Tuesday, January 9, 2018

Hedge fund manager wants to usher in the next step in the cryptocurrency sphere... a cryptocurrency bank

If cryptocurrencies are ever going to break through to becoming viable mediums of exchange, they first need a combination of platforms and infrastructure to be able to become readily accepted as an exchange currency.  And while the platforms to record the transactional history of cryptos are already complete within the blockchain or Ethereum blockchain, an integration with a traditional construct also needs to take place to allow for the acceptance of cryptocurrencies in mainstream retail.

Enter hedge fund manager Mike Novogratz who on Jan. 9 published a report where he is now working on plans to create a centralized cryptocurrency bank for use initially in the investment sector.

Graphic courtesy of Coin Telegraph
As Bloomberg reports, the former Fortress manager laid out a series of transactions in a statement Tuesday that would, if successful, raise $200 million and, through a holding company, list shares of his Galaxy Digital LP on Canada’s TSX Venture Exchange. He said Galaxy is building a "best-in-class, full service, institutional-quality merchant banking business in the cryptocurrency and blockchain space" and will be active in four areas: trading, principal investing, asset management and advisory work. 
While Novogratz had been planning the launch of a hedge fund, according to a Bloomberg source he also had been laying the groundwork for Galaxy for months. The fund, had he continued with it, would have sat inside Galaxy’s asset-management unit.
In many ways, launching a merchant bank is far more notable than rolling out a mere hedge fund to daytrade the record crypto vol. As BBG observes: 
A merchant bank is among the most ambitious concepts to emerge from the speculative frenzy that has characterized the cryptocurrency market. While Novogratz last year described the runup in bitcoin, ether, ripple and other so-called tokens as the “biggest bubble of our lifetimes,” he also has said he believes blockchain -- the computer code that underpins all cryptocurrencies -- will reshape finance just as the internet did communication. - Zerohedge
The current third party infrastructures for cryptocurrencies such as Bitcoin exchanges continue to show that they have many flaws, including that of cyber hacking and cyber theft, failures in facilitating account expansions, limits to withdrawal from cryptos to fiat currencies, etc..., and this alone may allow a big enough crack for someone from mainstream finance to come in and usurp these exchanges with a regulated financial institution, which in the end may also be the catalyst for expanding the use of cryptos in everyday consumer transactions.

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