As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
BLACKROCK SELECTS COINBASE FOR CRYPTO TRADING ACCESS: Coinbase (COIN) announced Thursday that it is partnering with BlackRock (BLK) to provide institutional clients of Aladdin, BlackRock's end-to-end investment management platform, with direct access to crypto, starting with bitcoin, through connectivity with Coinbase Prime. Coinbase Prime will provide crypto trading, custody, prime brokerage, and reporting capabilities to Aladdin's Institutional client base who are also clients of Coinbase, the company said in a blog post. "Our scale, experience and integrated product offering represented what BlackRock believes to be a logical partner for Aladdin," it added.
Following the news, Andrew Left's Citron Research said via Twitter, "$COIN huge validation...just shot down many bear cases on that particular stock...more interested in knowing who bought all the $COIN stock yesterday as it was up over 20% with BTC flat."
Additionally, JMP Securities analyst Devin Ryan said he was "encouraged" by the news that the largest asset manager in the world selected Coinbase. While his first reaction to the news is that it "likely isn't a big revenue contributor," Ryan argued that it has "other important implications for both the company and the crypto industry more broadly." The analyst, who believes this announcement reaffirms that institutional investors appear to be moving into the space for the long term and calls it a reminder that Coinbase is "still executing on its longer-term plans and playing offense," has an Outperform rating and $205 price target on Coinbase shares.
Meanwhile, Citi analyst Peter Christiansen lowered the firm's price target on Coinbase to $105 from $115 and kept a Buy rating on the shares. The analyst also opened a "90-day upside Catalyst Watch" on the shares. The analyst is not expecting Coinbase to post favorable Q2 results. Along with a 60% quarter-over-quarter decline in crypto prices and 25% decline in volumes, data suggests Coinbase has experienced a 20% quarter-over-quarter decline in active users, a sharper decline in downloads, and even share loss to other exchanges, Christiansen said. However, there are "some good developments brewing," namely potential for stablecoin legislation and increasing confidence the ETH 2 merger will occur later next month, said the analyst.
NY DFS FINES ROBINHOOD CRYPTO: New York Superintendent of Financial Services Adrienne Harris announced Tuesday that Robinhood Crypto (HOOD) will pay a $30M penalty to New York State for "significant failures" in the areas of bank secrecy act/anti-money laundering obligations and cybersecurity that resulted in violations of the Department's Virtual Currency Regulation, Money Transmitter Regulation, Transaction Monitoring Regulation, and Cybersecurity Regulation. In addition to the penalty, Robinhood Crypto will also be required, as part of the settlement, to retain an independent consultant that will perform a comprehensive evaluation of its compliance with the Department's Regulations. "As its business grew, Robinhood Crypto failed to invest the proper resources and attention to develop and maintain a culture of compliance - a failure that resulted in significant violations of the Department's anti-money laundering and cybersecurity regulations," said Superintendent Harris.
MICROSTRATEGY’S SAYLOR TO ASSUME EXEC CHAIRMAN ROLE: MicroStrategy (MSTR) announced Tuesday that Michael Saylor will assume the new role of Executive Chairman and Phong Le, the company's President, will also serve as the Company's new CEO and as a member of the Board of Directors. Saylor will remain the Chairman of the Board of Directors and an executive officer of the company. As Executive Chairman, Saylor will focus primarily on innovation and long-term corporate strategy, while continuing to provide oversight of the company's bitcoin acquisition strategy as head of the Board's Investments Committee. The company also reported Q2 earnings on Tuesday with a net loss per share of $94.01 on a revenue of $122.1M, which compared to a net loss per share of $30.71 on a revenue of $125.4M for the same period last year. As of June 30, the carrying value of MicroStrategy’s digital assets comprised of approximately 129,699 bitcoins was $1.988B, which reflects cumulative impairment losses of $1.989B since acquisition and an average carrying amount per bitcoin of approximately $15,326. As of June 30, the original cost basis and market value of MicroStrategy’s bitcoin were $3.977B and $2.451B, respectively, which reflects an average cost per bitcoin of approximately $30,664 and a market price per bitcoin of $18,895.02, respectively.
Following the news, Canaccord analyst Joseph Vafi lowered the firm's price target on MicroStrategy to $372 from $453 and kept a Buy rating on the shares. The analyst said the main value driver for them remains its BTC holdings, which increased again this quarter as measured by the number of bitcoins owned. Given his view that BTC is biased higher over time, he cannot but remain bullish on the stock. In his view, the company continues to innovate in its dual strategy of being both an operating company and a modestly leveraged investment play in digital assets.
HUT 8 ENTERS PARTNERSHIP WITH FOUNDRY DIGITAL: Hut 8 Mining (HUT) announced Tuesday it has signed a partnership with Foundry Digital, a wholly-owned subsidiary of Digital Currency Group, focused on digital asset infrastructure. Hut 8 will support multiple lines of business for Foundry, initially at the company's Mississauga, Ontario data centre with plans to expand into the Kelowna, British Columbia data center for infrastructure support across Canada.
CME TO LAUNCH EURO-DENOMINATED BITCOIN FUTURES: CME Group (CME) announced Thursday it plans to further expand its cryptocurrency derivatives offering with the introduction of Bitcoin Euro and Ether Euro futures on August 29, pending regulatory review. Designed to match their U.S. dollar-denominated counterparts, Bitcoin Euro and Ether Euro futures contracts will be sized at five bitcoin and 50 ether per contract. These new contracts will be cash-settled, based on the CME CF Bitcoin-Euro Reference Rate and CME CF Ether-Euro Reference Rate, which serve as once-a-day reference rates of the euro-denominated price of bitcoin and ether. These new futures contracts will be listed on and subject to the rules of CME.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Ideanomics (IDEX), Riot Blockchain (RIOT), Overstock (OSTK), Pareteum (TEUM) and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin dropped about 4% this week to $23,040 in U.S. dollars, according to TradeBlock.