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Since Genesis Global Trading launched a lending business in 2018, it has originated more than $40 billion loans — and that growth doesn’t appear to be slowing down. 

The firm, which releases a breakdown of its business across trading, lending, and derivatives every quarter, saw active loans outstanding on its platform increase 136% relative to the previous quarter, totaling $9.03 billion. The sharp increase in outstanding loans illustrates the desire for credit, which is being driven by “relentless” demand for dollars among crypto market participants. 

That demand for cash is tied to the basis trade, cashing in on the difference between the price of futures on bitcoin and the underlying crypto. There’s also demand from companies in the market that want to borrow dollars against their crypto to build out operations without having to sell. 

Contributing to the demand for credit is the entrance of corporate treasuries into the crypto market over the last several months, according to Josh Lim, head of derivatives at Genesis. 

In an interview with The Block, Lim said the “biggest driver comes from the growth of corporate treasury usage of crypto and the associated lending needs of those types of accounts.”

“It is very linked to the overall growth of the industry,” said Lim, who previously worked at both Galaxy and Circle in trading capacities. “It’s not just price action, it is the qualitative category of counter-parties entering the space.”

“They want to have as much capital efficiency as they can get to deploy risk into leveraged strategies, basis and derivative trades or DeFi yield programs, whatever their mandate may be,” he added. 

Lim and the team at Genesis are not the only ones beating the drum about the lending market’s growth. Alan Lane, CEO of Silvergate, told The Block in a recent interview that the entrance of corporate treasurers will likely fuel demand for credit. Silvergate lends to clients who store their crypto with custody partners through SEN Leverage. Bitstamp, the crypto exchange, is one of its custody providers and recently said it believes it will originate nearly a quarter-billion worth of loans by the end of the year through SEN. 

“You have folks like Elon,” Lane said, referring to Elon Musk, CEO of Tesla, which notably made a billion-dollar-plus bitcoin allocation. “He could have just put his bitcoin in custody with Silvergate and then we could lend dollars against it.”

The demand for dollars is putting pressure on lenders in the market to find new sources of funding. One such source might be familiar to those familiar with Wall Street parlance: securitization. Indeed, the topic of bundling up loans or interest payments into securitized products that banks or other financial players purchase from crypto firms is becoming a centerpiece of recent convos in the crypto credit market. 

“It is a very, very common topic,” Lim said. 

© 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.

Centuries-old auction house Sotheby’s has collaborated with Coinbase to accept bitcoin and ether for a physical artwork for the first time.

The artwork, Love Is In The Air, is a painting by popular graffiti artist Banksy. It will be on auction on May 12 at Sotheby’s New York. Bidding for the work is estimated at $3 to 5 million.

Sotheby’s said the decision to accept crypto via Coinbase Commerce “marks an important next step” as it aims to continue leading the art market in the adoption of blockchain technology.

When asked if it would accept crypto for more physical artworks in the future, a spokesperson for the company declined to comment to The Block. But Sotheby’s appears to be paving the way for further adoption of crypto.

Last month, the second-largest auction house in the world debuted a non-fungible token (NFT) sale that yielded nearly $17 million. The sale saw participation from more than 3,000 unique collectors, most of whom were first-time buyers with the auction house, said Sotheby’s.

“With the growing adoption of digital art and NFTs, along with our increased focus on digital innovation, we’ve seen an increasing appetite among collectors for more seamless payment options when doing business with Sotheby’s,” said Sotheby’s CTO Stefan Pepe. “Leveraging the trusted exchange Coinbase is a natural progression and is in line with our dedication to enhancing our client buying experience and developing new ways to expand our client base by meeting them where they are.”

© 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.

During a webinar on Tuesday, the CEOs of  Robinhood and Paxos juggled ideas for speeding up stock settlement times.

Robinhood’s Vlad Tenev has been in the public spotlight since wild volatility in meme-driven stocks like GameStop and AMC pushed the popular stock trading app into the public eye earlier this year. At the time, he appeared before Congress advocating for T+0, or same-day clearing and settlement on trading. 

“Recently, it went to T+2. You kind of look at the platonic ideal of what settlement is, and you have to assume it’s going to be instantaneous,” Tenev said.

Paxos CEO Charles Cascarilla agreed with Tenev that trading doesn’t need to be this way. “We’ve reached the end of this old way of operating. That’s what GameStop showed us,” Cascarilla said. “Frankly, we know how to fix this, just like we know how to fix the problems with our tunnels and rail systems. We just have to do it.”

Tenev pointed to cryptocurrency exchanges as an example of places successfully running same-day settlement already. “I think there are asset classes that essentially operate like this. Cryptocurrency markets, for example, where there is fiat-to-crypto settlement happening in these ad hoc batches.”

Paxos currently runs a T+0 settlement platform that puts securities on a blockchain. That platform operates under restricted parameters and an SEC no-action letter. 

Robinhood, meanwhile, has seen a spike in users buying crypto. Those crypto purchases, however, remain heavily custodial, with users unable to move coins off of the platform and into their own wallets. The firm is trying to change that.

“We’ve been staffing the crypto team pretty tremendously. We’ve committed to doing this. We want to deliver wallets to people,” said Tenev. 

© 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

• With Ripple’s legal troubles in the background, the firm’s CTO David Schwartz is focused on improving its payments network.
• According to Schwartz, recent technical improvements to Ripple’s XRP Ledger will help make the system a better alternative to certain cross-border payment systems.

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S&P Dow Jones Indices, the firm behind the ubiquitous S&P 500, announced Tuesday the launch of three new crypto indexes. The launches lay the foundation of a business that can touch a wide range of financial services companies, according to S&P DJI global head of innovation Peter Roffman.

The firm, formed by S&P Global in 2012, announced its intentions to launch cryptocurrency indexes in December through a partnership with institutional data provider Lukka. The first batch of crypto indexes includes the S&P Bitcoin Index, S&P Ethereum Index, and S&P Cryptocurrency MegaCap Index, the latter of which tracks both Ethereum and Bitcoin. 

“This is the first step,” Roffman said. The firm, which runs hundreds of thousands of indexes spanning major asset classes, plans to roll out indexes tied to other top cryptocurrencies in the coming months. 

“We are going to launch a broader set of indices,” Roffman added, noting that the firm wanted to get started with the two “most liquid and recognized assets.”

“We want to pick the coins that have the largest institutional following,” he told The Block.

According to S&P DJI’s Sharon Leibowitz, the index-provider sees an opportunity in the market for decentralized finance. 

“I think it is early,” said Leibowitz, who’s worked in technology at JPMorgan, Deutsche Bank, and UBS. “Some of these coins will probably qualify for our indexes as we get down to the next tier.”

Indexes are an important component of Wall Street’s market structure, powering tradable products like exchange-traded funds and serving as a benchmark for investors making allocations in a given asset. 

Roffman said the interest in the products reflects the growth of the broader crypto market. Banks, for instance, could leverage these indexes to build over-the-counter derivatives or structured products “of all different flavors.” Such products are tied to the price of an underlying asset, index, or basket of different assets. They could provide a way for banks to offer their clients exposure to BTC and ETH without having to store the underpinning crypto assets. 

During 2017’s market cycle, several banks explored the idea of launching products tied to bitcoin. Morgan Stanley, for instance, toyed with a swap product. 

“I don’t have any specifics,” Roffman added. “In general, folks are looking at a variety of creative solutions.”

Beyond that, the growing list of would-be bitcoin ETF providers offers another opportunity for S&P DJI. 

“We try to avoid direct comparisons with competitors but what I can say is we have a high-quality realistic way for asset managers to build these products.”

© 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.

The Digital Dollar Project has committed to launching “at least” five pilot programs in the next year to test possible frameworks for a U.S. central bank digital currency (CBDC). A partnership with technology consultancy firm Accenture is funding the projects.

J. Christopher Giancarlo, former chairman of the Commodities Futures Trading Commission (CFTC) co-founded the Digital Dollar Project just after his departure from the regulator. During his time in Washington, he was known to be crypto-friendly, and has since spent his retirement from politics in the crypto industry, accepting board positions at crypto firms and speaking out on the importance of a U.S. CBDC.

“The U.S. doesn’t need to be first to the central bank digital currency, but it does need to be a leader in setting standards for the digital future of money, which is why our pilot testing collaboration with Accenture and other partners is so critical,” he said.

The Digital Dollar Project will work to identify and solve technical and functional requirements, as well as assess the remaining benefits and challenges for applications in both retail and wholesale use. It plans to gather findings on the technology as well as existing policies to present to stakeholders and policymakers. At the close of its tests, the project will release its findings to the public, with the hopes that academics and lawmakers alike will incorporate them into the discussion surrounding CBDC.

The Federal Reserve Bank of Boston and the Massachusetts Institute of Technology are also doing considerable research on CBDCs. The Digital Dollar Project plans for its pilots to complement the work coming out of those centers. 

The Project said it’s open to pilot participants from “all relevant sectors, including commercial institutions, the innovation community, non-profit organizations and universities.”

© 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.

Cryptocurrency exchange Gemini has added support for the meme-themed cryptocurrency dogecoin, which has risen in popularity and price in recent months.

The development means Gemini clients will now be able to trade and custody dogecoin with the exchange in all 50 U.S. states. Trading will first open on Gemini’s API and active trader applications for USD. Then it will open on Gemini’s mobile and web applications on a rolling basis for USD, GBP, EUR, CAD, AUD, HKD, and SGD pairs, said the exchange.

“Yes, it’s a meme coin, but all money is a meme,” said the exchange. “And all money is both an idea and a matter of faith or belief in it. Over the multi-milennia history of money, the majority of money (be it shells, beads, precious metals, etc.) has been what we the people say it is and believe it is.”

As The Block reported recently, dogecoin is seeing signs of potential institutionalization. That means not only retail traders but even professional and institutional traders are executing dogecoin trades.

Dogecoin, a fork of litecoin, was originally created as a joke in 2013. Over the past year, dogecoin’s price has surged more than 23,000% and it is now the fourth-largest cryptocurrency by market capitalization, according to CoinGecko.

One Dogecoin is currently priced at around $0.50 and its market capitalization is about $66 billion, per CoinGecko.

© 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.

A new bill on the floor of the New York State Senate aims to prohibit crypto mining centers from operating until the state can assess their environmental impact.

New York Senate Bill 6486 has been referred to the State Senate’s Environmental Conservation Committee after its introduction by Senator Kevin Parker on Monday. 

The bill would institute a three-year moratorium on a crypto firm’s mining operation. The state would then conduct a full environmental impact statement on the impact of the center’s greenhouse gas emissions from mining, as well as its effects on water quality, air quality and wildlife. The report would be accompanied by a 120-day public comment period and at least one public hearing.

Mining centers shown to be harmful, which would constitute those that throw the state off the track of meeting its emission targets detailed in the Climate Leadership and Community Protection Act of 2019, won’t receive the necessary permits to operate. 

The bill argues that many of New York’s mining centers are located in retired or converted fossil-fuel power stations.

If the bill is voted through, it will likely affect New York’s Greenridge Generation plant. The power plant based in Dresden, New York was mining about 5.5 bitcoins each day in 2020. The plant’s parent company, Greenridge Generation Holdings, is expected to go public through a U.S. merger deal this year. 

© 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.

Crypto investment Multicoin Capital is launching a new fund worth $100 million, according to a Tuesday announcement.

The Venture Fund II would invest in several crypto sectors, including decentralized finance (DeFi), non-fungible tokens (NFTs), Web3 applications, and crypto infrastructure projects, said Multicoin.

Specifically, in DeFi, the fund is interested investing in projects that are building on Solana, which Multicoin invested in previously. 

Multicoin said that “there will be a burgeoning DeFi ecosystem on Solana written natively in Rust that takes advantage of Solana’s performance, and plugs into Serum’s composable on-chain order book.”

As for NFTs, Multicoin said that it is “convinced” that virtual world projects, known by some as the Metaverse, will be a “massive” opportunity. When asked why, Kyle Samani, managing partner of Multicoin Capital told The Block: “One of the most important trends in the world over the last 20 years has been that people spend an increasing percentage of their time online. The Metaverse represents the logical conclusion of that trend.”

Besides DeFi and NFTs projects, Multicoin said it is also looking to invest in crypto-native distribution platforms for creators, gaming platforms, and Web3 infrastructure projects through its second fund.

“Over the next few years, there is going to be an incredible wave of innovation in Open Finance and Web3, as well as new kinds of crypto-enabled infrastructure and applications,” said the firm. “This wave will only be possible because the underlying infrastructure has matured to a sufficient level. We expect to deploy a significant amount into these areas out of Venture Fund II over the next few years.”

Multicoin’s existing portfolio includes more than 30 projects, including Solana, The Graph, Audius, Helium, and Arweave, as The Block Research reported recently.

Multicoin also announced that it has promoted three of its team members — Matt Shapiro, Mable Jiang, and John Robert Reed — to partners.

© 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.