Tag Archives: blockchain

sec-ico-initial-coin-offerings

SEC Aims to Rein In and Reign Over Initial Coin Offerings – Duck Test 3.0

Initial Coin Offerings [Finally] Get SEC Attention; The Duck Test 3.0.

For those who believe the US SEC is slow to react when reining in and/or reigning over new-fangled investment products, the evidence indicates you are accurate. After all, recent history regarding sub-prime debt sold to unwary investors, Madoff-style investment management scams, payment-for-order schemes advanced by exchanges, and high-octane exchange-traded notes unsuitable for retail investors are just a few of the topics that made it out of the gate and far into the fields before investor advocates rang the alarm bells at the front door of the US Securities & Exchange Commission.

There have been more than 160 of these ICOs this year, which have collectively raised more than $3 billion, according to data from research firm Coindesk. Before this year, ICOs had raised a total of about $300 million going back to 2014.

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SEC Chair Jay Clayton Photo: Andrew Harrer/Bloomberg News

In defense of the bureaucrats based in Washington, their job description is arguably less a function of evaluating investor-suitable products and Wall Street selling practices as opposed to their primary role of chasing the horse after its out of the barn. After all, the folks who offer SEC staff with new investment product insight and regulatory recommendations (and tickets to concerts and sports events) are highly-paid lobbyists who represent Wall Street investment banks that have an agenda–to make fees from selling investment products and to ensure there is as little as possible regulatory oversight on their activities. Thanks for reinforcing that view, Mr. Trump!

But, in the case of the latest innovative product known as initial coin offerings, where innovators are raising money for an assortment of business models through issuance of bitcoins vs traditional shares in a company, Wall Street banks are finding themselves short of having a controlling role in the underwriting, sale and secondary market trading of these ‘instruments.’ Whilst the likes of Goldman Sachs and other fintech-friendly firms are racing to find their sweet spots in the digital ledger, blockchain and bitcoin space, suffice to say those investment banks are not happy about losing out on what would have been tens of millions of dollars in underwriting fees that could have been generated from the more than 160 private placement offerings that raised nearly $3billion since the beginning of the year, as well as potentially hundreds of millions of dollars in potential underwriting fees based on the pipeline of ICO deals in the pipeline.

So, it should come as no surprise that despite the ongoing string of announcements about new ICO issuance, the SEC has seemed to be asleep at the wheel for months insofar as issuing any regulatory edicts, leading some cynics to suggest that lobbyists from Wall Street have more recently whispered into the ears of SEC Chair Jay Clayton and compelled him to assert the power of SEC over those conducting initial coin offerings.

MarketsMuse readers are directed to coverage by Prospectus.com, “SEC Invokes Duck Test for Initial Coin Offerings-ICO Alert” via this link

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photo-china-daily-asia-fintech-funding-eclipses-us-eu

Asia FinTech Funding Initiative 2x That of US and EU

Latest Chinese Fintech FOF Completes Raise of 10-billion-yuan (US $1.8b) as Asia fintech funding continues to eclipse North America and EU allocation to financial technology initiatives..

(Econotimes.com) 28 December 2016- In a move to advance China as a financial and technology hub, Asia FinTech FOF, a foundation that aims to seek investment opportunities and fuel mergers and acquisitions (M&A) in Asia, was established in Beijing on Tuesday, China Daily reported. (feature photo also courtesy of China Daily)

With funds of 10 billion yuan ($1.44 billion), the foundation is the second fund of funds (FOF) after the Zhongguancun FOF, which is valued at 30 billion yuan. The Zhongguancun FOF was established in 2015 and expected to support acquisitions worth 150 to 200 billion yuan.

The Asia FinTech FOF was initiated by both private and State-owned capital. This includes Hong Kong-listed Credit China Fin Tech Holdings Ltd, Shanghai Xinhua Distribution Group Ltd and Jilin Province Investment Group Corp Ltd.

“Our investment will center on leading companies in the fields of big data, AI, cloud computing, mobile payment, supply chain financing and block chain,” said Sheng Jia, the executive director of Credit China Fin Tech, as quoted by China Daily.

Xie Sha, managing partner of Asia Fintech FOF, said that the fund already has some projects in the pipeline, which includes areas such as big-data driven consumption financing, blockchain infrastructure provision and AI-based credit service platforms.

While fintech has taken the global financial sector by storm, the Asian fintech funding market is spearheading this revolution. In the first half of 2016, the Asian fintech market saw $10 billion of investment far more than North America’s $4.6 billion and Europe’s $1.8 billion.

China, in particular, is in the forefront with policy support also stimulating the growth of country’s fintech market. The State Council in August published the national five-year plan on scientific and technological innovation by 2020, in which of fintech innovation is particularly encouraged.

“Fintech is reshaping the financial business. And this is an opportunity that neither traditional financial institutes nor technology firms want to miss,” said Xie.

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Steven Chow, Chief Strategy Officer, Prospectus.com

According to  Steven Chow,  the Hong Kong-based Director and Chief Strategy Officer for capital formation consultancy Prospectus.com, “Based on the projects that we’ve been engaged to assist throughout both 2015 and 2016, there is no question that that Asia domiciled companies, and particularly China-based start-ups are heavily focused on the fintech space.”  Added Chow, “However cyclical thematic investment trends tend to be, fintech is now justifiably an asset class unto itself. It is more than clear that the powers that be in China understand this, perhaps even better than their counterparts in the US or Europe.”

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To continue reading Asia FinTech Funding Initiative 2x That of US and EU, please visit Econotimes.com via this link

 

blockchain-equities-ats-overstock

What’s Next? A Blockchain-Powered ATS for Equities

“What’s Next? Well, for those familiar with Patrick Byrne, the controversial and innovative founder of Overstock.com, one of the first online retailers to embrace the use of bitcoins, it should not be a surprise that Overstock’s chief honcho would ‘get the joke’ and realize its all about the underlying technology that powers cryptocurrency applications, known as distributed ledger. While bitcoin currency continues to encounter challenges in terms of mass embracement, the real grease that makes the makes the wheels turn is under the hood. With that, Overstock subsidiary “T0” (T-zero) is taking a page from both the industry consortium formed by R3 and the Senahill-backed Symbiont –both of which target institutional capital markets usage–and aiming it’s own sights on retail investors by setting to launch an equities-centric Alternative Trading System aka ATS powered by their own blockchain formula.

A distributed ledger is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, and/or institutions.
A blockchain is a type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks.
Rob Daly of MarketsMedia (not related to MarketsMuse) provides the scoop..

Online retailer Overstock.com expects trading to begin on its blockchain-based alternative trading system before the end of the year, according to company officials.

The ATS will be operated by Overstock.com subsidiary TO as part of the company’s Medici Project, and it will only handle trades in the company stock, at least at first. So while it’s not an immediate competitive threat to the existing field of 13 U.S. stock exchanges plus several dozen ATSs, the initiative will be closely watched as a gauge of the potential of distributed-ledger technology in capital markets.

The ATS will write completed trades to its blockchain instead of routing them to the National Securities Clearing Corp., a subsidiary of Depository Trust & Clearing Corp., for clearing.

Overstock.com plans to prime the liquidity on the ATS through a new issue of corporate shares to existing shareholders the day before trading commences on the new trading venue.

judd bagley blockchain ATS
Judd Bagley

T0 officials plan to formally announce its partnership with a broker-dealer on Sept. 12. “For those who want to trade on the ATS, they will have to create an account with the broker-dealer,” said Overstock’s man-in-charge Judd Bagley, who declined to name the brokerage firm.

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Investors will be able to select from multiple “very vanilla” order types, which are still in development, he added. T0 may use a so-called maker-taker rebate model to encourage liquidity, but officials have not made a final decision.

The new trading venue is a mix of internally developed technology and the technology T0 acquired with its purchase of order-routing firm SpeedRoute in October 2015. T0 built its matching engine internally as well as the necessary interfaces to the rest of the U.S. equity marketplace.

The company, in conjunction with Bay-area consultancy PeerNova, also developed a proprietary blockchain architecture for the ATS instead of using Bitcoin, Ethereum, or Ripple.

To continue reading the story from MarketsMedia, please click here

BNP-PARIBAS-FINTECH-BLOCKCHAIN-CROWDFUNDING

BNP Paribas Gets Blockchain for Crowdfunding

(RaiseMoney.com)-French broker-dealer BNP Paribas “gets the joke” when it comes to fintech applications for equity crowdfunding and is embracing blockchain technology to advance their vision.

A subsidiary of BNP Paribas Group has announced a partnership that will find it leveraging blockchain technology to enable private companies to issue securities via equity crowdfunding.Revealed today, the partnership finds BNP Paribas Securities Services, its asset services division, working with investment platform SmartAngels on a pilot the firms said would be launched in the second half of 2016, pending regulatory approval.

In statements, BNP lauded the effort as a “major step” in advancing crowdfunding. The project will see BNP Paribas developing and managing a registry for shares in private companies using the blockchain that in turn will automatically register securities issued by SmartAngels.

Smart Angels will serve as a secondary market for shares registered on the BNP platform, a move the partners said would make it easier for startups and small businesses to access financing.

“Investor payments will be processed immediately and e-certificates will be issued to them straight away. Financial transactions made via the platform will therefore be performed simply, quickly, securely and for a lower cost.”

 

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Philippe Ruault, Head of Clearing, Settlement and Custody Solutions, BNP Paribas Securities Services

Philippe Ruault, head of product for clearing at BNP, emphasized his belief the program would accelerate trading in the private securities market.

“This is a major innovation for the custody and account-keeping of unlisted securities,” he said.

The project is not the first that finds a major financial firm seeking to leverage the blockchain as a way to ease aspects of the private securities process. The effort notably follows Nasdaq Linq, a pilot designed to allow entrepreneurs the ability to issue and manage private shares using a private blockchain system.

For the full story, please click here

blythe-masters-bitcoin-blockchain

Blockchain Babe Blythe Masters in Repo Deal with DTCC

Blythe Masters, the former grand dame of derivatives for investment bank JP Morgan, who after a less-than-glorious exit from her senior role overseeing credit derivatives for House of Morgan and who reinvented herself as a blockchain babe and leads digital ledger startup Digital Asset Holdings, has proven that every cute cat has nine lives. In a press release issued this week, Depository Trust & Clearing Corp. aka DTTC, the industry-owned utility that processes transactions across the multi-$trillion repurchase agreement and government securities markets has entered into an agreement with the startup to test their blockchain application for use within the $2.6tril repo market sleeve so that lenders and borrowers across the often illiquid repo market can have a more efficient tool to track securities and cash flowing between counterparties.

Digital Asset Holdings, for which Masters is Chief Executive Officer, is considered one of the top 3 fintech companies focused on leveraging digital ledger technologies, the basic foundation of the cryptocurrency bitcoin. R3 Blockchain Group, whose investors include a consortium of 42 investment banks and financial service firms and is led by former inter-dealer broker David Rutter, along with Symbiont, the creator of Smart Securities and sponsored by merchant bank SenaHill Partners, are considered to be the other leading players in the space seeking to ‘institutionalize’ the value proposition of the technology that powers bitcoin.blythe-masters-marketsmuse

(WSJ)-Depository Trust & Clearing Corp., a firm at the center of Wall Street’s trading infrastructure, is about to give the technology behind bitcoin a big test: seeing whether it can be used to bolster the $2.6 trillion repo market.

DTCC said in a statement Tuesday that it will begin testing an application of blockchain, the digital ledger originally used to track ownership and payments of the cryptocurrency bitcoin, to help smooth over problems in the crucial but increasingly illiquid corner of short-term lending markets known as repurchase agreements, or “repos.”

Repos play a critical role in the financial system by keeping cash and securities circulating among hedge funds, investment banks and other financial firms.

DTCC, an industry-owned utility that helps settle trades in the repo market and elsewhere, wants to apply blockchain technology to the market, so that lenders and borrowers can keep track of securities and cash flowing between firms in real time.

To test blockchain’s ability to improve repo trading, DTCC has tapped Digital Asset Holdings LLC, a startup run by former J.P. Morgan Chase & Co. executive Blythe Masters. Earlier this year, DTCC invested in the firm focused on blockchain applications, along with a range of banks including J.P. Morgan, Goldman Sachs Group Inc., and others.

 

For the full story from WSJ, please click here

top fintech bankers

Institutional Investor’s Top-Ranked FinTech Bankers Include…

Institutional Investor Magazine has recently announced the world’s top 35 FinTech Bankers, and…

As astutely noted by Institutional Investor Magazine’s Senior Editor Jeffrey Kutler, “The origin of the term “fintech” is difficult to pinpoint; only very recently has it become an accepted label for one of the hottest segments of the technology market. The availability of high-­performance computing and low-cost distribution channels is attracting a steady stream of entrepreneurs with ideas for improving, if not revolutionizing, financial products and processes — and investors are in hot pursuit.”

With that lead in, MarketsMuse curators are happy to excerpt II’s latest ranking report, this one profiling the top fintech bankers and financiers. We extend a special salute and shout out to merchant bank SenaHill Partners, led by securities industry veterans Neil DeSena and Justin Brownhill—whose boutique merchang banking firm is ranked within the top 20 of 35 firms profiled by Institutional Investor’s global survey.

Institutional Investor’s first Fintech Finance 35 ranking turns a spotlight on the financiers who are abetting this flowering of innovation. They include deal makers at various stages of the investment cycle and facilitators of the incubating, mentoring and capital-­raising ecosystems that accelerate promising financial start-ups’ paths to commercialization.

According to one global tally, by consulting firm Accenture, fintech investment tripled in 2014, to $12.2 billion, its growth rate dwarfing the 63 percent for venture capital overall. Research firm CB Insights estimates that fintech’s share of total venture capital activity quadrupled between 2008 and 2014, to 12 percent.

That’s the big picture. Here we present perspectives on the boom through the lenses of some of its leading players. (To account for firms’ partnership structures, a total of 41 individuals are recognized.) Opinions and investment theses vary, as does the approach of a traditional venture fund manager compared with that of a corporate strategic investor. But all share a conviction that fintech is here to stay and an enthusiasm for the work, which neither begins nor ends when checks are issued. Venture capitalists typically meet with hundreds of prospects over the course of a year before making a relatively small handful of bets, and through board seats or other types of advisory relationships they provide ongoing guidance, often drawing from extensive industry experience.

The Fintech Finance 35 ranking was compiled by Institutional Investor editors and staff, with nominations and input from industry participants and experts. The evaluation criteria included individual achievements and leadership at the respective firms, influence in the community at large, and the size, reputation and impact of the respective funds and institutions in the financial technology industry — particularly in the current wave of fintech financing.

The Fintech Finance 35 was compiled under the direction of Senior Contributing Editor Jeffrey Kutler. Individual profiles were written by Kutler; Asia Bureau Chief Allen T. Cheng; Senior Writers Frances Denmark, Julie Segal and Aaron Timms; Research Staff Writer Jess Delaney; Senior Contributing Writer Katie Gilbert; Associate Editor Kaitlin Ugolik; and Editor Michael Peltz.

And, coming in at #18… Continue reading

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Attention Wall Street BlockHeads: Get Your Bitcoins Here

MarketsMuse fintech update is a “bid on” to prior Wall Street bitcoin initiative coverage, and following is courtesy of excerpt from 4 Aug story by Bloomberg LP reporter Andrew Leising, ” Wall Street, Meet Block 368396, the Future of Finance.”

Justin Brownhill, SenaHill
Justin Brownhill, SenaHill

When Justin Brownhill wants to check up on one of his latest investments through fintech merchant bank SenaHill Partners LP, he only needs to check the ledger unpinning bitcoin. The address: block 368396.

That’s the new digital home for the equity stake his firm made in Symbiont, a startup using bitcoin’s underlying blockchain software to make it quicker and easier to prove ownership of assets or transfer them between buyers and sellers.

Putting its money where its mouth is, Symbiont on Tuesday morning digitized and published several of its equity investments to the blockchain, which drives the bitcoin digital currency. That means the stakes will forever be part of that public record, allowing dividend payments or stock-option conversions to happen automatically.

“I woke up this morning and thought, ‘This is a historic moment,’” Brownhill, a managing partner at New York-based SenaHill, said in an interview after the Symbiont presentation on Tuesday. The merchant bank has investments in over a dozen other private companies. “Our job now is to go and espouse the benefits to all our portfolio companies,” he said.

Wall Street is becoming enamored with the potentially transformational way blockchain could overhaul how derivatives, bonds, loans and other asset classes work, dramatically simplifying the process of tracking ownership and accelerating the transfer of assets from one person to another.

Smart Securities

Symbiont’s innovation is creating what it calls smart securities. The company is now practicing what it preaches: its founders’ stakes as well as shares and options granted to employees have been converted into encrypted code that lives in the bitcoin blockchain — the same ledger where any purchases and sales of the digital currency are recorded. Symbiont customers can do likewise to track changes in ownership interests.

“Today is the day crypto joins Wall Street,” Symbiont Chief Executive Officer Mark Smith said to the room full of investors, bankers and reporters in New York. Representatives of JPMorgan Chase & Co., Morgan Stanley and other financial institutions were among the audience members.

Symbiont’s not alone in trying to bring the blockchain to Wall Street. Other firms investigating finance-related uses of blockchain include Digital Asset Holdings LLC, headed by former JPMorgan Chase & Co. banker Blythe Masters; Nasdaq OMX Group Inc.; Ripple Labs; and the New York Stock Exchange.

In June, Symbiont raised $1.25 million from a group of investors including former NYSE chief Duncan Niederauer; former Citadel LLC executive Matt Andresen; two co-founders of high-frequency trading firm Getco LLC, Dan Tierney and Stephen Schuler; and SenaHill.

For the full story from Bloomberg LP, please click here

innovation marketsmuse

Frmr NYSE Capo Niederauer Backs Bitcoin-based ‘smart securities’ startup Symbiont

Tech Talk: Bitcoin’s Distributed Ledgers: A FinTech Innovation..

MarketsMuse Trading Technology/FinTech department profiles Wall Street’s rapid embracement of the tools that power Bitcoin with a look at Symbiont, a company that aspires to disrupt the capital markets process.

Distributed ledgers, the technology behind the Bitcoin blockchain, can be used to issue, trade and process an array of financial instruments on a single, global, decentralized peer-to-peer financial network. And guess what, Symbiont, a startup that’s backed by several high-powered Wall Street figures, has established a platform for so-called smart securities, or financial assets that are programmable versions of traditional securities, using the distributed ledger.

Early investors include Duncan Niederauer, former CEO of NYSE Euronext, and Matt Andresen, founder of the Island ECN. “Symbiont is bridging the gap between Wall Street and the emerging blockchain ecosystem,” said Niederauer, managing member of 555 Capital and a member of the Symbiont Board of Directors.”It’s an exciting, timely and much-needed development for the long-term health of the markets.”

Neil DeSena, Senahill Partners
Neil DeSena, Senahill Partners

SenaHill Partners, the recently-established fintech merchant bank led by former Goldman Sachs trading tech honcho Neil DeSena and former Citigroup tech titan Justin Brownhill will serve as Symbiont’s business development agent. “SenaHill Partners is focused on fintech companies, and specifically on assisting a transition from analog-based financial services into technology-based financial services,” Smith said. “All of our access into the Street comes through SenaHill, so SenaHill is an important part of the Symbiont story.” SenaHill Partners also served as merchant bank and deal advisor to Livevol, the provider of equity and index options technology and market data services. During the first week of June, Livevol entered into a definitive agreement to be acquired by options exchange CBOE Holdings, Inc.

“The real value of this new technology is in the underlying protocol, the distributed nature of the Bitcoin blockchain, and the immutable nature of its ledger,” says Symbiont CEO Mark Smith. The distributed ledger is “a way to create new securities that could solve some of the problems that existed in the more opaque, less transparent, less liquid markets,” Smith said.

“We have launched Symbiont to create a generic platform that can operate on multiple types of cryptographically protected distributed ledgers to create what we are trade marking Smart Securities,” said Smith. “It’s a digital security that can be programmed with all the terms and conditions of a financial instrument. Once issued on a block chain, it can act autonomously to execute and extract terms and corporate actions without any human intervention.”

MarketsMuse sends a shout-out and thumbs up to June 18 reporting of this story by MarketsMedia.com