Cypherstreet Securities Week – Volume 15 – January, 18, 2020

This is the 15th post for the weekly series on the state of securities with a focus on fintech, Bitcoin, blockchains & distributed ledgers.

Here are some of the key developments, stories & updates from the digital securities industry over the past week.

"Securitize Opens IRAs to Digital Securities Investors with Partnership"

Earlier this week Securitize claimed that they have facilitated the “first direct IRA investment in security token offerings (STOs).” The details of this investment would be a customer of the investment gateway AltoIRA purchased an initial investment in security tokens that represent CityBlock Capital’s $20 million venture fund. The CEO of Securitize Carlos Domingo stated about the intent behind this investment, “At the moment digital securities are not widely distributed. That makes it more complicated for investors to access them, creating a bad cycle.” This will hopefully be able to provide increased access to better performing investment opportunities while exposing the digital securities industry to a new avenue of innovation. Here’s a link to the Yahoo Finance article describing this announcement in more detail. 

"CME Takes Its Bitcoin Options Live, Competing with ICE's Bakkt"

CME Group has announced that their bitcoin options are now open for trading. Each one of these contracts is quoted in U.S. dollars and will represent five bitcoin all while being cleared centrally to avoid interparty risk. JPMorgan’s managing director for global market strategy, Nikolaos Panigirtzoglou stated about the release of CME’s bitcoin options, “This unusually strong activity over the past few days likely reflects the high anticipation among market participants of the option contract.” This release is in direct competition with Intercontinental Exchange (ICE) Bakkt who released their own options and cash settled project in September of last year. Bitcoin options are something many companies and investors are showing interest in, so we’ll have to see how some of these contracts play out throughout 2020. Yahoo Finance article on this announcement by CME Group on the release of their bitcoin future contract options. 

"Visa Token Service Launches this Month"

It was just a few days ago when Visa announced their blockchain based Visa Token Service would be released throughout the US. The intention of this service would be, “The Visa Token System tokenizes card payments to streamline the entire payment process. The integration is meant to simplify and further secure the online shopping experience for millions of users.” This is an interesting development because this is an indication that one of the largest payment processors is taking the benefits of blockchain technology seriously and is embracing the potential benefits.” What Visa will be doing here is they are going to tokenize transactions from its Visa cards and from other payment systems, they will then tokenize any sensitive information in order to remove the need to have to share private information with third-paarties directly. This is a major player entering the space and embracing the benefits of blockchain technology, it will be interesting to track this development and to take note of their customers’ feedback on utilizing this technology. Here’s a link to the article that breaks down this service from Visa and it’s potential implications. 

"Bitwise and ETF Trends 2020 Benchmark Report of Financial Advisor Attitudes towards Cryptoassets"

Bitwise, in conjunction with ETF Trends, recently released their 2020 benchmark survey of financial advisor attitudes towards cryptoassets and there are some interesting figures present throughout the report highlighted below.

  • The number of advisors allocating to crypto in client portfolios is expected to more than double in 2020, from 6% to 13%. 
  • 76% of all financial advisors report receiving questions from clients on crypto in 2019. 
  • 72% of advisors think clients may be investing in crypto on their own, outside of their advisory relationship. 
  • 64% of advisors expect the price of bitcoin to appreciate over the next five years, which is up from 55% of advisors in the previous year survey. 
  • Independent RIA’s reprented 47% of respondents, independent broker-dealer representatives made up 25%, financial planners made up 17% and wirehuose representatives made up 11%. 
  • 17% of surveyed advisors owned bitcoin, Ethereum or other cryptoassets in their personal profiles. 
  • None of the advisors with positions today intend to decrease or eliminate their position in the next year.”
  • 65% of advisors chose ETF as the most appealing investment vehicle for crypto.
  • For the second year running, ‘better regulation’ was cited as the most common improvement that would make advisors more comfortable with allocating to or increase their allocation to crypto.

These are just some of the figures and insights presented in the Bitwise and ETF Trends report about 2020 financial advisor attitudes toward cryptoassets, here’s a link to the full report. 

That's all for this week, check back in next week to learn all about what's happening in the rapidly evolving digital securities industry! Feel free to leave any comments below & if you're interested in following this weekly roundup be sure to click on "Notify me of new posts by email" underneath the comments box below to receive an alert for each new post.

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