tremendous growth in some African countries, and not-so-impressive uptake from other parts of the continent. The customer base in Kenya alone is about 17 Million, and Tanzania and South Africa are markets where they have their foot print.

M-Pesa’s expansion beyond Kenya and Tanzania have not been without challenges. Their slow growth in South Africa especially was a disappointment, primarily because of the regulatory landscape, payment infrastructure inter-operability issues and customer awareness were seen as key issues.

That didn’t stop M-Pesa from going Global though. They have a presence in India, through a partnership deal with ICICI bank and also in some parts of Europe. However, they haven’t been able to replicate their African story elsewhere.


Since the beginning of this year, M-Pesa seem to have revisited their strategy in going global. They have focused on making the most of their existing account holders in Kenya and Tanzania, and providing them financial services that go beyond borders.

“Essentially, how we will do it is look at mapping of customers we have today where we see customers transacting or making calls,”

– Paul Kavavu, Head of M-Pesa New Business Ventures

In order to do that, M-Pesa had to meet global regulatory standards around Anti-Money Laundering and Terrorism Financing. They seem to have done that well now, and are on a roll in signing partnerships with several global financial services organisations.

They had signed up partnerships with Moneygram and WorldRemit four years ago, but that deal largely focused on inward transactions to Africa. The recent deal with Western Union allows Kenyans to send money abroad from their mobile phone.

That opens up major opportunities for M-Pesa to expand globally through its partner channels. Safaricom charge a commission of Sh100 for remitting up to Sh5,000 to a Western Union agent and Sh500 for more than Sh35,000. While this is on the lower end of the pricing spectrum, it should give them the opportunity to grow.

M-Pesa signed a deal with Paypal earlier this year to exploit the market in India, where they also had tie ups with Vodafone. With global players looking at the Africa opportunity, M-Pesa should be able to script their growth story beyond African shores. In the last 6 months, M-Pesa revenues jumped 18.2% to Sh35.52 billion from Sh26.20 billion a year earlier.


Its good to see African super stars going global, and their success beyond borders will be a case study in itself. However, I believe, the rest of Africa is more of an opportunity for M-Pesa. Their understanding of the continent, clubbed with recent improvements against regulatory standards, should give them a good chance to look at rest of Africa. There are many leap frog moments to be had in Africa, and M-Pesa is perhaps best positioned to make them happen.


Arunkumar Krishnakumar is a VC investor focusing on Inclusion, a writer and a podcast host.

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Insurtech Front Page Weekly CXO Briefing – Agitation


The Theme last week was InsurTech action from China

The Theme this week is agitation. The  insurance industry is rattled. This week we bring you three stories that show customers, InsurTech ventures and  incumbents all agitated; but all for different reasons.

For more about the Front Page Weekly CXO Briefing, please click here.

For this week we bring you three stories illustrating the theme of Agitation.

 Story 1: Some life insurers unsure they can get results from digital

Extract, read more on Digital Insurance:

“Life insurers are still lagging other industries and even lines of insurance when it comes to leveraging data in the enterprise, including on the sales side, according to a report from RGAX.

Nearly a third said it is too expensive to introduce or expand digital marketing efforts, mostly because their companies aren’t equipped to recover the cost, RGAX found.”

The survey was conducted among small-to-mid size life insurers who hope to create a breakthrough with the help of digitalization. The cruel reality is that there is a high capital barrier for them to go through first.

Story 2: Customers Vote: State Farm or Lemonade?

Extract, read more on Insurance Thought Leadership:

“A recent social media dust-up between renters and homeowners insurance technology upstart Lemonade Insurance and old-line insurance industry stalwart State Farm motivated us to look at what their respective customers are saying about their experiences with the companies.

A little context: State Farm recently aired a television commercial poking fun at technology-focused entrants to the marketplace. Specifically, the commercial made fun of the use of bots (artificial intelligence) used to process claims.”

State Farm probably just wanted to stress the importance of real-person agent. But it got interpreted in another way. It could mark a significant moment of agitation between incumbents and startups.

Story 3: Marsh rolls out social unrest insurance coverage

Extract, read more on Life Insurance International:

“Marsh has introduced a standalone social unrest insurance plan that offers financial protection to businesses in event of losses.

The product, which is underwritten by Chaucer, provides coverage of up to $20m for denial of entry/leaving a property caused due to terrorism, protests, civil unrest and strikes.”

When it comes to agitations among regular people, it’s good to see we can seek insurance for help.

When the whole industry is on a fast track, some may be afraid of being left behind, some may worry that their efforts are made in vain. Thus agitation appears. It could be a good thing for customers if agitation induces more innovation, and more discounts.

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Zarc Gin is an analyst for Warp Speed Fintech, a Fintech, especially InsurTech-focused Venture Capital based in China.

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