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FinTech Collective, a venture capital firm investing across fintech and digital assets, has raised $250 million in fresh capital.

$200 million will be poured into the firm’s existing early-stage strategy, which targets fintech and digital assets, with $50 million assigned to a newly formed Decentralized Finance (DeFi) fund.

According to an announcement, the DeFi fund will invest in both equity and tokens linked to “open-source, composable financial protocols and applications being built on smart-contracting platforms such as Ethereum.”

Investors in the latest raise include a range of asset managers, such as The State of Wisconsin Investment Board, The Teachers’ Retirement System of the State of Illinois, Greenspring Associates, and StepStone Group. DRW and British billionaire Alan Howard also invested.

The raise brings FinTech Collective’s total assets under management to more than $500 million. Founded in 2012, the company has invested in 53 companies globally to date. Its big exits include the sales of Quovo and Reorg Research, and the upcoming SPAC-merger of MoneyLion.

Managing partner Brooks Gibbins said in a statement that Fintech Collective was “among the first venture capital firms to recognize the fintech opportunity resulting from the global financial crisis.”

“We believe the next 30 years represent an unprecedented period when every facet of financial services will be deconstructed and reconstructed, and our deep global roots, particularly in the New York and European ecosystems, allows us to take advantage of this tremendous opportunity,” he added.

© 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.

Since its public market debut in April, crypto exchange giant Coinbase has stockpiled around $4 billion in cash to prepare for a possible regulatory crackdown or so-called crypto winter, the firm’s chief financial officer told the Wall Street Journal. 

“We want to ensure that we maintain those cash reserves so that we can continue to invest and continue to grow our products and services in the event that we go into a crypto winter,” Asia Haas said, referring to an extended drawdown in market activity. 

The reserves, which amounted to $4.36 billion as of June 30, could help the firm navigate potential regulatory risks brought on by Securities and Exchange Commission head Gary Gensler.

Gensler recently said that decentralized finance projects are not immune from regulatory oversight, the Journal reported Thursday. Coinbase facilitates trading in a number of decentralized finance coins, like Uniswap, Aave, and Sushi.

Coinbase’s second quarter brought in more than $2.2 billion for the firm compared to just $186 million during the second quarter of the previous 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.

The stock price for Robinhood, the popular cryptocurrency and stock trading app, was down more than 10% at one point on Thursday after posting a $502 million loss during the second quarter of 2021. 

At the time of writing, the stock was trading hands at $45.80, a decline of about 8%. Robinhood’s all-time high was above $70 a share. 

The trading app, which went public on Nasdaq last month, disappointed Wall Street with the loss, which was tied to emergency funding Robinhood took out to shore up the platform amid frenzy meme-stock trading. Still, revenues for the quarter were up 131% from the same quarter last year. 

Still, the firm’s second-quarter earnings showed a surge in cryptocurrency trading, with more than 40% of the firm’s total revenues coming from such transactions, as The Block previously reported. 

The firm said that over 60% of its funded accounts traded crypto during the quarter. During the three-month period, more customers made their first trade in the crypto market rather than stocks. Sixty-two percent of its cryptocurrency transaction revenue was derived from trading in Dogecoin, per the results.

© 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.

Each month The Block Research hosts an analyst call reviewing the most important topics from the month prior. You can register for future analyst calls here.

This month, Lars Hoffman takes a look at July by the numbers. Eden Au shares details on Ethereum’s recent upgrade, EIP-1559. Lastly, Igor Igamberdiev takes a look at loyalty in the largest DeFi protocols. 

You can view this months analyst call in its entirety below and download the accompanied slides here.

This research piece is available to
members of The Block Genesis.
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this Genesis research on The Block.

Mike Novogratz’s Galaxy Digital has teamed up once again with data and financial information giant Bloomberg to launch a new crypto index tied to decentralized finance or DeFi. 

The new index, revealed Thursday, will track nine DeFi tokens to start, and will also serve as the basis for a new passively-managed fund by Galaxy. In 2018, Bloomberg and Galaxy launched the Bloomberg Crypto Index, comprised of the market’s most liquid tokens including bitcoin and ether. 

Indexes underpin financial products, such as an over-the-counter derivative or exchange-traded product. Both indexes are owned and administered by Bloomberg, which determines the product’s constituent assets. 

Assets in the index including Uniswap, Aave, Maker, Compound, Yearn, and Sushi. The new index joins a rival DeFi index operated by Bitwise, which launched in February.

According to a press release, the coins in the DeFi index were “selected based on institutional trading and custody readiness in the United States as well as quality of pricing.”

“Galaxy continues to pioneer inroads for institutions seeking exposure to the innovation happening within the crypto ecosystem,” noted Galaxy’s head of asset management Steve Kurz. “The blockchain-based infrastructure behind DeFi is maturing at an accelerating rate and clear examples of how this new technology can disrupt financial services are emerging in real-time. Our unique DeFi Index Fund provides investors with institutional-grade exposure to the future of financial services.”

© 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.

Former Securities and Exchange Commission (SEC)  Chair Jay Clayton has taken on a role on the advisory board at crypto security firm Fireblocks.  

This is the second advisory role Clayton has taken on since his departure from the SEC in December. In March, he signed on to advise digital hedge fund One River.

In today’s announcement, Clayton called the firm a “leader in the evolving digital asset space.” In the role, Clayton will help Fireblocks navigate the current regulatory landscape in the U.S.

“My primary role is to help Fireblocks understand how these new digital solutions and investment opportunities best fit within existing market practices and regulations,” he said in an email to The Block. “In short, how they can improve the function and resilience of our infrastructure.”

Clayton was former President Donald Trump’s pick for the securities regulator back in 2017, and his exit made room for President Joe Biden to nominate Gary Gensler to the office.

During his time as a regulator himself, Clayton took a technology-agnostic approach to crypto regulation. He guided the SEC through the initial coin offering boom in 2017 by applying existing regulation to crypto projects. He has continued to hold this sentiment. Still, he said regulators need to “embrace a focal point for regulatory coordination” with “function-based analysis” in order to effectively regulate crypto’s activity in securities markets.

“If you look at the function that crypto assets are providing, they will be regulated in the same way as the incumbent assets that serve a similar function are,” he told The Block. “To the extent a crypto asset is a means of payment nationally and internationally, I expect that it will be subject to the same Anti-Money Laundering, Know Your Customer, and Bank Secrecy Act types of requirements that international wire transfers are subject to.”

As for Fireblocks, it scored unicorn status last month, raising $310 million at a $2 billion valuation.

© 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 Web3-focused investment firm has launched with backing from some of the cryptocurrency market’s most well-known investment firms.

Follius Ventures LLC, which has been operating in stealth for several months, was founded by Jason Kam, a former director at New York-based Briarwood Chase Management. The new venture is backed by investment firms ParaFi Capital, Dragonfly Capital, and other investors such as Compound founder Robert Leshner and Vance Spencer and Michael Anderson, the founders of Framework Ventures. Kam’s previous employer, Briarwood, also is an investor. 

Follius plans to invest in projects working on so-called Web3 applications, referring to decentralized applications that operate on blockchain networks. The fund is aiming to raise around $50 million, with nearly $45 million committed thus far. Follius will have a focus on entrepreneurs in Asia. 

“I would say that the typical entrepreneurs in the greater APAC region are often fighting uphill battles in courting local firms who may not get it or be in a position to underwrite (especially China), or international firms that still face a bit of language and cultural barrier,” Kam told The Block, adding:

“The gap will close eventually, but there is a good window of opportunity in the region for 2-3 years in being local, missionary, and long-term focused.”

In his role at Briarwood, Kam focused on identifying Chinese investment opportunities. 

The cryptocurrency market has seen a number of new fund launches, including Framework’s $100 million venture fund focused on decentralized finance and CoinFund’s recently announced fund. 

© 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.

Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), has said that the agency could regulate decentralized finance (DeFi) projects.

Specifically, DeFi projects that reward participants with valuable tokens or similar incentives could be regulated, no matter how “decentralized” they say they are, Gensler said in an interview with the Wall Street Journal on Wednesday.

“There’s still a core group of folks that are not only writing the software, like the open source software, but they often have governance and fees,” said Gensler. “There’s some incentive structure for those promoters and sponsors in the middle of this.”

According to Gensler, the term DeFi is “a bit of a misnomer” because these platforms “facilitate something that might be decentralized in some aspects but highly centralized in other aspects.”

Some DeFi platforms can be compared with peer-to-peer lending platforms, which are regulated by the SEC, said Gensler.

© 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

• Maximizing fees earned from liquidity provision on Uniswap v3 requires active management
• Charm Finance and others have developed automated strategies that “rebalance” liquidity positions based on various parameters
• Rebalancing strategies currently underperform passive liquidity provisioning in Uniswap v2

This research piece is available to
members of The Block Genesis.
You can continue reading
this Genesis research on The Block.

Liquid, a regulated crypto exchange in Japan, has suspended asset deposits and withdrawals as its hot wallets have been hacked in a security breach.

The firm said in a Tweet on Thursday morning Japan time that its hot wallets were compromised and it is moving assets into cold wallets. “We are currently investigating and will provide regular updates. In the meantime deposits and withdrawals will be suspended.”

In a follow-up Tweet, Liquid specified four blockchain addresses – in Bitcoin, Ethereum, Tron and XRP – that are believed to be associated with the hacker.

But Liquid has not yet confirmed how much assets exactly have been stolen. The exchange has not responded to The Block’s request for comment. 

But according to on-chain data flow, the four addresses in total received crypto assets worth more than $80 million with transactions all being initiated hours ago and are still in possession of about $74 million as of press time.

The Bitcoin address has received 106 BTC, worth $4.7 million, in multiple transactions but from just two sending addresses. The Ethereum address has received $69 million worth-of ETH and various ERC-20 tokens within the past seven hours.

The assets on the Tron and XRP addresses have been further sent out totaling to over $10 million.

Shortly after Liquid revealed the hack on Twitter, bitcoin’s price started to drop below $45,000 and is now changing hands around $44,100.

© 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.