CIRCLE APPROVAL: BROKER DEALER DEAL: Circle Bid To Acquire SeedInvest Gets Go-Ahead From FINRA

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Circle is in the midst of a serious ‘beef up’ of its operations, scale, and capital position. Word of a sizable capital raise (which we expect to be heavily funded by one of their largest current stakeholders – Goldman Sachs) made its way through crypto news outlets last week. And now, today, FINRA has approved the broker dealer acquisition via SeedInvest.

As per Circle’s corporate blog post:

“Circle has signed a definitive agreement to acquire SeedInvest, an equity crowdfunding industry leader and an SEC and FINRA registered Broker-Dealer. This acquisition will accelerate our strategy of delivering a token marketplace that enables businesses and individuals to raise capital and interact with investors using open crypto rails and infrastructure. This acquisition and planned new offerings are subject to FINRA approval.”

“The SeedInvest product includes many of the end-to-end capabilities needed for executing regulated crowdfunding, including startup due diligence, securities issuance, investor accreditation, payments and securities custody, as well as a broad range of innovative tools for startups to market their crowdfunding offerings online in a compliant fashion. With the merger and approval from key regulators, these capabilities will be expanded to support crypto-denominated investments including using fiat stablecoins such as USDC, as well as issuing and offering tokenized securities.”

Circle remains a largely institutional trading platform, but moves like this make it clear they have designs on expanding their horizons. In many ways the language above makes it look like they are positioning themselves to handle as many STO-like transactions as legally feasible.

The growth in the crypto ecosystem, even in the midst of a long tail bear market, is remarkable. Add Circle to the list of those making moves in spite of any crypto headwinds.

TRADERS: BULL RUN: 5 Reasons A Legitimate Bull Run Is Coming (and soon)

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The crypto bear market has lasted nearly 13 months, but seems to be turning at the moment.

For the longest time crypto twitter has been a ‘trail of tears’. Instead of bullish posts being all the rage, the latest crypto twitter meme seems to be rage tweets claiming portfolio destruction and leaving the space altogether.

Sounds perfect – to several tenured crypto traders and crypto hedge fund managers. The screeches and audible pain that is emitting from crypto ‘hodlers’ and traders sounds like the sentiment that occurs just before a turn and the makings of a quiet bull market floor forming.

In discussions with several traders and a couple of crypto hedge fund managers over the weekend, we gathered five good reasons why the next crypto bull run could be upon us. Let’s take a look:

  1. Institutional infrastructure breadth and depth: Beyond individual stories about Goldman Sachs, Fidelity or Bakkt – two hedge fund managers spoke extensively about the breadth of institutional involvement in crypto that is on its way to the markets. Goldman Sachs, Fidelity, DRW and TD Ameritrade (ErisX), BlackRock and Coinbase, Nasdaq, Bakkt and the NYSE, and on and on and on.
  2. OTC Markets are VERY robust: One trader told us that the volume on the OTC markets is at a turning point and volumes have recently spiked higher; and not for sellers, but for buyers. Smart money sees the 2018 bear market as an opportunity to buy ‘digital gold’ on the cheap and stash it away for a couple of years. If traditional markets weaken any further the OTC buyers dynamic will only increase and push Bitcoin prices higher.
  3. The SEC just gave muted guidance (via enforcement) that should embolden the tokenization movement: The latest enforcement actions by the SEC, scolding two separate ICO’s, provided further guidance to the tokenization movement and its actors. The short version is essentially this ‘ICO’s aren’t illegal, and we really don’t mind them, just check in with us, pursue registration, and you should be good.’ The ICO enforcement actions taken late last week amounted to small fines given how much those ICO’s raised. A virtual slap on the wrist. And neither announcement claimed fraud of any kind.
  4. Some alt-coins are being destroyed, while others are pumping as we speak: One crypto hedge fund manager discussed Verge ($XVG) as an example of the kind of waste that needed to be burnt out of the ecosystem for the next bull run to begin, “…a token like Verge, built on nothing more than vaporware, hype, cringe partnerships, and stickers on rented lambos are what needed to go away before capital could consolidate and find it’s way back to the likes of projects that are serious and legitimate. Bitcoin, Ethereum, Monero, Stellar (and others) – these are teams that are legitimately attempting to build something that lasts and you can see money flows moving in that direction.” Yet, today the alt-coin markets are flying on the backs of the strength in Ethereum.
  5. Bakkt arrives soon enough: Bakkt brings serious force to the crypto markets by providing Tier 1 institutions the ability to accumulate and trade Bitcoin no differently than they trade gold, oil, natural gas, silver, copper, etc. Trading Bitcoin globally on the ICE exchange networks is 10x the size of CME and CBOE futures trading. The daily gold futures volume on global exchanges is routinely better than $200B. Yes, that is the DAILY volume. DAILY. The late 2017 bull run was somewhat fueled by the Bitcoin futures ramp up on the CME and CBOE. Expect a similar market reaction to Bakkt.

A look back to how some accomplished traders view Bakkt and its ability to curtail the bear market:

“Nothing else on the horizon comes close to what Bakkt will mean for Bitcoin. The depth and breadth of the ICE (Intercontinental Exchange) network and exchange ecosystem means that adoption/trading volumes will skyrocket overnight. The same pipes and structures that allow Goldman, JPMorgan, Morgan Stanley, among a horde of others, to trade billions in commodities like gold, silver, soybeans, and corn; will be the same architecture used to trade Bitcoin.”

“Think of it this way…with the custody and ‘warehouse facility’ solved inside of Bakkt’s infrastructure you have solved the final issue that institutions have been clamoring for in the digital asset space. Their Bitcoin transactions and investments are ‘safe’ via the warehouse facility, and the ability to go claim their Bitcoin straight from the warehouse should they allow their position to mature to that point.”

“Rather than ‘physical’ Bitcoin per se, you are getting access to Bitcoin being housed in an uber protected, heavily secure facility that will hold the digital asset as the backstop for Bitcoin. That is what the Novogratz’ of the world and Goldman and JPMorgan have been clamoring for.”

“While it would be interesting if Bakkt got the press it deserved, there really isn’t a single ‘name’ banking institution that could accompany them in a headline. And that is precisely the scale of the Bakkt story. The ramp up and volume with be enormous and lightning fast. Within months you will have billions of dollars in institutional cash running through Bakkt’s system, buying and selling Bitcoin.”

“This is ultimately the solution that the biggest players (within banking) want and need. And this move furthers the narrative of Bitcoin as a ‘store of value’ or ‘digital gold’.”

And a reminder regarding the reactions crypto hedge fund managers had to the Fidelity ‘digital assets’ initiative several weeks ago (that aims to compete with Bakkt):

“The rumors out there stem from Fidelity passing on taking a stake in Bakkt and then have run amok from there. They’ve been just as secretive about their build as Bakkt was for nearly two years leading up to their announcement. All we know is what we hear from a couple guys that work at Fidelity, but even that is vague and a wink and a smile. But as we see stuff leaked via the media in some way it makes sense that they would scale up. Bakkt has all the institutional pipes, but Fidelity has that same access, but a massive retail name that can tap millions of customers.”

“The real intrigue here is the rumor that Fidelity considers themselves to be crafting a real competitor to Bakkt. That is a mouthful if you ask me. Bakkt is leveraging fifty plus years worth of exchange infrastructure to establish Bitcoin as a standard and then offer products that evolve from there. Fidelity is said to be further along in the way they plan to leverage that same architecture. If that is true, and that is a big if, it only furthers adoption, and the crypto ecosystem wins. Still, lots of chatter about what could come from a name like Fidelity.”

Even Bank of America keeps grabbing crypto custody and blockchain patents by the armful:

“Describing its place and necessity in the future of financial services, the application reads, “As technology advances, financial transactions involving cryptocurrency have become more common. For some enterprises, it may be desirable to securely store cryptocurrency.” The Bank of America began its development of this online cryptocurrency vault system in 2014. So while top leaders at Bank of America have publicly derided Bitcoin and cryptocurrency in general, actions speak louder than words. And they are preparing for the rollout of custody solutions, structured products, and payment systems. Book it.”

A bull run is coming…and if tenured traders are to be believed, it is just around the corner.

POP! BANG! JP MORGAN COIN: Hedge Fund Sources Claim Surge In Volumes And Prices Directly Tied To JP Morgan Announcement

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Crypto purists scoffed at the JP Morgan coin announcement – and rightfully so. After nearly three years of shunning Bitcoin and crypto altogether, Jamie Dimon and his cohorts cooked up a crypto of their own.

Every news outlet in the world covered it. Every single one. And the news lasted for days and quickly made its way into the heads and hands of what most crypto diehards would call ‘plebs’.

Guess what those ‘plebs’ did with the JP Morgan coin information? They bought Bitcoin, Bitcoin futures, Ethereum (a whole lot of $ETH) and all manner of alt-coins as the crypto markets surged.

We went on the hunt to find out if a hunch we had had some meat to it. In speaking with our staffs friends and family, every single one of them asked “what do you think of the JP Morgan coin?”

That set our ears ablaze and gave us a reason to have deeper industry conversations.

Sure enough several hedge fund contacts were seeing and hearing the same thing. In the short run, the JP Morgan coin announcement breathed new life into the crypto narrative and added a large slice of credibility.

One hedge fund source said the following:

“Every adult with a bank account and a job knows who JP Morgan is. So the announcement of a native cryptocurrency brought interest to a renewed and fresh level that had been diminished throughout nearly all of 2018. My wife even asked me about it the day after it was announced. The huge bounce in volumes in Bitcoin and, for example, Bitcoin futures at the CME are indicative of the wave the announcement caused.”

A second hedge fund source went a step further:

“It isn’t that far fetched to foresee a look back in six months and point to the $JPM coin as the catalyst that busted the bear market. Sentiment and narrative play a huge role in what remains a pretty small markets at this point. The JP Morgan news pushed prices higher across the board and those price increases weee seriously validated by a surge in volumes.”

Again, nobody with a reasonable grip on the history and mission of Bitcoin and crypto believes that the JP Morgan coin poses any sort of existential threat to the ecosystem. In fact, those that claim that it may just be another shitcoin may not be that far off.

Be that as it may, everybody we’ve run into that is outside the crypto echo chamber has one question and one question alone: What do you think of the JP Morgan coin?

JAMIE DIMON: JP MORGAN COIN: Dimon Describes JP Morgan Coin Potential Evolution; Could See Consumer Use

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Jamie Dimon sure has been properly baptized as of late, hasn’t he? Baptized in the religion of crypto. Just two plus years ago Jamie was an avowed ‘no-coiner’ with knives out for Bitcoin and it’s siblings.

Earlier today he described a pathway where JP Morgan coin could be used at the consumer level.

Via CNBC:

“JP Morgan Coin could be internal, could be commercial, it could one day be consumer,” Dimon, 62, said during a question-and-answer session.”

“Earlier in February, J.P. Morgan became the first major U.S. bank to create its own cryptocurrency with the launch of “JPM Coin.” The digital token was designed to settle transactions between clients of its wholesale payments business, specifically for international payments and securities transactions that migrate to the blockchain.”

What a reversal. And what might that reversal mean? You can place your bets that JP Morgan has come up with a way to make the use of their native coin somehow profitable either directly or indirectly. Either way, it sheds light on the thinking of one of the largest banks in the world and where it’s CEO sees finance going.

And if JP Morgan and Dimon have moved this far, this quickly – how long before we see a Fidelity coin? Asking for a friend.

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Facebook continues to stalk the crypto and blockchain space. If you stop and pay attention you can almost feel their eyes staring at the cracks in the ecosystem. And those cracks are feeding rumors regarding Facebook’s intentions when it comes to crypto and a potential native platform payment token.

Whether like or dislike Facebook it is hard to deny that a Facebook token of some sort would be a potential eye opener for adoption within crypto. Billions upon billions of users across Facebook, WhatsApp, and Instagram would have access to digital cash fostered by social media’s ultimate ‘elephant in the room’.

As we’ve discussed the potential for a Facebook token this week with several thought leaders in the space one particular theme kept coming up. A Facebook token would make the most sense as a dollar backed stable coin. It would provide incredible buying power for ‘unbanked’ individuals that find themselves part of all three platforms. The WhatsApp platform in particular, with it’s adoption across locations such as India (a notoriously un-banked country), would create enormous demand for a stable coin.

As Facebook staffs up across it’s blockchain initiatives (whatever those happen to be, nobody really knows) the next incredibly used and profitable product could be a Facebook token used across billions of daily active users across the globe.

One rumor we heard coming out of Silicon Valley is that Facebook considered several types of banking initiatives to integrate into WhatsApp over the past two years, but simply wasn’t satisfied with the potential solutions. With the advent of Bitcoin and other cryptocurrencies becoming a larger part of the financial discussion, as stable coin would seem to meet the needs that a potential banking operation may have had it been rolled out.

One source, who left Facebook two months ago, added:

“Facebook has flirted with acquisitions in the crypto space and has yet to pull the trigger. That is telling if you ask me. They could easily swallow up Coinbase tomorrow, but they’ve chosen not to up to this point. Just keep track of the size, scale, and names associated with their ever-growing blockchain team. As it grows you can bet they are getting closer and closer to pulling the trigger on a token of some sort. And my guess, to satisfy regulators, it would be tied to the dollar in the way stable coins have been. They (Facebook) could easily back a token with the cash hoard they have on tap.”

Whatever truth exists in these rumors a Facebook ecosystem token would be enormous. With access to platforms carrying billions of users on a daily basis, adoption would quickly dwarf and other coin in existence. The specter of ‘Facebook Coin’ becoming a competitor to Bitcoin would be a remarkable evolution to witness in real time. And it isn’t as far-fetched as you may think.

A reminder…Facebook matured in the depths of Silicon Valley and the best minds in the valley are constantly looking for the next big thing. And need we mention the headlines Facebook has dealt with overt the past 12 months?

A Facebook stable coin could be the next innovation from a company in need of something new and shiny to feed Wall Street. If one of techs ‘glitterati’ (Jack Dorsey) finds comfort basking in the glow of the crypto world, who’s to say others like him aren’t aware of the opportunity that lies in this fast growing industry. Nobody should be surprised if we eventually see a coin with Facebook’s fingerprints all over it.

EXCLUSIVE: BITCOIN ETF ‘EVENTUAL APPROVAL’: Another SEC Commissioner Predicts Eventual Bitcoin ETF Approval/s (hedges on risk profiles)

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In a yet to be released post in Congressional Quarterly, the lone Democrat commissioner left at the SEC, makes several interesting claims in favor of an eventual Bitcoin ETF approval, and potentially multiple approvals.

Robert J. Jackson Jr., in a long form interview, set to be released on February 11th, believes that he expects an eventual applicant to meet the necessary standards for an approval.

A leak of the document can be found below:

As is pointed out in the first page of the article above, the last vote taken on a Bitcoin ETF (the Winklevoss ETF) was defeated by a vote of 3-1. A quick check via simple math says that a turn by Jackson into the potential ‘aye’ column would put the vote at an even 2-2. That is a profound step forward.

As reported last week, VanEck and Solid X resubmitted their Bitcoin ETF for consideration after pulling it just two weeks prior. This effectively restarted the shot clock for approval, thus taking advantage of market maturity and changing attitudes like Mr. Jackson’s.

VanEck Solid X has gone to get lengths to communicate with the SEC and its commissioners on a regular basis, hunting for the secret sauce that leads to an approval. It sounds like, based on the above rhetoric in the interview, they are having a positive impact on the SEC’s commissioners.

Ultimately the proof will be in the proverbial pudding – and that pudding is votes cast for an approval or disapproval of a Bitcoin ETF. As legal experts have pointed out, the VanEck Solid X pull and subsequent resubmission pushes the shot clock on an eventual decision into the second half of 2019. Given that regulatory agency watchers believe that the likes of Bakkt, Fidelity, Nasdaq, ErisX, and other larger crypto futures initiatives will have been in operation by that time, the specter of manipulation may have dissipated.

Again, time will tell.

BAKKT EXPECTATIONS: APPROVAL TIMELINE: Sources Expect BAKKT To Win CFTC Approval In March (pending US govt shutdown)

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For those of you closely watching the Bakkt narrative, in the hopes that the launch of the Intercontinental Exchange initiative will bust the bear market – we’ve got some good news for you. Sources in and around both the CFTC and Bakkt have been whispering about a potential approval and firm launch date.

It looks increasingly likely, pending any disruption via another US government shutdown, that Bakkt will win its CFTC approval and begin trading physically deliverable Bitcoin futures in March. The sources we spoke to refused to go on record, but were eager to share the potential timeline with us. They walked us through the ‘meat grinder’ that is the regulatory process and what to expect from Bakkt once an approval is passed on.

A source familiar with the Bakkt CFTC approval process said the following:

“You have to understand that the regulatory process is different than any reasonable business practice that most of you would recognize. It is ridiculous if you ask me. But it is the reality that we are faced with and are operating in. And understand this as well, the current administration is incredibly pro-business and pro-innovation; yet this process is still a meat grinder. I am sure that Jeff (Sprecher) and Kelly (Loeffler) are frustrated. Most believed that an approval would have come late last year. Either way, here we are, and an approval looks imminent.”

A source close to Bakkt (an early institutional investor in the project) gave us this piece of information late last night:

“In a way the delays have helped gather clients who will provide liquidity and volume at launch. The Bakkt team has used the time wisely and spent endless hours courting some of the biggest banks and names on the street to be trusted trade partners from the word ‘go’. All signs look to be headed toward mid-March for a final CFTC sign off. And for those out there that have talked about Bakkt delaying for an extended period of time – that is ridiculous. Take a close look at the resume of Jeff (Sprecher) and Kelly (Loeffler), they aren’t in the business of losing. The launch will occur days after approval is finalized. Short of an elongated government shutdown, expect that to happen in March.”

Bakkt remains the most closely watched institutional development in the crypto space. Why? The vast network of potential clients already committed to Intercontinental Exchange operations (essentially ALL of Wall Street and any financial institution that trades commodities with any meaningful volume) could be the type of Bitcoin volume that could break the back of the bear market and send Bitcoin higher.

Beyond simply a well-heeled potential client list, should Bakkt be successful their announced joint venture partners, Microsoft and Starbucks (Boston Consulting Group – BCG is also an announced joint venture partner, but we will cover that connection in a separate article), represent that kind of adoption and real world ‘use-case’ network that could potentially bring Bitcoin to the masses. Retail, tech, software, devices, and on and on. This is the Bitcoin dream that has brought some of the worlds most well known venture capital firms to the Bakkt table.

The chatter regarding an imminent (albeit 30-45 days) approval from the CFTC should create a buzz and keep the team at Bakkt on alert. If you’ve been keeping score their staff has more than tripled and the list of job openings continues to grow.

They are preparing for the biggest Bitcoin push the crypto ecosystem has ever seen. That isn’t hyperbole. Google search the daily trading volume of gold futures and prepare to have your mind blown. The only way Bitcoin can be added to the Starbucks app and used to pay for your next ‘coffee milkshake’ is the promise of serious liquidity and price transparency. Bakkt is set to provide that in spades.

BREAKING: COINBASE ADDS XRP: Coinbase Pro Announces XRP Deposits, Accepting Inbound Transfers

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And the XRP army rejoices. A collective exhale. The mob has been satisfied. Let them eat cake. And all manner of euphemisms associated with a long awaited, yet inevitable, outcome.

Coinbase officially announced that Coinbase Pro will add XRP, the official cryptocurrency of Ripple Labs, and make it available via several trading pairs.

The venerable and hyperactive XRP army is in ‘melt up’ mode at the moment. Here was the official language from Coinbase:

“After 10am on February 25, 2019 we will begin accepting inbound transfers of XRP to Coinbase Pro. We will accept deposits for a minimum of 12 hours prior to enabling full trading. Please note that inbound transfers require the specification of an XRP destination tag.”

“Once sufficient supply of XRP is established on the platform, trading on the XRP/USD, XRP/EUR, and XRP/BTC order books will start in phases, beginning with post-only mode and proceeding to full trading should our metrics for a healthy market be met. XRP trading will initially be accessible for Coinbase Pro users in the US (excluding NY), UK, supported European Union member nations, Canada, Singapore, and Australia. Additional jurisdictions may be added at a later date.”

“XRP is the cryptocurrency used by the XRP ledger, which supports international currency exchange and remittances. The ledger is powered by a network of peer-to-peer servers. All accounts on this network can send or receive XRP to/from each other, while XRP can be used to send underlying fiat currencies between two parties. In this way, XRP can function as a bridge currency in transactions involving different currencies such as US dollars, Japanese yen, Euros, Francs, and others in use on the XRP network.”

“Please also note that XRP is not yet available on Coinbase.com or via our mobile apps. We will make a separate announcement when that occurs.”

JP MORGAN COIN: DIMON DOLLARS: JP Morgan Creates Stable Coin To Process Blockchain Payments, Per CNBC

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In a scoop snatched by CNBC earlier this morning, JP Morgan has created a stable coin to process payments at hyper speed and scale. The ‘JP Morgan coin’ has been under development for months and has been widely tested internally at one of the worlds largest banks.

As word spreads across financial media and crypto media alike, the term ‘Dimon Dollars’ has been used. Jamie Dimon, a noted Bitcoin and crypto skeptic, is now the first major global investment bank to use/issue an in-house and native token.

Per CNBC:

“The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called ‘JPM Coin,’ the digital token created by engineers at the New York-based bank to instantly settle payments between clients.”

“J.P. Morgan is preparing for a future in which parts of the essential underpinning of global capitalism, from cross-border payments to corporate debt issuance, moves to the blockchain. That’s the database technology made famous by its first application, bitcoin. But in order for that future to happen, the bank needed a way to transfer money at the same dizzying speed that those smart contracts closed, rather than relying on old technology like wire transfers.”

We’ve maintained, even amongst skepticism and some disbelief, that JP Morgan was actively engaging in both blockchain and crypto technology. They have designs on using Bakkt as a resource for client involvement in crypto, and you can bet that sooner rather than later, their JP Morgan coin will be marketed to clients.

How that plays out is anyone’s guess at the moment. But if JP Morgan is good at anything it is marketing it’s in-house products to HNW and UHNW clients.

What does this mean for some of JP Morgan’s competitors? Is it that far fetched to foresee a Goldman Coin in the works? And other coins connected to global investment banks?

You can ‘bank’ on it.

RELEASE: SEC ICO GUIDANCE: Securities And Exchange Commission Issues New Guidance For Investors, Bullet Points On Coin Offerings For Public Consumption

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On a sleepy Sunday morning the SEC decided to issue a grab bag of commentary on ‘coin offerings’. The timing is interesting, but it certainly didn’t get past the peering eyes of crypto twitter. The initial paragraph of the release, which looks and feels almost like a carefully coordinated press release (colorful, easy to digest snippets, drop down menus, etc), was an introduction to the guidance positioned for retail investor public consumption:

“Companies and individuals are increasingly considering initial coin offerings (ICOs) as a way to raise capital or participate in investment opportunities. While these digital assets and the technology behind them may present a new and efficient means for carrying out financial transactions, they also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.”

The crypto ecosystem continues to wait with breathless anticipation as regulatory agencies craft the constructive architecture that will either move the industry quickly forward or dramatically slow it down.

To view the entire release:

https://www.sec.gov/ICO