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As Crypto Markets Grind Lower, Institutional Adoption Continues to Grow

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Two of Russia’s largest banks have launched portfolios dedicated to trading bitcoin and other cryptocurrencies, the local Kommersant newspaper reported Friday. The pilot projects are the latest examples of widening institutional acceptance of digital currencies in spite of the market’s recent correction.

Russian Banks to Offer Crypto Portfolios

Russians with bank accounts at Sberbank and Alfa Bank will soon be able to trade cryptocurrencies in a designated fund that will track price movements on some of the world’s largest exchanges. The portfolio, which is being overseen by the Bank of Russia, will include bitcoin, Ethereum and Litecoin.

Although the full list of assets has not been provided, the portfolio will be revised four times a year, with a trading algorithm balancing the holdings.

Sberbank is Russia’s largest financial institution, with the central bank owning 50% of its authorized capital. Alfa Bank is one of the country’s largest private banking institutions.

Although cryptocurrencies are largely unregulated in Russia, Justice Minister Alexander Konovalov recently confirmed that the asset class falls under the definition of “other property.” Two draft bills on cryptocurrency are still pending in the State Duma.

The Russian government had initially said it would ban cryptocurrencies as they could be use for money laundering and terrorist financing. As digital assets grew in popularity, government agencies took a decisive u-turn, with President Vladimir Putin even considering the launch of a state-backed cryptocurrency.

Institutions Preparing for Cryptocurrency Trade

Financial institutions from New York to London are planning to launch cryptocurrency trading operations in the not-too-distant future. An April survey by Thomson Reuters showed that one-in-five major banks are considering cryptocurrency trading in 2018, a sign that the niche industry is gaining mainstream acceptance.

Goldman Sachs has been gradually scaling its crypto operations in pursuit of a bitcoin trading operation that is expected to launch later this year. While Goldman won’t be trading bitcoin outright, it will serve in the capacity of market maker for bitcoin futures.

It has been argued that the first wave of institutional adoption of cryptocurrency was poorly timed given the market’s steep losses over the last two quarters. This has led to greater industry consolidation as major firms swept in to acquire cryptocurrency exchanges. Earlier this year, Monex Group announced it would acquire and rehabilitate Coincheck, a Japanese exchange that was hacked for $530 million. Goldman-backed Circle has also bought out Poloniex, one of the world’s largest digital exchanges.

In the realm of blockchain adoption, banks are pouring billions into new commercialization initiatives. According to a recent study by Greenwich Associates, blockchain budgets for major banks in 2017 swelled by 67% to $1.7 billion.

San Francisco startup Ripple has already brought on board hundreds of clients to test drive its blockchain-based payments and liquidity platforms. This includes big-name clients such as UBS, Standard Chartered and Santander.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 606 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Japanese Cryptocurrency Exchange Zaif Suffers $59 Million Hack

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The Japanese cryptocurrency exchange Zaif was reportedly hacked for almost $59,000,000. This is not the first time the exchange has struggled with vulnerabilities or technical flaws in its system.

The most notable example of this history occurred back in February when a system glitch enabled customers to buy cryptocurrency for free. At the time, users of the exchange complained about the sites poor backend performance and a general lack of support throughout the whole ordeal.

Unlike this former glitch, this hack could prove to be a much larger issue for Zaif and could potentially lead to its shutdown. This is mainly due to the fact that Japanese regulators have significantly heightened their overall scrutiny of domestic exchanges since Coincheck was hacked for $530,000,000.

The Zaif hack occurred on Sept. 14 but was apparently not discovered until Sept. 17. The hackers managed to steal various amounts of Bitcoin, Bitcoin Cash, and Monacoin from the exchange’s hot wallet, which was collectively worth about 6.7 billion yen (or just under $60 million).

Zaif has stated however that the efforts to re-enable deposits and withdrawals by are already well underway. The exchange has also reported the hack to the Japanese Treasury Department (who are ostensibly already investigating the incident)

Zaif also claims to have already made damages declaration to the relevant authorities. An official statement put out by the exchange said, “Currently, we are checking and strengthening security and rebuilding the server in order to restart the system.”

Zaif has additionally notified Japan’s Financial Services Agency, as well as invited a third-party investigation firm known as the Kaichi Corporation to review possible causes of the hack and to trace the steps the hackers took to carry it out.

The most concrete step that they have taken so far is to announce that the managing team that oversaw the exchange during the hack. This is seen in the following official statement:

“All of our management team takes seriously that our valuable deposit assets have disappeared due to this hacking damage. As a result, even if the virtual currency equivalent to customer’s assets can be prepared by the above-mentioned funding etc., the concerns and inconveniences given to customers are tremendous.

As a result, our current management team has responded with full power to this matter, and we are fully committed to preserving the customer’s assets and fulfilling our obligation to hand over control to the management team of the Fiscal Group, which acquires a majority of control. We will retire our officers as a management responsibility.”

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Market Update: Dow Jones Hits Record High; Cryptocurrencies Hold Their Ground

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The Dow Jones Industrial Average notched record highs on Wednesday, as global bond yields continued to rise amid heightened trade tensions between the United States and China. Meanwhile, cryptoassets were little changed amid news that Fidelity Investments was preparing to unveil new crypto offerings this year.

Stocks Settle Mostly Higher

Strong gains in financials and materials stocks propelled the Dow to record highs on Wednesday. The blue-chip index climbed 158.80 points, or 0.6%, to close at 26,405.76. Financial blue-chips JPMorgan Chase & Co (JPM) and Goldman Sachs Group Inc. (GS) were the Dow’s top performers.

The broader S&P 500 Index edged up 0.1% to 2,907.94. The S&P’s financials index rose 2%.

Meanwhile, the Nasdaq Composite Index fell 0.1% to close at 7,950.04.

Bond yields rose across the board Wednesday as markets fully priced in a Federal Reserve interest rate hike next week. The yield on the 10-year U.S. Treasury rose back above 3% en route to fresh four-month highs. Germany’s 10-year Bund jumped to 0.5% for the first time in three months.

Oil Prices Rise on Supply Concerns

Crude oil was back on the offensive Wednesday, with U.S. futures prices surpassing $71 a barrel after government data showed a fifth weekly drawdown in commercial inventories. The U.S. Energy Information Administration (EIA) said commercial crude stocks fell by 2.057 million barrels in the week ended Sept. 14. Stockpiles fell nearly 5.3 million barrels the week before.

Gasoline demand, which normally falls in autumn, was estimated at 9.5 million barrels in the latest week as consumption continues to hold near summer levels.

The West Texas Intermediate (WTI) benchmark for U.S. crude reached a high of $71.63 a barrel on the New York Mercantile Exchange. It would later settle at $71.19 a barrel for a gain of $1.34, or 1.9%. Brent crude, the international futures contract, rose 16 cents, or 0.2%, to $79.19 a barrel.

Cryptocurrencies Hold Steady

The cryptocurrency market hovered around $200 billion on Wednesday as bitcoin and the major altcoins traded within a relatively narrow range. Trade volumes were down 17% compared with Tuesday.

The CEO of Fidelity Investments, the world’s sixth-largest asset manager, has confirmed plans to unveil a suite of crypto- and blockchain-based products later this year.

“We’ve got a few things underway, a few things that are partially done but also kind of on the shelf because it’s not really the right time,” Abigail Johnson, Fidelity’s CEO, told Boston Fintech Week on Friday. “We hope to have some things to announce by the end of the year.”

Fidelity has been active behind the scenes researching cryptocurrency and mining bitcoin and Ethereum. While Fidelity’s mining operation turned out to be highly profitable during the bull market, the practice was intended to yield a better understanding of cryptocurrency networks and consensus.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 606 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Fidelity Investments Entering Crypto as Debate Over ‘Institutionalization’ Grows  

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One of the world’s biggest asset managers is planning to launch new cryptocurrency offerings by the end of the year, the latest evidence of a broad institutional push to bring digital assets mainstream.

Fidelity to Enter Crypto

Fidelity Investments, the world’s sixth-largest asset manager, is developing a new suite of crypto- and blockchain-focused products, according to CEO Abigail Johnson.

“We’ve got a few things underway, a few things that are partially done but also kind of on the shelf because it’s not really the right time. We hope to have some things to announce by the end of the year,” Johnson told the Boston Fintech Week conference on Friday.

While details remain scant, Johnson said Fidelity’s forthcoming offerings aren’t what she expected when her firm first began researching the space.

As CCN quotes:

“What we started with was building a long list of use cases for either bitcoin, Ethereum, other cryptocurrencies, or potentially just raw blockchain technology. Most of them have been scrapped by now or at least put on the shelf. The things that actually survived were not the things I think necessarily we expected. We were trying to listen to the marketplace and anticipate what would make sense.”

As Hacked reported last October, Fidelity appears to have been one of the first major institutions to mine cryptocurrency. At the time, Johnson acknowledged that her company’s U.S.-based mining operation is “making a lot of money” but the real motivation was to learn how networks and consensus operate.

Crypto Adoption Grows but Questions Remain

With $2.5 trillion in assets under management, Fidelity is one of the biggest players in global finance and its entry into cryptocurrency will provide an instant legitimacy boost to the sector. Despite the recent market downturn, large institutions ranging from Goldman Sachs to Intercontinental Exchange have announced new crypto ventures all designed to bring digital assets to mainstream circles. Although the pace and timing of these initiatives varies, the underlying trend remains overwhelmingly in favor of greater adoption, not less.

Some analysts have warned that the institutionalization of cryptocurrencies such as bitcoin undermines the core mandate of peer-to-peer money. This view was recently conveyed by Andreas Antonopoulos, who argued that the inevitable rise of the bitcoin exchange-traded fund could do more harm than good.

“ETFs fundamentally violates the underlying principle of peer-to-peer money, where each user is not operating through a custodian but has direct control of their money because they have direct control of their keys,” Antonopoulos said.

At this stage in the game, evaluating the impact of institutional money on cryptocurrency isn’t an exact science. Several analysts have noted correlations between, say, the launch of bitcoin futures and the meteoric drop in prices, but establishing causality is less credible given the small size of the futures market relative to trading over-the-counter and on digital exchanges. It has also been relatively easy to show the positive impact of bitcoin futures on volatility. As Diar points out, bitcoin’s volatility has declined sharply since December.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 606 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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