VeradiVerdict - International Playbook For Exchanges - Issue #30
Hi, I am Paul Veradittakit, a Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing into blockchain companies and cryptocurrencies. I focus on early stage investments and want to share my thoughts and what’s going on in the industry in this weekly newsletter.
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Pantera has invested into quite a few local cryptocurrency exchanges, covering Latin America, Europe, Asia, Africa, and the Middle East. The thought process is that Coinbase won’t likely dominate the entire world anytime soon, and those that are situated in these geographies have an advantage of knowing the local culture, being able to recruit and market, and having the ability to build relationships for banking and regulations.
The biggest risk of investing in an exchange internationally is the potential of regulatory crackdown. Before we make an investment, we travel to the geography to chat with banks and legal experts in the region. Even after coming out confident, you’re still banking on the entrepreneur to continue to build the company brand, strengthen the relationship with regulators, and to de-risk the investment opportunity by educating the central bank and creating/obtaining the necessary licenses for fintech or cryptocurrencies.
The hope is for governments and banks to work with the leading exchanges to develop regulations/licensing so that there is clarity and protection for customers. In negative instances, countries like China and India have made it very tough for exchanges to operate by blocking their access to banking. Earlier this week, Mexico also announced that they would like banking institutions to distance themselves from crypto exchanges.
We’ve seen this story before of blockchain banking access to exchanges and those companies have been agile through a few different strategies:
Creating an offshore entity and obtaining licenses/banking there
Setting up crypto-to-crypto exchange
Enabling cash-to-crypto through a local bitcoins equivalent
Looking into setting up a decentralized version of their exchange
The bet is that the teams will figure out ways to navigate the hurdles and continue their business, keeping a stronghold on their geography but opening up avenues for international expansion.
The vast majority of reported bitcoin trading volume is false. How many exchanges provide reliable data?
The discussion concerned NYSE Arca, Inc.’s proposed rule change to list and trade, pursuant to NYSE Arca Rule 8.201-E, shares of the Bitwise Bitcoin ETF Trust.
I had previously written about the potential of blockchain and cryptocurrency in Rojava. I felt that while the region lacks the basic security and resources offered by the West, it has something the West doesn’t have – the opportunity for a new system of governance to be realized.
In the Tweets
12:25 PM - 20 Mar 2019
#BitcoinTwitter and #CryptoTwitter! Square is hiring 3-4 crypto engineers and 1 designer to work full-time on open source contributions to the bitcoin/crypto ecosystem. Work from anywhere, report directly to me, and we can even pay you in bitcoin! Introducing @SqCrypto. Why?
2:58 PM - 20 Mar 2019
Circle CEO Jeremy Allaire spoke to Fortune about the cryptocurrency market downturn, his acquisition of SeedInvest, and Facebook.
Cryptocurrency mining equipment maker Bitmain’s application for an initial public offering (IPO) on the Hong Kong Stock Exchange (HKEX) has officially lapsed, meaning no such transaction is happening anytime soon.
Bucking international trends, the Mexican central bank would deny exchanges a sensible path to regulation and deny Mexicans safe access to financial …
Ethereum is most likely not a security under U.S. laws, but a statement by the SEC chairman did not confirm it.
As announced in late 2018, the Swiss Federal Council proposed specific adjustments in the existing federal law for the blockchain industry.
New Products and Hot Deals
BitGo clients will be able to hold their BCAP assets using qualified and regulated custody service BitGo Trust Company.
A startup offering a new twist on token airdrops has raised $2 million from a group of notable investors, CoinDesk has learned.
The hedge fund and predictions market startup Numerai just closed an $11 million round in March led by Paradigm and Placeholder strictly by selling NMR tokens, first launched through an airdrop in 2017.
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