White Star Capital Digital Asset Fund - newsletter #34
Unpacking the Coinbase direct listing while institutional, government, and investor activity in digital assets reaches all-time highs!
Unpacking Coinbase’s public debut… which is only the beginning!
In the minds of many, crypto has now gone mainstream with the Coinbase direct listing debut on April 14th, where Coinbase's first day on Nasdaq ended with an $85.7bn valuation. On opening day, the price of $COIN swiftly rose above the $400 level, hitting a session high of $429.54 after opening at $381 - significantly above the $250 initial reference price initially announced. Coinbase hit a low of $310 during the final hour of trading on its first day, before reaching $328.28 at the close. This impressive debut makes it the largest direct listing ever, eclipsing the performance of Palantir, Spotify, and Roblox!
In the midst of the excitement of crypto’s first large-scale public market debut, it’s nevertheless key to remember that we are still early in the major paradigm shift that this technology represents. Fred Ersham, Coinbase co-founder who since left the firm to launch leading crypto venture fund Paradigm said it best in a concise tweet on listing day:
The essence of this message was not lost upon the crypto community, both crypto native and newcomers to the space across enterprises, institutions, and regulators, with two jam-packed weeks in terms of positive momentum.
🔦 Portfolio Spotlight
Paraswap integrates layer-2 solution Polygon and goes multi-chain
Paraswap is now multi-chain! The team has integrated leading layer-2 ethereum solution Polygon, making them notably the fastest way to interact with leading DeFi protocol Aave, as exhibited in the second tweet below.
Rally social token gated rooms launch on Clubhouse
In one of the most exciting Rally API use cases to date, Gensight has launched Rally gated rooms on Clubhouse, allowing creators to enable access to rooms only to supporters holding their social tokens. We are all the more excited by this feature in that it has been built by the Rally community, rather than the core team itself!
dfuse’s StreamingFast saves the day after Binance Smart Chain leading DEX PancakeSwap experiences syncing issues
Leading Binance Smart Chain decentralized exchange PancakeSwap has been experiencing tech issues which led to their info site going down. As a result, the team put out a $150k bounty to the community, which dfuse and its StreamingFast product addressed and solved, with stellar results!
The news was applauded by the broader crypto community:
Our overall takeaway
The future is multi-chain and involves the lines between web2 and web3 blurring further. Excited to see our portfolio continuing to execute on this vision!
🏦 Enterprises & Institutions
VanEck launches new ETF on Nasdaq to invest in crypto companies
Asset manager VanEck has launched a new exchange-traded fund (ETF) on Nasdaq that aims to track companies working in the digital asset space or those that have exposure to the nascent asset class. The ETF, dubbed Digital Transformation ETF, would provide exposure to various companies in the digital assets space, including crypto exchanges, miners, payment gateways, hardware, and technology providers.
Goldman Sachs CEO talks bitcoin and crypto during the earnings call
Goldman Sachs CEO David Solomon touched on the importance of bitcoin and cryptocurrency during the bank's earnings call on April 14th, indicating how central the market has become for Wall Street's top banks.
US Bank to offer custody service for digital assets
US Bank, which is part of Bancorp, the 5th biggest bank in America with $500bn in assets, is set to move into digital assets by offering custody services. Further, the institution has invested in the asset tokenization firm Securrency and has been chosen to administer NYDIG’s bitcoin exchange-traded fund this year, pending regulatory approvals.
AXA Switzerland allows customers to pay in bitcoin
In order to “meet growing demand,” AXA Switzerland has enabled private customers to pay for all non-life products with bitcoin. Life insurance products do not carry this option for “regulatory reasons.” AXA confirmed, however, that it will not be holding any bitcoin on its balance sheet. Bitcoin paid goes to broker Bitcoin Suisse, which will convert them into Swiss francs.
Ark investment funds bought $246m worth of Coinbase shares on the first day of trading and double down on the second day, and beyond
Three funds belonging to Cathie Wood’s ARK Investment Management bought about $246m worth of $COIN on the day of the exchange’s Nasdaq debut. According to the firm's daily trade summary, Ark Innovation ETF, Ark Fintech Innovation ETF, and Ark Next Generation Internet ETF bought a combined 749,205 shares of the leading cryptocurrency exchange for around $246m. Ark boosted its Coinbase holdings the following day while cutting its stake in Square, purchasing an additional 341,186 shares, worth about $110m on the day. The firm further upped its holdings by 236,348 shares on April 20th, and 244,717 shares on April 21st.
Digital artist Pak sells NFT works for $17m at Sotheby’s
A series of digital artworks created by a popular crypto artist who goes by the pseudonym Pak sold for more than $17m during a three-day sale. The sale, capped by a marathon, three-way bidding war for one work that stretched over an hour, was conducted by the digital platform Nifty Gateway and auction house Sotheby’s—the house’s first foray into the booming market for nonfungible tokens, or NFTs, following Christie’s move with Beeple and Larva Labs / Cryptopunks.
Nasdaq-listed CleanSpark buys 22,680 bitcoin miners
CleanSpark has signed contracts to purchase 22,680 bitcoin (BTC, +0.4%) mining machines to meet “immediate needs” and increase production capacity. This is just the latest firm to ramp up its mining arsenal in recent weeks as the price of bitcoin flirts with all-time highs. Bitcoin mining is only one of CleanSpark’s energy offerings.
Edward Snowden auctions off non-fungible token to benefit the Freedom of the Press Foundation raises $5.4m
NSA whistleblower Edward Snowden auctioned off a non-fungible token (NFT).
The NFT, titled "Stay Free," went on sale on Thursday April 15th and sold for $5.4m. All proceeds of the sale will go to the Freedom of the Press Foundation, which is dedicated to funding and supporting speech and press freedoms. Snowden has been the president of the foundation's board of directors since 2016.
Time Magazine now accepts bitcoin and other cryptocurrencies for digital subscriptions
The 98-year old publication Time Magazine now accepts bitcoin and other cryptocurrencies for digital subscription payments in the US and Canada, through a partnership with crypto.com.
Ubisoft becomes a Tezos validator
Video game giant Ubisoft has officially become a validator on the Tezos blockchain, following EDF which also took on this role in October 2020.
Venmo now allows users to buy and sell crypto
Venmo has officially launched the service to let its users buy, hold and sell crypto assets within its mobile app. "Crypto on Venmo," has started to roll out on Tuesday, April 20th, and will be available to its 70m customers directly in the Venmo app within the next few weeks.
WeWork now accepts bitcoin for payments, will hold on the balance sheet
Commercial real estate company WeWork now accepts bitcoin and other cryptocurrencies for payments. WeWork has partnered with BitPay, and will also accept ether and stablecoins USDC and PAX for payments. Coinbase has become WeWork’s first client to pay in cryptocurrency.
IBM, patent marketplace IPwe plan to turn patents into NFTs
Tech giant IBM and global patent marketplace IPwe plan to turn patents into non-fungible tokens (NFTs). The two companies said NFTs would make patents more easily saleable, tradeable and monetizable, and bring liquidity to this asset class.
Robinhood names first Chief Operating Officer for crypto division
Robinhood Crypto has appointed its first chief operating officer (COO).
Christine Brown will oversee the trading app’s crypto operations and compliance, alongside her existing position as vice president of product operations.
Silvergate posts strong Q1 and says it’s looking to stablecoins as a growth avenue
Silvergate’s Q1 2021 earnings call showed the crypto-friendly bank is still growing with the help of its payments platform. The usage of SEN has continued to grow at a record pace. SEN volume reached $166bn in Q1, vs $59bn in Q4.
JPMorgan is preparing to offer an actively managed bitcoin fund
JPMorgan, the largest bank in the US, is reportedly preparing to offer its own actively managed bitcoin fund to private wealth management clients. The JPMorgan bitcoin fund could launch as soon as this summer and bitcoin broker NYDIG will serve as the fund's custody provider.
PayPal CEO: demand for cryptocurrency much higher than expected
Just a few months after payments giant PayPal launched buying and selling features for Bitcoin and other cryptocurrencies, user demand for digital assets on the platform has already exceeded the company’s expectations "multiple-fold," revealed CEO Dan Schulman, who also noted that the coronavirus pandemic has greatly accelerated the digitalization of payments across the globe.
Tesla sold bitcoin in Q1 for proceeds of $272m
Tesla sold some of its bitcoin stash in Q1 2021 for $272m in proceeds. The company reportedly purchased $1.5bn in bitcoin in February, and announced the news during its earnings call: "Year over year, positive impacts from volume growth, regulatory credit revenue growth, gross margin improvement driven by further product cost reductions and sale of Bitcoin ($101M positive impact, net of related impairments, in 'Restructuring & Other' line) were mainly offset by a lower ASP, increased SBC, additional supply chain costs, R&D investments and other items. Model S and Model X changeover costs negatively impacted both gross profit as well as R&D expenses."
Mastercard launching crypto rewards card with crypto exchange Gemini
Gemini has made Mastercard the exclusive card network for its bitcoin-back credit card, which will launch this summer, while WebBank will issue the card. Cardholders will earn up to 3% back in the cryptocurrency of their choice from the 30 available. Gemini will deliver rewards immediately, rather than monthly as with most points or cash-back programs, and deposit rewards into its customers’ accounts automatically.
Golden State Warriors become first NBA team to issue NFT set
The Golden State Warriors are auctioning a series of commemorative non-fungible tokens (NFTs). The sale marks the first time a US professional sports team has launched official NFTs. NBA Top Shot sells digital basketball highlights on the Flow blockchain, Topps sells digital baseball cards on WAX and individual athletes hawk their logo-free digital collectibles, but no franchise has offered its own team-licensed fare.
Our overall takeaway
Blockchain is here to stay, and leading companies globally are embracing it for a variety of use cases which now extend well beyond crypto assets as a new asset class, and financial infrastructure! We are in the early innings of web3.
⚖️ Government & Regulation
SEC Commissioner Hester Peirce publishes crypto safe harbor proposal 2.0
Securities and Exchange Commission (Commissioner Hester Peirce has an updated version of her 2019 proposal to let crypto startups sell tokens to fund their development efforts without running afoul of US securities laws. Relative to the 3 year grace period in the first proposal, this new version would require companies to provide updates to the SEC every six months, and find outside counsel to explain whether their network could be considered “decentralized” at the end of the grace period.
First ether ETF in Canada gets green light
Purpose Investments and CI Global Asset Management both received approval to launch an exchange-traded fund (ETF) in Canada that offers exposure to ether. The purpose is the manager of Purpose Ether ETF and Ether Capital Corporation will consult. The ETH will be kept in cold storage with Gemini acting as the sub-custodian and CIBC Mellon Global Securities acting as the fund administrator.
PBoC official says China regards crypto assets as investment alternatives
A vice governor of the People's Bank of China (PBoC) has said the country regards bitcoin and stablecoins as crypto assets – not currencies – and hence they are investment alternatives.
Bill aimed at linking up SEC, CFTC for crypto-focused task force passes US House, heads for the Senate
The House of Representatives has passed a bill that aims to get the SEC and CFTC working together on digital asset rules. The Eliminate Barriers to Innovation Act of 2021 passed the House on April 20. Ranking Member Patrick McHenry (R-NC) first introduced the bill to the Financial Services Committee in March. Stephen Lynch (D-MA), one of the leaders of the FSC's Fintech Task Force, cosponsored.
Former CFTC chairman Christopher Giancarlo joins BlockFi board of directors
Christopher Giancarlo, the former chairman of the U.S. Commodity Futures Trading Commission who’s known as “Crypto Dad” for his early embrace of digital assets, joined the board of cryptocurrency lender BlockFi.
Former acting head of the Office of the Comptroller of the Currency Brian Brooks joins Binance.US as CEO
Brian Brooks, an acting head of the Office of the Comptroller of the Currency under the Trump administration, will become the new chief executive of Binance.US, the U.S. affiliate of overseas crypto-exchange giant Binance Holdings Ltd.
Wyoming passes law recognizing DAOs as LLCs
Wyoming has become the first state to clarify the legal status of decentralized autonomous organizations (DAOs). On Wednesday April 21st, Wyoming Gov. Mark Gordon signed the state’s DAO-focused Bill 38 into law, allowing Wyoming to recognize DAOs as limited liability corporations (LLCs), effective July 1. LLCs are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship. DAOs are online collectives of like-minded investors relying on Ethereum’s underlying smart-contract technology to make shared decisions.
Paxos becomes the third federally regulated crypto 'bank'
Stablecoin issuer and blockchain startup Paxos has become the third crypto-native company to score a federal trust charter through the US Office of the Comptroller of the Currency (OCC). The national bank regulator announced it has granted Paxos a preliminary charter, letting the firm bring its new Paxos National Trust entity online as a federally regulated entity offering custody services, stablecoin management, payment, exchange, and other services.
European Investment Bank to price €100m in bonds on Ethereum
The European Investment Bank (EIB), the investment and development arm of the European Union, plans to price €100m in bonds registered in the Ethereum network. The sale of the Ethereum-based bonds is being overseen by investment banks Goldman Sachs, Banco Santander, and Societe Generale.
Our overall takeaway
Following retail and corporates, governments and regulators are embracing blockchain and digital assets at a record pace and leveraging it for bond issuances.
💰 Funding & Exits
Coin98 Labs raises seed round led by Hashed
A few short weeks after raising $4m from Alameda, Coin98 Labs, the DeFi arm of Coin98, which runs the biggest crypto fund in Vietnam, has raised a seed round led by Hashed, ParaFi Capital, Multicoin Capital, and Spartan Group.
Gitcoin raises $11.3m and spins out of ConsenSys
Decentralized funding platform for open-source projects Gitcoin, founded in 2017 within ConsenSys, has raised a $11.3m in a round led by Paradigm, with participation from 1kx, Electric Capital, IDEO, The LAO, and MetaCartel Ventures, as well as angel investors Naval Ravikant and Balaji Srinivasan.
Mark Cuban invests in NFT data platform CryptoSlam
Billionaire entrepreneur and owner of the basketball team Dallas Mavericks has made a strategic investment in NFT data platform CryptoSlam. Cuban invested in the startup via his venture capital firm Radical Investments. Details of the round were undisclosed.
Decentralized exchange startup DexGuru raises $1m in SAFT sale
Decentralized exchange startup DexGuru has raised $1m in a seed funding round led by ParaFi, with participation from Lemniscap, Divergence Ventures, Loi Luu of Kyber Network, Evgeny Yurtaev of Zerion, and several others.
Filebase raises $2m round led by Multicoin
In a bid to be the developer gateway to the likes of Sia, Filecoin, and Storj, Filebase has raised a $2m seed round led by Multicoin Capital and joined by Version One Ventures and angel investors such as Messari founder Ryan Selkis.
Injective Protocol raises $10m from Mark Cuban and other investors
Decentralized derivatives exchange Injective Protocol has raised $10m in new funding round, which took the form of a private token sale. Several investors, including billionaire entrepreneur Mark Cuban, Pantera Capital, BlockTower, Hashed Ventures, CMS Holdings, and QCP Capital, participated in the round.
Aleo raises $28m round for zero-knowledge private applications platform
An array of crypto industry investors led by a16z has backed the $28m funding round for Aleo, a platform designed to support decentralized, private applications. The project is aimed at making it easier for developers to create applications that employ blockchain tech and zero-knowledge cryptography, the latter of which effectively enables one party to prove to another that they possess certain, private information without actually having to reveal it. Zero-knowledge cryptography has been applied to varying areas in the crypto sphere, including privacy-focused blockchain networks.
UK asset manager Baillie Gifford invests $100m in Blockchain.com
Baillie Gifford, one of the U.K.’s most prominent asset managers, has invested $100 million in crypto exchange and wallet provider Blockchain.com, the largest single investment in the startup to date. This follows less than a month after Blockchain.com raised $300m in a Series C funding round led by DST Global, Lightspeed Venture Partners and VY Capital, which valued the company at $5.2bn.
TradeStars raises $1.67m to reframe Fantasy Sports
TradeStars, which is aiming to reframe fantasy sports leveraging crypto and NFTs, has secured funding of $1.67m through a strategic investment round led by AU21, Block Dream Fund and LD Capital Partners, with the participation of Sfermion, Taureon, Spark Digital Capital, Morningstar Ventures, Free Company, Faculty Capital, Hype Partners, NGC Ventures, Krypital Group, and angels.
Anoma Network raises $6.75m
Anoma, a layer 1 blockchain in development, which wants to help traders move assets across networks with privacy technology and without the need for a base currency, has announced a $6.75m round from Polychain Capital, Electric Capital and Coinbase Ventures.
Benqi Finance raises $6m for Avalanche algorithmic liquidity markets
Decentralized non-custodial liquidity market protocol Benqi Finance has raised a total of $6m in a strategic funding round. Participants included Arrington XRP Capital, Dragonfly Capital, Ascensive Assets, Mechanism Capital, TRGC, Woodstock Fund, and Spartan Group.
Staking firm Figment launches $16m Figment Capital
Canada-based blockchain infrastructure provider Figment has launched a $16m investment fund, Figment Capital, to support decentralized protocols and applications such as Cosmos, Terra, and Livepeer.
Crypto wallet ZenGo raises $20m Series A
Cryptocurrency wallet provider ZenGo has announced a $20m Series A round led by growth equity fund Insight Partners. Other funders include Distributed Global and Austin Rief Ventures, among others.
Blockchain firm Securrency raises $30m in Series B funding
Securrency, a blockchain-based compliance tools provider for banks and financial institutions, has raised $30m in a Series B funding round backed by asset manager WisdomTree Investments, State Street, US Bank, and Abu Dhabi Catalyst Partners — a joint venture between Abu Dhabi state investor Mubadala Investment and Falcon Edge Capital, among other investors.
NYDIG acquires Arctos Capital
Following its acquisition of Digital Assets Data a few months ago, NYDIG has moved forward with the acquisition of Arctos Capital, the Stone Ridge spin-off which provides financing solutions to bitcoin miners and other crypto firms. The terms of the deal were not disclosed.
Indian crypto exchange CoinSwitch Kuber raises $25m in Series B funding from Tiger Global
Indian crypto exchange CoinSwitch Kuber has raised $25m in Series B funding from Tiger Global. Tiger invested at a valuation of over $500m, according to CoinSwitch.
Digital Asset raises $120m in Series D funding
Enterprise blockchain firm Digital Asset Holdings has raised $120m in a Series D funding round. Investment firms 7Ridge and Eldridge backed the round. Carsten Kengeter and Veronica Augustsson of 7Ridge have also joined Digital Asset's board.
£3.8bn investment trust acquires stake in crypto exchange Kraken
RIT Capital Partners, a British investment trust managed by J. Rothschild Capital Management Limited, has acquired a stake in the cryptocurrency exchange Kraken. It is not clear how large the investment is, nor at what valuation shares in the startup changed hands or when the deal took place. Kraken was said to be seeking funding at a valuation of $10bn or more according to a Bloomberg published in February.
NYDIG nabs strategic investment from First Financial
First Foundation, the publicly traded company that counts a bank and a financial advisory firm among its subsidiaries, has made a strategic investment in NYDIG. First Foundation will also work with the investment firm to provide its clients with bitcoin-related products. First Financial did not disclose the size of the strategic investment in NYDIG in its announcement.
Listed Korean firm Gamevil to acquire $28m stake in local crypto exchange Coinone
South Korea-based publicly traded video game development company Gamevil is set to acquire a 13% stake in local crypto exchange Coinone for 31 billion won (around $28m). The transaction is expected to close on June 11th.
Dapper Labs raising capital at a $7.5bn valuation in a round led by Coatue Management
Dapper Labs, the NFT development platform behind NBA Top Shot and the Flow blockchain, is raising money at a $7.5bn valuation in a round led by Coatue Management. This round comes on the heels of a $305m funding round in March, which valued Dapper at $2.6bn, also led by Coatue Management.
Cryptology Asset Group raises €32m and explores buying bitcoin
Cryptology Asset Group, the Malta-based crypto investment firm, which trades on several German exchanges including Börse Düsseldorf, Gettex and Tradegate, has raised €32m through a share issue. The money will be used to invest in crypto and blockchain startups.
Galaxy Digital exploring BitGo acquisition
Galaxy Digital, the cryptocurrency-focused financial services firm run by Michael Novogratz, is in advanced discussions to buy BitGo, the US-regulated crypto custody specialist.
Crypto investment firm Pluto Digital Assets plots IPO on Aquis
Pluto Digital Assets, an investment firm focused on decentralized technologies, is planning a stock market flotation on the Aquis Stock Exchange in London. The company was only incorporated in January but raised $40m in March in a round led by Argo Blockchain, a crypto mining company that's also listed in London.
Our overall takeaway
Early-stage investments, later-stage investments, tokens, venture, exits… It’s 📈 on all fronts!
🚀 Project Launches & Updates
Stacks launches $4m accelerator to fund decentralized applications built on bitcoin
The Stacks Foundation is shepherding a $4 m accelerator program to invest in early stage teams building on the network formerly known as Blockstack, which aims to bring smart contracts to the bitcoin network.
Eminem partners with Gemini’s Nifty Gateway to Launch his First NFT
Just in time for Oscar Sunday, iconic rapper and Oscar winner for “Lose Yourself” in 2003, Eminem, in partnership with Nifty Gateway, has unveiled his first NFT at Shady Con. There are three types of NFTs up for sale, each of them high-quality animations with an original beat produced by Eminem himself.
Binance to launch own NFT marketplace in June
Despite the recent slowdown from all-time-high NFT activity, crypto exchange Binance is launching its own marketplace for creating and trading non-fungible tokens (NFTs). The launch is scheduled for June and the platform aims to offer users low fees, high liquidity, and a better user experience.
Our overall takeaway
NFTs continue to attract tier 1 creators and brands, and ecosystems beyond Ethereum and Flow are looking to capitalize on the momentum.
🔥 Other Bits We're Excited About
Ether price hits new highs
Ethereum's price has hit new all-time-highs over $2,560 on Coinbase Pro.
The price of the second-largest cryptocurrency by market capitalization jumped above the $2,500 level for the first time on April 22nd. This follows months of record levels of activity in both the DeFi and NFT sectors, and improvements in layer-2 and other scalability solutions amid the wait for the transition to Ethereum 2.0.
April's crypto exchange volumes have hit a new all-time high
Crypto exchanges have seen > $1.3tr in volume, the most-ever on record. The amount eclipses the previous all-time high seen in February on legitimate exchanges, as shown in the chart below. April's figure also represents the third month in a row that volumes have exceeded $1tr.
Ludo’s “R.I.P. The Banking System” (2018) comes full circle back to crypto via NFTs
Ludo, a popular street artist who’s been shown at the Centre Pompidou in Paris, Power Station of Art Shanghai, CAFA Beijing, UN Berlin, MOCA, ArtScience Singapore, etc, has collaborated with Radiohead, Pink Floyd, Valentino, Nike, etc, first created a Bitcoin focused mural titled “R.I.P. The Banking System” in the streets in Paris in 2018, before turning it into limited edition prints in recent years. Now, in a path which has led him full circle back to crypto, the artist is issuing a NFT of the Original and Unique photo of the famous R.I.P. Banking System (Bitcoin flower) piece.
Our overall takeaway
All-time highs for Ethereum and cryptoasset volumes… yet it still feels early. Bullish!!