Crypto Weekly: Funds and fine
Summary: Morgan Stanley is planning to offer Bitcoin funds to its wealth management clients while having an acquisition of a cryptocurrency exchange in sight. Coinbase is delaying its public listing upon a USD 6.5mn fine.
Morgan Stanley to offer Bitcoin funds
Morgan Stanley is allegedly about to offer wealthy clients access to three Bitcoin funds. This offering marks the first time a large US bank offers Bitcoin funds to clients. Two of the three funds are from the crypto-financial service provider Galaxy Digital, publicly trading as GLXY:tsx, and the final fund is a collaboration between FS Investments and NYDIG. However, the offering from Morgan Stanley comes with rather strict restrictions. First, private clients need at least $2mn in assets held at Morgan Stanley to qualify. Investment firms need at least $5mn. Second, accounts must be minimum 6 months old. Third, the ones qualifying are only able to invest up to 2.5% of their total net worth in the funds. The restrictions are limiting the number of clients able to take part in the funds and restraining their potential exposure to the cryptocurrency. There is strong evidence that Morgan Stanley is doubling down on the crypto-market as they are reportedly also in talks to acquire a significant part of the leading Korean cryptocurrency exchange Bithumb. Bithumb is allegedly eyeing a $2bn valuation. Morgan Stanley is joining other US banks like JPMorgan, Goldman Sachs, and BNY Mellon, also having cryptocurrency products in their pipeline.
Coinbase to delay public listing upon a $6.5mn fine
Since the end of 2020, it has been public knowledge that the largest US-based cryptocurrency exchange Coinbase is eyeing a public listing. For roughly a month ago, Coinbase published its S-1 filing to the SEC showing its finances to the public for the first time. At that time, Coinbase could ideally go public already this month. However, the listing is now delayed until at least somewhere in April. The delay comes after a settlement published on Friday with the Commodity Futures Trading Commission – known as CFTC. The settlement comes with a $6.5mn fine. The CFTC proclaimed that Coinbase ran two automated trading programs between January 2015 and September 2018. In some cases, the programs engaged in trading with one another. Following that, CFTC argues that Coinbase provided misleading data through its API to entities like CME Bitcoin Real Time Index and NYSE Bitcoin Index as the trading activity could potentially result in a misleading perceived volume and level of liquidity. Coinbase did not disclose why it used the trading programs. However, it was perhaps with the purpose to better hedge orders from its retail clients through two distinct methods, meaning they could sometimes match trades.
Grayscale adds five new cryptocurrency trustsThe world’s largest cryptocurrency asset manager Grayscale started last week to offer five new cryptocurrency trusts. The new trusts are respectively investing in Chainlink, Filecoin, Basic Attention Token, Livepeer, and Decentraland. The newly offered trusts were filed in Delaware in December 2020 and October 2020. Since then, the cryptocurrency community has been speculating on when the trusts would go live if they were to be offered at all. Grayscale has as of yesterday $44.2bn in assets under management while the total cryptocurrency market capitalization measures $1.7trn. As Grayscale holds a significant part of the total market capitalization, it is rather consequential for the newly added cryptocurrencies to be included in a trust. It is often institutions buying the Grayscale trusts, potentially indicating that they want exposure to these cryptocurrencies.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
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Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.