In the U.S., the world’s largest exchange traded funds (ETFs) market, there are four ETFs offering investors exposure to blockchain technology. All four of those funds debuted earlier this year. The newest of the four is the Innovation Shares NextGen Protocol ETF (NYSEARCA:KOIN), which debuted in February.
Data suggest investors are warming up to KOIN. The fund is the first ETF “to use artificial intelligence to identify and invest in blockchain innovators and adopters,” the issuer said. The ETF debuted at the end of January.
As of April 12th, KOIN had over $12.6 million in assets under management, according to issuer data. That is not a particularly large sum in the world of ETFs, but it shows KOIN is off to a decent start. More importantly, investors have recently been taking note of the ETF. Of its $12.6 million in assets under management, $7.05 million has flowed into KOIN since the start of April.
KOIN’s Issuer Defines Blockchain
“Blockchain is a new digital protocol for authentication and authorization that allows parties to bypass a centralized administrator,” according to Innovation Shares, KOIN’s issuer. “To give this basket a more defined framework, stocks are placed in one of four custom stakeholder categories in terms of how they relate to the theme: Cryptocurrency as Payment, Mining Enablers, Solutions Providers and Adopters.”
KOIN holds 42 stocks, including well-known companies such as Visa, Inc. (NYSE:V), Amazon.com Inc. (NASDAQ:AMZN), Oracle Corp. (NYSE: ORCL), NVIDIA Corp. (NASDAQ:NVDA), and American Express Co. (NYSE: AXP). Semiconductor maker NVIDIA is one of the largest producers of the graphics cards essential in the mining of digital currencies.
KOIN “seeks to give investors access to companies that may benefit from a technology that has the potential to revolutionize the way global trade is conducted, data is secured, supply chains are managed, financial instruments are cleared and contracts are recorded,” according to the issuer.
Components in KOIN must have minimum market values of $100 million. The ETF charges 0.65% per year, the equivalent of $65 on a $10,000 investment.
Ripple Hunting For Unicorns With $25M Blockchain Investment
Ripple, also known by the symbol “XRP,” is putting its money where its mouth when it comes to investing in blockchain technology startups. Ripple is putting $25 million worth of XRP into a blockchain venture fund, a move that could increase adoption and use of XRP.
Ripple is investing in San Francisco-based Blockchain Capital. That company, founded in 2013, “is one of the oldest and most active venture investors in the blockchain technology sector, and has financed 72 companies, protocols and tokens since its inception. We are multi-stage investors and invest in both equity and crypto assets,” according to its website.
The $25 million contribution to Blockchain Capital was made in XRP, not dollars. Last month, Blockchain Capital announced the closing of Blockchain Capital IV, LP a $150 million fund. The company “has invested in 72 companies, protocols, and tokens, including Coinbase, Ripple, Circle, Ethereum, 0x and Kraken,” it said.
This is the first venture fund Ripple has contributed to and it is likely it will continue seeking related investments.
“We want smart people and smart entrepreneurs, who can solve a problem using Ripple,” Cory Johnson, chief market strategist at Ripple, told CNBC in an interview Wednesday. “There’s money sitting there to be used.”
More About Ripple
As of this writing Wednesday, XRP was the third-largest digital currency by market value behind bitcoin and ethereum. XRP traded at an all-time high of $3.84 in January but labored around 50 cents at this writing. Its market capitalization is $19.62 billion. The supply of XRP is capped at 100 billion, of which Ripple controls 60 billion.
Ripple uses a blockchain technology known as the “Enterprise Blockchain” ledger. XRP is used by some banks and other financial institutions, such as American Express and Western Union, and allows users to send, receive and hold any currency on a secure, decentralized network.
Ripple technology is more secure than those of rivals, including bitcoin and XRP transactions settle rapidly, in as little as four seconds.
Billionaire Investor Soros Eyes Crypto Trading
In January, billionaire investor George Soros ripped cryptocurrencies, saying the asset class is too volatile to replace traditional currencies. Now, Soros is eyeing trading cryptos, according to various media reports.
Soros Fund Management, the billionaire’s family office operation, which has $26 billion in assets, is looking to trade digital currencies.
“Adam Fisher, who oversees macro investing at New York-based Soros Fund Management, got internal approval to trade virtual coins in the last few months, though he has yet to make a wager, according to people familiar with the matter,” reports Bloomberg.
At the World Economic Forum in Switzerland earlier this year, Soros bashed bitcoin and other digital currencies. The price of bitcoin, the largest digital currency, is off more than 40% since Soros made those remarks and has lost about half its value just this year. Bitcoin traded just under $7,000 at this writing Sunday, meaning it has lost nearly two-thirds of its value since its December peak.
Others Following Suit
Soros is not the only famed financial name to recently get involved in cyrpotcurrencies. Last week, it was reported that Venrock, the venture capital arm of the famous Rockefeller family, said it is partnering with New York-based CoinFund “to help entrepreneurs build businesses based on blockchains, the hot distributed ledger technology that first came to prominence with the development of Bitcoin a decade ago,” according to Fortune.
Some industry observers believe the addition of more big-name institutional investors to the crypto market will help the market mature, potentially enhancing liquidity in the process. Recent data suggest many professional investors remain leery of digital currencies with the bulk of that group not planning to make crypto investments this year.
While not necessarily a famed investor on par with the Rockefellers or Soros, the Crown Prince of Liechtenstein recently said his family could look to diversify its investment portfolio to include cryptocurrencies.
In a recent interview with CNBC, Crown Prince Alois acknowledged that digital currencies are “risky” while highlighting the potential of blockchain, saying “Blockchain will change a lot of things, it could even help make our state more efficient the way it is administered.”
Longfin’s Long Blockchain Nightmare Continues
Shares of Longfin Corp. (NASDAQ:LFIN) were halted during Friday’s U.S. trading session after a federal court in New York froze $27 million of the company’s assets regulators allege were acquired illegally.
“According to a complaint unsealed today in federal court in Manhattan, shortly after Longfin began trading on NASDAQ and announced the acquisition of a purported cryptocurrency business, its stock price rose dramatically and its market capitalization exceeded $3 billion,” said the Securities and Exchange Commission (SEC) in a statement released Friday.
Early Friday, Longfin sported a market value of $2.10 billion, according to Yahoo Finance data. The SEC alleges that Longfin insiders, including Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi, and Suresh Tammineedi, sold large chunks of their restricted shares to the public while shares of Longfin were high. The stock’s 52-week range is $4.69 to $142.82. It resided just over $28 early Friday.
Tale of Woe
On March 22nd, Longfin issued a statement saying it was added to the Russell 2000 Index, one of the most widely followed benchmarks of domestic small-cap stocks. That sent the stock soaring amid expectations that mutual fund managers and passive index funds that benchmark to the Russell 2000 would be buying shares of Longfin.
The ebullience did not last long. Just five days later on March 27th, FTSE Russell, the index provider of the Russell 2000, said it was booting Longfin from its indices, news that sent shares of Longfin tumbling.
“We acted quickly to prevent more than $27 million in alleged illicit trading profits from being transferred out of the country,” said Robert Cohen, Chief of the SEC Enforcement Division’s Cyber Unit. “Preventing defendants from transferring this money offshore will ensure that these funds remain available as the case continues.”
The SEC has taken a hard line on blockchain-related investments. For example, the agency has aggressively warned investors about the risks associated with unregulated initial coin offerings (ICOs) while also barring companies from even using “blockchain” in their names. The SEC has also barred fund managers, including exchange traded fund (ETF) issuers, from using blockchain in fund names.
By selling restricted shares, the Longfin executives potentially violated federal laws “that restrict trading in unregistered shares distributed to company affiliates,” according to the SEC.
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