$1 Trillion Investment Group Eyes Up Cryptocurrency

An investment group with over $1 trillion under management have declared their interest in the cryptocurrency space. Wellington Management Co. stated in their February report that they were looking at companies connected with the emerging industry surrounding digital coins. For now, however, they’re exercising caution in their consideration of pursuing direct exposure to cryptos for their clients.

Another Big Player Edges Towards Crypto

According to an article in Bloomberg, the Wellington Management Co. systems now include various Bitcoin derivatives. Along with this development, the mainstream investment firm has begun to explore positions in companies such as mining manufacturers and those working closely with the technology behind digital currencies, the blockchain. The February report read:

“Various Wellington teams are already positioning portfolios to take advantage of mining and blockchain implementations by, for example, investing in select chipmakers making components.”

The Wellington Management Co. report mentioning cryptocurrency was authored by a team that includes experienced equity researched Matthew Lipton, along with Wellington veteran trading technologies principle, Lee Saba. Along with the report, an Investment Guide has been penned for the company’s clients. It includes information about “cryptoassets and blockchain”, as well as an FAQ comprising of basic questions those unfamiliar with the space are likely to ask.

Wellington Management’s decision to direct the immense capital at their disposal towards companies relating to cryptocurrency is likely backed by recent stellar performances by such stocks.  Companies such as Overstock, Nvidia, and Square have all seen their share price jump thanks to their involvement in the digital currency space. The firm responsible for creating chips for Nvidia Corp. and Advanced Micro Devices, Taiwan Semiconductor Manufacturing Co., has had a 34% increase in the price of share since the beginning of last year. During the same period, shares in Nvidia doubled in value.

Even companies with little to no discernible ties to blockchain (other than their name) have seen similar gains.  Long Blockchain, formerly Long Island Iced Tea, saw massive gains shortly after the announcement of their re-brand last December. Since then, the Nasdaq stock exchange has delisted the company for misleading investors. Naturally, this has caused their share price to drop.

Despite their obvious interest in the legitimate stocks of those companies closest to cryptocurrency, Wellington Management is reluctant to direct any of their $1 trillion fund towards direct exposure in the space. According to their report, their official stance is “cautious”.

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Mike Novogratz, former hedge-fund manager at Fortress, will advise on new token-exchange platform AirSwap. Based on the Ethereum network, the project aims to provide users a digital coin swapping service. The idea to is to match buyers and sellers in a model similar to CraigsList, or GumTree in the UK. Novogratz told CNBC that he was:

… fascinated to see the next wave of innovation in decentralised exchanges, and find AirSwap to be a well-thought out platform with a fantastic team. We continue to be excited about the ongoing developments in the Ethereum ecosystem.

CNBC report that Novogratz agreed to assist in the AirSwap project on October 4 but the news has gone under the media’s radar. The token exchange platform he’s teamed up with is based in New York and will work with Consensys, a lead development team on the Ethereum network. In a recent ICO, AirSwap raised around $35 million. They aim to launch the platform publicly early in 2018.

Co-founder of AirSwap and former head trader for Virtu, Michael Oved, told CNBC about their collaboration with Novogratz:

In a lot of ways right now, we’re seeing the bridge between Wall Street and this cryptoworld. I think Novogratz is going to help bring institutional players into our platform.

Novogratz hasn’t been shy about his appreciation for crypto in recent months. Whilst he doesn’t dismiss the possibility that the whole thing is a bubble, he’s excited about the profits that can be made along the way.  The former hedge manager has plans to launch a digital assets fund through his firm, Galaxy Investment Partners. Together, they’re looking to invest some $500 million in cryptocurrency.

Image: CNBC

Now is a good time as any to make a bold Bitcoin price prediction. Tom Lee, one of Wall Street’s top strategists, did exactly that. In his opinion, Bitcoin will outshine gold in the next five years. Moreover, Lee sees the Bitcoin value surpass the US$20,000 mark with relative ease. It is even possible one BTC will be worth US$55,000 by 2022. Very interesting statements, to say the least.

It is evident Wall Street experts have no love lost for Bitcoin and cryptocurrency. According to some people, cryptocurrency is clearly in a bubble. It is certainly possible there is some merit to such statements. Then again, free markets can’t be predicted in an accurate manner. Strategist Tom Lee feels things are looking a lot better than others predict. In his opinion, Bitcoin will eventually cannibalize gold altogether. That would be a rather remarkable turn of events, to say the least.

Tom Lee Makes a Bold Bitcoin Price Prediction

In his opinion, Bitcoin will be worth as much as US$55,000 by 2022. Such a high number may seem ludicrous at first, but it is not entirely impossible to reach either. With investors showing less demand for gold and more interesting in cryptocurrency, such a shift can take place sooner rather than later. Even reaching the “minimum” of US$20,000 per BTC would be rather incredible. After all, that puts the total Bitcoin market cap at around US$332bn. To put this into perspective that would be an 800% market cap increase over the next five years.

It is worth mentioning Lee is quite bearish on stocks right now. That in itself is very remarkable where Wall Street is concerned. Most traders still scalp stocks for minuscule profits whenever they can. However, opportunities are harder to come by and returns are a lot lower compared to a few years ago. It is evident Bitcoin makes a lot more sense in this regard. Supply and demand can push the BTC value to new heights over time, that much is evident.

Moreover, the influx of “new coins” in Bitcoin will slow down by 2020. Gold, on the other hand, is being mined at an accelerated pace right now. High demand for a limited product should have a positive effect on the price. Only time will tell if Lee’s prediction is accurate, though. We have seen some wild price predictions over the years, which never even got close to hitting their mark. This one may be a bit too optimistic, for the time being. Then again, there is no reason to deny the possibility of Bitcoin hitting US$20,000 either.

The cryptocurrency ecosystem, created with the launch of Bitcoin in 2009 has gone mainstream, sans the recognition as legal tender by most governments in the world. Bitcoin and other altcoins like Dash are on the verge of creating a global economy without geographical barriers. Similar to heavyweight financial institutions like Goldman Sachs and JP Morgan in the conventional fiat economy, few cryptocurrency platforms and businesses have established themselves as recognized, trusted organizations/institutions. According to a renowned venture capitalist in cryptocurrency circles Fred Wilson, Coinbase is one such company.

According to a leading business news outlet, the managing partner at Union Square Ventures, Fred Wilson equated Coinbase to the likes of leading Wall Street institutions while speaking at a conference organized by StockTwits on Thursday. He was quoted saying,

“They (Coinbase) are like J.P Morgan or Goldman Sachs for blockchain. “

Fred’s speech at the Stocktoberfest is an indication of his trust in the cryptocurrency ecosystem and its portfolio company. Founded by Brian Armstrong and Fred Ehrsam, Coinbase is among the early Bitcoin businesses to provide online wallet service. The company eventually expanded to offer Bitcoin exchange service and merchant solutions. Now, under the brand GDAX, Coinbase also operates a trading platform supporting multiple cryptocurrencies.

Continuing, Wilson also spoke about the advantage of Bitcoin and other cryptocurrencies over conventional financial instruments like stocks and bonds. The suggestions Wilson offered is also something he practices. Wilson has made a significant investment in the likes of Coinbase and other crypto-startups through Union Square Ventures. He also personally holds cryptocurrencies like Bitcoin, Ethereum, and Litecoin. In Wilson’s words, he owns a small percentage of his net worth in cryptocurrencies. Wilson further said,

“If I were a trader, a stock trader or hedge fund person, I might think of having 5% of my assets in something like this; it’s still early days; I don’t think you want to go all in on it, but I think you want to be in it.”

Coinbase has had its problems with the platform, operations and even the IRS. Wilson believes that the company represents security, trust, safety, etc., but at the same time, doesn’t discount the chances of theft, fraud and other challenges that continue to remain, just like in the early days of Wall Street.

The comparison ultimately means that the cryptocurrency industry is gaining the much-deserved traction from the investor community and it is going to rise in the coming years to hold a commanding position in the global economic system. The benefits, challenges, and opportunities remain the same for all established cryptocurrency platforms and are not limited to Coinbase alone.

Ref: Fortune | Image: NewsBTC

A new breed of hedge funds is coming to Wall Street and other financial areas all over the world. Two new technologies are becoming the next area of focus: artificial intelligence and bitcoin. One interesting example is called Numerai, a hedge fund trading through machine learning models built by scientists paid in bitcoin. It is evident there is a growing demand to access the bitcoin ecosystem without having to buy cryptocurrency directly.

On paper, it is not easy to grasp the concept of a bitcoin or AI hedge fund. Wall Street has welcomed tech-driven hedge funds in the past, most of which have been relatively successful. It is not surprising entrepreneurs are building a directory for the next wave of such funds, which will focus on bitcoin and AI. Interestingly enough, the majority of these hedge funds has yet to publicly announce themselves.

An Intriguing Future for Bitcoin and AI Hedge Funds

One major question that arises immediately is whether or not these investment vehicles have any promise at all. When it comes to bitcoin and AI, it is impossible to tell what the future will hold. There is plenty of reason to remain cautious when it comes to these new offerings, that much is certain. Using artificial intelligence in quantitative finance will be a bit of a struggle, as there are an unlimited number of variables.

Machine learning is a somewhat unexplored technology in the financial sector right now. Several smaller hedge funds made use of this technology already, albeit it is still in the very early stages of development. In the end, the next wave of investment vehicles will use different kinds of technology into one powerful offering. In this case, that will be a combination of AI, bitcoin, and possibly blockchain technology.

It remains unclear what this means for the future of bitcoin ETFs, though. The SEC will issue their decision regarding these trading vehicles very soon. Assuming the bitcoin ETFs are given the green light, future hedge funds related to cryptocurrency may just be around the corner. It is evident some things will change in the financial sector moving forward. Bitcoin and AI-based solutions may only be the first of many changes to come.

Header image courtesy of Shutterstock

Blockchain technology in banking and fintech is not a new thing. The sector has been working on implementing the distributed ledger technology into its operations for more than a year now. As they make progress, the Wall Street clearinghouse has decided to hop on the bandwagon by adopting blockchain technology.

According to reports, Depository Trust and Clearing Corporation – DTCC has announced its intentions to start using Blockchain technology on a trial basis. DTCC is a leading firm offering back-end trading services to many Wall Street companies. To start with, DTCC will be replacing one of its central databases with distributed ledger.

The DTCC blockchain project will be spearheaded by the Information Technology powerhouse, IBM. The process of development and implementation is expected to start soon to ensure a fully functional platform by early next year.

The coverage on one of the leading newspaper quotes the CEO of DTCC saying,

“This is a real tangible step into what could be a very different future for Wall Street.”

The acceptance of Blockchain technology by Wall Street institutions is driven by both cost benefits and increasing competition from the mainstream cryptocurrency industry. The banking and financial institutions woke up to the possibility of using blockchain technology after they felt that the growth of Bitcoin may threaten their business. By implementing blockchain technology into their existing operations, they will not only be able to offer services at the same speed as Bitcoin transactions but also reduce the overhead costs by including automation and eliminating third party fees.

DTCC is not the first trading infrastructure provider to consider the use of blockchain technology. NASDAQ has already created LINQ and working on further improving it. Similarly, driven by Digital Assets Holdings, the Australian Securities Exchange has also implemented blockchain based automated clearing system for trades.

In the case of DTCC, the platform will not be using Bitcoin blockchain, but a distributed ledger which shares similarities with the blockchain. If the trial turns out to be successful, DTCC may also consider using the technology for fund transfers in addition to record keeping operations.

The increasing interest among large corporations in Blockchain technology will soon drive more businesses to do the same. This will eventually end up making distributed ledger technology, an industry standard.

Ref: NYTimes |  Image: NewsBTC

Apart from apprehension and anxiety, the cryptocurrency technology has offered a lot more to the traditional banking and financial sectors. Bitcoin is increasingly being perceived as a threat to banking and financial industries. In order to counter the threat, the industry is focusing on the very underlying that powers bitcoin. Also, the introduction of Bitcoin, an open source distributed digital currency led to the creation of various crypto-token that either adopt the same technology as bitcoin or draw inspiration from it.

The underlying bitcoin technology is known as blockchain. Blockchain is a distributed ledger that records all transactions happening over the cryptocurrency network. It acts as a permanent record keeping repository. the use of blockchain is not confined to digital currency transactions and it can be programmed to do much more than that. The same concept is used by Ethereum, another crypto-token to create smart contract based applications among others.

Ethereum is the next best crypto-platform after Bitcoin. Ethereum network is also built on the blockchain similar to that of bitcoin in many ways. The crypto-token on Ethereum is called ether, which unlike bitcoin is used to pay for running and accessing computational services on the Ethereum platform. Ether can be bought, sold or traded on many cryptocurrency trading platforms and exchanges. But it can’t be used as a replacement for fiat currency like bitcoin.

Smart Contracts Powered by Ethereum for Banking and Finance

The Smart Contracts capability of Ethereum is sought after by the banking and financial institutions as part of their attempts to improve their operations and services to counter the threat posed by Bitcoin and bitcoin-based financial services. By using smart contracts, financial institutions can automate their back office processes to a huge extent. These smart contracts on the Ethereum blockchain will be self-executing in nature, triggered by certain conditions.

For example, thousands of people trade on stock exchanges. Whenever somebody invests in stocks or sells them on a regulated platform, the transaction is accompanied by paperwork proving or transferring the ownership of traded assets between parties. All these are currently managed manually, making it a time and cost intensive process. With Smart Contracts based automatic clearing system, all trader, customer and stock data can be stored or connected to a blockchain based application with predefined conditions and Smart Contracts already programmed into it. Any transactions that happen on the trading floor will be done over the platform/blockchain. Each transaction satisfies a condition(s), initiating the execution of corresponding Smart Contract. The Smart Contract automatically settles the trade, satisfies all regulatory requirements and closes it by communicating relevant information with parties involved in the transaction. It all happens in a matter of minutes, to hours without human intervention!


The huge potential of such a system when it comes to increasing efficiency while reducing costs makes Ethereum and blockchain technology a potential gold mine for Wall Street-based financial institutions. Some of the well-known Wall Street powerhouses that are working closely with Ethereum includes Goldman Sachs and JP Morgan. The international payments giant Visa is also looking forward to working with Ethereum to create blockchain projects. Even the banking consortium with over 40 leading international banks working together with R3CEV to develop blockchain technology for the banking sector is also included in the list.

Ethereum is a promising platform that can truly deliver the sought after blockchain solutions that can contribute to the advancement of the whole sector.

Ref: Business InsiderVisa Planning to Develop 'Secure and Scalable' Blockchain Project 

Many big names who have been working in mainstream finance, tech, banking and politics have switched their respectable high paying positions of power to join a still nascent cryptocurrency industry. The whole notion of cryptocurrency started less than a decade ago, following the development of bitcoin. Bitcoin is the first cryptocurrency to be developed; later came lots of other digital currencies that were developed using similar protocols. These alternatives to bitcoin are aptly referred to as altcoins or alternate coins.

This week, a woman who has been in an executive position in Citigroup Inc. and the Bank of America Corporation, Sallie Krawcheck was announced as the newest member to join the board of Digital Asset Holdings Inc. Before joining the Digital Asset Holdings Inc., Sallie Krawcheck served as the chief financial officer and the head of wealth management at the Citigroup Inc. At the Bank of America, she was heading the wealth management operation before becoming the CEO of an investment firm targeting women called Ellevest. While Ellevest gets ready to be launched soon, Sallie Krawcheck has accepted a position on the board of Digital Asset Holdings Inc.

Sally Krawcheck is not the only high-profile Wall Street woman on the company’s board. Another person who has been making news in the recent days, Blythe Masters was earlier working with JP Morgan before she switched to crypto-industry to become the CEO of Digital Asset Holdings.

Digital Asset is not the only company to have migrants from other industries coming in, only to become naturalized citizens of the company. Uphold, formerly known as Bitreserve founded by Halsey Minor is currently run by Anthony Watson. He was formerly associated with Nike and Barclays where he held the position of the Chief Information Officer before joining Uphold. Currently, Anthony Watson is the President and Chief Executive Officer of Uphold. Another Nike executive, William Dennings was also with Nike as the Chief Information Security officer. He also moved from Nike to Uphold.

Another bitcoin mining company, BitFury recruited former White House Press Secretary and Special Assistant to President Barack Obama, Jamie Elizabeth Smith as the Global Chief of Communications. She has also worked as the Director of Public Affairs for the Office of the Director of National Intelligence and as the Director of Communications for the Senate Commerce, Press Director for Hillary Clinton during the 2008 presidential campaign and more.

Professionals have realized the importance of digital currency and its potential to bring about change. It has become the driving force for more and more established professionals to enter the digital currency domain. With other industries striving to include blockchain technology into their operations, it is also an industry in great demand, which will definitely emerge as a driving force behind all the other sectors.

Digital Asset Holding Inc. itself is working on blockchain projects focused on rapid trade settlements and the company recently received a funding of over $60 million from various Wall Street giants like JP Morgan, Goldman Sachs Group, and others. The company is also working on upgrading Australian Stock Exchange’s existing trade settlement system with blockchain powered trade settlement system. For a company that is involved knee deep in the fintech sector, people like Blythe Masters and Sallie Krawcheck with years of experience in the Wall Street will prove to be invaluable.

Ref: Bloomberg Business | Image: Fast Company

In a recent article published on Bloomberg, former Wall Street executive Blythe Masters explains that she is particularly interested in the blockchain, the shared technology behind everyone’s favorite cryptocurrency bitcoin.

In the article, Masters explains that the blockchain has “a pretty long list of positive attributes,” and that it could potentially bring a whole new level of security to both Wall Street and other financial institutions.

This is nothing that cryptocurrency fans haven’t heard before. Companies such as computer giant IBM have long endorsed the blockchain, saying that it will change the future of business as we know it. The blockchain has certainly secured its popularity amongst those who know about it, so why aren’t more companies embracing all it has to offer? Is it possible that many businesses simply don’t know it exists?

Earlier, bitcoin was referred to as everyone’s favorite cryptocurrency. Among all virtual money currently in existence and use today, it can arguably be said that Bitcoin is the most well-known and has garnered more acceptance with purchasers and sellers alike, but that doesn’t necessarily mean it is understood among the general public. Despite first coming to fruition in 2008, many people admit that they still don’t comprehend bitcoin, much less understand what it is.

This is a disturbing fact for many reasons, and it could mean one of several things. First off, one has to question whether Bitcoin has been well advertised, or advertised enough for that matter. Almost a decade has gone by since its birth, and yet it hasn’t reached mainstream status. Bitcoin has obviously found an audience somewhere and has continued to promote itself to that audience alone, but this group is fairly limited. Any entrepreneur would likely mention that this is not necessarily the way to conduct business or solidify the legacy of a product. The goal should always be to gain customers and expand one’s market arena.

Another possibility may be that people simply don’t try hard enough to stay informed. Members of the public appear to be fairly with it when it comes to the latest I-phone or I-pad, but when it comes to deeper branches of our technological world, several of us stay in the dark.

This may also suggest a lack of need for bitcoin. People call and text every day with friends, family members and co-workers. Staying in touch is important for both business and social purposes, so we make sure always to remain in the “knowing” when it comes to what the latest phone has to offer. It’s likely that the majority of society still relies on traditional banking and more conventional methods to get them through daily life.

The same ideas can also apply to the blockchain. The technology behind could allow for a higher rate of transactions at a faster pace, and with more security in place, the necessity is certainly there. However, with many businesses still relying on wire transfers and similar means to ensure payments to their clients, it’s possible they just may not know enough about it.

Regardless, the true potential behind the blockchain has yet to be reached, but with digital advancements coming almost every day, those who already rely on it and seek its aid and guidance to propel business forward can trust its technological prowess to get the word out and convince others to join in the game.

Blockchain technology continues to draw powerful admirers including Goldman Sachs, Barclays, BBVA, Commonwealth Bank of Australia, Credit Suisse, JPMorgan, State Street, Royal Bank of Scotland, and UBS.

World’s most powerful banks have joined hands to work on the formulation of industry standards and protocols based on the blockchain technology for their mainstream applications in the financial markets. The partnership will be led by a startup R3 which is being led by Wall Street expert David Rutter.

R3 describes itself as an innovation firm focused on building and empowering the next generation of global financial services technology.

The announcement of the partnership was made in a press release issued to the media by R3.

What puts blockchain in the spotlight is the reason that it is swifter, more transparent and easier to use than the traditional banking operations.

This partnership signals a significant commitment by the banks to collaboratively evaluate and apply this emerging technology to the global financial system,” said Rutter. “Our bank partners recognize the promise of distributed ledger technologies and their potential to transform financial market technology platforms where standards must be secure, scalable and adaptable.

The press release also informed that the partnership will focus on research, experimentation, design, and engineering to help advance state-of-the-art enterprise-scale shared ledger solutions to meet banking requirements for security, reliability, performance, scalability, and audit.

Earlier we had reported that Swiss Banking giant UBS is working on a project termed as the “utility settlement coin” and this project is also making use of the blockchain technology. For the said project, the work is being undertaken at a Bitcoin lab in London and the banking major wants to build an alliance around it.

While most banks have shown interest and have taken small steps towards the understanding the technology, this is the first time that the banks will be coordinating on a blockchain project.