TFU | May 21-27

Leading Off

The DOJ is investigating price manipulation in digital currency markets; a task force of U.S. and Canadian regulators is investigating nearly 70 initial coin offerings; the BOX exchange and Overstock’s T0 are teaming up to create an SEC-compliant, blockchain-based securities exchange; SoFi plans to expand into crypto investing by 2019; and 2018 VC funding for blockchain firms has already surpassed 2017 totals.

 

In the News…

Federal government investigating crypto price manipulation.  The U.S. Department of Justice launched an investigation into whether traders are manipulating the price of digital currencies, including Bitcoin and Ethereum. According to sources familiar with the matter, the investigation is focused on illicit practices like spoofing and wash trading.

U.S. and Canadian regulators crack down on ICOs.  In a coordinated effort known as “Operation Cryptosweep,” a task force of U.S. state and Canadian provincial regulators is conducting a “wide-ranging crackdown on initial coin offerings [ICOs] . . . [consisting] of nearly nearly 70 inquiries and investigations and 35 pending or completed enforcement actions.”

CFTC publishes guidance on crypto derivatives.  The U.S. Commodity Futures Trading Commission (CFTC) issued an advisory to exchanges and clearinghouses hoping to list cryptocurrency products, providing a set of best practices for offering cryptocurrency derivative contracts. The CFTC  is reportedly responding to industry concerns about the vetting process for crypto contracts.

Community banks embrace crypto to differentiate from big banks.  The Wall Street Journal highlights how some small banks, including Silvergate (CA), Metropolitan Bank (NY), and Cross River Bank (NJ), have begun offering crypto-related banking services to their customers as a way to differentiate themselves from larger competitors that “shun the crypto world” due to perceived risks.

The race is on to create a regulated token exchange.  Chicago-based options exchange BOX is partnering with Overstock.com’s T0 crypto exchange platform to “create the first regulated exchange for ‘security tokens,’” digital versions of stocks that are exchanged using blockchain and “designed to be compliant with Securities and Exchange Commission rules.”

BOE releases paper on “central bank digital currencies.”  The Bank of England (BoE) issued a staff working paper analyzing risks and issues related to financial stability and the use of central bank-backed digital currencies. The report concluded that such currencies would not be detrimental to the provision of private credit or an economy’s total liquidity.

Adyen confirms it will IPO in Amsterdam.  The European payments processor behind dozens of fintech firms and e-commerce merchants confirmed that it will list up to 15% of its shares on the Euronext Amsterdam stock exchange, expecting a post-IPO valuation between $7 billion and $11 billion. To date, Adyen has raised $266 million in outside funding.

SoFi to offer crypto investing by 2019.  CEO Anthony Noto said he wants to diversify the online lender, including by offering a platform for its customers to invest in cryptocurrencies. SoFi is also reportedly planning to “expand into home equity and brokerage [and] launch [a] personal checking account” as Noto steers toward his vision of SoFi as a “modern finance company.”

Will the GreenSky IPO be a litmus test for online lenders?  The Atlanta-based online lender raised $874 million after debuting on the Nasdaq stock exchange, finishing up 1.5% after a day of trading. In an article appearing prior to the IPO, the WSJ considered what GreenSky’s  IPO could suggest about the market’s stance toward online lenders, including embattled firms like LendingClub and Prosper.

Blockchain VC funding has already surpassed 2017 totals.  According to TechCrunch, the venture capital raised by blockchain-related firms in 2018 is now greater than $1.3 billion, surpassing the total amount raised by such firms in 2017. The increase in funding comes despite a general downtick in cryptocurrency valuations, with many “hover[ing] at less than half their all-time highs.”

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