“This Week in Crypto” Summary for March 27, 2020
Insight into CoinMetro’s recent developments, upcoming updates, and more news covering the ongoing global crisis — all in This Week in Crypto!
Crypto Market News Highlights
1) STO Platform’s Registration with Traditional Bank Helps Move Security Tokens Forward
This is basically a primary issuance platform — primary issuance meaning an issuer, someone needing to raise some money, issues not into a matching engine, but into what is called a billboard, people come in and make offers, and they fill the offers.
The bank is going to let them accept Euro and hold custody of the Euro, rather than them having to get bank accounts themselves. Like many things in crypto and Fintech, the first steps are always a bit lazy. This is a bit lazy. It’s still only a primary issuance platform, and it’s in France only. It’s regional, it’s siloed, just like the traditional markets.
As Kevin has said before, there is no reason to get into blockchain/DLT, in terms of capital markets, if you’re not going crossborder and not doing it in real time. It doesn’t solve any pain points, just makes new headlines.
2) Telegram ‘Loses Big’ Against SEC on Cryptocurrency Case – Is Kik and Hedera Next?
When this came out, Kevin said that they were going to lose. Open and shut case, they lose. But Telegram knew that the case was going to come, and they strategically waited to link Telegram to the underlying issuer of the GRAM token, so that they could delay the release, because they weren’t ready. So they actually used this to their advantage initially. But they probably knew that they were going to lose.
They are betting that they will only have to return the money to US contributors, and maybe pay a fine, but because of the size of the raise overall, it shouldn’t hurt them so much. Kik is definitely open and shut as well, but the precedence from the Telegram case is going to help the SEC.
3) Bitcoin Mining Difficulty Posts Second-Biggest Percentage Drop in Its History
People see prices drop and they start to move out. The halving coming out is also going to make it difficult for non-institutional miners that aren’t in a place with capped electricity costs. In China, the price to mine a Bitcoin is roughly about 3000 USD. After the halvening, that means it’s going to cost them roughly 6000 USD. Meaning at current prices, they are still profiting, but many small miners and miners in other countries are going to have big problems when the halvening comes.
Kevin expects it to level down, but it will level out and then back up at some point. Miners will come back in, but it won’t be the institutional miners.
Read about the differences between Digital Currency vs Cryptocurrency.
Check out our Medium post to read more crypto market news!
What has been done this month at CoinMetro? No new Dashboard or anything yet.
Lots of stuff going on behind the scenes. Expanding our banking partnership, to be able to provide IBANs — not only in Europe, but also elsewhere. Streamlining the onboarding process together with our Compliance/Development teams, so new clients can get Tier 1 with fiat, without providing a proof of address document.
We have a new Compliance officer and a new Head of Digital. Google contacted us and we will most likely be accepted for US ads due to being registered with the FinCen in the US. We are working with a local company here for social media marketing.
Do you think the global situation will affect marketing?
No, it won’t affect us rolling out with marketing. It may have a positive effect — everybody is at home. Everybody is online. A lot more captive eyes than normally.
As Kevin has said before, vices — which trading is one — is something people keep doing even in crises. Another aspect is the unfortunate fact that people are losing incomes, seeing their 401k and pensions dwindle. So no longer trusting traditional markets, people tend to look for alternatives. That could be good for us too.
Is there any point to do advertising in the US if you are not licensed to do business there?
We have US clients, and can accept American clients from almost all states. Only clients from Hawaii, Washington and New York are we currently unable to onboard.
What kind of marketing are you planning?
Digital marketing is a focus, but we are looking at ways for traditional or physical marketing, such as the airport gate we used to have here in Estonia. For instance, we are in contact with a business that wraps cars — taxis, ubers — in high traffic areas, like London.
Other ideas are perhaps doing some influencer marketing, podcasts and some print media.
Are we any closer to increasing leverage on the platform?
Internal discussions have been positive on this. Now it’s about getting one new liquidity provider — which we just got onboarded — into the mix. That is probably going to take another two weeks. That will give us some cross-margin capabilities, which will allow us to better manage liquidity across multiple assets. This would reduce our risk in terms of negative balances.
Did you submit your PSP license?
We actually paused the PSP license. We got most of the documents ready, but we paused — not because of the virus, but Kevin is glad that we did pause before the outbreak, as we may have ended up spending even more money, or extending timelines, due to the virus.
We started reaching out to other providers that can umbrella us, so we can offer the same services without acquiring the licenses initially.
Realistically speaking, we are on track to be able to have cards and virtual IBANs before the summer. It does depend a lot on the third parties.
Weren’t you supposed to have a meeting with the SEC this month about a possible sandbox in the US?
Yep! But there aren’t going to be any flights for any personal meeting for a few months, most likely. We are trying to set up conference calls, but everybody is setting up conference calls, so it’s not that easy to get in touch right now. Will most likely not happen in March.
Any feedback regarding the Hawaii sandbox mentioned last week?
They came back and said that they are interested to hear a bit more. Kevin will probably send them an email over the weekend, with more information about what CoinMetro and Ignium will do inside that sandbox.
Their sandbox was created essentially for exchanges, doing fiat-to-crypto with Bitcoin. Kevin is trying to show them that we could potentially do something much more interesting in that sandbox.
Any new VCs or angel investors willing to invest in CoinMetro?
We have to revamp pitch pecks and do a few other things before starting that process again. Probably will probably begin by the end of April.
In terms of CoinMetro, VC money is going to be tough in this climate. Angel investors won’t be as tough, possibly easier if they are out there really hunting for alternatives, angel investors that were invested in other industries and realise that Fintech is one of those industries that don’t see so much damage during crises.
Personal question, but where do you hold most of your wealth?
A very diverse portfolio. A good portion in cash — US Dollars, Euro, Mexican pesos — because Kevin owns businesses in these countries, and the money sits in cash accounts of those businesses. Almost no direct exposure to equities. Some crypto. Some real estate, for own use, not in the rental or flipping market. No equities and bonds at this time, started scaling back in 2015.
Most of Kevin’s investments at this time are in businesses which he has exposure to.
Diversification is key. Just holding and you will miss out. There will be a myriad of opportunities for investing in companies that have just crashed, which you can get in and see really good returns until the next crisis. Generally, all crises create mega-mega opportunities. You just need to be quick to act, and know how to take on risk.
If I have learned anything about my way of learning and improving is that I do best with hands on and visual aids that track my progress. Will you be adding more info graphs into the dashboard for better tracking of our accounts performance? Also add profit to loss (week, month year), trades long, trades short (p/l, %), and end of year reports that can help use file taxes? I would like CoinMetro to really stand out as a better overall exchange to offer more unique functionality as possible. Really stand out! Thank you
Kevin has the same goal. At some point, you need to balance a goal of being “the platform for newbies”, and creating a Dashboard that provides them with so much data that they are overwhelmed.
That type of data is great for traders, but not for laymans. It just may not be great for them initially as it is “information overload”. Overtime, our Dashboard will grow and expand to become something that will allow this type of information to be visible when one wants to see it.
The new Dashboard will have much more data at your fingertips, than you currently have. That’s for sure.
Curious to see mockups of the new Dashboard? Check it out in CoinMetro’s Feedback channel on Telegram! Community feedback is greatly appreciated. You are also welcome to join CoinMetro’s Main channel!
“Kevin Explains Crypto” Term: Merkle Tree
The most widely used blockchains today use Merkle trees as part of their cryptographic toolset.
It’s called a tree because of its composition. You have a starting hash, and you build a tree out of that root hash. No actual information is stored, but rather linking to information. So let’s say a document is sitting outside the tree. A hash is created based on that document, and that hash is being stored in a branch of the tree. Anything that has to do with that hash over time, creates more leaves on that branch. Every new piece of information stored on the tree, has its own branch on the tree.
Interested in learning more? Have a look at the video where Kevin explains “Merkle Tree”:
Listen to Last Week’s TWiC on the Go
Get the complete scoop by tuning in to our audio version of last week’s TWiC on SoundCloud. Happy listening!
That’s a wrap for this week’s AMA with CoinMetro Founder Kevin Murcko! Please join us next week on CoinMetro’s Facebook and YouTube Channel at 1 PM (UTC) for another round and make sure you submit your questions to the CoinMetro subReddit!
As always, we’re available to answer any questions you may have on our Telegram Group 24/7.
You can also find CoinMetro on other channels: Twitter, Facebook, Instagram, Medium, Reddit, LinkedIn, and YouTube.