Finance

Brazil’s Central Bank President Expects to Have News on a CBDC ‘Soon’

14/04/2021 by Idelto Editor

Brazil Central Bank President Expects to Have News on CBDC 'Soon'

The largest country in Latin America could have its central bank digital currency (CBDC) soon, as the Brazilian central bank is taking steps towards creating it. Recently, the Banco Central do Brasil (BCB) president hinted at the possibility of having news on the matter “soon.”

No Decision Has Been Made on Whether the Digital Real Will Be Interest-Bearing

During an online debate hosted by the Bank of Spain, cited by Reuters, Roberto Campos Neto highlighted that the central bank is “making progress” on the plans to digitalize the Brazilian real.

He called central banks globally to keep discussing on CBDCs and deepen its talks to advance in further digitalizing the economy:

We are making great progress on the digital currency process, and we should have news soon.

However, Campos Neto didn’t specify the details on the progress made by the central bank. Still, he pointed out that some topics are still in the pipeline, such as if the “digital real” will be interest-bearing and what kind of technology will host the CBDC.

Brazil Has Been Studying CBDCs Since 2020

Overall, Brazil has been witnessing a surge in the use of electronic payments across the nation, as more Brazilians keep increasingly adopting mobile solutions for such purposes.

Due to the growing interest among citizens, the BCB commissioned last year a study group to research the CBDC matter to “evaluate the potential benefits and impacts of issuing the Brazilian Real in a digital format.” The central bank set the following goal:

Among the study group’s objectives is the proposition of a digital currency issuance model covering risk mapping — including cyber security, data protection and regulatory compliance issues —, as well as an analysis of CBDC’s impacts on financial inclusion and stability and on the conduct of monetary and economic policies.

That said, Brazil’s central bank expects to assess the feasibility to generate a proper environment for the development of a “financial citizenship” with the creation of a CBDC:

In addition to cost reduction of the money cycle, a digital currency issued by BCB can support its strategic objective of ‘fostering the financial citizenship and strengthen the relationship with society and public powers’. An electronic currency can increase the safety of handling and custody of cash, in addition to creating monetary policy instruments.

What do you think about the latest words from the Brazilian Central Bank’s president? Let us know in the comments section below.

Novogratz’s Galaxy Digital Jumps Into the Bitcoin ETF Fray

13/04/2021 by Idelto Editor

The investment company Galaxy Digital Holdings has revealed it is joining the growing list of firms looking to sponsor a bitcoin exchange-traded fund (ETF). Novogratz’s crypto firm applied with the U.S. Securities Exchange Commission (SEC) on Monday to launch a product called the “Galaxy Bitcoin ETF.”

Galaxy Digital Wants to Provide a Bitcoin ETF

Galaxy Digital Holdings (TSX: GLXY) filed a Form S-1 registration with the SEC on Monday in order to get approval for a new bitcoin ETF. The “Galaxy Bitcoin ETF” filing was submitted on April 12, 2021, and joins the seven other bitcoin ETF contenders waiting for approval from the U.S. regulator. Galaxy Digital is an investment company led by Michael Novogratz, a former executive from the macro-strategy hedge fund Fortress.

“Galaxy Bitcoin ETF is an exchange-traded fund that issues common shares of beneficial interest that trade on NYSE Arca,” The Galaxy ETF filing notes. “The trust’s investment objective is to reflect the performance of the Bloomberg Galaxy bitcoin Index, less the trust’s expenses and other liabilities. In seeking to achieve its investment objective, the trust will hold bitcoin and will value its shares daily based on the value of the Index, which is calculated based on data from bitcoin pricing sources selected by Bloomberg Index Services Limited.”

Eight Bitcoin ETF Filings Waiting for Approval

Novogratz has been a bitcoin bull for quite some time and speaks about the crypto economy on a regular basis. On April 13, when bitcoin (BTC) saw a new all-time high (ATH) at $63,769 per unit, Novogratz was quite pleased. “A fine day for my favorite song,” he tweeted. “Bitcoin Please Go To Moon Song,” Novogratz added. The Galaxy Bitcoin ETF filing notes that the sponsor does not plan to buy or sell BTC directly.

“The trust is an exchange-traded fund. Barring a liquidation or extraordinary circumstances,” the filing adds. “The trust does not intend to purchase or sell bitcoin directly, although the trust may direct the custodian to sell bitcoin to pay certain expenses. Creations and redemptions of shares will be effected in ‘in-kind’ transactions in blocks of [ ] shares based on the quantity of bitcoin attributable to each share.”

The Galaxy Bitcoin ETF registration follows the recent Kryptoin re-filing last week. Galaxy will now be the eighth BTC ETF applicant hoping for the SEC’s approval. Besides Galaxy there’s Valkyrie, Vaneck, Fidelity, NYDIG, Wisdomtree, First Trust & Skybridge, and Kryptoin.

What do you think about Galaxy Digital’s bitcoin ETF filing? Let us know what you think about this subject in the comments section below.

Microstrategy Will Now Pay Board of Directors in Bitcoin as Treasury Grows to Nearly 100K BTC

12/04/2021 by Idelto Editor

Nasdaq-listed Microstrategy, which has amassed nearly 100K bitcoins in its treasury, has modified its compensation agreements for the board of directors. The company will now pay non-employee directors in bitcoin, citing its commitment to the cryptocurrency “given its ability to serve as a store of value, supported by a robust and public open-source architecture, untethered to sovereign monetary policy.”

Board of Directors Will Be Paid in Bitcoin

Microstrategy Inc. (NASDAQ: MSTR) has filed a form with the U.S. Securities and Exchange Commission (SEC) stating that its Board of Directors has “modified the compensation arrangements for non-employee directors.” The filing explains, “Going forward, non-employee directors will receive all fees for their service on the company’s Board in bitcoin instead of cash,” adding:

In approving bitcoin as a form of compensation for Board service, the Board cited its commitment to bitcoin given its ability to serve as a store of value, supported by a robust and public open-source architecture, untethered to sovereign monetary policy.

The SEC filing further clarifies that the board fees payable to directors will remain unchanged and will continue to be nominally denominated in U.S. dollars under the new agreement. It also notes that “At the time of payment, the fees will be converted from USD into bitcoin by the payment processor and then deposited into the digital wallet of the applicable non-employee director.”

Microstrategy has been aggressively acquiring bitcoin since it made the cryptocurrency the company’s primary reserve currency back in August last year. In its latest announcement on April 5 regarding the acquisition of bitcoin, the company revealed that “it had purchased approximately 253 bitcoins for $15.0 million in cash, at an average price of approximately $59,339 per bitcoin, inclusive of fees and expenses.” As of April 5, Microstrategy says:

The company holds approximately 91,579 bitcoins that were acquired at an aggregate purchase price of $2.226 billion and an average purchase price of approximately $24,311 per bitcoin, inclusive of fees and expenses.

Do you think companies’ board of directors should be paid in bitcoin? Let us know in the comments section below.

Off to the Races: Kryptoin Re-files Bitcoin ETF Opting to List on Cboe Over Nasdaq

11/04/2021 by Idelto Editor

On April 9, 2021, the Delaware-based company and sponsor of the “Kryptoin Bitcoin ETF Trust” filed an S1 amendment for a bitcoin exchange-traded fund (ETF) with the U.S. Securities and Exchange Commission (SEC). The asset manager re-filed its 2019 ETF application and instead of leveraging NYSE, the company plans to use Cboe BZX.

Kryptoin Joins the List of Bitcoin ETFs Hoping for Approval in 2021

The race for a bitcoin exchange-traded fund (ETF) in the United States has grown thick with competition in recent days. The asset manager Kryptoin has recently revealed it has re-filed with the SEC in order to get an ETF approved. With Kryptoin joining the competition, there are now seven bitcoin-based ETFs hoping to get approved by the U.S. regulator. The list includes Valkyrie, Vaneck, Fidelity, NYDIG, Wisdomtree, First Trust & Skybridge, and Kryptoin.

Kryptoin’s prospectus is not much different than its 2019 filing, except at that time it had chosen to list on NYSE Arca. However, this time around, Kryptoin’s prospectus sent to SEC on Friday named Cboe BZX as the listing exchange. Kryptoin has decided to add its prospectus to the list of bitcoin ETF filings, while both Vaneck and Wisdomtree step up for the SEC review. The company’s product will be named the “Kryptoin Bitcoin ETF Trust,” and the company would like to launch as soon as it is permissible.

The preliminary prospectus subject to completion further notes the “objective is to provide exposure to bitcoin at a price that is reflective of the actual bitcoin market where investors can purchase and sell bitcoin, less the expenses of the Trust’s operations.” Kryptoin adds that the firm will leverage a reference rate in order to determine the value of shares.

The SEC filing states:

In seeking to achieve its investment objective, the Trust will hold bitcoin, and in seeking to ensure that the price of the Trust’s shares is reflective of the actual bitcoin market, the Trust will value its shares daily as determined by the CF Bitcoin US Settlement Price.

Kryptoin CEO Has Experience With the SPDR Gold Shares ETF

There are already two North American bitcoin-based ETFs in Canada, and a few weeks ago in South America Brazil launched its first bitcoin ETF as well. The United States has yet to allow a bitcoin ETF, as the SEC has denied plenty and many have withdrawn their preliminary filings. The SEC has cited issues like price manipulation but since a lot of institutional money has jumped into the crypto ecosystem, many firms have hopes for 2021 approval.

Kryptoin’s ETF is led by Jason Toussaint, a businessman who has a lot of experience with ETFs. Toussaint was previously the CEO of World Gold Trust Services, a sponsor of SPDR Gold Shares ETF (GLD). Kryptoin’s CEO and board member Toussaint has also worked with ETFs and other investments with Morgan Stanley, Northern Trust Asset Management, and JP Morgan Asset Management.

What do you think about Kryptoin’s bitcoin ETF filing and the other ETFs waiting for approval? Let us know what you think about this subject in the comments section below.

HSBC Changes Crypto Policy, Now Bars Clients From Buying Stock of Companies That Hold Bitcoin

10/04/2021 by Idelto Editor

HSBC has reportedly changed its policy regarding cryptocurrency. The bank now prohibits customers from buying the stock of public companies that hold bitcoin, like Microstrategy. All of the companies with bitcoin treasuries could be on the chopping block at HSBC.

HSBC Now Bars Clients From Buying Crypto and Crypto-Related Stocks Like Microstrategy

British bank HSBC has reportedly become more strict with its crypto policy. The bank now prohibits its customers from buying the stock of public companies that are holding bitcoin in its treasury.

An HSBC customer has shared a message he said he received from the bank, informing him of a policy change regarding cryptocurrencies, naming bitcoin and ethereum as examples. The bank’s new policy applies to “products related or referencing the performance of virtual currencies.” The notice reads:

HIDC [HSBC Invest Direct] will not participate in facilitating (buy and/or exchange) product related to virtual currencies, or products related or referencing to the performance of virtual currency.

The notice singles out one stock in particular. “Our records show that your HSBC Invest Direct account is holding Microstrategy Inc-A — MSTR-US, a virtual currency product.”

While Microstrategy does not offer any crypto services, it has been heavily buying BTC since October last year. The company has amassed almost 100K BTC and has made acquiring the cryptocurrency one of its primary goals.

HSBC’s notice continues:

While we will permit the holdings of MSTR-US to be held and/or sold/ transfer-out in your HSBC Invest Direct account, new purchases or transfers-in will not be allowed.

The British bank did not specify how much bitcoin a company has to hold in order for its stock to be banned from the bank. Microstrategy has made it a policy to hold 100% of its treasury reserves in BTC.

A rapidly expanding list of companies have said that they are investing in bitcoin but usually in smaller percentages than Microstrategy. This includes Elon Musk’s Tesla which invested $1.5 billion in January. Jack Dorsey’s Square Inc. also put 5% of its total cash reserves in bitcoin. The website bitcointreasuries.org has curated a growing list of companies with bitcoin in their treasuries.

One Twitter user commented on the situation, speculating that HSBC Canada “is probably arbitrarily deciding what % bitcoin reserves is ok for clients to invest in.”

The HSBC customer who received the notice tweeted to Microstrategy CEO Michael Saylor: “You may want to ask your legal team if what HSBC Canada is doing here is legal. It sure does not sound like it is. They won’t allow us to buy Microstrategy.” Referring to all companies with bitcoin investments, he further opined: “All of these companies may be on the chopping block because they hold BTC. This is the opposite of ‘free market.’”

What do you think about HSBC’s new crypto policy? Let us know in the comments section below.