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What is an Equity Token Offering (ETO)?

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An Equity Token Offering is a capital generation event which specifically deals with the sale of equity within a company.  Equity sold through and ETO is represented through the creation of digital securities doled out to investors.

Antoine Tardif is the founding partner of Securities.io, the CEO of BlockVentures.com, and has invested in over 50 blockchain & AI projects. He is also the founder of Unite.AI a news website for AI and Robotics, as well as Bitcoinlightning.com a news website focusing on the lightning network.

Cryptocurrency

Big Money Finds Bitcoin in 2020 – Hedge Funds, Service Providers, Intelligence Firms, and High Profile Investors

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Since cryptocurrency markets began seeing a resurgence, months ago, there have been various instances of ‘big money’ getting in on the action.  Examples of this can be seen on various levels, including high profile investors, intelligence firms, hedge funds, and service providers.  Today we’ll take a look at each, and why an entrance is being made now.

MicroStrategy

Our first example is also the most recent occurrence.  Only days ago, software giant and intelligence firm, MicroStrategy, announced to the world that they purchased a significant sum of Bitcoin.  More specifically, MicroStrategy purchased 21,454 BTC, which equates to roughly $250M USD.

Why now?

Michael Saylor, CEO at MicroStrategy, states,

“Our investment in Bitcoin is part of our new capital allocation strategy, which seeks to maximize long-term value for our shareholders…This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash. Since its inception over a decade ago, Bitcoin has emerged as a significant addition to the global financial system, with characteristics that are useful to both individuals and institutions. MicroStrategy has recognized Bitcoin as a legitimate investment asset that can be superior to cash and accordingly has made Bitcoin the principal holding in its treasury reserve strategy.”

To reiterate, the world’s largest intelligence firm notes that Bitcoin…

  • is a dependable store of value
  • has long-term appreciation potential
  • appeals to, both, individuals and institutions
  • is a legitimate asset
  • can be superior to cash

As the aforementioned figures would indicate, MicroStrategy fully believes this, as it has put its money where its mouth is – to the tune of $250 million

Interestingly, Twitter sleuths have managed to find past commentary by Michael Saylor on his expectation for Bitcoin, back in 2013.

Michael Saylor cannot be faulted for this past tweet, though.  At the time, the cards were stacked against Bitcoin and other cryptocurrencies.  Adoption was woefully small, the technology wasn’t as developed, and it was traded on pure speculation.  In the time since, however, Bitcoin has made believers out of many through addressing/conquering each of these issues.  Never say never.

Paul Tudor Jones

When a hedge fund manager, worth nearly $6 billion USD, makes a move, people notice.  So when Paul Tudor Jones announced, in May, that he would be allocating ‘low single-digits’ percentage of the Tudor BVI fund into Bitcoin, crypto enthusiasts understandably got excited.  While ‘low single-digits’ may not sound like much, only a few percentage points allocated from a $5 billion fund represents a hearty sum.

“The best profit-maximizing strategy is to own the fastest horse…If I am forced to forecast, my bet is it will be Bitcoin.” – Paul Tudor Jones, CEO of Tudor Investment Corp.

Why now?

Inflation.  With the seemingly never ending printing of FIAT, many are looking towards safe-haven assets, as a hedge against expected inflation.  Bitcoin is not the only asset to benefit from this sentiment – gold and other precious metals are also booming as well.

Dave Portnoy

More than just a popular online-personality, Dave Portnoy is the founder and president of Barstool Sports.  In recent months, Portnoy has captivated the attention of many, as he livestreams his day-trading activity.  As a successful entrepreneur, worth roughly $100 million, with a strong online presence, his pending entrance into Bitcoin has excited many.

Portnoy most recently caught the attention of many with a public invitation to the Winklevoss twins.  This invitation surrounded a desired introduction to Bitcoin, and how he can partake.  This did not go unnoticed, as the Winklevoss twins saw this invitation, and accepted.

Why now?

With over 1.3M followers, Portnoy indicates in past videos that he was feeling the pressure to re-evaluate Bitcoin, and the potential behind it.  Although the Bitcoin community can at time be overzealous in its preaching, this trait appears to have done the trick in this particular instance.  This pressure from his followers simply underscores the current appetites of many investors, as they look for high potential assets to mitigate risks of inflation.

PayPal

While PayPal has yet to release official statements surrounding its intentions, it has become increasingly clear that the company is gearing up to launch cryptocurrency services in the near future.  Speculation of this first came when the company began hiring cryptocurrency specialists for product development.

In addition to herding talent, multiple sources have shared information with news outlets, indicating an established partnership between Paxos Crypto Brokerage and PayPal – not unlike the recently announced partnership between Paxos Crypto Brokerage and Revolut US.  Each of these partnerships would allow for the seamless integration of an API-based service, which allows for the buying and selling of a plethora of cryptocurrencies.

Why now?

In its early days, Bitcoin straddled the line between fizzling out and becoming a respected asset.  Fast forward to 2020 and if Bitcoin has made one thing clear, it is that it has staying power.  We have reached a point in time where there has been enough development and adoption surrounding the sector, that the chances of Bitcoin fizzling out are all but nil.

With this being the case, who better to capitalize on Bitcoin, than an established FinTech service provider?  Revolut has adopted it.  Square has adopted it.  WealthSimple has adopted it.  RobinHood has adopted it.  If anything, PayPal might be a little late to the party.

An Increasing Pace

Each of these instances on their own may not upend markets.  Cumulatively however, they point to a positive shift in sentiment towards cryptocurrencies.  While the ‘why now’ may vary between each new entrant, Bitcoin markets are no longer populated solely by speculative retail traders, but home to participants from a variety of sectors.  It is viewed as a legitimate asset, and whether looking at service providers, hedge funds, intelligence firms, etc. – adoption is occurring at an increasing pace.

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Digital Securities

FinTech ‘Unicorn’ Revolut Shows Positive Growth in 2019 Annual Fiscal Report

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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.

Service Expansion

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

Looking Forward

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

Canadian Expansion

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.

Revolut

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.

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Forex

Dollar Weakness Continues in Forex Market Despite Positives

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Dollar Weakness Continues in Forex Market Despite Positives
  • GBP Gains on USD Despite Huge Employment Drop
  • Hopes Build For Airline Bailout as Stocks Surge
  • Putin Claims Russian Victory in Vaccine Race

Even after revealing the largest quarterly employment drop in more than a decade, the GBP forex market managed to continue gaining ground on a US Dollar displaying weakness. More than 94,000 new unemployment claims were lodged in the UK for July alongside the employment drop. The currency weakness though has not negatively impacted Wall Street as stocks push for an eighth consecutive day of gains. It has also been widely reported that Russian leader Vladimir Putin has claimed his country to have developed the first coronavirus vaccine, with his daughter being among the initial recipients.

10-Year Record Employment Drop in UK

Employment numbers in the UK have seen their largest quarterly drop since 2009. This comes as the figures show there are 220,000 less people in employment than the previous quarter. The number of people in receipt of unemployment benefit has also seen a sharp rise of more than 100% over the same period, standing at 2.7 million people. The overall unemployment rate stands at 3.9% though this is not reflective of the situation on the ground where millions remain backed by government fiscal measures.

Still these dire numbers have not taken a toll on the Pound to date. This is due to an ongoing combination of US Dollar weakness combined with a prevailing optimism from the Bank of England that they will continue to support the economy if is encounters another stumbling block. Those forex trading the may also be buoyed by a renewed positive push on Wall Street which has pushed many away from the safety of the US Dollar.

Possible Bailout Helps Airline Stocks to Soar

Despite still being down record numbers, the fact that the TSA has clocked air travel at its highest rate since March was good enough for airline stocks to rise strongly in trading on Monday. This is a positive sign of a return to some degree of normality for a sector which has been hugely hampered by COVID-19.

Forex brokers were not the only ones to note strong activity in certain markets. Stock traders continued to push flagging airline stocks back up yesterday as support continued to grow for a new stimulus package to help the industry in the amount of $25 billion in federal payroll backing for airlines.

Russia Declares Successful Virus Vaccine Development

Despite some skepticism, Russian President Vladimir Putin has announced that the country has successfully developed the world’s first coronavirus vaccine. With many countries racing through trials to develop a vaccine, this would be a landmark achievement for Moscow.

He has also reported that one of his daughters has successfully received the vaccine. There are plans for mass vaccination to begin early next year. There are still widespread concerns that the virus may not have been fully tested, but the news is sure to stir a global reaction as markets on Wall Street open in search of another success day with futures trading positively.

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