The week’s developments in the crypto currencies world including CoinShares to lobby against UK ban on crypto exchange-traded notes

CoinShares to lobby against UK ban on crypto exchange-traded notes

Investment platform CoinShares is urging customers to lobby the FCA over impending regulations it fears will be too restrictive to crypto asset products. In a letter to investors sent Monday, CoinShares has asked its customers to write emails and text messages to the UK regulator in support of one of its premiere products, exchange-traded notes (ETNs), which would be banned under the proposed regulation for retail investors.

In the letter to investors, CoinShares stated, “We believe that the FCA has not provided sufficient evidence to justify the proposed ban. Through its consultation, the regulator makes little attempt to genuinely evidence its claims and instead ‘cherry picks’ data sets in order to illustrate its perception of crypto assets, ETNs and the perceived harm the FCA believes these products cause.” CoinShares is asking customers and proponents of cryptoassets to write to the FCA over the proposed ban before the Oct. 3 comment deadline.

Source: “CoinShares enlists customers to lobby against UK ban of crypto ETN”, available at https://www.coindesk.com/coinshares-enlists-customers-to-lobby-against-uk-ban-of-crypto-etn

Deutsche Bank joins JPMorgan’s blockchain-based Interbank Information Network

Deutsche Bank has joined banking rival JPMorgan’s Interbank Information Network, a blockchain-based network comprised of over 60 banks, according to a Financial Times report. The IIN allows member banks to exchange information related to international payments on a blockchain. Up until this point, most of the members of the network have been smaller banks and clients of JPMorgan.

“Having Deutsche join — and hopefully Deutsche will be the first of several other large banks — is going to help us drive towards ubiquity and ubiquity is a prerequisite for the success of the network,” said JPMorgan head of payments Takis Georgakopoulos. Joining the INN could prove to be a buoy for Deutsche Bank, which laid off thousands of employees earlier this year to address financial headwinds. As per the FT, it could allow Deutsche Bank to “offer better services to their clients, and would lower the cost of processing difficult payments.” As for what’s to come next, Georgakopoulos said the firm was on target to sign up 400 banks by the end of the year, which he expects to include other “large banks,” according to the FT.

Source: “Deutsche Bank joins JPMorgan’s blockchain-based Interbank Information Network”, available at https://www.theblockcrypto.com/linked/39693/deutsche-bank-joins-jpmorgans-blockchain-based-interbank-information-network

UK fund that aims to capitalize on crypto volatility raises $50 million

U.K.-licensed Nickel Asset Management says it has raised $50 million for a fund aimed to make profits off the volatility of cryptocurrencies. The firm said Monday it has now “soft closed” its Nickel Arbitrage Fund to new investors, two months after launch. The raise was joined by funds of funds and family offices in the U.K., Europe, North America and Singapore. Regulated by the FCA, the firm says the arbitrage fund strategy “harnesses the extreme swings in crypto markets to deliver low-volatility, consistent performance.”

Nickel has built its own automated trading systems. By investing in only those digital assets that have active futures and swap markets, it maintains “an overall market-neutral exposure to volatile crypto-assets,” according to a press release. Anatoly Crachilov, Nickel Asset Management CEO, said, “Our vision is that it’s simply a matter of time until digital assets become part of institutional portfolio allocation for forward-looking investors around the world, and we aim to build an institutional-quality gateway to this high-octane world of digital assets.” Nickel said the fund may reopen to investors for a limited period later this year as its service reaches full capacity.

Source: “UK fund that aims to capitalize on crypto volatility raises $50 million”, available at https://www.coindesk.com/uk-fund-that-aims-to-capitalize-on-crypto-volatity-raises-50-million

Tencent, Fidelity back $20 million round for blockchain firm Everledger

Blockchain provenance startup Everledger has raised $20 million in a Series A round led by internet giant Tencent. Everledger said Tencent has now joined its board as part of the investment deal. Bloomberg Beta, Rakuten, Fidelity, Graphene Ventures and Vickers Venture Partners also took part in the round. The U.K.-based startup set out as a platform using blockchain to verify the authenticity of diamonds, and his since expanded to other areas where provenance and transparency are of key importance such as minerals, luxury goods wine and art. Discussing the reasons for backing the blockchain firm, Tencent chief strategy officer James Mitchell said, “Everledger’s application of blockchain technology enhances value to consumers and reduces risks for businesses across the industry.”

Source: “Tencent, Fidelity back $20 million round for blockchain firm Everledger”, available at https://www.coindesk.com/tencent-fidelity-back-20-million-round-for-blockchain-firm-everledger

Fidelity-backed crypto custody provider KNØX launches today, claiming to provide up to 100% insurance via Marsh

A new Canada-based cryptocurrency custody provider has entered the marketplace today, claiming to provide up to 100% insurance coverage for clients’ assets. KNØX, which is backed by Fidelity Investments Canada, has officially launched, according to an announcement Tuesday. The startup said it recently raised $6.2 million in funding led by Initialized Capital and iNovia, with participation from Fidelity Investments Canada, FJ Labs, and Ferst Capital.

KNØX said it provides up to 100% insurance coverage via its partner and insurance giant Marsh and its custodial service is capable of insuring the full value of a customer’s assets. KNØX is currently offering an insured cold storage custody service, and charges customers a fee based on their assets held under custody and based on the insurance allocation they select, which can be as high as 100% of the value of their holdings.

Source: “Fidelity-backed crypto custody provider KNØX launches today, claiming to provide up to 100% insurance via Marsh”, available at https://www.theblockcrypto.com/post/40851/fidelity-backed-crypto-custody-provider-knox-launches-today-claiming-to-provide-up-to-100-insurance-via-marsh

Claire Cummings

Claire practises financial services law with a focus on regulatory issues, cryptocurrencies and tokens, trading and brokerage documentation and advising both existing and start-up funds and fund managers.

If you would like to discuss any of the points we raise, please contact me or one of our other lawyers.

Phone: 0207 585 1406
Email: claire.cummings@cummingsfisher.com

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