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Guggenheim Partners, the $200 billion-plus asset-manager, could be the latest Wall Street firm to allocate capital to the cryptocurrency market, as per a filing. 

The firm, which invests across asset classes on behalf of companies, pension funds, and sovereign wealth funds, wrote in a filing that it might “seek investment exposure to bitcoin indirectly” via Grayscale’s Bitcoin Trust product (GBTC) through its Macro Opportunities Fund. 

“The Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”), a privately offered investment vehicle that invests in bitcoin,” the November 27 dated filing with the US Securities and Exchange Commission said.

The Macro Opportunities fund is one of the firm’s best-known with more than $5 billion in assets. As per the firm’s website, it seeks to offer exposure “to the investment team’s highest-conviction ideas in the current market environment through an unconstrained approach. The strategy opportunistically allocates to other asset classes to potentially enhance return and/or mitigate risk.”

Grayscale, one of the largest crypto asset-managers, recently surpassed $10 billion in assets as bitcoin soared to highs rivaling levels in 2017. The firm’s funds have gained popularity given their similarity to exchange-traded funds and their availability through retail brokers like Charles Schwab. Still, they have traded at large premiums, which could result in retail investors purchasing a share in the fund at a much higher premium than the price at which bitcoin is trading. 

“To the extent the Fund invests in GBTC, it will do so through a wholly-owned subsidiary, which is organized as a limited company under the laws of the Cayman Islands (the “Subsidiary”). Except for its investment in GBTC, the Fund will not invest, directly or indirectly, in cryptocurrencies.”

The firm would be the latest to signal its interest in bitcoin as a macro play. Earlier this year, investment legend Paul Tudor Jones penned a note outlining how bitcoin could serve as an inflationary hedge against aggressive central bank policy. In October, the billionaire doubled down on his position, saying that he liked bitcoin “more now than I did.” Billionaire Stanley Druckenmiller said earlier this month that he had placed a bet on bitcoin.

© 2020 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.

Imagine a network where partners – stemming from legacy finance, CeFi, and DeFi industries – are all created equal. This network has no central nodes and all data is sent from one node to another via the shortest, most efficient route available. In this network, all participants agree to a set of core conceits – be they policies, algorithms, a governance hierarchy, or otherwise – for the benefit of the network as a whole. Beyond these core conceits, network participants maintain their autonomy.

This is the vision that Velo Labs is pursuing with its Federated Credit Exchange Network. This network, powered by the Velo Protocol, enables network participants to freely issue digital credits pegged to any stable currency by staking VELO tokens. Network participants can then use these digital credits in their day-to-day business operations.

To participate in Velo Labs’ Federated Credit Exchange Network, there are several stipulations to which all network participants must abide. These include:

• VELO tokens serve as the network’s universal collateral;
• VELO token transactions are confirmed using a Federated Byzantine Agreement – the Stellar Consensus Protocol;
• The network’s core function is built on the Velo Protocol.

Behaviours outside these stipulations are left to the network participants.

The Velo Protocol

The Velo Protocol is a financial protocol that issues digital credits pegged to any fiat currency. It ensures that these digital credits are always properly collateralized to maintain a 1:1 digital credit to fiat currency value ratio. There are two primary components to the Velo Protocol. A Digital Credit Issuance Mechanism and a Digital Reserve System.

The Digital Credit Issuance Mechanism is the part of the Velo Protocol that issues digital credits pegged to any fiat currency. The Digital Reserve System automatically rebalances these collateral pools to maintain a 1:1 value ratio between the digital credits and their related fiat currency. In other words, as the price of the collateralized tokens increases on the open market, the Digital Reserve System automatically removes said tokens from the individual collateral pools and adds them to the system’s reserve pool. Similarly, when the price of the collateralized tokens falls on the open market, said tokens will be automatically removed from the system’s reserve pool and added to each individual collateral pool.

Issuing digital credits and balancing collateral pools in this way requires Turing-complete smart contracts – something that the Stellar Network does not support. As VELO is Stellar-based, a bit of cross-chain wizardry is required. Enter the Hermes Warp Protocol.

The Hermes Warp Protocol

The Hermes Warp Protocol is a cross-chain protocol that bridges Stellar and other chains such as Evrynet.

When smart contract functions are needed, the relevant Stellar-based tokens are locked in a custodian multi-signature address and Evrynet-based tokens – corresponding to each individual Stellar-based token – are released. When a network participant needs to convert their digital credits back into Stellar-based tokens, the Evrynet-based tokens are removed from circulation. The original Stellar-based tokens are then unlocked from their custodial accounts. On a related note, Velo Labs recently announced a partnership with Matrixport Cactus to provide cutting-edge custodial services.

The Hermes Warp Protocol also enables Ethereum-based tokens to be converted to-and-from Evrynet- and Stellar-based tokens. This paves the way for all Ethereum-based projects to connect to Velo Labs’ Federated Credit Exchange Network.

Velo Labs’ Federated Credit Exchange Network

Backed by the Stellar Network and the CP Group – one of the biggest conglomerates in the world – Velo Labs is currently serving business partners in Southeast Asia. By connecting the legacy finance, CeFi and DeFi industries, Velo Labs’ Federated Credit Exchange Network positions Velo Labs to be one of few blockchain projects with a clear path towards mass adoption.

Learn More about Velo.

© 2020 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.

Ripple is selling one-third of its stake in MoneyGram for the first time, after investing in the remittance firm last year.

The development was revealed in a filing submitted to the U.S. Securities and Exchange Commission on Friday, in which Ripple said it has authorized an unnamed financial institution to sell up to 4 million shares of MoneyGram on its behalf by March 31, 2021.

After the sale, Ripple will still own 2.3 million shares of MoneyGram and a warrant that gives it the right to buy additional 5.9 million shares, making the total to 8.2 million shares.

So, in terms of percentage stake, Ripple is selling about 33% of its shares in MoneyGram, when including the warrant shares. It would still hold about 67% of the stake (12.2 million minus 4 million shares).

“This is purely a judicious financial decision to realize some gains on Ripple’s MGI [Moneygram International] investment and is in no way a reflection of the current state of our partnership,” a Ripple spokesperson told The Block.

Indeed, the stock of MoneyGram has gone up in price since Ripple’s initial investment. In June 2019, Ripple bought the MoneyGram shares at $4.10 apiece — representing a premium of about 183% at the time. The shares are currently trading at about $7.45 — i.e., a gain of about 80% on the initial investment.

“We will remain a significant shareholder in MoneyGram following the sale — they are clearly a leader in the global payments space in over 200 countries and territories. In just over a year, we’ve made incredible progress and look forward to continuing to work alongside MoneyGram to transform cross-border payments,” said the Ripple spokesperson.

The Block has reached out to MoneyGram for comments and will update this story should we hear back.

Ripple and MoneyGram partnered last year to leverage XRP in forex settlements as part of MoneyGram’s cross-border payments business. As part of the deal, Ripple invested $50 million in MoneyGram. Their partnership agreement is scheduled to expire in July 2023.

Apart from the $50 million investment, Ripple also provides incentives to MoneyGram in XRP for leveraging the digital asset in remittance processes. So far, Ripple has shelled out $52 million worth of incentives.

While MoneyGram receives these incentives in XRP, the company does not hold the digital asset. “We sell XRP as soon as we receive it,” a MoneyGram spokesperson told The Block earlier this year.

© 2020 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.