Citywealth Crypto All Stars 2023 – on the winning side of crypto
Citywealth serves the UHNW investor but mainly the trustees, lawyers, accountants and private banks who work for them. In order to understand the opportunity in crypto, Citywealth is looking at the market to offer a critical eye. Citywealth had a look at the topic of institutional engagement which sees increased publicity particularly in a recent pictogram from Blockworks. However, we see the situation, which is ongoing, for Celsius investors as money was written off by a pension fund; also the possibility of large exchanges hitting regulatory queries, Bitkub in Thailand has been in the news, for instance, who have a Mastercard partnership. There also may be competition from banks; taking the new tech and providing their own crypto AML, risk capabilities and latterly dashboards for clients. Although these partnerships also benefit the crypto industry. Chainalysis, Elliptic, TRM Labs and Amberdata are some of the major beneficiaries of institutional investments and engagement to protect and predict for institutional services. The banking industry includes Barclays, BNY Mellon, Wells Fargo, JP Morgan, Santander and Commonwealth Bank of Australia. Another big winner of institutional investment is a crypto native, Gemini.. There is also a co-dependency story of debit cards from the big names Visa and Mastercard white labelling their services into crypto exchanges who need to onboard clients.
Now they are working out crypto themselves as perhaps Google and Twitter may do: they certainly have the distribution capability, however for now they are acquiring and partnering with crypto natives, re-modelling and selling services and products to banks to enable crypto. The Paxos tie up was a major announcement to offer trading to banks. Early investment’ in the sector has gone into AML/compliance and Travel Rule Protocol blockchain enablers, now though it spends on analytics and dashboards. But there is also a behind-the-scenes tech industry providing super fast, white label banking and credit card platforms to crypto and digital banking. This is because of changes like the UK’s ‘Payment Services Directive 2’ to bring payment costs down for consumers and to allow challenger banking services. They do not fall foul of any securities laws because they are simply the tech. One firm Galileo Financial Services now owned by SoFi Technologies (owned by SoftBank Group) started in 2019, based in Utah, sold for $1.2bn in 2020 offering payment card fraud management solutions.
Chainalysis, was cofounded by Michael Gronager and Jonathan Levin in 2014. They believe in building trust between the key players – law enforcement, regulators, cryptocurrency businesses and financial institutions – so the industry can continue to grow. Chainalysis powers compliance, regulatory, and investigative software that detect and prevent activities on the blockchain like money laundering, terrorist financing, child exploitation, ransomware, and more. Chainalysis has FBI and IRS as clients. Other clients: Banco Topazio, Brazil, Capital Union Bank, Bahamas, Commonwealth Bank of Australia, BNY Mellon, New York and Union bank/MUFG.
Rise, created by Barclays, is a global community of the world’s top innovators working together to create the future of financial services.Rise operates FinTech hubs around the world, where cutting-edge startups and scale-ups can connect, create and scale their businesses, backed by our Barclays’ global network of industry experts, mentors, investors and partners. Barclays Accelerator is a 13-week intensive startup programme designed to shape and scale the next generation of FinTech businesses. Chainalysis were part of the Barclays Accelerator Programme.
Matt Comyn has been the Chief Executive Officer and Managing Director of the Commonwealth Bank of Australia since 9 April 2018. Matt has over 20 years’ experience in banking across business, institutional, retail and wealth management and has held a number of senior leadership roles since joining the Bank in 1999. As CEO, Matt is focused on delivering global best digital experiences for customers, underpinned by strong risk management and a strong commitment to customer service.From 2012 until his appointment as Chief Executive Officer, Matt was Group Executive Retail Banking Services, the Bank’s largest operating division, which accounts for more than half of the Bank’s profit and also leads the development of digital products and services for the Bank. Between 2006 and 2010, Matt was Managing Director of the Bank’s biggest digital business, CommSec, overseeing a significant modernisation of its technology platform and growing market share and profitability.
Commonwealth Bank of Australia are working with Chainalysis and Gemini CEO Matt Comyn said the organisation had seen a large proportion of its customers – especially the younger demographic – wanting to access crypto assets. Given this pre-existing customer demand, Mr Comyn said an opportunity presented itself for the bank to innovate, evolve its current app, and provide an offering where customers could have confidence and trust in trading through their main financial institution with institutional grade security.
Robin Vince is President and Chief Executive Officer of BNY Mellon and a member of its Board of Directors. Previously, he was Vice Chair of BNY Mellon and CEO of Global Market Infrastructure. In that role, he oversaw BNY Mellon’s Clearance and Collateral Management, Treasury Services, Markets and Execution Services and Pershing businesses. BNY Mellon has been working closely with market-leading fintechs. The firm brought in digital asset technology specialists Fireblocks and Chainalysis to integrate their technology in order to meet the present and future security and compliance needs of clients across the digital asset space. 11 October BNY Mellon announced that its Digital Asset Custody platform was live in the U.S. With select clients now able to hold and transfer bitcoin and ether, this milestone reinforces BNY Mellon’s commitment to support client demand for a trusted provider of both traditional and digital asset servicing.
Fireblocks is settlements and an “all-in-one platform for running your digital asset business.” Chainalysis provide blockchain analysis, crypto risk and credit scoring.
As of June 30, 2022, BNY Mellon had $43.0 trillion in assets under custody and/or administration, and $1.9 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. “As the world’s largest custodian, BNY Mellon is the natural provider to create a safe and secure Digital Asset Custody Platform for institutional clients,” said Caroline Butler, CEO of Custody Services at BNY Mellon. “We will continue to innovate, embrace new technology and work closely with clients to address their evolving needs.” Using Fireblocks and Chainalysis.
Ajay Bhalla is president of cyber and intelligence solutions for Mastercard. He leads the team that develops product solutions to ensure the safety, security and experience of our products and solutions for consumers, merchants, partners and governments around the world. Ajay serves on the company’s management committee. Prior to this role, Ajay was president of the Digital Payment Services business for Mastercard. He led the development and growth of the business in e-commerce and innovative payments processing establishing Mastercard as a pioneer and leader in many markets in this space. Mastercard acquired Ciphertrace which was founded in 2015 and has now launched a new product to combat crypto crime called Crypto Secure. Mastercard’s digital assets strategy includes the acquisition of Finicity (data aggregation/ verification), Ekata (identity verification), RiskRecon (vendor risk) in addition to CipherTrace. With their BNPL strategy it is likely we will all be buying Doge on Mastercard in four installments. Mastercard have Start Path fast-growing digital assets, blockchain and cryptocurrency companies. seven startups have joined the program, including – GK8, Domain Money, Mintable, SupraOracles, STACS, Taurus, and Uphold.
Nobutake Suzuki joined MUFG Bank in 2018 as a managing director in charge of open innovation of MUFG Group, and he has been the President and CEO of MUIP (MUFG Innovation Partners) since January 2019. Before joining MUFG, he started his career as a venture capitalist at Global Brain, an independent venture capital firm in Japan, in 2002, and had experiences of investing in both Japanese and overseas Open Innovation Fund startups. MUIP’s primary focus is to pursue partnerships and business synergies between MUFG group companies and portfolio companies. It plans to continue seeking investment opportunities in fintech. MUIP will use Chainalysis’s compliance technology “for next-generation compliance frameworks.” The Chainalysis investment was MUIP’s first investment outside of Japan and second since its January 2019 launch by MUFG.MUFG Bank, Ltd. is the largest bank in Japan. It was established on January 1, 2006, following the merger of the Bank of Tokyo-Mitsubishi, Ltd. and UFJ Bank Ltd. MUFG is one of the three so-called Japanese “megabanks”.
September 2020 Banco Santander announced the launch of Mouro Capital, a new, autonomously managed venture capital fund focused on fintechs. Mouro Capital will have $400 million in allocated funds after the bank doubled its current commitment. Mouro Capital will manage the existing portfolio of Santander Innoventures, which was established in 2014. Since then the fund has invested in 36 startups in Europe and the Americas. The decision to spin out its investment arm is another milestone in Santander’s four-year (2019-2022) €20 billion digital and technology investment plan. The group is accelerating its digital and commercial transformation to maintain its operational excellence while constantly improving the customer experience. Ana Botín, Banco Santander executive chairman, said: “The creation of our fintech venture capital fund in 2014 has allowed Santander to lead the industry in implementing new technologies, including blockchain, offering better services to our customers as a result. Innoventures has almost doubled the cash invested, despite being relatively young for a venture capital fund. Mouro Capital put investment (Series C participation) into Elliptic, crypto asset risk management. Elliptic also ran a pilot of its software with Banco Santander. Manuel Silva Martínez, general partner at Mouro Capital, said: “Elliptic is one of our oldest investments, and they have been a great partner at helping us navigate the complexities of the distributed ledger technology (DLT) and crypto world.” Elliptic “manage financial crime risk, achieve regulatory compliance.”
Mastercard introduced Crypto SourceTM, a new program enabling financial institutions to bring secure crypto trading capabilities and services to their consumers. In partnership with Paxos, Mastercard’s financial institution partners will gain access to a comprehensive suite of buy, hold and sell services for select crypto assets, augmented with proven identity, cyber, security and advisory services provided by Mastercard. This Crypto SourceTM offering is complemented by Mastercard Crypto SecureTM to bring additional security to the crypto ecosystem and help card issuers learn how their customers are already investing in digital assets today on other platforms. The payments giant will act as a “bridge” between Paxos, a crypto trading platform already used by PayPal, and banks. Mastercard’s program will handle regulatory compliance and security. Paxos has more than $500 million in total funding from leading investors like PayPal Ventures. Paxos offer blockchain solutions tokenize, custody, trade and settle assets for enterprise clients. Charles Cascarilla and Rich Teo are the founders.
Founded in 2013 and regulated before the industry knew it needed it. The beginnings of CoinShares were formed when they pivoted from commodities brokering towards bitcoin. CoinShares started life as Global Advisors in New York and London back in 1998 with two partners, Daniel Masters and Russell Newton before moving to Jersey, Channel Islands in 2008. The pair ran this commodity investment firm until early 2013 when global macro investors began moving out of commodities and into equities and fixed income and were looking for new areas in which to invest.Masters had had a career in the oil industry, and was a former global head of energy trading at JP Morgan. Since 2014, CoinShares has been offering products and services that bridge the gap between crypto-assets and traditional financial markets. They offer trading technology and services includes electronic trading, liquidity provisioning, lending and borrowing, as well as bespoke hedging and risk management solutions for miners, exchanges, brokers and crypto funds. “CoinShares is Europe’s largest and longest standing digital asset firm, managing billions of assets on behalf of a global client base. Our mission is to expand access to the digital asset ecosystem by pioneering new financial products and services that provide investors with trust and transparency when accessing this new asset class. CoinShares is publicly listed on the Nasdaq First North Growth Market under the ticker $CS, and on the OTCQX under $CNSRF.”
Coinshares just made an announcement about pricing NFT’s (Bloomberg) an often disputed topic across the platforms on floor price. Coinshares also made an acquisition and further stake into Flowbank a swiss operation
BCB Group show the potential of crypto and its battle with regulation. They dealt with it by buying a bank, a master stroke of genius (fintech-focused, Germany based, Sutor Bank). BCB Group was founded in the UK in 2017 by Oliver von Landsberg-Sadie (CEO) and Oliver Tonkin (General Counsel). CB was built to service the blockchain and cryptocurrency industry with the promise of providing durable financial infrastructure in a volatile environment. They have worked for both traditional and crypto brands like Barclays, Paysafe, Bitstamp, Coinbase, Credit Suisse, Deutsche Bank, FIS, Goldman Sachs, JP Morgan, Investec, Lloyds Commercial Bank, Luno, Norton Rose Fulbright, FIS and Sun Life of Canada. Anecdotally they are growing at such a pace that another ‘great leap forward’ is to be expected from this organisation. BCB Group’s Chris Aruliah, spoke at a recent Citywealth Crypto club event.
Nickel Digital Asset Management is an investment manager connecting traditional finance with the digital assets market. The firm deploys algorithmic trading, with a range of arbitrage strategies in both spot and derivative markets, as well as a range of directional buy-and-hold products. All funds are designed with institutional clients in mind. Founding partners also include Michael Hall and Alek Kloda. Crachilov prior to joining Nickel, was with the Investment Management Division of Goldman Sachs dealing with portfolio construction for the bank’s professional UHNW and family office clients. Prior to that, he worked for JPMorgan, HSBC, and EBRD. Nickel use Fidelity Digital Assets for cold storage, Copper for vault storage of assets and Fireblocks for secure settlement.
TRM Labs monitor blockchains and cryptocurrency transactions to ensure KYC and AML compliance, combat fraud, and reduce financial crime. Rahul Raina is co-founder also and CTO. They serve crypto businesses, financial institutions, and government agencies. Castano previously worked at McKinsey & Company. Received his BA in Government from Dartmouth. Withdrew from Stanford Graduate School of Business to co-found TRM. Investors include Amex Ventures, Citi Ventures, Paypal and Visa. Their blockchain intelligence tools provide a specialized view of the emerging risks and criminal typologies unique to crypto, but are secure and user-friendly enough to plug into existing anti-financial crime architectures.
poundtoken.io is the sole issuer of GBPT stable coin pegged 1:1 to the pound which is audited monthly by KPMG. Monthly assurance reports give holders of GBPT the peace of mind that their GBPT maintains its stable value. Designed for stability, GBPT is 100% backed by GBP held in GBP-denominated bank accounts so that it’s always redeemable 1:1 for pounds sterling. Digivault has entered into a partnership with poundtoken.io. Digivault will offer the holders of poundtoken secure custody in the UK, through its cold and warm custody solutions. Poundtoken.io is owned by Blackfridge, the Isle of Man-based fintech company, who secured financial backing from FunFair Ventures and Gate Ventures to launch poundtoken.Poundtoken and poundtoken.io are business names of Blackfridge SC Limited incorporated in the Isle of Man and licensed and regulated by the Isle of Man Financial Services Authority to carry on Class 8 (2)(a) and (4) – Money Transmission Services as a part of the Authority’s Regulatory Sandbox. Poundtoken integrated with Chainlink Proof of Reserve (PoR) to enable the visibility of the reserves of GBPT and to help secure the minting function of GBPT. Through an automated workflow, the industry-leading decentralized oracle network helps assure that the circulating supply of GBPT does not increase beyond the amount of off-chain fiat reserves held via safeguarded accounts at a custodian.
Chainalysis announced a partnership with Capital Union Bank, which serves private & institutional clients and is based in the Bahamas. They have expertise in crypto and Capital Union are using Chainalysis for their risk management software for the rollout of cryptocurrency solutions – including trading and custody – to their customers. The Bahamas government have been one of the first in the world to work on a CBDC – the sand dollar – to modernise the local banking system which although is not crypto demonstrates the digital mindset locally. A Web3 conference in the Bahamas (D3 Bahamas) offering big prizes for start ups.