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What Is an IEO? Initial Exchange Offerings [2020 Guide]

Initial Coin Offerings (ICOs) and Initial Exchange Offerings (IEOs) are both forms of crowdfunding that use crypto assets. In more traditional fundraising such as venture capital, a small number of people would provide large amounts of money. In crowdfunding, small amounts of money are raised from a large number of people. The most popular crowdfunding […]

What Is an IEO? Initial Exchange Offerings [2020 Guide] was originally found on Blokt – Privacy, Tech, Bitcoin, Blockchain & Cryptocurrency.

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What is an Initial Exchange Offering (IEO), and how does it compare to ICOs? Find out below!

An Introduction to Crowdfunding

Initial Coin Offerings (ICOs) and Initial Exchange Offerings (IEOs) are both forms of crowdfunding that use crypto assets. In more traditional fundraising such as venture capital, a small number of people would provide large amounts of money. In crowdfunding, small amounts of money are raised from a large number of people.

Crowdfunding

The most popular crowdfunding platforms such as Kickstarter, GoFundMe, and Indiegogo, mainly showcase projects from the U.S. and Europe and only accept payments via credit cards and traditional fiat currency. These mainstream crowdfunding platforms are also focused on supporting products, projects, and causes, but do not offer the ability to purchase a share of an organization or network.

When you ‘invest’ in a platform like kickstarter you only get some benefits in the form of early access to products, promotional gifts or other benefits. This means that they really are not good investments, but more of a vote of confidence in a products development.

The ICO: An Evolution of Crowdfunding

The Initial Coin Offering (ICO) was a leap forward in terms of access. Anyone in the world who had an internet connection and some crypto asset was able to participate in an ICO.

Participants in an ICO were able to own a share of a crypto network, which was basically a startup in a completely new technological arena with very high potential returns if the token appreciated in value. These coins or tokens were also provably rare, could be owned and exchanged without restriction, and could be tied to how that network functioned.

Evolution of ICO – Source: Shutterstock.com

In the past, investing in a startup was limited to only venture capitalists that had a strong network and enough capital to participate in venture capital funding rounds. Furthermore, being the first to own an exchangeable share of a business meant participating in Initial Public Offering (IPO), which is an initial sale for a company on the stock market. IPOs are limited to certified investors in certain jurisdictions.

The ICO was a completely new innovation in that anyone could participate in a sale that was like a combination of an IPO and a venture capitalist funding round.

ICO History

ICOs were able to raise unprecedented amounts of money at their peak, which eclipsed both traditional venture capital funding and incumbent platforms such as Kickstarter. Of the highest funded crowdfunding projects in history, blockchain ICOs dominate; occupying 17 of the top 20 positions including the three highest funded projects.

Pace of ICO Fundraising

In the summer of 2017, during the peak of the ICO craze, the amount of money raised by ICOs surpassed angel and seed VC funding for the first time.

It was clear that the value proposition of the ICO: the possibility of massive returns on investment, the completely unrestricted access, and the immense demand at the time was truly changing how fundraising worked. The excitement around this new innovation would be short-lived.

The ICO or crowdfunding, in general, was the first use case for live blockchain networks that truly tested the networks’ capacities. Because most ICOs launched their initial sales or conducted their sales on the Ethereum platform, the Etheruem network was pushed to its maximum limits. Even now, Ethereum remains the platform on which most crypto projects are built on top of.

Ethereum – Undisputed Leader

During some of the largest and most popular ICOs, the Ethereum network ground nearly to a halt and at times very large asset holders were able to manipulate the network by pushing through huge transaction fees so they could buy their tokens before everyone else.

For example, during the Brave ICO, $35 million worth of Basic Attention Tokens (BAT) sold out in less than 30 seconds. In that sale, one buyer paid more than $6,000 in gas fees, and five buyers were able to buy up half of the supply. The hotly anticipated Status ICO raised nearly $100 million in a day, and the enormous demand led to congestion on the Ethereum network, which increased wait times and fees for all other non-ICO related transactions.

Total Funds Raised

The high demand, limited supply, and rapidly closing sales times are being repeated on the Initial Exchange Offerings that we are seeing today, but without the network-wide slowdown effects.

Scams, fraud, and legal issues were the worst part of the ICO boom of 2017 and the beginning of 2018. One of the triggers that spelled the end of the ICO era and also the end of the crypto bull market was the regulatory or legal crackdown on ICOs by regulatory authorities such as the U.S. Securities and Exchange Commission (SEC).

There were many outright frauds and scams that simply stole people’s money and had no intention of building a real product, but there were also legitimate projects that faced legal action because they were unregistered.

The SEC even started taking action against celebrities such as Floyd Mayweather and DJ Khaled who were profiting from the ICO craze.

China completely outlawed crypto ICOs and exchanges. Even many of the ICOs that legitimately tried to build real products were either not able to deliver or saw their asset prices plummet from their original ICO prices.

The IEO: An Evolution of the ICO

Though ICOs have been in decline, the Initial Exchange Offerings (IEOs) have been gaining a lot of attention recently because of the rise in popularity and the rapid sales cycles that are reminiscent of ICOs.

Funds Raised Through IEO

The objective of ICOs and IEOs are essentially the same, which is to offer tokens to a large group of investors. An IEO is basically an ICO except that it is launched and managed by an existing exchange instead of the organization that created the token. The exchange holds and sells the token on behalf of the project team. This small change has significant effects on the entire process.

IEO Differences

Centralization

In a typical ICO that takes place on the Ethereum network, the developers create a smart contract and investors send crypto assets to the smart contract in exchange for a set number of tokens at a fixed price. In a typical IEO, developers send their tokens to the exchange, and the exchange sells them to its platform users at a fixed price.

Centralization

The ICO format is completely permission-less for absolutely anyone to launch and participate in. There are no gatekeepers. The IEO reinserts the middle man and central authority in the form of an exchange. This reintroduction of centralization can be seen as counter to the basic ideology that created Bitcoin and open blockchains in the first place, which was to be a completely peer-to-peer network.

Bitcoin: A Peer-to-Peer Electronic Cash System”

Satoshi Nakamoto, Creator of Bitcoin

Satoshi Nakamoto

Platform Tokens

Many of the top exchanges who are hosting IEOs have different requirements that involve holding or using their own platform tokens in order to participate in the IEO. By creating this condition, exchanges create demand for their internal tokens, which increases its value.

For example, Binance requires participates to use Binance Coin, Huobi requires participants to hold Huobi Token for a certain amount of time, and OKEX requires OKB tokens to be held.

Source: Huobi

With an ICO, there were generally no fees for either the investor or the token creating teams since projects were sold directly on a blockchain network with no intermediaries. The only fees were the standard transaction fees to the network. With the IEO, the exchange performs many functions, including serving as the intermediary, facilitator, manager, marketer, and all these services are paid for by the organization that is launching the IEO.

Streamlined Listing Process

The goal of most tokens or coins after they launch a coin offering is to get listed on at least one major exchange. Getting listed on an exchange brings credibility to a project as well as liquidity and may potentially increase the token’s value.

For example, the effect of Bitcoin Cash getting listed on Coinbase and Bitcoin SV getting delisted from major exchanges had a profound impact on their prices.

Bitcoin SV Charts

Though not all projects are interested in being traded, many are and by doing an IEO, getting listed on a major exchange is an automatic process that happens after the IEO is completed.

Marketing Synergy

Binance Launchpad – Prepare for Launch

Exchanges have an existing community and promotional resources, which the IEO teams can take advantage of.

The exchange’s existing audience and resources for marketing make it easier for a new project to get discovered by a larger audience and thus launch its token offering successfully. Ideally, with exchanges assisting with fundraising and marketing, project teams can focus more on building a great product.

The exchanges benefit in that they receive new interest from those people who want to invest in the IEO, but were not already on their platform. Essentially, both the exchange platform and the IEO project are promoting each other in a way that wouldn’t have happened during a normal ICO.

Non-Technical Investors

It is likely that being on an exchange from the start will bring more types of investors who would not have normally participated if it involved a direct, smart contract interaction. The user experience of an exchange is far more familiar to most people than participating in a pure ICO.

Non-Technical Investors – Source: Shutterstock.com

This may or may not be an advantage for the IEO teams because they may receive a more diverse token holder base, but they may also receive token holders who are purely speculating with no long term interest in the token or project.

Legitimacy

Projects that choose to launch an IEO are curated and vouched by the exchanges. Though every exchange has a different reviewing standard, this process is a major difference from ICOs, which commonly had no external review processes at all, leading to greater risks for investors.

Legitimacy

In general, if you believe that an exchange is trustworthy, there is a reason to believe that it will select projects that have some degree of trustworthiness or credibility.

Exchanges are one of the only services or products in the crypto industry that have consistently generated revenue and do not rely solely on the appreciation of crypto assets. The teams behind exchanges may offer unique insight from running a legitimate revenue-generating blockchain business as well as being exposed to such a wide variety of different crypto projects that would greatly benefit the IEO teams.

Advising

In traditional venture capital funding, the venture capitalists provide funding as well as advice and guidance. In IEOs, the exchanges offer a platform for raising capital and potentially valuable advice and guidance for the IEO team. Because of their experiences with a variety of different projects, exchanges may have a better idea of how much an IEO should raise or what their token limit and prices should be.

Legal Protection

Exchanges will commonly have a well-organized legal structure that protects them from regulatory consequences. For a young startup seeking initial funding, this is a protection that they normally would not have access to or resources for. Well-developed exchanges can offer legal advice and clarity as well as access to a full legal team to help nascent startups traverse through the minefield that is the blockchain industry.

Legal Protection

The exchange will also commonly have some kind of Know-Your-Customer (KYC) verification required in order to use its services. With ICOs, all you needed was an Ethereum address.

Though IEOs are more restricted than ICOs, it does not mean that they are safe from regulators completely. If anything, they may be more vulnerable, but exchanges and projects have also learned their lessons. For example, Binance is based in Malta, where it has guarantees of protection and restricts users from certain countries such as the United States, Venezuela, and North Korea from participating.

The speed of centralized exchanges and technology far eclipse those of the completely decentralized platforms such as Ethereum where ICOs were commonly launched from. This evolution in user experience seems to be a natural maturation of the technology. As we shall see, exchanges have been closing token sales in minutes and sometimes in only a matter of seconds thanks to their streamlined and centralized systems.

Major Exchange Platforms:

Exchange IEO Platform Platform Token
Binance Binance Launchpad Binance Coin (BNB)
KuCoin KuCoin Spotlight KuCoin Shares (KCS)
OKEx OK Jumpstart (OKB)
Huobi Huobi Prime Huobi Token (HT)
Bittrex Bittrex International None

Binance Launchpad

Binance is well-known for being one of the best cryptocurrency exchanges, and it has also been an innovator in the area of IEOs. Binance has recently popularized the concept with the success of its Binance Launchpad platform. Binance’s founder, Changpeng Zhao (also known as CZ), believes that fundraising is ‘a killer app for the blockchain’ and its potential will be ‘many times bigger than the VC industry in the future.’

Binance Launchpad

Binance Launchpad is essentially a streamlined platform and process for new projects to launch their initial token offerings and then get subsequently listed on the Binance exchange. Binance Launchpad offers full advisory services for startups using its platform for an IEO.

In order to participate in an IEO on Launchpad, users must complete verification so that they conform to a user’s jurisdiction as well as use specific coins such as BNB in order to participate.

BitTorrent Token

Binance Launchpad’s first IEO was for Bittorrent Token (BTT) and ended on 29 January 2019. BitTorrent was acquired by TRON in July 2018 so the BTT token is built on the TRON network.

BitTorrent Token

The BitTorrent technology is already widely known and used by over 100 million people across the world, and the BTT token will reportedly be integrated into the popular uTorrent client to reward users for seeding or sharing files.

A total of 50 billion tokens were sold out in less than 15 minutes for a total value of over $7.1 million. There were two sessions in which users could participate; one for purchases using BNB tokens and the other using TRON tokens.

But in a surprise move the token was de-listed from Binance in November 2019.

Less than a month later, Binance Launchpad concluded its sale of the Fetch.AI (FET) tokens. Participants were only able to use BNB tokens for the FET sale, which generated $6 million dollars for 69 million tokens within 22 seconds.

KuCoin Spotlight

The crypto exchange KuCoin launched its own IEO platform called KuCoin Spotlight. In order to participate, KuCoin users must complete KYC identity verification before the offering. Like Binance, certain jurisdictions or countries are not allowed to participate in its IEOs.

KuCoin Spotlight’s first offering was MultiVac, which is a blockchain scalability solution that emphasizes sharding technology. The MultiVac IEO sold out on the KuCoin Spotlight platform in only 7 seconds.

OK Jumpstart

The platform launched by the OKEx exchange is called OK Jumpstart.

OK Jumpstart – OKEx Token Sale Platform

OKEX only accepts its internal OKB tokens for payment in an IEO. OK, Jumpstart uses a subscription and allotment model that is determined before the actual sale that limits the number of sales that can be conducted. Participants are allowed to purchase more of the IEO’s tokens if they have more OKB tokens held in their accounts.

Formula for calculating User Allotment and table for Allotment Coefficient

Blockcloud

Blockcloud is a blockchain-based architecture that was recently launched on the OK Jumpstart platform as the first IEO venture selling 1 billion tokens and raising a total of 8 million dollars.

Huobi Prime

Huobi Global is one of the longest-running crypto-asset exchanges in the world having started in 2013. Huobi Tokens(HT) are essential to using the Huobi Prime token sale platform. The limits of what participants are allowed to purchase during the IEO are also directly tied to how many HT they are holding for a certain period of time.

Huobi Prime Average Daily Holding and Trading Limits

Initial offerings are conducted in rounds that consist of five-minute intervals. The IEO tokens will be freely available for trade on the main Huobi exchange after the supply of tokens from the IEO get sold out, or three rounds of IEO trading are completed.

TOP Network

Huobi Prime’s first token launch was on 26 March 2019 for the TOP Network. The rounds for the TOP tokens were met with phenomenal demand with each one ‘with the first round selling out of available tokens in 7 seconds, the second round in 5 seconds, and the third in 7 seconds.’

Only 3% of the total 130,000 participants wound up being able to buy the TOP tokens. Like many of the other IEO platforms, there has been concern about bots that prevent many investors from being able to participate.

Huobi Prime X TOP

Bittrex is also a well-known and established crypto-asset exchange. The exchange platform was founded in 2014 and is based in the United States. However, its IEO platform is Bittrex International, which is based in Malta because Malta offers crypto exchanges the regulatory certainty that the U.S. does not.

Bittrex users need to be fully verified in order to participate in these initial offerings.

Bittrex International

The first Bittrex offering was with VeriBlock (VBK), and since Bittrex does not have its own native token, Bitcoin was the only accepted crypto asset in which you could buy VBK tokens. Another thing that makes this IEO unique is its settlement and vesting schedule, where 50% of VBK tokens are held in escrow by Bittrex for a certain time period.

VeriBlock

RAID Token

To showcase the due diligence and review process of the IEO system, Bittrex actively removed one of its IEO projects right before it was scheduled to take place. The RAID team had a major partnership that was canceled before the IEO event, so Bittrex decided to cancel the offering.

If this was an ICO, an external source could not stop or prevent an initial offering since all the decision making would be in the hands of the founding team. The IEO process has checks and balances that did not exist with ICOs.

Raid IEO

Lessons Learned

Wishful thinking suggests that the blockchain industry has learned a lot from the first ICO craze and this new system of IEOs is an improvement on the past iteration of mass blockchain-based fundraising. Tested and grizzled veterans in crypto exchange businesses have seen what works and what doesn’t work and are able to use their accumulated industry knowledge to weed out the worst and most fraudulent projects.

These exchanges have also learned how to effectively protect themselves from regulators and market their products to a large group of users, both necessary components on the path to widespread adoption.

Lesson Learned – Source: Shutterstock.com

The IEO projects themselves have also learned not to have such extreme or uncapped funding rounds. Each IEO is limited to some specific and limited supply, which increases the demand. The more restrained funding model drip feeds these young projects the resources that they need without burning out all the investors or underlying asset value, which should also be a sign of a maturing industry.

The Next Big Thing?

Is this type of more restrained, orderly, curated, and serviced crowdfunding the next standard in the blockchain industry? Perhaps the idealism of the very early crypto adopters was too extreme, and the resistance to centralization is softening in order to accommodate more mainstream users, adopters, and builders.

Perhaps the ICO craze, bull market, and subsequent crash was simply a necessary step in order to get to our current IEO stage, which will drive new investment and fuel promising projects in the industry.

The Next Big Thing – Source: Shutterstock.com

The danger is that this is another hot crypto fad with no real substance. Considering that most ICOs failed after launch or saw their tokens drop significantly in value, this is not an overly pessimistic outlook. The breakneck speed of investing where initial offerings are selling millions of dollars of tokens in minutes or even seconds is something we have seen before.

However, it could also be taken that this is the ecosystem maturing and offering much-needed improvements in standards and user experience. It could also be argued that the regulators and extreme market conditions had stopped the initial ICO craze too early when in reality there was still underlying demand that was simply being suppressed.

The energy and speed in which new IEOs (IEO list here) are being launched and closed could signify that this is just an outlet for the demand that had been simmering beneath the surface this entire time.

Update for March 2020:

When this article was written in 2019 we were witnessing the height of the IEO boom. It was almost like ICO money and had come back. But it was just another bubble and many people lost a lot of money while very few profited immensely. Today as I write this in May 2020, IEOs are no longer really talked about. Although as with ICOs they are still happening, they are no longer the main focus of the crypto world.

We were right to caution that it may just be another crypto fad without real substance as that is indeed how it has turned out. Will such a fad every come back again, i am sure it will as the crypto space has a short term memory when big money is to be made.

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BIC’s Video News Show: Shiba Inu (SHIB)

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In this episode of the BeInCrypto video news show, host Jessica Walker will address Shiba Inu, which has been stealing the spotlight from dogecoin (DOGE). We’ll look at details about its launch, its prospective ecosystem, and recent price movements.

Is Shiba Inu Coin Really a Dogecoin Killer, or is There More to It?

Shiba stealing the spotlight

Dogecoin has now become so big that the world needed a “Dogecoin killer”! The Shiba Inu coin has taken the crypto world by storm in the last several days. Despite Elon Musk announcing a dogecoin mission to the moon on SNL, this other meme coin has stolen the spotlight.

Shiba Inu is up almost 1,500% in the past week, after being listed on Binance and Crypto.com. Everyone seems to think it’s dogecoin 2.0. But could this coin carve out a place for itself among the heavyweights in the crypto world? 

Vitalik owns half

Perhaps the most curious fact about the SHIB coin is that half is owned by Ethereum (ETH) leader Vitalik Buterin. He has nothing to do with the creation of the coin. But he received 50% as a gift from the creators when the coin was launched. This could quite possibly be the biggest gift in human history, as it currently stands at $8.2 billion.

This type of offering is known as an initial DEX Offering where founders release their token via a decentralized exchange. Some tokens launched under Ethereum’s ERC-20 standard, have been known to send Buterin a certain amount of their coin. This is done partially out of respect for his vision but also as a publicity tactic.

Shiba ecosystem

The other 50% of Shiba Inu is on the decentralized Uniswap network and was released through an initial DEX Offering.  It can also be used on ShibaSwap, the project’s decentralized exchange. Here, users can stake their tokens for interest via staking rewards. Shibaswap also has plans to Integrate NFTs into its platform after launch.

All-in-all, there will be three different tokens native to Shiba Inu’s platform. First, Shiba Inu, then LEASH, which supports the staking function. Finally, BONES will act as a governance token.

ShibaSwap was expected to launch at the end of April, but currently there’s no fixed date. But with over 260,000 holders, we’re pretty sure the developers will be working overtime to get things going.

Technical analysis

At the time of recording, we can see that the price is testing a support level but the uptrend is definitely intact. If it keeps going the price could be headed higher to test the record high we saw yesterday, after the coin was added to Binance.

The Shiba Coin and its soon-to-be decentralized exchange, have definitely attracted attention. And as we’ve seen with other cryptocurrencies, community enthusiasm and numbers play a key part in the rise and fall of the project. 

Should ShibaSwap launch while the attention is at its peak, and function as promised, we could see another DeFi player emerge rapidly and push for a place in the top projects by market cap. At the time of the recording, Shiba Inu is in 14th place on Coinmarketcap and has passed the $10 billion threshold.

This rapid growth has of course been seen before and price volatility is expected in the short term. But if its unique selling point of being a cryptocurrency run 100% by its community does materialize, then we could be witnessing the start of something special.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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Source: https://beincrypto.com/bics-video-news-show-shiba-inu-shib/

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Crypto.com Gains Class 3 VFA License From Maltese Financial Authorities

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Crypto.com has reportedly become the first cryptocurrency platform ever to get a Class 3 VFA License. A license issued by financial authorities in Malta.

On May 12, Crypto.com posted a tweet stating their pride at this historic moment. They linked to a post on the company blog page, which outlined the license in more detail. The post described the event as “a watershed moment for the cryptocurrency industry.”

The Class 3 Virtual Financial Assets (VFA) License reinforces the relationship between Crypto.com and the Malta Financial Services Authority (MFSA). Now, affording the platform’s users with better protection under a definitive regulatory framework.

Prior to the issuance of this license, the crypto platform had adhered to Malta’s Virtual Financial Assets Act, and worked closely with the MFSA ever since.

A strict set of conditions

The license allows Crypto.com to provide services to users trading at both beginner and expert levels. Services such as executing orders on a trader’s behalf, or serving in the role of dealer on their own account. 

As one of the few countries in the European Union with a clear regulatory framework when it comes to cryptocurrency, the MFSA had a strict set of conditions for Crypto.com to meet before granting the license. Meeting those conditions gives the platform what it describes as “proof of [its] commitment to provide a secure and compliant crypto trading environment.”

Crypto.com is still waiting on a final decision from the MFSA regarding another certification. Namely, a Financial Institution License. The platform received its in-principle approval from the Maltese regulator back in November 2020.

According to Crypto.com’s latest blog post, the final approval over this license, which will allow the platform to issue electronic money and offer payment services, is still being processed.

Malta is not the only relationship Crypto.com has been carefully cultivating recently. The cryptocurrency platform forged a partnership in Italian soccer, last week. A partnership officially launching with the Hong Kong-based exchange sponsoring the Coppa Italia final between Atalanta and Juventus.

While this is by no means a first for Crypto.com in terms of sponsorship deals in sport, their partner, Lega Serie A, expressed pride at being “the first football league to step into the world of cryptocurrency.” A collection of NFTs will commemorate the collaboration. The series will reportedly feature match highlights and the trophy among other things.

Prior to this, Crypto.com has also collaborated with the Aston Martin Cognizant Formula One Team, also with a collection of NFTs. In addition, back in March, they partnered with hockey team The Montreal Canadiens.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Dale Hurst is a journalist, presenter, and novelist. Before joining the Be In Crypto team, he was an editor and senior journalist at a news, lifestyle and human-interest magazine in the UK.

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Source: https://beincrypto.com/crypto-com-gains-class-3-vfa-license/

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More Crypto Point-of-Sales Through MoneyGram, Coinme Partnership

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MoneyGram is partnering with Coinme to enable the cash funding and payout of digital currency purchases and sales. 

The partnership will pair MoneyGram’s mobile, API-driven payments platform with Coinme’s proprietary cryptocurrency exchange and custody technology. It will enable thousands of new point-of-sale locations throughout the United States. If successful, the partnership will expand to international markets by the second half of 2021.

“This innovative partnership opens our business to an entirely new customer segment as we are the first to pioneer a crypto-to-cash model by building a bridge with Coinme to connect bitcoin to local fiat currency,” remarked MoneyGram Chairman and CEO Alex Holmes. 

Specially designed for newcomers to cryptocurrencies, the integration is set to provide a convenient way for customers to purchase bitcoin (BTC) with cash and withdraw bitcoin holdings in cash. This could dramatically expand access to bitcoin, as there are currently fewer than 20,000 cryptocurrency kiosks in the world.

“MoneyGram has spent more than 80 years building one of the world’s largest P2P payment networks,” said Neil Bergquist, Coinme CEO. “By integrating its global infrastructure with our licensed crypto exchange technology, we can enable the purchase and sale of cryptocurrencies across its system using cash”.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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Coinbase, Softbank Boost Funding of Brazil-Based Money Management Firm

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Brazilian money management firm focused on cryptocurrencies, Hashdex, has raised $26 million in funding.

Prominent investors included SoftBank Group Corp. and Coinbase Ventures, an arm of the U.S.’s biggest cryptocurrency exchange. However, a majority of the funds came from venture capital firm Valor Capital Group. Other investors included Brazil’s Igah Ventures, Globo Ventures, and Canary.

Hashdex history

Founded in 2018 by former Microsoft Corp. executive Marcelo Sampaio and Bruno Caratori, Hashdex is based in Rio de Janeiro. Currently, the firm has around 4 billion reais (roughly $763 million) under management. Headcount will reportedly rise from 25 to 100 by the end of the year, bolstered by plans for opening of new offices outside Brazil.

“Investors are still getting to know crypto and we see room to offer more products in Brazil,” said CEO Sampaio.

Just last month, Hashdex launched its Nasdaq Crypto Index Fund. The ETF debuted on April 26, on Brazil’s B3 exchange under the ticker symbol HASH11, with 615 million reais. The initial offering was led by Genial, with BTG, Itaú, and Banco do Brasil.

The ETF tracks the Nasdaq Crypto Index (NCI), co-developed with Nasdaq, to represent the institutionally investable crypto asset market.

When it launched, Sampaio highlighted the exposure the ETF would offer to investors in Brazil. “The arrival of HASH11 at B3 brings more comfort and security to the investor, who will have access to a basket of assets with periodic rebalancing and which follows the international safety parameters in this sector,” explained Sampaio. 

Crypto developments in Brazil

However, Hashdex’s crypto-based ETF was not the first available in Brazil. That distinction went to the Bitcoin ETF launched by QR Capital on the Sao Paulo exchange in March. The primary offering was for $500 million. While only immediately available to qualified investors, retail investors will be able to access it in June.

Meanwhile, Bitso, which services customers in Brazil, recently became the first crypto unicorn in Latin America. After raising $250 million during its Series C investment round, the company valuation rose to $2.2 billion.

Additionally, Moeda Seeds, which uses blockchain technology to serve “the unbanked and under-banking population in Brazil,” was recently accepted into Mastercard’s incubator program.

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All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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Source: https://beincrypto.com/coinbase-softbank-boost-funding-of-hashdex/

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