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Goldman Sachs Warns Investors About Failing USD, But Points Them To The Wrong Safe Haven

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This article originally appeared in our Weekly Bits newsletter. If you want our news and analysis before anyone else, make sure you subscribe now!

This week, one of the world’s preeminent investment banking enterprises signalled some serious FUD against the U.S. dollar.

“Combined with a record level of debt accumulation by the U.S. government, real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” the bank wrote in a correspondence with clients, according to multiple news reports. “The greater the deflationary concerns that policymakers must fight today, the greater the debt build-up and the higher the inflationary risks are in the future.”

In addition to the red flag around debt accumulation, the analysts pointed to a growing debasement risk emerging as a result. And they went on to recommend an alternative safe haven for investors. 

“Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows,” the analysts wrote. “With more downside expected in U.S. real interest rates, we are once again reiterating our long gold recommendation from March.”

Firstly, I commend Goldman for recognizing the fundamental problems emerging in our fiat system. This warning from one of the legacy system’s most ingrained institutions is no small thing and, along with other major cracks in the system — like record-low interest rates, a worldwide pandemic, the emergence of what the prescient Marty Bent calls “Woke Capital,” etc. — it is clear that the prevailing economic system is already failing or will soon fail many of us. 

But it should also be pointed out that Goldman Sachs is steering its investors to a safe haven that doesn’t hedge against this failing system as well as bitcoin does.

Goldman Is Missing Out On Bitcoin

I’ve written about the relationship between bitcoin and gold before. Gold is a solid safe haven asset in many ways that can serve as a powerful tool for opting out of our deflationary fiat system. But Goldman is singing gold’s praises while actively dismissing bitcoin, despite the fact that BTC serves as an even more powerful “currency of last resort” as governments debase their own fiat.

In May, Goldman’s consumer and investment management division released a presentation that betrayed some negative outlooks on bitcoin. It warned investors that BTC is a “conduit for illicit activities,” that its “appreciation is primarily dependent on whether someone else is willing to pay a higher price for it” and, in perhaps its most misguided conclusion, that it is not a scarce resource.

“Though individual cryptocurrencies have limited supplies, cryptocurrencies as a whole are not a scarce resource,” according to a slide from the presentation. “For example, three of the largest six cryptocurrencies are forks — i.e., nearly identical clones — of Bitcoin (Bitcoin, Bitcoin Cash, and Bitcoin SV).”

It’s hard to argue that B Cash and Bitcoin SV are “nearly identical clones” of Bitcoin Core. But the larger point I’m trying to make is that Goldman is right to steer investors toward a safe haven, but wrong to dismiss bitcoin as a valuable hedge option.

It should be noted that Goldman is suggesting that its investors double down on gold as the asset hit an all-time high in price (though bitcoin is surging, it’s currently far below its all-time high). And, unlike some of its competitors, it has not made a significant, public investment into cryptocurrency.

“It’s important to note that Goldman Sachs’ competitors Fidelity and JP Morgan have made significant investments in cryptocurrency,” Dave Hodgson, the managing director of crypto-focused venture firm NEM Ventures, told CNBC. “By considering it unviable for its investors, Goldman Sachs has risked causing its investors to miss out on one of the best performing asset classes in the past 100 years, nevermind the last 10.”

Source: https://bitcoinmagazine.com/articles/goldman-sachs-warns-investors-about-failing-usd-but-points-them-to-the-wrong-safe-haven?utm_source=rss&utm_medium=rss&utm_campaign=goldman-sachs-warns-investors-about-failing-usd-but-points-them-to-the-wrong-safe-haven

Blockchain

Eyeing EU Banks, Hex Trust Teams With SIA on Crypto Custody

A multinational payments firm is partnering with cryptocurrency custodian Hex Trust to help its European banking clients hold digital assets.

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Multinational payments firm Sia is partnering with cryptocurrency custodian Hex Trust to help its European banking clients hold digital assets.

“When you have one bitcoin, it’s not a big problem, but when you start adding 10, 20 or 100, you have a treasury and you have to decide where to store this,” said Daniele Savarè, SIA’s innovation and business solutions director. “We are discussing digital custody needs with banks in Europe.” 

The firm is also helping banks manage and safekeep security tokens and central bank digital currencies, he added.

Through SIA, Hex Trust plans to offer European banks the software to custody digital assets on behalf of their customers. Hex Trust will also act as a sub-custodian for banks that don’t want to directly offer the service, said Hex Trust CEO Alessio Quaglini. 

Currently, Hex Trust works with three banks – Mason Privatbank Liechtenstein AG and two unnamed Asian banks. Quaglini said Hex Trust has 10 other banks that are exploring the custodian’s products.

Going forward, SIA will be the primary distribution partner for Hex Trust to offer digital-asset services to banks in Europe, Quaglini said. 

Source: https://www.coindesk.com/hex-trust-sia-crypto-custody-eu-banks

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Collider Labs Raises $1M to Invest in Blockchain Startups

The venture builder is seeking to invest in early-stage startups with a focus on transparency, privacy and “fairness.”

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Collider Labs has raised $1 million to be invested in early-stage blockchain and cryptocurrency startups.

In an announcement Thursday, the venture builder said the raise had brought on board several notable limited partners including Efficient Frontier CTO Alon Elmaliah and Follow [the] Seed Founding Partner Andrey Shirben.

Collider provides funding and liquidity and actively participates in building up startups alongside their communities and founders, according to the firm’s founding partner, Avishay Ovadia.

The company is actively seeking to invest in early-stage blockchain and crypto startups globally, with a focus transparency, privacy and “fairness.”

Collider “is a venture builder that somewhat resembles an accelerator” Ovadia said. With some “key characteristics” that differentiate it from a typical accelerator.

Venture builders, also known as startup studios, pair with early-stage startups and utilize their own ideas and resources to, if all goes according to plan, construct viable enterprises.

According to Ovadia, Collider forms partnerships with founders, invests in teams and works alongside them as what he calls “Investors in Residence.”

Source: https://www.coindesk.com/collider-labs-raises-1m-to-invest-in-blockchain-startups

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Voyager Agrees to Buy LGO Markets and Merge 2 Firms’ Tokens

Two cryptocurrency trading firms are merging, and in a rare twist, so are their tokens.

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Two cryptocurrency trading firms are merging, and in a rare twist, so are their tokens.

Voyager Digital, a publicly traded digital asset brokerage with offices in New York, has agreed to buy LGO, a French crypto exchange primarily serving institutional investors, as the company expands to Europe.

The transaction requires regulatory approval, which the parties said they expect to receive by the end of this year, along with the token swap. The value of the deal will depend on the value of Voyager’s shares, and the firms’ tokens, at closing; at current prices, it would be in the low seven figures.

As such, this deal is dwarfed by this year’s blockbuster crypto M&A deals such as Binance’s acquisition of CoinMarketCap, estimated to be worth $400 million, and FTX’s $150 million deal to acquire Blockfolio.

Read More: ‘They Have the Users’: Binance CEO Explains Why He Bought CoinMarketCap

What makes this deal unusual is that the two companies’ utility tokens, VGX and LGO, will be swapped into newly minted tokens featuring decentralized finance (DeFi) functions such as community governance and staking at an initial interest rate of 7%.

“We think this is really taking the old-school mergers and acquisitions to the token world, which hasn’t been done before,” Steve Enrlich, Voyager’s co-founder and chief executive officer, told CoinDesk.

Upon completion, Voyager, which is publicly listed on the Canadian Securities Exchange, will issue one million shares for the acquisition and operate in the European retail market with LGO’s Virtual Asset Service Provider registration with the French Financial Markets regulator (AMF). All activities will be conducted under the Voyager brand and LGO will discontinue its institutional services on Oct. 31. Shares of Voyager closed at C$0.67 ($0.51) on Wednesday. 

Read More: Voyager to Pay Interest on DeFi Tokens to Gain Brokerage Clients

Hugo Renaudin, co-founder and chief executive officer of LGO, told CoinDesk that the French company made the deal after it decided to shift its focus from institutional clients to increasing value for its token holders.

“The key decision-maker is what will bring the most value to our tokens,” Renaudin said. “So we have this token. We have token holders and they’re mostly retail [clients].”

LGO launched an initial coin offering (ICO) in February 2018, according to its website, which raised 3,600 bitcoin (worth about $36 million at the time). The company’s white paper shows that 60% of the tokens were distributed through a pre-sale process, while 20% of the supply went to LGO’s founders and advisors.

At its peak in April 2018, the LGO token’s market cap was nearly $40 million, according to data from CoinMarketCap. On Wednesday, that value was calculated to be $1.5 million. 

Renaudin told CoinDesk that the company’s other option would have been focusing on better serving its institutional clients, which means its spot exchange would have to provide new and exotic derivatives products. After consideration, he said that the team had decided to change its focus to retail customers instead.

The merger comes during a time of regulatory crackdown on crypto derivatives trading around the globe. Popular crypto derivatives exchange BitMEX was charged by the U.S. Commodity Futures Trading Commission (CFTC) with facilitating unregistered trading activities, while in the UK, the Financial Conduct Authority (FCA) has banned crypto derivatives for retail consumers.

This is not the first acquisition by Voyager, which went public in early 2019 in a reverse merger with the shell of a Canadian mineral exploration company. Previously, it acquired wallet startup Ethos.io for about $4 million.

Read More: Voyager CEO Says Revenue Growth Accelerates 8-Fold as DeFi Trading Surges

Voyage’s revenue in the most-recent fiscal quarter, which ended Sept. 30, surged to about $2 million, compared with $1.1 million during the fiscal year ending in June.

“We are becoming the financial service firm of the future, which means I will look at acquisitions that can add products, customer assets to the platform, or tokens and other communities that can be accretive to what we are trying to do,” Enrlich said. “And adding these pieces together we are going to either do it organically or through more acquisitions.”

Disclosure

Source: https://www.coindesk.com/voyager-acquires-lgo-token-merger

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