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Crypto assets are here to stay. What began as some niche financial experiment has matured into a retail-driven bona fide market, garnering the interest of financial institutions and professionals alike. Bitcoin, the oldest and most secure crypto asset, has seen its highs and lows, as its price has plummeted and skyrocketed – seemingly all while you grabbed your morning cup of coffee.

On Oct. 6, CoinDesk hosted its second annual Bitcoin for Advisors event to educate financial professionals on all things bitcoin. And while the focus remained bitcoin – hence the name – the conference also dabbled into some of the other parts of the larger crypto ecosystem, giving advisors a new understanding of bitcoin as an asset class and equipping them with the tools to do more research on their own.

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So why should advisors take a close look at crypto now? Well, according to Onramp Invest’s CEO Tyrone Ross the answer is simple: “If we’re going to see the next great lift in crypto assets, it’s going to come from the registered advisors space … it’s clear institution adoption has come after mass acceptance”.

What bitcoin and digital assets mean for advisors

And Bitcoin for Advisors’ first keynote speaker corroborated this story.

Ric Edelman, the founder of Digital Assets Council of Financial Professionals, gave a lot of food for thought when discussing bitcoin and what this new digital asset class means for advisors. He made it clear that advisors cannot afford to be left behind and that they need to educate themselves on this new asset class.

Edelman, who is famous for creating the 1% digital allocation strategy for bitcoin and digital assets, went on to demonstrate how getting advisors “off zero” upside far outweighed the potential downside.

He went on to note his support of Gary Gensler’s recent actions as chair of the U.S. Securities and Exchange Commission, citing Gensler’s experience at MIT and stating, “We finally have adult supervision in the room” (though to be clear, this was not a slight at Gensler’s predecessor). Edelman was appreciative of Gensler’s breadth of experience in crypto and said that he looks forward to the clean-up that’s to come. Notably, Edelman doesn’t see the lack of full regulatory clarity as a reason for advisors to sit on the sidelines, believing that they have enough of a framework to work with.

While Edelman may have been a tough act to follow, all of the speakers brought important insights for advisors. Max Schatzow, a shareholder at the law firm Stark & Stark, broke down compliance and what advisors can and can’t say to their clients, and Morgen Rochard of Origin Wealth Advisers LLC led an excellent discussion on bitcoin and practice management.

Bitcoin’s obstacles and opportunities

At the top of the hour, Bitcoin for Advisors featured financial planning nerd Michael Kitces in a fireside chat with Tyrone Ross, covering bitcoin’s obstacles and opportunities. Kitces isn’t quite completely sold on the bitcoin thesis; he holds a healthy dose of skepticism when it comes to the oldest digital asset in the ecosystem, and for good reason – the “holding” problem advisors have on how to integrate assets into their systems remains. Unless advisors are able to aggregate crypto held by their clients for tracking and reporting, the conversation remains somewhat bleak, Kitces said. Furthermore, he anticipated that advisors’ investments in crypto assets will much more likely happen in the format of an exchange traded fund (ETF) or a separately managed account (SMA) as opposed to trading individual coins, believing advisors to prefer more diversified baskets.

Ross pushed back on the ETF bit, mentioning that fees would be quite expensive, and Kitces conceded that the cost might be prohibitive. And while Kitces remains skeptical about an asset that goes up solely because others are putting money into it, he positions himself and advises others to remain curious and keep an eye out as everything continues to unfold. For one thing, Kitces said he is certain that advisors, whether they hate or love bitcoin, can no longer afford to ignore the asset.

Perspectives on advisor fees and continuing education

Rounding out the end of the day were two of the most recognizable names on the advisor end: Grayscale and Coinbase. (Disclosure: Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.) In a redux of last year’s event, Grayscale CEO Michael Sonnenshein and Lauren Abendschein, Coinbase’s head of U.S. institutional sales, spoke together. From the onset, Sonnenshein came out strongly, saying that fees ought not to be the determining factor on whether an advisor breaks into the space. He noted that the fees will come down over time, but advisors should not let that be the reason they don’t consider bitcoin as part of their portfolio.

Abendschein agreed on the fees, and went on to encourage advisors to continue educating themselves in the space, citing the sophisticated tooling being introduced to the market as an opportunity, as well as catching investors up to speed on the ever-expanding crypto landscape.

Crypto moving forward

And finally, in a closing keynote that can only be described as a history lesson rolled into an optimistic forward-looking take, Dani Fava, Envestnet’s head of strategic development, took advisors down memory lane to a time and place when only a select few institutions were able to trade stocks and how deregulation gave rise to the likes of Charles Schwab. She likened this history lesson to the current situation unfolding before our eyes: Crypto is cutting out the middleman, and if advisors don’t adapt, they will be left behind because their clients will keep building wealth without them.

American companies targeted by ransomware attacks would be required to disclose payments made in connection with those incidents under a new law proposed in Congress.

Introduced by Senator Elizabeth Warren (D-MA) and Representative Deborah Ross (D-NC), the Ransom Disclosure Act would, per an announcement from earlier this week:

“[R]equire ransomware victims (excluding individuals) to disclose information about ransom payments no later than 48 hours after the date of payment, including the amount of ransom demanded and paid, the type of currency used for payment of the ransom, and any known information about the entity demanding the ransom.”

Additionally, the bill proposes that the U.S. Department of Homeland Security be required to make disclosure information available on an annual basis, though no identifying information about the payees would be disclosed. DHS leadership would also establish a web portal for voluntary disclosure and prepare a study “on commonalities among ransomware attacks and the extent to which cryptocurrency facilitated these attacks and provide recommendations for protecting information systems and strengthening cybersecurity.”

“Ransomware attacks are skyrocketing, yet we lack critical data to go after cybercriminals. My bill with Congresswoman Ross would set disclosure requirements when ransoms are paid and allow us to learn how much money cybercriminals are siphoning from American entities to finance criminal enterprises — and help us go after them,” Warren said in a statement.

Ransomware as a cybersecurity challenge has taken on greater prominence over the course of 2021, with the Biden White House as well as Congress pushing for action in this area. Cryptocurrency as a payment method for such attacks has come under scrutiny, as evidenced by the particular nature of the proposed DHS reporting.

A new cryptocurrency-focused team announced Wednesday by the Department of Justice is focused in part on “tracing and recovery of assets lost to fraud and extortion, including cryptocurrency payments to ransomware groups.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Visionrare, a startup that aimedto create the fantasy football version of NFT venture funding, shut down its marketplace after a day of open beta testing, TechCrunch first reported. 

The original premise was that users could purchase NFTs representing fake shares of actual companies and compete among others regarding who had the most successful portfolio. 

However, the founders allegedly did not seek permission from the startups featured in the game to sell NFTs of fake shares of their companies. 

As Visionrare founders Jacob Claerhout and Boris Gordts wrote in a statement, Visionrare “underestimated the legal complexities” of creating such a game. They had inadvertently waded into the ongoing debate as to whether NFTs can represent securities. 

As the co-founders wrote: 

“Our goal from the get-go has been to create a game that brings the excitement of startup investing to a wide audience through NFTs. We want Visionrare to be an ode to startups and a fundamentally positive experience for both players and startups.

For the last couple of weeks we worked on building the minimal viable product of a game that brings this idea to life. However, during this process we underestimated the legal complexities and decided it is best to hold off on some of the current dynamics.

We are still convinced that startup investing is a fascinating, exciting and educational experience that should be available to a wider audience, but we want to make sure we build a product that is mindful of all the intricacies that come with this mission.”

Visionrare is now pivoting to a free-to-play model, in which the game will give players a certain amount of credits to build their startup portfolio and then compete on their portfolio’s performance. No player may purchase new NFTs of fake shares of startups, and anyone who has purchased any will be refunded. 

“Down the line, we’ll figure out if and how we can add a financial element again,” the Visionrare founders wrote in the statement.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

In the course of an investigation into Tether published on October 7, Bloomberg’s Zeke Faux unearthed new information as to the assets backing Tether’s USD-pegged stablecoin.

With a current supply of $72.6 billion according to The Block’s data, Tether’s backing has long attracted major interest. Controversy over that backing has proved central to developing standards of transparency among dollar-backed stablecoins. 

Faux reported: “I also learned that Tether had lent billions of dollars more to other crypto companies, with Bitcoin as collateral. One of them is Celsius Network Ltd., a giant quasi-bank for cryptocurrency investors, its founder Alex Mashinsky told me. He said he pays an interest rate of 5% to 6% on $1 billion in loans from Tether.”

Celsius provides retail users with interest-bearing accounts. Like competitor BlockFi earlier in the summer, Celsius has become the target of a growing roster of state securities regulators for their interest accounts. The regulators say these are unregistered securities. 

When reached by The Block, Mashinsky and representatives for Celsius had no immediate comment as to whether Tether had accounts with the firm.

Earlier in September, Mashinsky told The Block regarding recent scrutiny from securities regulators: “All of these agencies are supposed to be operating in the best interest of their community, of the users, of the actual people who live in this country, and if they do, then they will see that that DeFi/CeFi system is a stable system. And our traditional finance system requires trillions of dollars injected every year or two to keep it going.”

“BlockFi at the corporate level has not held Tether funds,” a representative for BlockFi told The Block. “Some clients may hold Tether and we would support that activity.”

Competing lending platform Nexo did not return a request for comment as of publication time. 

Beyond such interest accounts, there have long been rumors that the corporate paper backing Tether includes major investment in Chinese firms. The issue became particularly concerning as Chinese real estate developer Evergrande approached a colossal liquidity crisis after years of offering double-digit returns.

While Tether has denied holding Evergrande debt, the firm has avoided confirming or denying other short-term corporate bonds with Chinese companies. Faux reported finding a document with a detailed account of Tether’s reserves, which he says include billions of dollars of such debt. 

Tether, for its part, responded to the investigation by dismissing it as “a false and aging story arc about Tether based on innuendo and misinformation, shared by disgruntled individuals with no involvement with or direct knowledge of the business’s operations.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• dYdX has seen soaring volumes and rapidly rising revenues in recent months.
• We take a look at the technology that has enabled this, and what incentives have spurred it on.

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this Daily feature on The Block.

Mexico’s stock exchange BMV (Bolsa Mexicana de Valores) has been evaluating the possibility of listing crypto-based financial instruments like futures, CEO José-Oriol Bosch Par said during an Oct. 5 discussion streamed on YouTube.

In response to an audience question during the talk, which was primarily focused on how to start investing, the BMV’s CEO José-Oriol Bosch Par said that the stock exchange has evaluated instruments linked to crypto. He clarified that one possibility would be listing crypto futures through the derivatives exchange MexDer, a subsidiary of the BMV.

“Yes, it’s something we have talked about with financial authorities, that we’ve analyzed,” Bosch said. CoinDesk first reported the news in English following an article from Mexican financial news outlet El Economista.

While Bosch said during the video conversation that he sees crypto as part of the evolution of where money is headed, he understands that the financial authorities are taking a cautious approach to avoid a situation like the dot-com boom of the 1990s.

According to a report in El Economista, the BMV appears to be actively soliciting approvals to list crypto futures on MexDer and exchange-traded funds through a BMV platform called SIC. The report quotes Bosch as saying that Mexican financial authorities have been more conservative than others about the topic. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Stader Labs, an India-based crypto staking project, has raised $4 million in a seed funding round.

The round was led by Pantera Capital, with participation from Coinbase Ventures, True Ventures, Jump Capital, Huobi Ventures, TerraForm Labs, Solana Foundation, Near Foundation, and others.

Several angel investors, including Anchorage CEO Diogo Monica, Coinbase head of crypto Nemil Dalal, Staked CEO Tim Ogilvie, Polygon CEO Jaynti Kanani, Polygon COO Sandeep Nailwal, CoinDCX CEO Sumit Gupta, and Biconomy CEO Ahmed Al Balaghi, also backed the round.

Stader Labs raised the funds via a Simple Agreement for Future Tokens (SAFT) sale, co-founder and CEO Amitej Gajjala told The Block. The fresh capital will help the firm expand its team, add support for more blockchains, and promote its platform, he said. 

Stader currently supports Terra blockchain’s LUNA token for staking in a test version of its platform. Over the next few months, it looks to add support for native tokens of Solana (SOL), Ethereum (ETH), Polkadot (DOT), Polygon (MATIC), and Near (NEAR).

Stader claims to make crypto staking easier and more profitable for users. Gajjala said staking today is “manual and tedious,” meaning participants have to research validators, claim rewards, and find avenues to deploy those rewards. “Stader will curate the best staking service providers along with building automated yield optimization strategies to maximize returns,” he said.

Gajjala declined to name the staking service providers Stader will partner with, saying that selection will depend on a provider’s performance on a particular blockchain. Stader will charge a distribution fee from staking service providers and additional fees from stakers for providing high-yield strategies, Gajjala said of the firm’s business model.

Stader will act more like a staking aggregator bringing staking solutions in one place, including conventional staking, liquid staking, and derivatives to hedge the price risk of staked assets. “The staking aggregator model is our view of what the future of staking UX [user experience] will be for retail and institutions,” Franklin Bi, director of portfolio development at Pantera Capital, told The Block.

Stader is currently focused on onboarding retail customers and plans to serve institutions in the future. It also intends to build API staking solutions for exchanges and fintech apps.

There are currently 12 people working for Stader, and Gajjala plans to recruit 15-20 more people in the next six months to meet the firm’s growth plans.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Dapper Labs, the startup behind NBA Top Shot, announced Thursday that it will partner with the blockchain analytics firm Chainalysis. 

Dapper Labs will leverage Chainalysis’ blockchain analytics tools to monitor transactions and ensure better compliance to regulatory guidelines. In particular, Dapper Labs plans to use Chainalysis’ tools Know Your Transaction (KYT) and Reactor to respectively flag suspicious activity and investigate those interactions. 

“NFTs are one of the most exciting spaces in cryptocurrency, but they will only be successful in the long-term if we can ensure a safe environment for our customers,” said Naeem Bawla, Associate Director of Compliance of Dapper Labs in a statement shared with The Block. “We’re thrilled to partner with Chainalysis to keep potential bad actors off our platform, combat money laundering, and at the same time, stay on top of the quickly-evolving local and global regulatory and compliance space.” 

Dapper Labs has also announced plans to launch another NFT platform that will focus on American football sports highlights. The new NFT project is expected to launch in early 2022. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

New York-based neobroker Public.com is launching crypto trading tools, becoming the latest in a growing number of fintech firms to have made the move, according to a report in the Wall Street Journal. 

The stock trading startup, which was valued at $1.2 billion earlier this year, will now support trading in bitcoin, bitcoin cash, ether, ethereum classic, dogecoin, litecoin, stellar, zcash, cardano and dash, according to a press release.

More than three quarters of investors who entered financial markets via meme stocks, such as dogecoin, went on to diversify their portfolios, according to a recent Public.com survey.

Apex Crypto, an affiliate of Apex Clearing, is handling execution and custody services for the new crypto trading tool. 

The crypto bandwagon

A wide array of fintech firms from neobrokers to neobanks have rolled out crypto trading tools this year.

The Block reported in February that Plum and Freetrade, two United Kingdom-based investment apps, were hiring crypto experts to expand their offerings. In the same month, on the other side of the pond, mobile banking app MoneyLion announced plans for a new suite of crypto products. In April, German neobroker Trade Republic officially entered the crypto market, followed by the neobank N26 in July.

Launched in 2019, Public.com has raised more than $310 million to date from investors including Tiger Global Management, Accel and Lakestar. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.