Bank of America partnership with Paxos will allow same-day trade settlements

Joining the Paxos Settlement Service could allow many Bank of America customers to settle stock trades in minutes rather than days.

The second-largest bank in the United States is now reportedly using blockchain technology for settling stock trades.

According to a Bloomberg report on Monday, Bank of America has joined Paxos Settlement Service, a platform capable of same-day settlement of stock trades using blockchain technology. Kevin McCarthy, head of financing and clearing, said the bank “has been conducting internal transactions for the past few months” and would offer the service to Bank of America clients upon approval as a clearing agency.

The move would reportedly allow for a “more flexible and speedier” stock settlement system compared with that of the Depository Trust & Clearing Corporation, or DTCC, in which Bank of America is a direct participant. The DTCC settlement time is roughly two days, whereas Paxos’ service is capable of settling some stock trades in minutes.

“We can determine the settlement cycle down to T+0,” said McCarthy. “We then can free up the collateral we’d have to post on an overnight basis. […] The return-on-assets in this business would improve, which has been a challenge.”

Paxos officially launched its settlement service for equity trades in 2019 after receiving no-action relief from the U.S. Securities and Exchange Commission. Credit Suisse, a Zurich-based financial institution, and Instinet, the trading arm of Nomura Holdings, both participated in the pilot, settling U.S.-listed stock trades on the same day.

The stablecoin operator announced in April that it had applied for a clearing agency license with the SEC. Paxos also recently completed a $300-million funding round, which brought its valuation to $2.4 billion.

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Ethereum market cap hits $337 billion, surpassing Nestle, P&G and Roche

The value of the Ethereum network soared above major companies like Nestle and P&G after its market cap hit a new high at $337 billion.

Ether (ETH) price has rallied more than 200% in 2021, resulting in a massive $337 billion market capitalization. This impressive figure pushed the value of the Ethereum network ahead of the total market cap of major companies like Procter & Gamble’s ($326 billion) and PayPal’s $308 billion.

The market cap figure is achieved by multiplying the last trade price by the total outstanding number of coins, regardless of whether they’ve been moved. Therefore, it seldomly reflects the average price where most investors transacted.

For investors from traditional finance, ‘value’ is assessed by comparing multiples and valuations. These are often calculated in the form of earnings, sales, and market share, and attempting to apply these same ‘value’ metrics to cryptocurrencies with multiple use cases creates uncertainty and discomfort.

Ether is a multi-faceted asset that is difficult to evaluate

There is not a bullet-proof metric available to assess how Ether’s value stacks against its potential. The cryptocurrency might simultaneously act as a digital store of value while also functioning as the token required to access the Ethereum network.

Ether market cap, in USD billion. Source: TradingView

Therefore, one must consider the coins deposited on exchanges or the percentage effectively changing hands when comparing different asset classes. The existence of regulated derivatives markets allow institutional investors to bet against the asset’s price, and it is another factor that should be accounted for.

Largest global assets’ ranking by market capitalization. Source: Infinite Market Cap

While the merits of comparing the market cap of different asset classes side-by-side is debatable, the metric essentially works the same way for commodities, stocks, and mutual funds.

According to data from Infinite Market Cap, Ether recently surpassed the market cap of Nestle, Procter & Gamble, PayPal, and Roche.

The American multinational consumer goods company P&G was founded in 1837 and holds a diversified brand portfolio, including personal health, consumer care, and hygiene. With 100,000 employees worldwide, the conglomerate posted a $13 billion net income in 2020.

On the other hand, Ethereum has 2,320 average monthly developers, according to the Electric Capital’ Developer Report’. Although it is not a secular company, its decentralized applications (dApps) handle over 100,000 daily active addresses. Even more impressive is the $12 billion daily transfer and transactions on the Ethereum network. These numbers alone are outstanding even for an S&P 500 company.

Stocks have their own risks, which can’t be ignored

Comparing a 183-year company that is heavily dependent on production and distribution to a technology-based protocol is unlikely to uncover many similarities. However, equity investors enjoy the fruits of dividends, and while some will argue that Ether could be staked for a return, there are more significant risks involved.

Investors staking in the ETH 2.0 contract have the options of becoming a full validator or joining a pool but their coins could be lost due to malicious activity or by failing to validate network transactions. Similar risks emerge when lending Ether via centralized services and decentralized protocols.

On the other hand, listed companies can create new shares to benefit from excessive valuations or increase their cash position.

Tax changes, operational liabilities, and regulatory changes are other risks that stockholders sometimes face. For example, Roche was recently challenged for $4.5 billion from the government for deceiving the CDC, according to a lawsuit unsealed in September 2019.

Decentralized protocols are virtually free of these perils, and perhaps this justifies their sky-high valuations.

Considering the risks described above, investors might conclude that holding Ether is less risky than buying stocks. At least it is possible to self-custody, making the asset less dependent on third parties and unauthorized transactions.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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SEC approves Exodus wallet for Regulation A stock offering

Exodus shares are now available for purchase through its wallet.

Crypto wallet provider Exodus recently received the green light from the United States Securities and Exchange Commission to sell shares of its operation. 

According to a public statement from Exodus on Thursday: “Exodus Movement, Inc., a Delaware corporation that has developed a leading non-custodial cryptocurrency software platform, received notice that the Securities and Exchange Commission has qualified its offering of Class A common stock under Regulation A.”

The shares hit the market last night in the U.S. and are available through the wallet itself. For many years, Exodus has existed as a desktop wallet for crypto users, compatible with an array of digital assets. The wallet also hosts a feature that allows users to swap between assets within the wallet. Now, according to the statement, users can buy Exodus shares through the app as well.

Exodus filed with the SEC for a Regulation A offering in February, as detailed in its related paperwork. Regulation A offers a form of exemption under which entities can sell unregistered shares, based on information from Investor.gov.

The Thursday statement notes a price of $27.42 per unit of Class A common stock. Buyers can pick up as little as a single share, or as much as 2,733,229 shares. “All investors must be registered with the Exodus transfer agent Securitize,” the statement noted, pointing toward two avenues for registration: through Securitize or in the Exodus wallet itself.

Shares can only be purchased by U.S. residents. Arizona, Florida and Texas folks, however, cannot participate. The statement also added:

“Exodus is currently exploring partnerships with alternative trading systems (ATS) that could potentially expand the availability of Exodus shares. Exodus intends to make the Class A common stock available for trading on several ATS, including the tZERO ATS within nine months of this offering.”

Crypto companies going mainstream has been hot news as of late, with Coinbase’s direct listing on the horizon, expected to occur on April 14.

Quotes in this article taken from previously published sources have been lightly edited.

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Reported volume of top South Korean crypto exchanges surpasses that of the country’s stock market

The increase in volume came as the price of Bitcoin rose to a new all-time high of more than $61,000 Saturday.

The volume of transactions in the South Korean digital currency market briefly exceeded the daily average transaction amount of the country’s stock market on Sunday.

According to data from CoinMarketCap, the combined 24-hour volume of major South Korea-based crypto exchanges UPbit, Bithumb, Coinone, and Korbit was more than $14.6 billion on Sunday. On Friday, the same metric was roughly $14.5 billion on the Korea Composite Stock Price Index, or KOSPI, and $10 billion on the Korean Securities Dealers Automated Quotations, or KOSDAQ.

The increase in volume came as the price of Bitcoin (BTC) rose to a new all-time high of more than $61,000 Saturday before dipping under $60,000 again.

It should be noted that trade volumes appearing on CoinMarketCap are not always believed to be accurate due to the prevalence of volume inflation. CoinMarketCap has introduced several initiatives to combat inflated volume data but the figures reported there are higher than what’s seen on Messari.

Some crypto exchanges in South Korea have experienced their share of regulatory and business-related challenges in the last year.

In August, local authorities seized Coinbit, the country’s third-largest cryptocurrency exchange, following allegations 99% of transaction volume on the exchange was faked through wash trading. Data from CoinMarketCap shows Coinbit’s 24-hour transaction volume is now just over $900 million.

In addition, major crypto exchange Binance’s Korean arm said it would close its doors in January, citing shrinking liquidity and low trading volume of its BKRW trading pairs. Bithumb, the second largest exchange in the country by volume, announced last week it would be implementing new Anti-Money Laundering and Know Your Customer measures.

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Here’s how the Purpose Bitcoin ETF differs from Grayscale’s GBTC Trust

The newly launched Purpose Bitcoin ETF surpassed even the most bullish expectations but how does it differ from Grayscale’s GBTC Trust?

Since 2017, investors have been anxiously awaiting a Bitcoin ETF approval as the existence of such a fund was an important symbol of mass adoption and acceptance from the realm of traditional finance. 

On Feb. 18, the Toronto Stock Exchange hosted the official launch of the Purpose Bitcoin ETF and the fund quickly absorbed more than $333 million in market capitalization in just two days.

Now that the long-awaited Bitcoin ETF is here, investors are curious about how it will compete with Grayscale Investments GBTC fund. On Feb. 17, Ark Investment Management founder and CEO Cathie Wood said the likelihood that U.S. regulators will approve a Bitcoin exchange-traded fund has gone up.

Although exchange-traded funds (ETF) and exchange-traded notes (ETN) sound quite similar, there are fundamental differences in trading, risks, and taxation.

What is an exchange-traded fund?

An ETF is a security type that holds underlying investments such as commodities, stocks, or bonds. It often resembles a mutual fund, as it is pooled and managed by its issuer.

ETFs have become a $7.7 trillion industry, growing by 65% in the last two years alone.

The most recognizable example is the SPY, a fund that tracks the S&P 500 index, currently managed by State Street. Invesco’s QQQ is another EFT that tracks U.S.-based large-capitalization technology companies.

More exotic structures are available, such as the ProShares UltraShort Bloomberg Crude Oil ($SCO). Using derivatives products, this fund aims to offer two times the daily short leverage on oil prices.

What is an exchange-traded note?

Exchange-traded notes (ETN) are similar to an ETF in that trading occurs using traditional brokers. Still, the difference is an ETN is a debt instrument issued by a financial institution. Even if the fund has a redemption program, the credit risk relies entirely on its issuer.

For example, after Lehman Brothers imploded in 2008, it took ETN investors more than a decade to recoup the investment.

On the other hand, buying an ETF gives one direct ownership of its contents, creating different taxation events when holding futures contracts and leveraging positions. Meanwhile, ETNs are taxed exclusively upon sale.

GBTC does not offer conversion or redemption

Grayscale’s Bitcoin Trust Fund (GBTC) is the absolute leader in the cryptocurrency market, with $35 billion in assets under management.

Investment trusts are structured as companies — at least in regulatory form — and are ‘closed-end funds.’ Thus, the number of shares available is limited and the supply and demand for them largely determines their price.

Investment trust funds are regulated by the U.S. Office of the Comptroller of the Currency (OCC), therefore outside the Securities and Exchange Commission (SEC) authority.

GBTC shares cannot easily be created, neither is there an active redemption program in place. This tends to generate significant price discrepancies from its Net Asset Value, which is the underlying BTC fraction represented.

An ETF, on the other hand, allows the market maker to create and redeem shares at will. Therefore, a premium or discount is usually unlikely if enough liquidity is in place.

An ETF instrument is far more acceptable to mutual fund managers and pension funds as it carries much less risk than a closed-ended trust like GBTC. Retail investors may not have been aware of the possibility that GBTC trades below net assets value. Thus the recent event might further pressure investors to move their position to the Canadian ETF.

To sum up, an ETF product carries a significantly less risk due to greater transparency and the possibility to redeem shares in the case of shares trading at a discount.

Nevertheless, the impressive GBTC market capitalization clearly states that institutional investors are already on board.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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