White Star Capital Digital Asset Fund - newsletter #29
Announcing our investment in Ledn, Tesla pushes BTC to new highs, CME launches ETH futures & Coinbase confirms plans to go public!
Announcing our investment in Ledn
We are very pleased to welcome Ledn to the WSC Digital Asset family! The company has raised a $2.7m round which we led, with participation from Coinbase Ventures, Global Founders Capital, CMT Digital, Kingsway, and Darrow Holdings, an affiliate of Susquehanna International Group. Following its growth in Canada and LatAm, Ledn will use the funds to bring its loans and savings products to other emerging markets. We are thrilled to back Adam and Mauricio, as well as the whole Ledn team.
Looking at markets, the last 2 weeks have seen BTC cross the $48k mark on the back of Tesla’s $1.5tn investment in the cryptocurrency. Tesla joins a rapidly growing list of publicly traded companies that hold BTC (see here). Another notable event this past week was the launch of ETH futures which are now available for trading on CME, with the first day seeing volumes of almost $33m.
In enterprise adoption, payment giants including Visa, MasterCard, and PayPal are doubling down on their crypto strategies as they work towards making cryptocurrency payments mainstream.
Elsewhere, the explosion in DeFi space shows no sign of slowing down, with 10 crypto unicorn protocols already in the space (source: Messari). While Decentralized exchanges (DEXs) helped facilitate the growth of DeFi, lending protocols such as Aave, Maker, and Compound have emerged as the top draw for total value locked (TVL) and soaring token prices. In addition to the high yield opportunities, investors are also attracted by the governance features that give token holders a say in the future development of the protocol. These DeFi unicorns are likely to pique the interest of long-term capital given their increased liquidity and massivre network effects.
I. Enterprises & Institutions
Tesla buys $1.5bn in bitcoin, plans to accept it as payment
Tesla announced in an SEC filing on February 8 that it has bought $1.5bn worth of bitcoin for “more flexibility to further diversify and maximize returns on our cash.” The company also said that it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.”
MicroStrategy purchases an additional $10m worth of bitcoin
Publicly-traded MicroStrategy has purchased an additional 295 bitcoin for $10m in cash. This brings MicroStrategy's total bitcoin holdings to 71,079 bitcoin. The company has acquired all its bitcoins at an aggregate price of around $1.15bn, or at an average price of around $16,109 per bitcoin.
Italian payments firm SIA to launch DLT-based secondary credit marketplace
SIA, an Italian company that specializes in e-payment services, is working on a blockchain-based system to enable secondary credit trading. The Ethereum-based platform will allow banks, funds, and financial operators to negotiate secondary credit transactions via blockchain.
Bitcoin an ‘emerging competitor’ to gold as per CME’s chief economist
Bluford Putnam, the chief economist and managing director of CME Group, has said that he believes bitcoin is an “emerging competitor” to gold. He also noted that his firm has begun to notice gold’s waning appeal as a hedge against global political risk.
Guggenheim CIO says bitcoin could climb to $600,000
Scott Minerd, the CIO of multi-billion dollar investment firm Guggenheim Partners, has revised his previous prediction for bitcoin’s long-term price potential. He added that the firm has been looking at bitcoin for almost 10 years and the size of the market earlier was “just wasn’t big enough to justify institutional money.”
NYDIG could hit $25bn in bitcoin under management by end of 2021
Ross Stevens, founder, and chairman of the New York Digital Investment Group (NYDIG) has predicted that the firm could significantly expand the amount of bitcoin it holds under management before the end of 2021. He said that NYDIG currently has $6bn in bitcoin assets under management, and could hit $25bn by end of the year.
Dan Tapiero launches $200m fund for late-stage crypto firms
Macro investor Dan Tapiero has launched a new $200m fund to invest in mid-to late-stage companies in the digital asset ecosystem. Tapiero and his 10T Holdings partners Michael Dubilier and Stan Miroshnik have given the SEC notice of a $200m growth equity fund for crypto and blockchain firms. The filing shows that the fund has already sold $124m of the original investment.
PayPal investing in a new business unit focused on crypto and digital currencies
PayPal has released new details about its cryptocurrency plans in its Q1 earnings call. These plans include a new dedicated business unit for PayPal's crypto ambitions, according to CEO Daniel Schulman. He also added that PayPal expects to start rolling out the ability for users to fund their accounts with crypto “late this quarter”.
Visa shares details about its crypto strategy in Q1 earnings call
Investment firm Accelerate Financial Technologies has filed for approval to list the Accelerate Bitcoin ETF on the Toronto Stock Exchange (TSX) under the ticker “ABTC.” The ETF will offer units denominated in both the U.S. and Canadian dollar, with a management fee of 0.70%.
Visa working on API pilot for bank customers to buy bitcoin
Visa is working on piloting a suite of application programming interfaces (APIs) that will allow banks to offer bitcoin services. The company is working with Anchorage, a federally chartered digital asset bank, to set up the service that will allow their customers to buy and sell digital assets “within their existing consumer experiences”.
Mastercard will allow merchants to accept payments in crypto this year
Mastercard is reportedly planning to give merchants the option to receive payments in cryptocurrency later this year. The functionality will see its customers’ digital currency payments settled in crypto at participating merchants, a first for the financial giant.
EY to extend enterprise blockchain to China on ‘localized’ Ethereum via BSN partnership
Global consulting giant EY is partnering with the Blockchain Service Network (BSN) to expand its Ethereum-based OpsChain to the Chinese market. The firm plans to offer its EY OpsChain to developers in China via the Blockchain Open Source (BCOS) enterprise network that runs on the China state-sanctioned BSN.
Arcane Crypto lists on Sweden’s Nasdaq First North after a reverse takeover
Norway-based cryptocurrency investment firm Arcane Crypto was listed on Sweden’s Nasdaq First North following a reverse takeover of Vertical Ventures AB on February 5. Arcane listed with a $200m valuation as per the firm’s CIO.
Our overall takeaway
Bitcoin on the balance sheet is becoming normalized. Will we see a central bank add bitcoin to their reserves in 2021?
II. Government & Regulation
Two-thirds of surveyed banks studying stablecoins: Bank of International Settlements
A recent survey of about 60 central banks by the Bank of International Settlements (BIS) has found that approximately two-thirds of surveyed central banks are studying the impact of stablecoin on monetary and financial stability. As per the survey, most central banks are looking at central bank digital currencies (CBDCs) on a long-term horizon, though some are at the pilot development stage.
US Fed looking to hire a manager for digital innovations policy program with a focus on stablecoins
The US Federal Reserve is looking to hire a manager for its digital innovations policy program. The responsibilities include examining risks and benefits related to CBDCs, stablecoins, and "the supervisory and regulatory framework for emerging payments platforms, activities and institutions."
Protego becomes second crypto firm to get bank charter from OCC
Seattle-based Protego Trust Bank has become the second applicant following Anchorage to receive conditional approval for a Trust charter from the Office of the Comptroller of the Currency (OCC) to custody digital assets. Protego will also offer a trading platform for clients, a service for issuing new digital assets, and a peer-to-peer lending platform for its clients.
Our overall takeaway
Protego has followed on the heels of Anchorage to become the second crypto firm to get a bank charter from OCC, as regulators become more open to the space. Miami government website now hosts the bitcoin white paper as the city continues its push to become the new crypto innovation hub.
III. Funding & Exits
Crypto lender Ledn raises $2.7m in a seed round led by White Star Capital
Canadian cryptocurrency lender Ledn has raised $2.7m in a second seed round to expand its services in other emerging markets after its success in Latin America. White Star Capital led the round, with participation from Coinbase Ventures, Global Founders Capital, CMT Digital, Kingsway, and Darrow Holdings, an affiliate of Susquehanna International Group.
Bitcoin startup Casa raises $4m in seed funding
Bitcoin self-storage startup Casa has raised $4m in a seed funding round led by Fidelity Investments’ blockchain-focused Avon Ventures. Tioga Capital, Castle Island, Lerer Hippeau, and Coinbase Ventures also participated in the round, among others.
NFT marketplace Rarible raises $1.75m in seed funding
Non-fungible token (NFT) marketplace Rarible has raised $1.75m from investors including 1kx, Coinbase Ventures, ParaFi Capital, and CoinFund to build a “Uniswap for NFTs”. The new funds will be used to build a decentralized autonomous organization (DAO) structure for the buying and selling of NFTs on Rarible.
ParaState raises $1.3m in a seed funding round
ParaState, a project offering Ethereum developers access to Polkadot blockchain, has raised $1.3m in a seed fundraising round led by CMS Holdings. Kenetic Capital, FBG Capital, and JRR Capital also participated in the round, valuing ParaState at $12m.
DeFi platform Parsec launches with $1.25m seed funding round
Parsec, an application aiming to be the decentralized finance (DeFi) system's all-in-one trading platform, was recently launched following its $1.25m seed funding round. Polychain Capital led the round, with participation from Robot Ventures and Volt Capital, among others.
Privacy-oriented DEX Manta Network raises $1.1m in seed funding
Polychain Capital has led a $1.1m seed round in privacy-oriented decentralized exchange Manta Network. Started in 2020, Manta Network plans to launch as a Polkadot parachain and roll out its test network later this quarter. Defiance Capital, Multicoin Capital, and Alameda Research also participated in the round, among others.
DeFi protocol Sovryn raises $2.5m in a token pre-sale
Bitcoin-based decentralized finance (DeFi) protocol Sovryn has raised $2.5m in a token pre-sale. The sale was reserved for Sovryn community, giving participants the right to purchase the protocol's native token, SOV, which will be launched next month.
DeFi options platform Opyn raises $6.7m in Series A funding
Opyn, a decentralized finance platform for options, has raised $6.7m in a Series A funding round led by venture capital firm Paradigm. Opyn plans to use the funds to further the development and security of the Gamma protocol and to grow the Opyn team.
SynFutures raises $1.4m in new funding
SynFutures, a decentralized derivatives exchange, has raised $1.4m as it prepares to launch the test net for the first version of its synthetic asset trading platform. Standard Crypto and Dragonfly were among the investors in the round.
0x Labs raises $15m in Series A funding
0x Labs, the firm behind a decentralized exchange (DEX) protocol and the ZRX token, has raised $15m in a Series A equity round led by Pantera Capital. Additional investors included Jump Capital, Blockchain Ventures, and Coinbase Ventures, among others.
Balancer Labs raises $5m in additional Series A funding
Balancer Labs has raised $5m in an investment round led by Three Arrows Capital and DeFiance Capital. The two VCs join Pantera Capital and Alameda Research, bringing Balancer’s series A round to a total of $12m raised.
Plasm Networks raises $2.4m in Series A funding
Plasm Networks, a hub for decentralized apps (dApps) on Polkadot, has raised $2.4m in Series A funding, with Binance Labs leading the round. The company will use the funding to develop its Ethereum bridge, on-chain governance and Network Portal.
Celo raises $20m in a new funding round
Celo, a decentralized payments protocol, has raised $20m from investors including Andreesen Horowitz (a16z), Greenfield One, and Electric Capital. The latest investment brings Celo’s total fundraising to $65m, with past investors including Jack Dorsey and Coinbase Ventures.
Castle Island Ventures launches second $50m fund to invest in blockchain technologies
Boston-based cryptocurrency and blockchain venture capital firm Castle Island Ventures has launched its second $50m fund. The fund, which has invested in the likes of BlockFi and River Financial, would take on a broader thesis than its first fund, which mainly identified companies building infrastructure around bitcoin. CIV II will have an added focus on firms building in decentralized finance and stablecoins.
Crypto market maker Hehmeyer merges with Swiss trading firm
Chicago-based Hehmeyer Trading has announced that it will merge with Swiss-based Nortide Capital AG, less than a year after going all-in on the cryptocurrency market. The deal will provide the newly created trading firm with "broader market access as well as deliver better prices", the company said in its announcement.
Interoperability project Ren ‘joins’ Alameda Research
Ren, the team behind the interoperability blockchain project RenVM, is “joining” Alameda Research. Formerly known as Republic Protocol, Ren acts as a bridge between various blockchain assets through a custodial node solution.
Hanwha to acquire $52m stake in crypto exchange Upbit’s parent company
South Korean conglomerate Hanwha Group is reportedly acquiring a 6.15% stake in Dumanu, the parent company of major local cryptocurrency exchange Upbit, for $52m. Hanwha is one of the largest conglomerates in South Korea alongside giants such as Samsung, Hyundai, LG, and SK Group.
Bitcoin mining pool Poolin acquires hashrate of NovaBlock to expand in North America
Chinese bitcoin mining pool Poolin has acquired the hashrate of rival North America-based NovaBlock to expand in the continent. The acquisition will still keep Poolin at the second rank, taking its total 7DMA hashrate to 13.35 EH/s. The current largest bitcoin mining pool, F2Pool, has a 7DMA hashrate of 15.79 EH/s, per BTC.com.
Our overall takeaway
Quality projects in the space, especially DeFi, continue to raise capital as investors globally look to double-down on the space. The past 2 weeks saw continued consolidation, with increasing participation from traditional enterprises as acquirers.
IV. Project Launches & Updates
Portfolio app Blockfolio launches crypto and stock trading
Blockfolio, the cryptocurrency portfolio tracker which was acquired by FTX for $150m in August 2020, has added crypto and stock trading capabilities on its platform. The move is aimed at capitalizing the situation with Robinhood, which has restricted some stock and crypto offerings amid the GameStop trading craze.
SDAX gets in-principle approval from Singapore's central bank to launch a digital exchange
Singapore-based Digiassets Exchange (SDAX) has received the nod from the Monetary Authority of Singapore (MAS) for the launch of its digital asset exchange operations. The exchange, which is built using blockchain technology, aims to "simplify and speed up" traditional exchange processes.
SBI Holdings and SMFG to launch digital securities exchange in 2022
Japanese finance group SBI Holdings is collaborating with Sumitomo Mitsui Financial Group (SMFG) to build a digital stock exchange. In order to launch the exchange, SBI and SMFG will set up an operator, Osaka Digital Exchange, or ODX. SBI will reportedly hold a 60% stake in ODX, while SMFG will own the other 40%.
The Graph is exploring new Layer 1 integrations, including Bitcoin
Crypto startup The Graph has said that it is exploring providing support for additional layer-one blockchains, including Bitcoin, Polkadot, and NEAR. These will add to the startup's existing list of supported chains, including Ethereum, IPFS, and POA. The Graph's service enables the querying of data across many blockchains.
Uphold to launch crypto cards in Europe with new acquisition
Uphold, an American digital wallet and trading platform has acquired European card issuer Optimus Cards UK Limited as it plans to launch a cryptocurrency-enabled card on the continent in April 2021. Uphold CEO JP Thieriot said that the launch in Europe follows a successful roll-out of the service in the United States in March 2020.
Our overall takeaway
The pace of shipping in the space continues to amaze us.
V. Other Bits We're Excited About
Elon Musk says that he is a supporter of bitcoin
Tesla and SpaceX CEO Elon Musk recently said that he is a bitcoin supporter if a bit “late to the party.” Speaking during a discussion days before Tesla’s 10-K was made public on the invite-only audio-chat app Clubhouse, he further added that bitcoin is “on the verge of getting broad acceptance by conventional finance people.”
Ray Dalio calls Bitcoin ‘one hell of an invention’, considering it for new funds
Bridgewater Associates founder Ray Dalio has said that Bitcoin is “one hell of an invention” and he’s considering cryptocurrencies as investments for new funds to offer clients protection against the debasement of fiat money.
Coinbase officially announces plan to go public
Coinbase has made official its plan to go public by way of a direct listing, according to a blog post released Thursday by the U.S.-based crypto exchange. Coinbase had earlier announced in mid-December that it has filed a confidential S-1 with the US SEC.
Crypto exchange trade volume breaks record in January
Spot trading volume on cryptocurrency exchanges broke all previous records to reach over $900bn in January. Of the total of about $906bn, Binance accounted for close to 60% share at about $518bn.
Crypto exchanges witnessed over 300m website visitors in January
The number of visitors to crypto exchange websites surged in January to about 344m, as per SimilarWeb data, surpassing December's total of 196m. This is the highest point since January 2018, when exchange sites drew in roughly 531m visitors.
Stablecoins on-chain value transfers surpassed $1tn in 2020
Stablecoins on-chain value transfers for 2020 stood at $1.04tn, surpassing the likes of PayPal ($963bn), Fedwire ($840bn) and Zelle($307bn).
Linkin Park’s Mike Shinoda mints new song on Zora
Linkin Park’s Mike Shinoda is selling a new song "One-Hundredth Stream” on Zora. The current highest bid is at 7 WETH, which values the music piece at over $11,000 based on current prices.
Actress Lindsay Lohan selling NFT collectible on Rarible
Hollywood actress Lindsay Lohan has become the latest celebrity who is selling their NFT collectibles. The “Lindsay ‘Lightning’ Lohan” artwork is selling for 33 ETH on NFT marketplace Rarible.
Blockchain protocol could help combat authoritarian censorship
Firms such as Arweave, a blockchain-based project for permanently storing and displaying websites, and Minds, a blockchain-based replacement for Facebook, could provide a roadmap for a solution to the growing authoritarian censorship globally. One of the biggest proponents of the trend has been Twitter CEO Jack Dorsey, who has talked about the promise of decentralized social networks.
Our overall takeaway
Elon Musk and Ray Dalio are now publicly supporting bitcoin, which shows the growing mainstream acceptance that is driving bitcoin’s price to record highs. Linkin Park’s Mike Shinoda and actress Lindsay Lohan are the latest entrants in the NFT universe - make sure to place your bids!