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.
FACEBOOK ROLLS OUT NOVI PILOT: Facebook's (FB) David Marcus said Tuesday via Twitter: "Remittances are a critical way to achieve financial inclusion. Today, we're rolling out a small pilot of the @novi digital wallet app in two countries - the US and Guatemala. People can send and receive money instantly, securely, and with no fees. We're doing a pilot to test core feature functions, and our operational capabilities in customer care and compliance. We're also hopeful this will demonstrate a new stablecoin use case beyond how they are typically used today...The Novi pilot uses USDP through partnerships with @paxos and @coinbase (COIN). USDP is a well-designed stablecoin that's been operating successfully for over three years and has important regulatory and consumer protection attributes. I do want to be clear that our support for Diem hasn't changed and we intend to launch Novi with Diem once it receives regulatory approval and goes live. We care about interoperability and we want to do it right. Beyond the pilot, our business model is clear. We're a challenger in payments. We'll offer free person-to-person payments using Novi. Once we have a solid customer base, we'll offer cheaper merchant payments and make a profit on merchant services. Scaling Novi will take time and this pilot is a great chance for us to learn from our early customers. We want to make sure that our wallet has been fully tested before we open Novi up to more people."
FACEBOOK, COINBASE PARTNER FOR NOVI: Facebook has chosen Coinbase as its custody partner for its pilot of Novi, a new digital wallet that enables people to send and receive money "abroad instantly, securely, and with no fees," Coinbase said in a Tuesday blog post. For the pilot, Coinbase is supporting Novi via Coinbase Custody, which it says "keeps user funds secure with our proprietary, fully segregated cold storage capability for managing private keys." Novi users who can participate in the pilot can acquire Pax Dollar through their Novi account, which Novi will hold on deposit with Coinbase Custody. Novi users will then be able to transfer USDP between each other instantaneously.
Meanwhile on Thursday, Mizuho analyst Dan Dolev raised the firm's price target on Coinbase to $300 from $220 and reiteratds a Neutral rating on the shares. The analyst increased revenue estimates to reflect higher bitcoin prices and rising volatility. He also sees early signs of bitcoin market share gains in October for Coinbase following multiple quarters of share losses. However, Dolev continues to believe the company's "over-reliance" on trading commissions makes it vulnerable to long-term take rate compression "as competition mounts and free trading alternatives proliferate." Additionally, JPMorgan analyst Kenneth Worthington raised the firm's price target on Coinbase to $375 from $372 and kept an Overweight rating on the shares. It was a solid quarter for Coinbase from a trading activity perspective, albeit "considerably less active" than Q2, Worthington said. He added while July was particularly slow, activity levels picked up in August and further in September.
INTERACTIVE BROKERS INTRODUCES CRYPTO TRADING FOR RIAS: Interactive Brokers Group (IBKR) announced Monday its launch of cryptocurrency trading for Registered Investment Advisors in the U.S., enabling these RIAs to trade and custody Bitcoin, Ethereum, Litecoin and Bitcoin Cash via Paxos Trust Company on behalf of clients. "Allocating a small percentage of assets to cryptocurrency as part of a well-diversified portfolio has steadily become more commonplace, and advisors may wish to recommend cryptocurrency to their clients," said Steve Sanders, EVP of Marketing and Product Development at Interactive Brokers. "Adding cryptocurrency trading underscores our ongoing dedication to providing advisors with the investment products and tools they need to successfully manage client portfolios and grow their businesses."
CBOE TO ACQUIRE ERISX: Cboe Global Markets (CBOE) announced Wednesday it has entered into a definitive agreement to acquire Eris Digital Holdings. ErisX operates a U.S. based digital asset spot market, a regulated futures exchange and a regulated clearing house. The company said, “Ownership of ErisX presents a unique opportunity for Cboe to enter the digital asset spot and derivatives marketplaces through a digital-first platform developed with industry partners to focus on robust regulatory compliance, data and transparency”. Cboe plans to operate the digital asset business as Cboe Digital. The company also has secured the support of a broad range of market participants, including retail brokers, crypto-leading firms and sell-side banks, who are expected to form a Digital Advisory Committee tasked with advising Cboe on the ongoing development of the Eris spot and derivatives markets.
SILVERGATE PRICE TARGET RAISE: Craig-Hallum analyst George Sutton raised the firm's price target on Silvergate Capital (SI) on Wednesday to $170 from $135 and kept a Buy rating on the shares. The analyst notes that the crypto industry has undergone a meteoric rise over the last twelve months, and Silvergate has significantly benefited from the growth in the space. While Silvergate sold off on a few muted sequential KPIs, and digital currency deposit growth, he would caution against overreacting to a pause caused by the summer downturn brought on by the China Hash Crash. SEN volumes trend with overall exchange volumes, and October is already outpacing the "doge days" of summer, Sutton added. More importantly, the analyst is "encouraged" by the 25% sequential growth in SEN Leverage approved lines of credit and the program's recent expansion to include digital currency treasury operations via a $100M bitcoin lending agreement with Marathon Digital (MARA).
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. Overstock (OSTK), Ideanomics (IDEX), Riot Blockchain (RIOT), 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 roughly 1% this week to $61,850 in U.S. dollars, according to TradeBlock.
Bitcoin
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Bitcoin
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Bitcoin
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Ethereum
+
Litecoin
+
Dogecoin
+
Ticker changed to META
-17.265 (-5.05%)
Coinbase
-1.19 (-0.40%)
Interactive Brokers
+0.12 (+0.16%)
Cboe Global Markets
-0.48 (-0.38%)
Silvergate Capital
+0.52 (+0.35%)
Marathon Digital
-1.55 (-3.05%)
AMD
+0.94 (+0.79%)
Nvidia
+3.26 (+1.44%)
OSTK
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Ideanomics
-0.045 (-2.25%)
Riot Platforms
-0.97 (-3.30%)
Pareteum
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Srax
+ (+0.00%)