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Grayscale Bitcoin Trust Files to Become First Fund to Report to SEC

Grayscale Bitcoin Trust (GBTC) has positioned itself to become the first cryptocurrency investment fund to achieve a reporting status to the United States Securities and Exchange Commission (SEC). Published in a blog on Nov.19, Grayscale announced that it had filed a Registration Statement on Form 10 with the SEC. The Trust clarified that it was not seeking recognition as an exchange traded fund (ETF) but did highlight what would change for its investors should the SEC approve the filing.

Pending Approval

Historically, it would make the Trust the first digital currency investment vehicle to achieve a reporting status with the SEC and to register its shares pursuant to the Exchange Act. Grayscale would also fall under the SEC’s auditing standards in this event which could have a positive effect on attracting further investment as institutional restrictions on investment will be eased. The Trust also highlighted the increased opportunity for liquidity among accredited investors stating, “Accredited investors who have previously purchased shares in the Trust’s private placement would have an earlier liquidity opportunity, as the statutory holding period of their private placement shares would be reduced from 12 to 6 months.”

Image via Shutterstock

Paxos—How the Global Financial Crisis Inspired the Creation of the NYDFS-Regulated Stablecoin

Charles Cascarilla is the CEO and co-founder of Paxos, a financial technology company working to modernize the financial system by digitizing and mobilizing assets. Paxos is building a future where all assets—from money to gold to securities— can be digitized and then moved instantaneously.

Before Paxos, Cascarilla co-founded institutional asset management complex Cedar Hill Capital Partners in 2005 and its venture capital subsidiary, Liberty City Ventures, in 2012. Earlier in his career, Cascarilla was a portfolio manager at Claiborne Capital and worked at both Bank of America Securities and Goldman Sachs.Following his panel engagement at The Capital by CoinMarketCap, where he took part in a discussion on the ‘Institutional Adoption of Crypto’, he sat down with Blockchain.News to discuss the impetus behind the formation of the Paxos Trust Company, its recently launched PAX Gold regulated digital asset and the current state of the stablecoin ecosystem.

Clogged Plumbing

Cascarilla comes from a traditional hedge fund background where his main focus was investing in financial services companies and managing private equity vehicles. Investing in the whole life cycle of financial services companies gave Cascarilla a 360-understanding of the limitations of the traditional market structure and fueled his conviction that he could improve upon the system using technology.

“Prior to the Global Financial Crisis, there was a big theme happening in the ecosystem regarding how the front end of markets and execution and trading were going to change. Then when the crisis hit, we saw how the entire plumbing of the financial system really locked up and exacerbated the situation.” he explained.

Cascarilla recalls being struck by the insanity of the situation—being able to trade in microseconds and then having to wait several days to settle a trade. It became apparent that the whole system needed to be reconfigured on a fundamental level, which could lessen the market’s reliance on centralized intermediaries and ‘too-big-to-fail’ institutions. He said, “Blockchain technology looked to us as a great solution to this fundamental contradiction of really fast trading on really archaic infrastructure. Not only would it solve these problems, but it would actually create more access and ability to create new products and new intermediation, but in a completely different way, when its decentralized.” He added, “Paxos was formed with this vision of creating a financial market infrastructure for an open financial system.”

Foundation of Trust

Paxos is a Trust Company regulated by the New York State Department of Financial Services (NYDFS), which according to Cascarilla, makes it like a bank but safer. He explained, “When assets are placed into our custody, it’s held bankruptcy remote and completely segregated. Many people don’t realize this, but when you deposit money in a bank—you’re actually making a loan to the bank and they then go and make more loans onwards.” He continued, “Setting up as a trust company, is a way to give our customers a huge level of confidence that when they send assets to us that they’re safe and they’re not being misused. And because we then tokenize those assets, you know that the underlying asset backing the token is still there.”

Paxos recently received a no-action letter from the U.S. Securities and Exchange Commission (SEC) allowing the company to move forward with its Paxos Settlement Service. Cascarilla said, “It allows us to tokenize US equities, in limited amounts, and so you can begin to see settlement for US equities on a blockchain. Those are all based on using the trust company as a regulated vehicle of safety and soundness, to then be able to transform assets into blockchain-based assets.”

Paxos Gold

In September 2019, Paxos introduced PAX Gold (PAXG), digital tokens backed by one fine troy ounce (t oz) of gold. This means that if you own a PAXG token, you own the underlying physical gold, held in custody by Paxos Trust Company. Cascarilla explained, “In the gold market, and any commodity market, there is a fundamental contradiction—on one hand, when the commodity is very liquid and very tradable then it is very much not the actual underlying asset. It’s a synthetic like ETFs or futures, it’s synthetic gold.” He added, “On the other hand, when you own the physical underlying gold bar in your backyard–it’s not liquid, it’s not divisible or easily transportable. It’s not even easily sellable because who even knows if that’s really gold.”

PAXG solves the problem of actual gold ownership while also creating the liquidity and fast traceability of synthetic products. Cascarilla concluded, “Part of the problem for gold and why it stopped being truly useful as money is because we all moved to a digitized financial system, but gold itself couldn’t really be digitized in a way that gave you true ownership. By putting gold on a blockchain, you can send us $1500 USD, and we will sell you an ounce of the highest quality gold and you will get a serial number that matches a physical gold bar stored in Brink’s Vault in London. So you have true ownership of the gold on a beneficial basis and yet at the same time, you can move that gold—24 hours a day, seven days a week to anybody with low fees and no storage costs.” He concluded, “That’s really fundamentally different to any way gold could be traded before—I actually think this is a complete sea change in the advocacy and efficiency of gold as a financial asset.”

MintDice—Rolling the Dice on Trust

Many perceive online casinos and gambling as inherently unfair and many studies and surveys have shown that players believe the betting sites to be completely rigged. The motto ‘the house always wins’ is commonly seen written on gambling site threads and to some extent it’s true—casinos make their money because users lose more than they win. Add high fees, commissions charged by payment systems and house-cuts of prize pools and the player advantage slips even further. If you do happen to win—good luck seeing that money any time soon with average online casino wait times spanning several days to several weeks and even months; and of course everyone has heard stories of players never receiving payment at all. Within the world of online gambling, it’s clear that one thing needs to be established above all others—trust.

MintDice is an online cryptocurrency casino that leverages the immutable trust-machine—Blockchain. No, blockchain does not magically turn losers into winners or improve their odds, but players on the site will be able to know for certain that the odds didn’t change mid-spin, the game was played properly, and the stakes were real on both ends.

Provably Fair Tech + PoS

MintDice seeks to establish real and provable trust between both professional and casual gamblers and its online gambling site by delivering a casino experience with unprecedented transparency, a low house edge, low fees and even secondary options including investing in the house bankroll to earn cryptocurrency.

MintDice CEO and Founder, Bryce Daifuku explained, “Blockchain allows for dramatic overall improvements that can save users up to 80% in fees/house edge in comparison to fiat-based competitors.” He added, “The lack of payment processors, fees and fraud with Bitcoin’s low fee and irreversible nature cuts down on costs tremendously with the majority of the saving passed down directly to the consumer.”

Provably fair technology is the gold standard of the online gambling industry and is leveraged on MintDice. The fairness assessment is done by comparing two pieces of information, a server seed and a client seed. Between the server seed, the client seed and a nonce (the number of bets created with this seed pair), the site will generate a provably fair bet value for all its games. As an added bit of transparency, the seeds may be compared on a third-party site and will deliver the same fair bet value.

Another very important aspect for enhancing the MintDice ecosystem of trust is Proof-of-Solvency (PoS)—a scheme designed to let users verify the fiscal holdings of online websites which accept Bitcoin deposits in a way that doesn’t compromise the privacy of users. Explained more simply, it allows users to quickly find proof that MintDice has the prize money or, in this case, Bitcoin on offer and is capable of paying out and covering bets.

Best Products

MintDice is a fully-featured online cryptocurrency casino featuring games such as Bitcoin Dice, Slots, Plinko and Bit.Rocket—an innovative Bitcoin Crash game that requires both luck and a certain level of skill.

Bitcoin Dice is by far the most popular and allows users to pick their own odds—they can take a chance to double their money with 49.5% odds or increase their win odds to 90% and win smaller amounts of money or they can even go to the other extreme and take a 1% chance to 99x their money.

The slot machines are a firm favorite of players which are also 100% provably fair and feature high-quality graphics and features—this combination is incredibly rare in online gambling. According to Daifuku, “Basically these type of slots do not exist almost anywhere else on the internet. You can find low-quality slot machines that are provably fair or high-quality games that are not provably fair, but almost never both. We have tried to bridge the gap.”

Daifuku and his team are also trying to add extra layers of security to their in-house built games to combat AI botting, he said, “Our next-generation bot-resistant skill gaming is coming soon with the development of Pyramid and Castle Royale. AI botting is one of the biggest threats to skill gaming, so we are trying to ensure an atmosphere where humans are playing against other humans.”

Investing and Innovation

On top of the gaming options, MintDice also offers its users the opportunity to invest in the house. Daifuku explained, “Investing in the casino bankroll exposes players to the risk of the casino’s profits and losses. Since the house generally wins, the investor will generally win over time as well. The house takes a commission from each bet and it is exposed to no risk. Investors will absorb the risk and provide the capital and in return will share in some of the casino’s profits.”

Another unique investment opportunity is the risk-free Masternode and Staking option. Players can stake their own crypto into the casino’s shared Masternode pools and claim a share of the house profits.

As MintDice runs on a blockchain, there is always the slight possibility of a fork—which occurs when two parties on the blockchain following the same rules are not in agreement. Forks also occur when two miners/stakers take possession of a block in the chain at the exact same time. Daifuku said, “We have only been operating since the first half of the year and have not encountered this issue, but in the event of a large hard fork, both coins will be credited to the users.”

Future Roadmap

Always looking to expand and offer their client-base more options, MintDice shared that they will be partnering with a sportsbook platform to allow players to bet on sports and e-sports. Daifuku elaborated, “We will also be moving to a customized platform to fit the MintDice model and aesthetic that our users enjoy.”

They will also be launching a rewards program for their loyal user-base in the very near future but Daifuku was not willing to let the cat out the bag just yet.

About MintDice

MintDice is a 100% provably fair Bitcoin casino built from the ground up using as many transparency policies as possible to provide the best possible service. Offering a suite of different games including both casino games and skill gaming, those seeking a thrill of gambling are bound to find something to tickle their fancy. Alternatively, MintDice also offers an investment feature allowing users to profit share in the casino’s earnings from gamblers giving multiple reasons for users to want to join MintDice today.Follow us on:FacebookTwitterYouTubeLinkedInInstagramReddit

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This is a sponsored article.

Disclosure/Disclaimer: This sponsored article should not be viewed as an endorsement by Blockchain.News. The article is for informational purposes only and does not constitute any investment advice. Readers should always perform their own research before investing in any cryptocurrencies and blockchain projects.

Grayscale Bitcoin Trust Offers Public Access to BTC “Era of Digital Gold”

With Bitcoin back in the public eye after hitting a new all-time high last month and the BTC price gaining over 150% in 2020, Grayscale Bitcoin Trust is offering mainstream investors access to the newly proclaimed era of digital gold.

The Bitcoin price has been on a tear this year, pushed to new heights by the growing institutional investment narrative that BTC has become an actual store of value and can be used to hedge against currency devaluation. As public interest peaks, Grayscale is seizing the opportunity in the hopes of offering retail and professional investors a route into the era of digital gold.

With a link to their Bitcoin trust and services, Grayscale posted on Twitter:

“Be bold in the era of #digitalgold with Grayscale Bitcoin Trust, your route into #Bitcoin investing. $#BTC”

The Bitcoin as a digital gold narrative is becoming more and more prevalent. According to Mike McGlone, Bloomberg Intelligence Senior Commodity Strategist whose recent report supports this position said on Twitter:

“In a World Gone Digital, #Bitcoin May Surpass #Gold — The past year has been a stepping stone for Bitcoin into the mainstream of investment portfolios and for the digital evolution of money, which should keep the benchmark crypto on an upward price trajectory in 2021.”

Is Bitcoin Digital Gold?

While there is growing consensus among institutional players like Microstrategy’s CEO Michael Saylor that Bitcoin can be a store of value, not everyone is convinced or quite as sure.

Banking giant Wells Fargo has, in the same breath, called Bitcoin this year’s top asset and labeled it a ‘speculative’ investment. In its report, Wells Fargo compares investing in crypto to the early days of the 1850’s gold rush – however, according to Gavin Smith, CEO of Panxora their research neglects various key facts about Bitcoin. Smith said:

“In the same way that the gold market today bears no resemblance to the ‘gold rush’ mentality of the 1850s, the Bitcoin of today has become a store of value that is used in times when people fear currency devaluation.”

As reported by Blockchain. News, Tom Jessop, President of Fidelity Investments digital assets arm, said last Thursday that his firm still uses the word “potential” when describing volatile Bitcoin’s ability to act as a store of value, although many investors appear sold on the BTC as a safe haven narrative.

While the Panxora CEO Smith agrees that Bitcoin still displays high volatility, he believes BTC’s classification as a speculative instrument as been dismissed. Smith said in an email to Blockchain.News:

“As recently as 2017 Bitcoin could be viewed largely as a speculative instrument but this is no longer the case. Bitcoin displays the high volatility which is characteristic of any emerging asset. But there is a growing acceptance among institutional investors that a strong use case exists for using Bitcoin alongside gold as a hedge against currency devaluation. This is evidenced by the growth of the Grayscale Trust and companies like Microstrategy parking a quarter of a billion dollars in bitcoin as part of their treasury management strategy.”

Miller Opportunity Trust Says It Could Invest Up To $300 Million In Grayscale’s Bitcoin Trust

Miller Opportunity Trust, a value fund founded and overseen by veteran American investor and hedge fund manager, Bill Miller, stated in a regulatory filing submitted to the U.S. Securities and Exchange Commission (SEC) that it is planning to invest in Bitcoin. Based on the filing, Miller Opportunity Trust may seek indirect exposure to Bitcoin through the investment into the Grayscale Bitcoin Trust.

The investment trust plans to invest 15% of its assets into Grayscale’s Bitcoin Trust. As of December 31, 2020, Miller Opportunity Trust holds $2.25 billion in assets under management. This means that the trust plans to indirectly invest more than $300 million dollars into Bitcoin through Grayscale’s Bitcoin Trust.

The Miller Opportunity Trust wrote in the filing with the US SEC that:

“The Fund may seek investment exposure to bitcoin indirectly by investing in the Grayscale Bitcoin Trust, an entity that holds bitcoin. The Grayscale Bitcoin Trust invests principally in bitcoin. The Fund will not make any additional investments in the Grayscale Bitcoin Trust if, as a result of the investment, its aggregate investment in bitcoin exposure would be more than 15% of its assets at the time of investment.”

The announcement comes at a time after Bill Miller told investors in a recent letter about Bitcoin’s potential as a good investment for maximizing profits.

Better Understanding of Risks

The skyrocketing Bitcoin price has gained widespread attention from media, individuals, institutions, and regulatory agencies. With significant price growth and volatility, the number of investors participates in the crypto market has been on the rise. Although there are many options available to institutional investors to gain exposure to Bitcoin, the Grayscale Bitcoin Trust has become a popular approach.

The Miller Opportunity Trust is one of the several major investors indirectly channeling their funds into Bitcoin. While a huge number of institutional investors opt to put 10%-15% of their funds’ net worth indirectly into Bitcoin, the commitment is another milestone for the crypto market. An estimate of half a billion-dollar commitment indicates that several larger investors now understand the advantages and the risks associated with the inclusion of cryptocurrencies in their portfolios.

DBS Provides Crypto for Trust Offerings

DBS Group announced Friday that the company has started offering trust services for cryptocurrencies, allowing their premium clients to include the emerging asset class in their succession plans.

Reuters reported Friday that the Singapore-based private bank’s trust subsidiary is offering their clients support for investing, storing and managing digital assets for cryptocurrencies. Bitcoin and Ether, the two largest cryptocurrencies, will be supported and included in clients’ wealth succession plans.

Lee Woon Shiu, Regional head of wealth planning and insurance solutions at DBS, said in a statement:

“International regulations and protocols are still nascent in the digital asset space, which could give rise to complications or unnecessary confusion if proper measures are not in a place to prevent them.”

DBS said that their clients are showing more interest by investigating digital assets. Clients are also concerned about confidentiality and taxation-related issues, which are listed as their top priority. The bank expects the new trend of crypto to become mainstream soon and is advising their clients to set up trust structures properly.

This is the latest measure from Southeast Asia’s largest bank, which launched a crypto exchange for institutional and other accredited investors late last year.

Meanwhile, several other global banks are cautiously starting to offer crypto-related services, often to their high-value clients, drawn by the recent surge in price of Bitcoin and other cryptocurrencies.

In terms of crypto exchanges, Bitcoin has risen by more than 70% so far this year. Thailand has introduced a new verification approach for crypto exchange customers.

Grayscale Contacts with SEC over the Securities Status of Three Trusts

Grayscale Investments, a subsidiary of the Digital Currency Group (DCG), has been in contact with the United States Securities and Exchange Commission (SEC) over the definition of the status of three of its established Trusts.

According to the reviewed filings first sighted by Coindesk, the contact between the regulator and the company is about its Horizen (ZEN), ZCash (ZEC), and Stellar Lumens (XLM) Trusts, respectively.

The alleged correspondence between both parties happened in both June and August. On one of the occasions, Grayscale acknowledged that the tokens under review “may currently be a security,” or they may be deemed as one by the relevant body in short to long term.

“The sponsor has been contacted by staff from the SEC’s Divisions of Corporation Finance and Enforcement concerning the sponsor’s securities law analysis of ZEC,” Grayscale said in its June and August filings regarding its ZEC trust. “The sponsor is in the process of responding to the SEC staff.” This exact position or language is also reflected in the company’s filings for its XLM and ZEN trusts, with the asset names changed to match each trust.

The communication between the SEC and Grayscale is yet another known instance of interaction or inquiry with digital currency platforms as the regulator seeks to deepen its regulatory oversight of the broader industry.

The SEC recently named nine tokens that trade on the Coinbase Global Inc exchange platform as securities. This changed the narrative of the cryptocurrency trading outfit and maintained the claim that it has always abided by the necessary asset listing rules that conform to appropriate laws.

Getting in the crosshairs of the SEC might not speak well for a business venture, as any regulatory push that may ensue can be very costly. While not praying for a Ripple-related situation, Grayscale said in its June filing that the regulator has not disclosed the securities status for the tokens. This condition might have impacted its decision at the end of the day.

Valkyrie's Two Crypto-focused Trusts Raise $73.6m

Two crypto-focused trusts owned by digital asset manager Valkyrie have raised $73.6 million.

One cryptocurrency trust, the Valkyrie Tron Trust, launched last year to offer accredited investors access to the TRX cryptocurrency.

According to an amended filing with the SEC, the fund has secured a $50 million investment fund from investors.

Another cryptocurrency trust is a new trust launched in May, Valkyrie Avalanche Trust, dedicated to providing investors with separate exposure to the Avalanche (AVAX) blockchain and the underlying cryptocurrency.

The report shows the trust has now raised nearly $24 million, slightly less than the $25 million Valkyrie said in May had raised for the then-newly announced trust.

Valkyrie spokesperson comments on the two cryptocurrencies trust fund that:

“Tron has gained significant traction because the Tron network continues to see continued transaction growth, including for stablecoins, and investors familiar with the Asia-Pacific region have started taking notice. Avalanche is also seeing increased adoption at a substantial rate, including earlier this week when KKR announced a deal with Securitize to tokenize a piece of a private equity fund on the Avalanche blockchain.”

Valkyrie Digital Assets was one of the first asset managers to launch a Bitcoin futures ETF in the U.S. with a very robust underlying trust portfolio.

These include, but are not limited to, the Valkyrie Bitcoin Trust, the Valkyrie Algorand Trust, the Valkyrie Polkadot Trust, the Valkyrie Dash Trust, and the Valkyrie TRON Trust. In addition to launching these funds based on the innovation embodied in cryptocurrencies and their underlying blockchains, they also float based on popular demand.

Valkyrie is knowns as an experienced Index manager whose Bitcoin futures ETF was approved by the U.S. Securities and Exchange Commission (SEC) last year.

In July, crypto asset manager Valkyrie launched a new financial investment product. The Tennessee-based company has announced that it is entering the venture capital arena with plans to raise a $30 million fund by investing in early-stage startups in Israel.

UAE Crypto Insights: 72% Investors Lean Towards Bitcoin

KuCoin, a global cryptocurrency exchange, has recently disclosed a survey report, “Into The Cryptoverse: Understanding Crypto Users in the UAE”, which is the 17th edition in its report series. The survey engaged 597 cryptocurrency investors from the UAE, providing vital insights into the indispensable need for trust, security, and crypto education. The findings also reinforce the UAE’s emerging recognition as a cryptocurrency hub, with a remarkable 72% preference for Bitcoin among the respondents.

Alicia Kao, the Managing Director of KuCoin, underscored the pivotal insights brought forth by the survey, stating, “Our survey has unveiled the pressing needs and aspirations of the UAE’s crypto community. Trust, security, and education are at the core of their concerns.” This survey not only elucidates their preferences but also solidifies the UAE’s standing as a forerunner in the crypto revolution, with a pronounced 72% preference for Bitcoin and a robust enthusiasm for blockchain and AI integration. The UAE’s conducive environment, including access to funding, a robust financial infrastructure, and global networking, lays a fertile ground for the burgeoning crypto industry.

One of the critical aspects revealed by the survey is the concern regarding trust and crypto education. About 48% of UAE crypto users expressed concerns about the lack of trust in crypto platforms, and 32% of respondents identified a deficiency in crypto education and awareness as a significant challenge in the region. This reflects a pressing need for fostering trust and enhancing educational outreach in the crypto domain.

When it comes to choosing a crypto exchange, the elements of security and customer support stand paramount. The data shows that 63% of UAE crypto users prioritize security, while 47% emphasize the importance of customer support, illuminating the critical role of trust in crypto platform selection.

The survey also showcased a notable preference for Bitcoin, with a remarkable 72% of UAE crypto investors favoring it. This underscores the UAE’s leadership in regional crypto adoption and reflects a substantial inclination towards the seminal cryptocurrency.

Moreover, the survey unraveled a strong appetite among UAE crypto users for real-world applications beyond mere investment. About 40% showcased a preference for utilizing crypto in cross-border remittances and daily transactions, indicating a significant interest in exploring diverse crypto use cases.

Furthermore, a significant portion of respondents, 62%, expressed keen interest in the integration of AI and blockchain technologies. This reflects the UAE’s progressive and forward-looking approach towards crypto innovation, aligning with global technological trends.

Lastly, the survey highlighted the perceived advantages of the UAE for crypto industry development. A total of 53% of respondents recognized access to funding as a top advantage, closely followed by a robust financial infrastructure and a global network. This positions the UAE as an appealing destination for crypto entrepreneurs and businesses aiming for growth.

The survey offers a nuanced glimpse into the attitudes and preferences of crypto investors in the UAE, further elucidating the nation’s potential as a burgeoning hub for crypto innovation and adoption. The blend of technological enthusiasm and robust financial frameworks paves the way for a promising trajectory in the crypto realm within the UAE.