This month, the Gemini exchange applied for a broker-dealer license from the Financial Industry Regulatory Authority (FINRA). The popular trading platform seeks to gain approval from FINRA as an Alternative Trading System (ATS). If successful, the Gemini exchange would be amongst an exclusive class of FINRA approved crypto organizations.
Gemini’s approach to the market has been to include regulators throughout every step of the platform’s development. In 2015, Gemini first received approval from the New York Department of Financial Services (NYDFS) to custody digital assets. The exchange was among the first to receive this licensing. Consequently, the exchange has held a strong position in the market.
Since that time, Gemini has sought approval on a number of occasions including when adding new tokens. For example, the exchange decided to seek NYDFS approval to add Bitcoin Cash (BCH) to the platform in December 2018. Now, the company wants to extend its approval to the national stage.
While Gemini continues to push for national approval, FINRA continues to drag their feet. Currently, there are 40+ applicants awaiting FINRA approval for blockchain-related projects. Unfortunately, the organization appears to be hesitant about supporting these firms at this point. Importantly, FINRA issued a statement this week discussing the approval process and the delays.
Gemini employed some unique strategies to date in order to service the growing demand for regulated security tokens. Previously, the platform partnered with Harbor to allow investors to purchase digital securities. For its part, Harbor provided users access to the platform’s stable coin – GUSD. Investors would make purchases and receive dividends using this stable coin.
In a recent interview, Harbor’s CEO, Joshua Stein took a moment to discuss the growing demand for security tokens by traditional investment firms, and why Gemini’s strategy is more efficient. He praised the firm’s pro-regulatory approach before describing how the new regulations altered the market since 2017.
An Inclusive Strategy
While many of the details of the company’s plans remain private, there are reports that indicate the platform will allow third-party securities to trade. If this is the case, you can expect to see Harbor as one of the main companies to take part in the exchange’s expansion.
The Gemini exchange is owned by the famed Winklevoss twins. These Harvard school graduates have long been pioneers in the crypto-space. Notably, in Dec 2017, the twins became one of the first official Bitcoin billionaires. Since that time, the Cameron and Tyler Winklevoss continued their crypto aspirations, which led to the founding of the Gemini exchange.
Gemini Aims High
The Gemini exchange seeks to be the dominant exchange in the crypto-sphere. If the firm is able to leverage its vast experience and network, it’s possible that FINRA may approve the company’s strategy moving forward. Regardless of the outcome, you can expect to hear more from this innovative platform in the coming weeks, as the security token sector continues to heat up.
FinTech ‘Unicorn’ Revolut Shows Positive Growth in 2019 Annual Fiscal Report
Revolut, a tech ‘unicorn,’ and one of the more promising FinTech platforms on the market today, has recently released its annual fiscal report. The annual fiscal report touches on the various accomplishments, setbacks, and financial markers surrounding the company’s operations throughout the 2019 fiscal year.
By the Numbers
Revolut has various developments to share, and the numbers seem to be trending in a positive direction.
The following is one key metric provided, which demonstrates the direction that its decisions have resulted in – active users.
- 2018 : 3.5M
- 2019 : 10M
- 2020 : 13.5M and counting
As its user base increases, so do its cash holdings on the users’ behalf, with this total jumping from £903M in 2018 to roughly £2,281M in 2019.
Furthermore, Revolut notes a substantial increase in 2019 revenue vs. 2018 (£162.7M vs £58.2). Of course, larger operations also result in great operational costs. Revolut witnessed a substantial jump in revenue as well as a tripling of operational costs over the same time frame, jumping to £107.4M in 2019 from £34.01M in 2018.
While expansion into new markets may be fuelling this jump in revenue, expansion has been made possible in the first place by a series of successful capital raises. Revolut successfully raised £580M in investments in the first half of 2020 alone, and we expect to see additional funds raised.
Undoubtedly, various platform features implemented over the course of 2019 are also responsible for a portion of Revolut’s growth. A few examples of these include:
- Support for Apple Pay
- Commission free trading of U.S. listed stocks
- Expansion to Singapore, Australia*, United States*, Japan*
*launched in beta
Despite not turning a profit, 2019 was an overall positive year for Revolut, considering its ongoing desire for global growth. Looking forward, the company has already established a game plan to ensure profits are one day realized. The following is an excerpt from the fiscal report, touching on what these plans entail.
- Future investment in the technology infrastructure and development of the core product offering to Revolut customers,
- Continue to operationalize Revolut Bank UAB and the roll-out across other European markets,
- Obtain further regulatory authorizations required to expand our product offering across jurisdictions,
- Develop existing operations in international jurisdictions including North America and Asia Pacific whilst continuing to expand our operations across the UK and EEA,
- Further investment in the customer support, risk and compliance infrastructure
Whether looking at the revenue or losses sustained in 2019, each can be largely attributed to a desire for global expansion. Revolut has established a strong foothold in both the United Kingdom and Europe and has plans for expansion.
One example is the company’s anticipated entrance into Canada. Although Revolut has not provided an anticipated launch date for Canadian services, interested users can currently join a waitlist for early access.
When this entrance inevitably occurs, Revolut can expect strong competition from various other FinTech outfits establishing themselves in Canada. We recently touched on an example of this, as Canadian based, WealthSimple, launched a new crypto trading service.
As each of these companies develop and launch new services, the companies simultaneously become more comprehensive, and closely linked as competitors. Whether looking for investment capabilities, savings accounts, crypto trading, pre-paid debit cards, etc. – Revolut and its competitors have you covered.
Looking beyond these two, and the increasing list of FinTech companies following suit, it would not be surprising to find truth in rumours that PayPal will soon join the fray.
Founded in 2015, Revolut is a FinTech company, with operations based out of London, England. In the time since launch, Revolut has developed a suite of services surrounding digital banking. Adoption of these services has allowed the Revolut team to expand, totaling over 2000 employees, to date.
CEO, Nikolay Storonsky, currently oversees company operations.
Traditional Banks Ramp Up Custodial Services for Digital Assets
In recent weeks, we have seen an increase in the adoption of blockchain services, among traditional banks. First, U.S. based banks were given the green light to custody cryptocurrencies by the Office of the Comptroller of the Currency (OCC). Now, we learn that one of the largest banks in South Korea, KB Kookmin Bank, is already working to develop similar services.
With regard to South Korea, the plan is for KB Kookmin Bank to begin offering custodial services for digital assets. This is a group effort involving the following companies,
This collaboration is particularly noteworthy, as KB Kookmin Bank is not just any old bank. They are currently the largest bank in South Korea. Moves made by a bank of this stature are followed closely by many. Although KB Kookmin Bank and its partners may be first to the table, expect to see others take a seat in the near future.
Future Asset Expansion
While initial services will centre on the custody of cryptocurrencies, it is believed that this support will eventually grow, encompassing various types of digital assets. More specifically, it is expected that in time, these custodial services will support digital securities.
In commentary released by Hashed, this expansion of supported assets was touched upon. Hashed states that through this collaboration, participants anticipate, “…that the digital asset industry will not only involve cryptocurrencies, but also other traditional assets such as real estate, artwork, and other reified rights that will be issued and traded on blockchain platforms.”
Although cryptocurrencies stand to benefit first, the development of such custodial services has the potential to transform and usher forth new growth among the digital securities sector.
Office of the Comptroller of the Currency
In the weeks preceding the news surrounding KB Kookmin Bank and its forthcoming custodial service, we saw the OCC release of an interpretive letter on the subject.
In this letter, the OCC breaks down, not only what digital assets are, but how banks can support the growing use. The OCC summarized its stance, stating,
“The OCC recognizes that, as the financial markets become increasingly technological, there will likely be increasing need for banks and other service providers to leverage new technology and innovative ways to provide traditional services on behalf of customers. By providing such services, banks can continue to fulfill the financial intermediation function they have historically played in providing payment, loan and deposit services.”
“…we conclude a national bank may provide these cryptocurrency custody services on behalf of customers, including by holding the unique cryptographic keys associated with cryptocurrency. This letter also reaffirms the OCC’s position that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.”
Which came first, the chicken? Or the egg? This old saying could easily be applied to the current world of blockchain. Are these traditional banks jumping on board the train due to the recent resurgence being seen in the sector? Or is the sector surging due to banks jumping on board. Regardless of the answer, signs of blockchain adoption within traditional industries is a definite positive.
Hopefully, this swing in sentiment among banks continues to gain momentum, as banks have not always viewed digital assets in a positive light. Only months ago, we were reporting on difficulties being faced by German companies, as they were refused services by traditional banks.
KB Kookmin Bank
Founded in 2000, KB Kookmin Bank maintains operations in Seoul, South Korea. Since launch, KB Kookmin Bank has grown to employ over 25,000, while providing customers on a global scale with access to commercial banking services.
CEO, Hur Yin, currently oversees company operations.
Office of the Comptroller of the Currency (OCC)
The OCC is a U.S. based regulatory body, tasked with supervising national banks. This supervision is undertaken with the goal of ensuring fair and transparent financial services to all customers.
Acting Comptroller, Brian P. Brooks, currently oversees operations at the OCC.
META 1 Coin Threatens Securities.io with Litigation for Reporting on ICO Fraud
On August 4th, 2020 Securities.io was threatened with legal action by Robert Paul Dunlap, the legal advocate for META 1 Coin, the creator, owner, controller, and also one of the defendants in the Complaint filed by the SEC. The threat followed the publication of an article titled “SEC Files Charges Against ex-Senator David Schmidt” which was published on March 25, 2020.
Who is META 1 Coin?
META 1 Coin raised funds in April 2018 by performing an Initial Coin Offering (ICO). As described by an SEC filing META 1 COIN raised at least 4.48 million from over 150 investors in the United States and internationally.
In order to raise funds misleading claims were made. These were some of the claims:
- They owned $1 billion in art insured against loss by a surety bond, and later, that META 1 owned $2 billion in gold assets;
- KPMG, one of the largest independent financial audit firms in the world, was auditing Meta1’s gold assets;
- Meta1 formed its own investment bank and developed its own digital currency exchange;
- the Coin is safe and risk-free and will never lose value;
- Each Coin, sold for either $22.22 or $44.44 would in two years be worth $50,000—up to a 224,923% return—as a “very conservative value.”
Unfortunately many investors did not perform adequate due diligence as the SEC claims the tokens were backed by nothing.
The letter received by META 1 accused the SEC and Securities.io of being fraudulent, below are some of the accusations/threats and our responses.
If SECURITIES.io was to do any due diligence at all you would know it was a fictitious story fabricated by the SEC in order to make all digital assets look fraudulent.
Our response: Securities.io has the responsibility of reporting on both legitimate projects, and fraudulent projects. Every time an investor is taken advantage with false claims whether it is the form of an ICO, or other fraudulent behavior, it destroys the credibility of the industry. We also believe in the credibility and the mission of the SEC which is stated as “The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”.
So time will tell if SECURITIES.io is really about digital assets or just another STATE run publisher of malicious defamation.
Our response: Perhaps this is pushing a conspiracy theory or an agenda of being owned and controlled by a deep state. Either way, Securities.io is NOT owned in part or in whole by any government entity in any jurisdiction.
Today is August 4th 3:25 EST 2020 and a claim will be made in 24 hours and It will decimate SECURITIES.io if the named article is not immediately removed.
Our Response: This has been noted. We have fact checked the original article and it remains accurate.
Additionally, I am ordering a follow-up update of the facts regarding the validity or META 1 Coin
Our Response: We have updated the article to reflect new information regarding the fraud behind the initial ICO raise. We were unaware that information was missing, thank you for notifying us of this. Whenever we are notified of errors in reporting we take corrective action.
Unfortunately, the digital assets industry continues to result in many operators that are taking advantage of the naivety of investors. It is our responsibility to report on this unethical behavior and to report on any actions taken against these rogue operators by the SEC or other government entities. We will continue with our mission.
- Big Money Finds Bitcoin in 2020 – Hedge Funds, Service Providers, Intelligence Firms, and High Profile Investors
- FinTech ‘Unicorn’ Revolut Shows Positive Growth in 2019 Annual Fiscal Report
- Dollar Weakness Continues in Forex Market Despite Positives
- Traditional Banks Ramp Up Custodial Services for Digital Assets
- Commissioner Hester Peirce Awarded 2nd Term at SEC