Cypherstreet Securities Week – Volume 6 – November, 16, 2019

This is the 6th 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.

"Bakkt Expands Bitcoin Custody Service Beyond Futures Trading Clients"

On Monday November 11th, Bakkt announced that they would be providing custody services for clients, specifically for their Bitcoin.

I’ve been following Bakkt and it’s developments with interest. It’s a professional and well capitalized team.

About the announcement, their COO Adam White had to say, "When investors have ready access to regulated custodians whose security and processes they trust, the full potential of this emerging asset class and technology can flourish." Many other companies in the space are working to develop similar platforms, but this is the 1st one to launch. Full Nasdaq article explaining this announcement by Bakkt.

"HSBC, SGX to Investigate if DLT Offers Efficiency Boost for Bond Markets"

HSBC Singapore is asking an interesting question in a new trial they are involved in, "Can digitalizing bonds with distributed ledger technology (DLT) bring benefits to market participants?" This is specifically looking into the Asian bond markets and the potential for DLT to streamline those operations to make things easier for investors. Although this is a step in the right direction, the efficiencies DLT can provide still need to be investigated as stated by HSBC Singapore's CEO Tony Cripps, "Only by collaborating with market participants will we fully understand its actual viability." Yahoo Finance article describing this announcement by HSBC regarding the potential of Distributed Ledger Technology (DLT).

"Bitcoin Miner Maker Canaan Sets $100 Million Target for US IPO"

This statement by Canaan illustrates how more companies are engaging in IPO's in the traditional US market as they are intending to raise $100 million in their own initial offering. If this succeeds Canaan will be the first major bitcoin miner maker to go public in the traditional U.S. stock market. As stated in the CoinDesk article, they are "aiming to offer 10 million American depositary shares (ADS) with each at a price of between $9 and $11." It'll be interesting to monitor the space as more and more players from the cryptocurrency & blockchain technology space continue to join the traditional U.S. market. Full CoinDesk article on this announcement from Canaan.

"Fintech Arm of Chinese Insurance Giant Files for US IPO After Blockchain Push"

OneConnect Financial Technology filed for an IPO with the SEC on Wednesday November 13th, they are planning to list their shares on NASDAQ. Their filing plans to raise $100 million, but that number could go even higher before the offering. Blockchain technology is something that the company believes very strongly in, as stated in the Coindesk article "The white paper detailed both its existing and future projects across trade finance, asset securitization and supply-chain financing, as well as 14 use cases that can be applied to sectors outside of banking." This is yet another example similar to the Canaan announcement above of more companies getting involved in the traditional U.S. financial space. Yahoo Finance article describing in additional detail this announcement by OneConnect.

"DeFi Startup Compound Finance Raises $25 Million Series A Led by a16z"

Compound Finance in a round led by Andreessen Horowitz's a16z fund just completed a $25 million raise, this is one of the largest investments in a decentralized finance startup. Their founder has this to say about the announcement, "We're planning to integrate Compound into as many custodians, exchanges, wallets, and brokers as we can to allow exchanges and custodians to be the interface of the protocol." It will be interesting to see what Compound deploys the raise on and what other innovations they will continue to move forward on. Fortune write-up on this announcement as well as an analysis on implications.

"Putin: Russia's not Ditching the Dollar It's Moving away from US"

This is amazing. Here we have one of the most powerful people in the world calling out the US Dollar on it’s reduced usefulness on the global stage due to its own restrictions.

The US’s own theft of resources from various countries and seizures of dollars without due process has indeed decreased the value of the currency.

For a technology or money to work best it should have a censorship resistant base layer.  The dollar would be stronger if it had both limited supply and more censorship resistance / immutability.

Interesting that Saddam Hussein saw such value in the USD to stockpile them but also had great difficulty accessing that money.  US capital controls have had increasing impact since the days of the Gulf War.

The world is too complex for various nations and regulators and other organizations to all agree. Israel and Saudi Arabia and Taiwan and China won’t always agree on who should be censored or stopped.  It’s best to have the base layer free and each jurisdiction can use their own second layer tech and their own laws to influence how things work in that jurisdiction.

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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