#cryptoequity

Blockchain intelligence firm TRM Labs raises $70M in expanded Series B round

Private equity firm Thoma Bravo led the expansion round, bringing the total amount raised to $130 million.

But despite the downturn crypto markets have experienced since the beginning of the year, there are numerous onramps being built with the goal of bringing more sophisticated infrastructure to OTC markets.

A sure sign of maturation is last week’s announcement that Fidelity, the world’s fifth-largest asset manager, is entering the world of storing and trading crypto - to be sourced from OTC markets - for institutional investors.

Indeed, building software systems for crypto that can replicate the settlement, clearing and risk management systems to which traditional investors are accustomed is becoming big business.

“Even though the market has disappointed a lot of people, the infrastructure wasn’t sacrificed and you still have a lot of things being built,” explained Nuzzi. “There are dozens of software providers that are tackling this need by OTC traders.”

For example, OTCXN is building a multi-custodian network that seeks to address the lack of a clearing and settlement mechanism that can connect liquidity providers and exchanges with minimal counterparty and settlement risk.

“What we have created is an institutional-grade Layer 2 network, like Lightning Network, except that it operates across all crypto assets and at institutional scale and capacity,” said Rosario Ingargiola, CEO of OTCXN.

“You simply cannot scale the crypto markets to institutional levels without removing public ledger transactions from the real-time trading critical path,” he continued, explaining that his platform will facilitate OTC trades between counterparties to be settled and cleared in less than a second.

As CCN reported, Goldman Sachs, Citigroup, and Morgan Stanley, three of the largest investment banks in the US, have already developed a wide range of products including a trusted custodian solution to serve institutional investors in the cryptocurrency market.

Morgan Stanley is said to have developed the infrastructure required to provide complex derivatives tied to Bitcoin, with the plans of launching Bitcoin swap trading as soon as the bank sees enough demand from institutions for crypto.

To remain relevant in the fintech space and connected to the cryptocurrency space, Harding said that banks are closely working with newly emerging fintech companies to study the cryptocurrency market and will soon allocate capital into the asset class.

“A lot of banks are healthily skeptical about bitcoin and blockchain. They see the need to invest in it to keep up with technological developments, but they’re waiting to see where regulators fall and are working closely with financial technology (fintech) companies to make sure they’re not behind the curve. There is a lot of money being poured into [blockchain and cryptocurrencies],” she explained.

CDRs feature all the benefits of conventional equity ownership and issuance without the drawbacks and can thus make life much easier for both investors and issuers. Apart from leveraging the high speed, transparency, and immutability of blockchain, they will help to reduce costs significantly. For instance, there will no longer be a need to conduct regular meetings of shareholders, pay numerous accountants, or maintain a share register. Many routine corporate actions can be eliminated or automated. Since CDRs are issued on the blockchain, smart contracts embedded in them will enable the automated distribution of dividends and permit online voting, drastically reducing the current costs associated with these actions (which run into millions of dollars).

Besides, investors and issuers will be exempt from burdensome broker execution costs and fees since no intermediaries will be required to perform and settle transactions. Finally, CDRs will allow fractional ownership of many assets that would otherwise be too expensive for small investors.

“In creating our CDR product, we have sat with investors, issuers, and regulators to address their frustrations with traditional markets. We are at the forefront of these developments, and unlike other securitized token models, direct participation from issuers is not required. Our approach leverages a proven route to securitization which, following regulatory approval, allows immediate conversion of the entire market,” CDRX CEO, David Ward said.

Dozens of blockchain startups have got off the ground in Switzerland using cryptoassets as their startup capital, circumnavigating banks. But the strategy is not without risk.

swissinfo.ch has traced 60 firms that have stumped up the new brand of digital money to either set up or inject fresh capital into their enterprise. It is a particularly attractive option for companies that raised high volumes of cryptocurrencies through initial coin offering (ICO) fundraising rounds.

For some firms, using cryptoassets rather than francs to cover the founding capital requirement is the perfect antidote to banks refusing to open business accounts. SwissCrypOne is a Zug-based trading platform that connects investors with a crypto mining operation in Finland.

“We spent days going around every bank in the region with a begging bowl, but were rejected by them all,” CEO Bing Voorham told swissinfo.ch. “Without the option of bitcoin, we were struggling to get established in Crypto Valley.”

Crypto investment advisory firm Bravisexternal link is the only company to have used bitcoin to establish in canton Zurich so far. If you have a stockpile of cryptocurrencies, why not vest them in your enterprise, says co-founder Simon Leuenberger.

“You can’t yet buy a coffee with bitcoin but you can use it to start up a company,” he said. “It’s also a question of credibility: as a supporter of the whole crypto ecosystem we need to walk the talk.”

Neufund, a German blockchain platform for equity fundraising, announced it had partnered with Malta-based crypto exchange BitBay to offer equity tokens for fiat currencies.

According to its statement, Neufund has recently signed an agreement with seven companies from five countries to conduct equity token offerings through its platform, with over a thousand investors committing to future participation. These companies are active in sectors such as cosmetic, electric cars, e-commerce, and fintech. Several other partners are to be announced soon, Neufund says on its website.

The alliance with BitBay - whose tradable fiat pairs include the Polish zloty, the euro, and US dollar - will allow the partnering companies to liquidate their equity tokens against fiat currency.

Citing a study by Polymath, Neufund noted that the security token market was projected to hit $10 trillion in value by 2020.

“We welcome BitBay among our partners with great excitement. It is Neufund’s mission to make fundraising more inclusive and easier for companies, while bringing investors more liquid investment assets, and our partnership will enable investors to liquidate their investments directly into fiat currencies,” commented Neufund co-founder and CEO Zoe Adamovicz.

“Our partnership with Neufund aims to bring security tokens to BitBay’s everyday operations in a fully compliant and regulated way,” added Pawel Sobkow, CEO of Bitbay.net operator Pinewood.

Cryptocurrency capital markets--which are less than 3 years old--are challenging the supremacy of traditional investment banks for raising new capital, as they raised 45% of the amount raised by traditional IPOs (initial public offerings) during Q2 2018. Incumbent investment banks remain absent from nascent cryptocurrency capital markets and may increasingly lose customers to them.

The initial coin offering (ICO) market—defined as capital raised on open blockchains via token sales—was 45% and 31% of the traditional IPO and venture capital markets during Q2 2018, respectively, up from 40% and 30%, during Q1 2018. ICO volume during Q2 2018 was approximately $7.2 billion, according to Coindesk, while the US IPO market raised $16.0 billion (as reported by PwC), and US venture capital markets raised $23 billion (as reported by CB Insights and PwC) during the same period.