Coinbase listing marks latest step in crypto’s march to the mainstream

LONDON (Reuters) – Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, will list on the Nasdaq on Wednesday, marking a milestone in the journey of virtual currencies from niche technology to mainstream asset.

The listing is by far the biggest yet of a cryptocurrency company, with the San Francisco-based firm saying last month that private market transactions had valued the company at around $68 billion this year, versus $5.8 billion in September.

It represents the latest breakthrough for acceptance of cryptocurrencies, an asset class that only a few years ago had been shunned by mainstream finance, according to interviews with investors, analysts and executives.

“The listing is significant in that it marks the growth of the industry and its acceptance into mainstream business,” said William Cong, an associate professor of finance at Cornell University’s SC Johnson College of Business.

Bitcoin, the biggest cryptocurrency, hit a record of over $63,000 on Tuesday. It has more than doubled this year as large investors, banks from Goldman Sachs to Morgan Stanley and household name companies such as Tesla Inc warm to the emerging asset.

Coinbase’s direct listing – which means it has not sold any shares ahead of its market debut – is likely to accelerate that process, those interviewed by Reuters said, by boosting awareness of digital assets among investors.

“This is a very positive thing for bitcoin in itself, as it proves the bridge that has been built from an esoteric, left-of-field arena, full of cowboys, to mainstream finance,” said Charles Hayter of data firm CryptoCompare.

Still, some institutional investors voiced caution over long-term prospects for Coinbase and the crypto sector.

Swiss asset manager Unigestion said it was wary of the hype around cryptocurrencies, and as a result would not be buying Coinbase stock.

“We think there is a lot of frenzy and exuberance in everything that looks like crypto,” said Olivier Marciot, a portfolio manager at Unigestion, which oversees assets worth $22.6 billion.

“Hedge funds and retail will probably be the early birds in these new stocks – probably buying into them pretty heavily – which shouldn’t be a clear indication of how they will be in the longer term.”

BEHOLDEN TO BITCOIN?

Others experts said risks included Coinbase’s exposure to a highly volatile asset that is still subject to patchy regulation.

Founded in 2012, Coinbase boasts 56 million users globally and an estimated $223 billion assets on its platform, accounting for 11.3% crypto asset market share, according to regulatory filings.

The company’s most recent financial results underscore how revenues have surged in lock-step with the rally in bitcoin trading volumes and price.

In the first quarter of the year, as bitcoin more than doubled in price, Coinbase estimated revenue of over $1.8 billion and net income between $730 million to $800 million, versus revenue of $1.3 billion for the entire 2020.

“The correlation to bitcoin will be very high after the stock stabilizes after listing,” said Larry Cermak, director of research at crypto website The Block.

“When price of bitcoin goes down, it’s inevitable that Coinbase’s revenue and inherently price of the stock will decline as well.”

Regulatory risks also loom, others said, as Coinbase increases the number of digital assets users can trade on its platform.

Coinbase last year suspended trading in major digital currency XRP after U.S. regulators charged associated blockchain firm Ripple with an $1.3 billion unregistered securities offering. Ripple has denied the charges.

“Given the expansion of assets covered by Coinbase it’s almost inevitable that other listings will come into question,” said Colin Platt, chief operating officer of crypto platform Unifty.

Coinbase declined to comment.

Reporting by Tom Wilson and Anna Irrera; Editing by Nick Zieminski

Bitcoin hits record high of $62,575

LONDON (Reuters) – Bitcoin hit a record of $62,575 on Tuesday, extending its 2021 rally to new heights.

The world’s biggest cryptocurrency has more than doubled in price this year amid growing mainstream acceptance as an investment and a means of payment, and as investors seek high-yielding assets amid low interest rates.

Major firms including BNY Mellon, Mastercard Inc and Tesla Inc are among those to have embraced or invested in cryptocurrencies.

Reporting by Thyagaraju Adinarayan and Tom Wilson, Editing by Iain Withers

Cryptocurrency inflows hit all-time high of $4.5 billion in first-quarter: Coinshares

NEW YORK (Reuters) – Inflows into cryptocurrency funds and products hit a record $4.5 billion in the first quarter, suggesting increased institutional participation in the once-maligned sector, data from digital currency manager Coinshares showed on Tuesday.

The first quarter inflows represented an 11% increase from the last three months of 2020, which hit $3.9 billion.

Investments into crypto, however, slowed in the first quarter compared with the fourth, where growth was 240%, data showed. Coinshares said in the report, however, that this was not “indicative of a broader slowing trend, as quarterly growth rates tend to be highly varied.”

On Monday, the cryptocurrency sector hit an all-time peak of $2 trillion in market capitalization. Bitcoin’s market cap was more than $1 trillion, holding that milestone level for one whole week.

“There’s so much momentum that’s building and people are scrambling to see where the other coins, aside from bitcoin, are going,” said Edward Moya, senior market analyst at online FX trading platform OANDA.

Bitcoin had the most inflows in the first quarter with $3.5 billion, according to the Coinshares data, followed by ethereum, which posted $765 million in investments.

The largest cryptocurrency in terms of market cap hit a record high of $61,781.83 in mid-March, but has since traded in a narrow range as investors consolidated gains.

Crypto assets under management have also surged to a peak of $59 billion, CoinShares data showed. Last year, assets under management for the sector hit $37.6 billion.

Grayscale is still the largest digital currency manager, with $46.1 billion in assets, while CoinShares, the second biggest and the largest European digital asset manager, oversees about $5.1 billion in assets.

Of the $59 billion in assets under management, active investment managers represented just 1.5% of total assets under management, down from 3.6% at the start of the fourth quarter last year.

Total market volumes remained high during the quarter, averaging $11.6 billion per day, compared with $3.5 billion in the last three months of 2020.

Cryptocurrency firm Paxos to apply for clearing agency license

(Reuters) – Cryptocurrency firm Paxos said on Tuesday it will apply for a formal clearing agency license from the U.S. Securities regulator following a pilot test in which Credit Suisse and Instinet used its platform for same-day trade settlements.

Paxos said Credit Suisse and Instinet, the trading arm of investment bank Nomura Holdings Inc, settled U.S.-listed stock trades on the same day using Paxos’ settlement service.

The trades marked the first live application of blockchain technology for equities markets in the U.S., Paxos said.

Currently, it takes two days to settle a trade. However, calls to shorten this time gained momentum in the wake of the retail trading frenzy that sent a handful of heavily-shorted stocks like GameStop Corp up as much as 1,600%.

In February, the Depository Trust and Clearing Corporation (DTCC) said reducing the settlement time to one day would reduce market risk and lower margin requirements, especially during particularly volatile market conditions.

Robinhood Chief Executive Officer Vlad Tenev has also called for real-time settlement of equities in the U.S. The brokerage app was forced to restrict trading in some stocks earlier this year to meet deposit requirements at its clearinghouse.

Trades at Paxos, however, were not executed real-time. The company said transactions occurring at 11:00 am Eastern Time (ET) and 3:00 pm ET were settled at 4:30 pm ET.

The New York-based company said it hopes to secure clearing agency registration in 2021. A clearing agency is an intermediary that facilitates the proper settlement of a trade between a buyer and a seller.

Japan’s central bank issues digital currency

TOKYO (Reuters) – The Bank of Japan (BOJ) began experiments on Monday to study the feasibility of issuing its own digital currency, joining efforts by other central banks that are aiming to match the innovation in the field achieved by the private sector.

The first phase of experiments, to be carried out until March 2022, will focus on testing the technical feasibility of issuing, distributing and redeeming a central bank digital currency (CBDC), the BOJ said in a statement.

The BOJ will thereafter move to the second phase of experiments that will scrutinise more detailed functions, such as whether to set limits on the amount of CBDC each entity can hold.

If necessary, the central bank will launch a pilot programme that involves payment service providers and end users, BOJ Executive Director Shinichi Uchida said last month.

“While there is no change in the BOJ’s stance it currently has no plan to issue CBDC, we believe initiating experiments at this stage is a necessary step,” Uchida told a committee of policymakers and bank lobbies looking into CBDC.

Global central banks are looking at developing digital currencies to modernise their financial systems, ward off the threat from cryptocurrencies and speed up domestic and international payments.

While China leads the pack, the BOJ has been speeding up efforts to catch up with a plan announced in October to begin experimenting on how to operate its own digital currency.

Coinbase gets green light from SEC for direct listing on Nasdaq

(Reuters) – Coinbase Global Inc, the largest U.S. cryptocurrency exchange, has received approval from the U.S. Securities and Exchange Commission (SEC) to list its shares on the Nasdaq, paving the way for what will be a landmark victory for cryptocurrency advocates.

Coinbase said in a blog post that its shares were declared effective by the SEC earlier on Thursday. The company, which plans to go public through a so-called direct listing, expects to list its shares on the Nasdaq under the ticker ‘COIN’ on April 14.

PayPal launches crypto checkout service

virtual coins cryptocurrency

LONDON (Reuters) – PayPal Holdings Inc will announce later on Tuesday that it has started allowing U.S. consumers to use their cryptocurrency holdings to pay at millions of its online merchants globally, a move that could significantly boost use of digital assets in everyday commerce.

Customers who hold bitcoin, ether, bitcoin cash and litecoin in PayPal digital wallets will now be able to convert their holdings into fiat currencies at checkouts to make purchases, the company said.

The service, which PayPal revealed it was working on late last year, will be available at all of its 29 million merchants in the coming months, the company said.

“This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” President and CEO Dan Schulman told Reuters ahead of a formal announcement.

Checkout with Crypto builds on the ability for PayPal users to buy, sell and hold cryptocurrencies, which the San Jose, California-based payments company launched in October.

The offering made PayPal one of the largest mainstream financial companies to open its network to cryptocurrencies and helped fuel a rally in virtual coin prices.

Bitcoin has nearly doubled in value since the start of this year, boosted by increased interest from larger financial firms that are betting on greater adoption and see it as a hedge against inflation.

PayPal’s launch comes less than a week after Tesla Inc said it would start accepting bitcoin payments for its cars. Unlike PayPal transactions where merchants will be receiving fiat currency, Tesla said it will hold the bitcoin used as payment.

Still, while the nascent asset is gaining traction among mainstream investors, it has yet to become a widespread form of payment, due in part to its continued volatility.

PayPal hopes its service can change that, as by settling the transaction in fiat currency, merchants will not take on the volatility risk.

“We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants,” Schulman said.

The company will charge no transaction fee to checkout with crypto and only one type of coin can be used for each purchase, it said

UK to focus crypto rules on stablecoins, says minister

virtual coins cryptocurrency

LONDON (Reuters) – Britain will initially focus on regulating stablecoins rather than the broader cryptocurrency market given the risk of too little competition, UK financial services minister John Glen said on Tuesday.

Facebook’s move in 2019 to introduce its own stablecoin Diem, then known as Libra, raised concerns among governments and central banks that a major payments competitor could emerge overnight.

“We need to manage risks to competition,” Glen told a City & Financial conference.

“There is the potential for some firms to swiftly achieve dominance and crowd out other players, due to their ability to scale and plug into existing online services,” Glen said.

“We believe the case for intervention in the wider cryptocurrency markets is less immediately pressing.”

Stablecoins such as the planned Diem – currently seeking approval in Switzerland – are designed to avoid the volatility typical of cryptocurrencies like bitcoin, making them in theory more suitable for payments and money transfers.

Glen said stablecoins have become the largest component of cryptocurrencies by trading volume, and while no globally systemic player has emerged so far, this could change rapidly.

The largest stablecoin by market capitalisation, Tether, is a fraction of the size of bitcoin, and is little used for commerce.

Britain will not hold back innovation or be protectionist when it comes to using distributed ledger technology, which underpins cryptocurrencies such as bitcoin, Glen said.

“We have a once-in-a-generation opportunity here to make vast strides in the efficiency of financial services, and ultimately benefit consumers and the economy as a whole,” he said.

Exclusive: Bitcoin jumps to one-week high above $58,000

LONDON (Reuters) – Bitcoin jumped to a one-week high on Monday, rising as much as 4.5% to $58,300 and nearing a record high above $61,000 hit earlier this month.

Visa Inc said earlier it would allow the use of cryptocurrency to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.

Visa moves to allow payment settlements using cryptocurrency

Exclusive: Visa moves to allow payment settlements using cryptocurrency

(Reuters) – Visa Inc said on Monday it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry.

The company told Reuters it had launched the pilot program with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year.

Bitcoin, the most popular crypto coin, jumped to a one-week high on the news, rising as much as 4.5% to $58,300 and heading back toward a record-high above $61,000 hit earlier this month.

Visa subsequently confirmed the news in a statement.

The USD Coin (USDC) is a stablecoin cryptocurrency whose value is pegged directly to the U.S. dollar.

Visa’s move comes as finance firms including BNY Mellon, BlackRock Inc and Mastercard Inc take steps to make more use of cryptocurrencies for investment and payment purposes.

Tesla Inc boss Elon Musk, a major proponent of cryptocurrencies, said last week that customers can buy its electric vehicles with bitcoin, hoping to encourage more day-to- day use of the digital currency.

“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” Cuy Sheffield, head of crypto at Visa, said.

Traditionally, if a customer chooses to use a Crypto.com Visa card to pay for a coffee, the digital currency held in a cryptocurrency wallet needs to be converted into traditional money.

The cryptocurrency wallet will deposit traditional fiat currency in a bank account, to be wired to Visa at the end of the day to settle any transactions, adding cost and complexity for businesses.

Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled.

Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.