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Stablecoins – Are they Gimmicky or Trendy?

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Stablecoins - Are they Gimmicky or Trendy?

Stablecoins

These blockchain based assets known as stablecoins, are digital tokens which are pegged to another asset. This pegging usually links the digital assets to FIAT currencies on a 1:1 basis, attempting to mimic their stability.

The entire purpose of these assets is to provide investors with a blockchain based form of payment, while experiencing a reprieve from the volatility often associated with cryptocurrencies.

These qualities have made stablecoins perfect for use in STOs/DSOs, which have been seen various times, to date.

Gimmicky?

While most stablecoins to have hit the market are pegged to FIAT currencies, there are various options that have attempted to capitalize on the stability of non-conventional markets. Unfortunately, for those going down this road, most have been viewed as gimmicks, or outright scams. The following are two examples of stablecoins based on non-conventional reserves. One with potential, the other a scam – be diligent when utilizing such assets.

Cannabis

Outside of Crypto, one of the hottest industries is the Cannabis market. With legalization taking place throughout the nation of Canada, as well as various states, acceptance of the industry has never been higher. Strengthening the case for Cannabis is its ability to affect change in, both, recreational and medicinal capacities.

Recognizing this, billionaire Alkiviades David has recently announced a stablecoin to be backed by hemp flower. This stablecoin is a BTC based token which is known as SWX Coin. Strengthening the case for its adoption is the intent of the Swissx Global Hemp Exhange to create secondary markets for the trading of this coin.

Shipwrecked Gold

This particular offering took place as an ICO in 2018, and was widely viewed as an outright fraud. Korean firm, ‘Shinil Group’, sold tokens to investors which were to function as a stablecoin, backed by gold found in a shipwreck.

Operations were eventually raided by local authorities, and it came to light that the Shinil Group had no idea if these gold reserves even existed.

ICO Founded on Gold Suspected of Fraud

Trendy?

A growing trend seen in 2019 is the advent of crypto-based savings accounts. Leading the pack, among the various offerings on the market, is BlockFi. Facilitating services offered by BlockFi is, none other than, Gemini. The Winklevoss run outfit provides custodial services for assets invested through BlockFi – bringing clout and reputability through the affiliation with a licenced and respected third party.

Recognizing the importance of stablecoins alongside assets such as Bitcoin, Ethereum, and others, BlockFi naturally supports the Gemini stablecoin, GUSD.

In a recent update to their service terms, BlockFi announced that investors trusting them with their GUSD will receive 8.25% returns on a monthly basis. This outpaces many well managed mutual funds, making this option a very attractive options for investors.

Offerings like this show a real world benefit to investors, that has actually been realized.  BlockFi in particular has paid out tens of million in interest over the past few months, moving them beyond the promise phase, and on trend.

Market Dominance

Despite the woes, which have plagued Tether over the previous year, the stablecoin market is still dominated by the controversial offering.

While current market dominance by Tether is still strong, alternatives have clearly taken a chunk out of their business. Within the last year, we have seen Tether’s share of the stablecoin market drop from >95% to roughly <75% – a significant drop, showing demand for alternatives.

Tether vs The Pack

We recently took a deeper look at the perception and operational issues being experienced by Tether, and the various options on the market for replacing it. Make sure to check out the following article to learn more about these alternatives, and how they vary from industry-leading Tether.

Stablecoins within Digital Securities

While one of the stablecoins discussed in the aforementioned article may one day prove to win out as the industry darling, the reality is that the yet-to-be released Facebook tokens, Libra, have the best opportunity to do so. This is due to the sheer exposure and influence that Facebook holds over various markets.

The average person prizes convenience over all else. While there are many that are voicing their displeasure and apprehension towards the Facebook product, to date, when the tokens are eventually released, there will be a pre-existing pool of clients gaining access that simply don’t care about past privacy and security lapses.

Regardless of which stablecoin eventually wins out, there are various viable options out there from reputable companies. Right now, industry participants are spoiled with the amount of competitors, as many attempt to carve out their place within crypto – some gimmicky, some on trend.

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Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Security Token News

CoinList Founder Andy Bromberg Discusses Security Token Trends

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CoinList Founder Andy Bromberg Discusses Security Token Trends

The security token sector continues to be a hot button issue amongst the crypto community. This month, CoinList founder Andy Bromberg took some time to discuss the importance of these tokens, and how the coming months might play out. Unexpectedly, Bromberg had mixed feelings on the market’s trajectory.

In a recent interview, Bromberg pointed out some of the major issues facing the security token sector. He believes that the lack of clear regulations is the main factor deterring large scale adoption. Businesses are still unsure of what to think of this new crowdfunding strategy. The lack of transparency from regulators leaves many potential blockchain investors with unanswered questions.

Andy Bromberg via Twitter

Andy Bromberg via Twitter

More Guidance

Recognizing the need for more clarity in the space, the SEC issued multiple statements this year. These posts are an attempt by the SEC to help business owners understand the classifications of each type of token, and what regulations it falls under. Most recently, the SEC released a full guidance that covers each token class in detail.

STO Regulations Evolve

When STOs first emerged, many businesses saw these tokens as a cheaper and quicker alternative to traditional securities. At that time, the market lacked any regulatory structure. Businesses were able to issue tokens at will.

Nowadays this is no longer the case. The SEC recently stepped into the space in a major way. As a result, numerous businesses faced backlash for issuing securities illegally. Consequently, the STO market slowed until recently.

It Takes Time

When asked about the markets adoption rate, Bromberg was quick to let people know there is still a lot of time before STOs make it to the mainstream. The savvy crypto advocate noted that it could be years still until STOs gain enough traction to become a major crowdfunding strategy.

CoinList

CoinList entered the market in 2017 with the goal of providing financial services to next-gen tech firms. The company has headquarters in New York and offices in San Francisco. Notably, the firm has fewer than 50 employees according to Crunchbase.

CoinList offers clients advisory services regarding blockchain-based investment strategies. As the President of CoinList, Bromberg is uniquely positioned to understand the sector’s demands. His company hears the concerns of both investors and service providers. Discussing the issues, Bromberg described how there is little incentive for companies to make the shift to the crypto ecosystem at this time.

Bromberg feels that in order for companies to have confidence in these new systems, there needs to be a clear legal framework that doesn’t detract from the advantages of blockchain technology. Basically, legislators need to fully understand the advantages of blockchain technology in order to structure regulations that enable the tech to function at peak performance levels.

CoinList STOs – A Bumpy Road Ahead

The overall tone of Bromberg is one of a man who fully understands the complicated scenarios that play out in the cryptospace. His ability to point out these shortcomings is sure to help CoinList remain a dominant player in the future.

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Security Token News

Polymath Partners with QRC Group- Eyes Asian Markets

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Polymath Partners with QRC Group- Eyes Asian Markets

Asian companies looking to host an STO in the future just got a powerful alley. The token issuance platform Polymath announced a strategic partnership with one of Asia’s most successful STO consulting firms – the QRC Group. The partnership strengthens Polymath’s presence in the region. Also, it provides future STOs with the added guidance needed to make their crowdfunding campaigns a success.

News of the strategic partnership first broke via a Polymath blog post. In the post, the firm discusses Polymath’s goal to make token issuance as easy as possible. Notably, providing companies access to valuable third-parties is an integral part of Polymath’s all-inclusive strategy.

QRC Group

The QRC Group has an excellent reputation as an established STO advisory in the Asian marketplace. This Hong Kong-based firm provides companies with a plethora of STO-related services such as turnkey issuance. Additionally, QRC provides end-to-end solutions for STOs, including access to regulated secondary market trading.

QRC Group via Homepage

QRC Group via Homepage

Speaking on the developments, the CEO of the QRC Group, Shoga Ishida described the partnership as an “important milestone” for his firm. Ishida pointed out Polymath’s ideal position in the market. He then explained how QRC plans to help businesses seeking more guidance. According to the post, QRC will offer consultation in:

  • Legal
  • Compliance
  • Token issuance
  • Technical infrastructure

Currently, QRC hosts a variety of blockchain-related programs. These run the full scope of the sector ranging from production and investment services, all the way to identity verification platforms. Additionally, the company has a native multi-currency STO wallet capable of storing over a thousand different tokens in the works.

International Standards

Notably, QRC continues to push for international STO standards for the Asian and Southeast Asian markets. Asia plays a huge role in the crypto market. QRC believes that standards are needed in order for the STO market to reach its full potential in the region. Importantly, businesses need this regulatory framework in place before considering STOs to be an attractive alternative to the status quo.

The QRC Group currently works with multiple universities including Taiwan Tech and the University of Malaya. These programs study the effects of blockchain technology, and how it relates to the digitization of the global markets.

Polymath on QRC Group Services

Polymath’s Head of Tokenization, Graeme Moore also took a moment to describe why the QRC Group was the perfect addition to the Polymath ecosystem. He explained why connecting high-quality service providers with valuable business resources, is critical for the developing STO space.

Polymath via LinkedIn

Polymath via LinkedIn

Partnerships

Polymath continues to expand its network. The firm made headlines numerous times this year including in June when it partnered with Ethereum co-founder, Charles Hoskinson on the Polymesh project. Polymesh is a separate blockchain designed specifically for compliant tokens.

Polymath – STO Pioneers

Polymath’s expanding network is just one example of how STO providers plan to bridge the knowledge gap between businesses interested in hosting STOs, and providers of these services. The addition of the QRC Group provides the network with a host of valuable resources. You can expect to see these services play a major role in Polymath’s future token issuances.

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BaFin Approves Germany based STO Platform by Black Manta Capital

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BaFin Approves Germany based STO Platform by Black Manta Capital

Licence Approval

In a process that took roughly 9 months, Luxembourg based, Black Manta Capital, was awarded licensure to operate an STO platform within Germany. This licensure was provided by regulatory body, BaFin.

This development moves the company one step toward their self-described mission of setting “a global standard for Security Token Offerings (STO).”

In their release, the company hinted towards a launch date, stating,

“The operative start of the investment platform with the first Token Offerings is planned for early Q4/2019.”

STO Platform

The approval received allows for Black Manta Capital to offer clients services surrounding security token offerings. Black Manta Capital has indicated that they intend for this platform to function as a comprehensive offering – meaning that they will provide clients all the necessary services from start to finish, through the tokenization process.

The act of tokenization involves selling, creating, and distributing digital securities which represent ownership of a variety of assets. These assets may range from cars, to art, to equity within a company, and anything in between. As these digital assets are securities, their creation and distribution is only possible when adhering to laws enforced by typical regulatory bodies, such as BaFin.

The Competition

The STO platform to be offered by Black Manta Capital is expected to face stiff competition, as Europe is quickly becoming a hot bed for companies with similar ambitions. The following are a few of those expected to fit this role.

Commentary

Upon making their announcement, Managing Partner of Black Manta Capital, Christian Platzer, took the time to comment. The following is what he had to say on the matter.

“Tokenization in the core financial field of securities will – for sure – bring paradigmatic change to the global financial markets.” – “While Black Manta Capital Partners want to be ‘boutique’ in its beginnings and run ‘handpicked’ STOs only, our strategy is global from day one: the first step is to link Europe and Asia on one blockchain-based investment platform. Therefore we look already today into Singapore.”

Black Manta Capital

Black Manta Capital is a young company which specializes in tokenization services. Operating out of Luxembourg since 2018, the company has plans for eventual expansion across various continents.

Managing Partners, Christian Platzer and Alexander Rapatz, currently oversee company operations.

BaFin

BaFin is a leading financial supervising authority across Europe. With over 2,600 employees, this regulatory body oversees a variety of industries ranging from finance, to banking, insurance, and more.

The organization has been operational since being founded in 2002.

In Other News

Today’s announcement is not the first time that BaFin has provided licencing to outfits partaking in the digital securities sector. The following articles demonstrate a pair of other companies that have also been successful in this respect.

BitBond Gains Approval of BaFin to Host Security Token Offering

Fundament Group to Issue €250 Million in Security Tokens backed by German Real Estate

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