This yearhas been a tumultuous yearfor cryptocurrency markets, buthere on Wall Street, blockchain
technology and the development of aregulatory compliant, digital assetecosystem is moving full steam ahead.Over the past several months, the Lon-don Stock Exchange, New York Stock Ex-change, NASDAQ, and Fidelity have allannounced plans to launch digital assetplatforms and services intended tousher a new era global finance. But if crypto markets are down, why
are the world’s leading financial institu-tions rushing into the industry? The an-swer centers around the evolution ofdigital securities (also known as securitytokens) and the ability to create more ef-ficiency and liquidity in our capital mar-kets.There are roughly ￡550 trillion of illiq-
uid assets in the world and the owner-ship of these assets are transacted andverified with paper documents. Even theworld’s most liquid assets, such as pub-lic stocks and bonds, are transacted
with technical infrastructure from the1980s designed to benefit brokeragehouses, clearing cooperations and de-positories collecting fees and creatinginefficiencies on every trade madeacross global markets. By moving to-ward secure digital automation andtransparency, and away from paper cer-tificates and intermediaries, new ex-changes can open for previously illiquidassets, private marketplaces can growon a global scale and more efficient fi-nancial products can be created for in-
stitutional and retail investors alike.The key driver of this technological rev-
olution are smart contracts (also knownas smart securities) which use softwarecode and blockchain technology to settletrades instantly, eliminate intermediariesand reduce fraud. At CityBlock Capital,our mission is to expand the global digitaleconomy through equity investments inearly-stage blockchain infrastructurestartups that are facilitating this once ina generation technological upgrade. Inorder to build the best early-stage ven-ture firm in this space, CityBlock has as-sembled an all-star capital deploymentteam compromised of former leadersfrom Goldman Sachs, Softbank, WellsFargo and Google, to identify and sourcetop-tier deals that sit at the intersectionof blockchain technology and Wall Street.We also practice what we preach: in ad-dition to decades of expertise evaluatingstart-ups, CityBlock is one of the earliestissuers of a digital security so we can uti-lize blockchain technology to provide di-versified access and increase liquidity forour limited partners. Our unique combi-nation of domain expertise, long-termtime horizon, and laser focus on unlock-ing value in real-world assets is the whywe’re looking beyond the ups and downsof the cryptocurrency market, and wehope you will too.
To learn more, go towww.cityblockcapital.com.
26 TUESDAy 20 NOVEMBER 2018FEATURE CITYAM.COM 27TUESDAy 20 NOVEMBER 2018 FEATURECITYAM.COM
first place. It is vital, in order for thecryptocurrency market to thrive, fortraders to know that the platform theychoose to trade on has limited andmitigatable security risks. After all, se-curity breaches can affect private data,as well as incurring possible tradingfund losses. Decentralized exchanges provide an
obvious solution to these issues. By re-moving the need for a third party, de-centralized exchanges allow users tohave more control over their transac-tions. In an era where control over
What a difference a week makes! Theglobal crypto market has fallen 20.1%is now US$167bn. On 16th October I
suggested that the floor for Bitcoin (BTC)would be US$5,000 but now people are openlytalking about US$4,800 being the next resistancelevel. At the time of writing at US$5,185 it doesn’t have farto go. Other major market news is that Ripple (XRP) hastoppled Ethereum (ETH) convincingly from the No 2 spotand Bitcoin Cash (BCH) has seen all of its recent gains wipedout.
Good news appeared on the 16th November with SIX theSwiss stock exchange announcing that they will list theAmun AG exchange-traded product (ETP). Interestingly theAmun ETP index will be managed by VanEck whothemselves famously have their Bitcoin ETF applicationsitting with the SEC. Perhaps now that the Swiss havebeaten the US to the regulatory punch, the SEC will bemotivated to stop dragging their feet and make a decision?
Despite the dire performance of the market financially, arewe starting to see an end to the beginning of crypto? It’s fairto say that we’re witnessing a flight to quality in theindustry, by the need to create institutional-grade servicesfor professional investors. What preoccupies investors is notjust how to make returns, but also how to protect the assetsthey already have. Prominent hacks of exchanges this yearcertainly haven’t helped. As a result, areas like custodialservices are firmly in the spotlight.
I met an interesting company called Koine recently, whichis developing institutional custody and settlement servicesfor both fiat and digital assets. It is responding to marketchallenges such as the safekeeping of assets while in use,and the compliance and settlement hurdles, which currentlyprevent many investors entering this space. Getting thiskind of infrastructure in place is the vital next step to tradingcrypto at an institutional scale. Even the big guys likeFidelity and Nomura have noticed it’s going this way.
As we’ve seen things move fast in Blockchain world. Sothe UK needs to adapt swiftly to be at the forefront of whatthe IMF’s Christine Legarde is calling “a new wind”, callingfor central banks to work quickly now to establish digitalcash. Raising many crucial issues, which we need to addressat speed if we are to lead. So I particularly welcome theannouncement of a new, dedicated, industry body theBritish Blockchain Industry Association (BBIA). Chaired byour own Crypto AM weekly columnist Barry James, the BBIAis fully focussed on working with the Blockchain industry toput Britain at the forefront.
one's own information is more impor-tant than ever, and where hacks con-tinue to occur regularly, it is prudentto opt for the more secure option.In addition to security, decentralized
exchanges offer several other benefitsover the centralized exchanges:Decentralized Exchanges Help Avoid
Market Manipulation. Centralized ex-changes, such as Bitfinex and others,have been accused of market manipu-lation. Since they have full authority todetermine which tokens can be listedon the exchange, they have the poten-
tial to influence the financial marketin unseen ways. This is not the case fora decentralized exchange — their mar-ket actions are transparent and acces-sible to everyone on the blockchain. Decentralized Exchanges Can Oper-
ate as Exchanges Instead of Custodians.While it depends on which exchange isused, a majority of centralized ex-changes operate as escrow accounts forcrypto for their customers. Decentral-ized exchanges do not act as custodiansand purely make it possible for twoparties to trade with each other usingsmart contracts.Decentralized Exchanges Offer Un-
precedented Openness And Privacy.Due to the peer-to-peer nature of eachtransaction, decentralized exchangesallow trades to go beyond KYC and AMLprocedures. This is unlike centralizedexchanges, where users need to pro-vide these large entities with personaldata and trust that the exchange canand will protect it. Ultimately, decen-tralized exchanges provide a moreseamless, sensible, and reliable alterna-tive for trading. Decentralized Exchanges Offer
Higher Protection from Potential Secu-rity Breaches. By removing the need forcustodians to operate the exchange,and by offering users increased open-ness and privacy, decentralized ex-changes are a more secure investmentoption for cryptocurrency traders.Thisin turn offers higher protection frompotential security breaches.In time, I believe that we will see a
paradigm shift towards using more de-centralized exchanges due to the widearray of benefits they can offer users.It’s important to remember why digitalassets were created to begin with — toremove third party entities and togrant individuals full ownership overtheir money. By removing the ‘middleman,’ decentralized exchanges remaintrue to the nature of cryptocurrenciesand blockchain technology, and byeliminating the most vulnerable pointfor attacks, they increase security dra-matically.
David Holtzman, DSTOQ’s Chief Security Officer, https://dstoq.com/
Cryptocurrency trading plat-forms, both centralized anddecentralized, offer diversefeatures and varying levels ofsecurity for users. In a time
when there is growing scepticism overthe reliability of cryptocurrencies, it ismore important than ever before tohave a trustworthy, secure, and acces-sible exchange to trade digital assets.Most people do not understand thatthey have two options to choose from:a centralized exchange or a decentral-ized exchange. Understanding the differences be-
tween these two kinds of exchanges isfundamental in order to fully compre-hend what each one offers, and whatsecurity issues may arise from tradingon one rather than the other. Central-ized exchanges, such as Coinbase, Bi-nance, or Kraken, are based on asystem where transactions on the ex-
change are handled by that very sameexchange, the ‘third party’ in any tradetaking place on the platform. Whilecentralized exchanges often offer asimpler user interface as well as liquid-ity, these exchanges are ultimately incontrol of a trader’s funds and privateinformation. As a result, centralizedexchanges are left open to more poten-tial security risks, including hacks andscams. The principal of decentralizedcontrol, which is what blockchain as atechnology promotes, is also under-mined using this model, because ofthe presence of a third party. This isthe principal differentiation between
the two types of exchanges, as decen-tralized exchanges offer more securityfor traders, since users have full con-trol over all of their funds and transac-tions. The volatility of the cryptocurrency
market has been affected by problemswith the trading platforms used forcryptocurrencies. Hacks on centralizedexchanges leave traders open to scamsand an immense loss of funds, and ex-amples of this are unfortunately notuncommon. One of the largest andmost infamous hacks was on Mt. Gox
in 2011 and then 2014, where 1.35 mil-lion BTC, the equivalent of $473 mil-lion USD was stolen. In 2016, Bitfinexhad issues with its multi-signaturewallets features, leading to a loss of120,000 BTC, or $72,000,000 USD of itsclients’ funds. More recently, in 2018,Coincheck was hacked, with approxi-mately $532 million USD stolen fromthe exchange. Traders on cryptocur-rency exchanges need to be confidentthat their funds are secure, and thesedoubts cause potential future tradersto be reluctant to begin trading in the
Designed by Phill Snelling,Bowater Media
In association with
CITY A.M.’SCRYPTO INSIDER
Crypto AM shines it’s Spotlight on
CityBlock Capital
@CityAm_CryptoE: [email protected]
JAMES BOWATER
PARTNER CONTENT
Our series on AI, Blockchain, Cryptoassets and Tokenisation
CityBlock Capital’smission is to
expand the global digital economy
The answer is simple: We want tolead the world, not fall behind.Oh, and then we can replace
many of our digital (banking,payments and other) slow toll-roadswith far faster highways shrinkingtimes from days to seconds (3 to 30days through a bank network versus 3seconds on the Ripple network – that’sbetween 86,400 & 864,000 times faster,so let call it a round 100k time). With asimilar reduction in costs, becausethere are no people involved once thenetwork’s running. This doesn’t just make things a
hundred thousand times faster andcheaper, removal of friction on thislevel makes possible all sort of thingsthat were completely non-startersbefore. On top of all that it makes possible a
whole list of things proven impossible(at any scale) before. Frommicropayments to fractionalisation ofassets, decoupling ownership fromuse of an asset (including houses, cars,art, goods in transit... to name a few)releasing trillions in value currentlylocked away. Which is why nimbler jurisdictions,
Zug Switzerland, Singapore and Maltaspring to mind, are leapfrogging theUK. Its why Liechtenstein have aBlockchain Act. This really matters Professor Bill
Buchanan OBE, of Edinburgh’s NapierUniversity explained to me in themost recent episode onwww.ICOrad.io. Plus why he’slaunched a petition to parliamentsaying so. It matters because it meansjobs and future prosperity. As well aslosing our place in the world versus
helping lead it. This is why you should sign the
petition. Britain needs this act and tostop driving the tech businesses andtalent away - as the FCA has beendoing by forcing closure of their bankaccounts, and those of their ventures.It’s why the UK’s Cryptoassets Task
Force (which reconvenes in the formof Christopher Woolard, FCA, GillianDorner, HMT and Martin Etheridge ofthe Bank of England this verymorning in a city conference room todiscuss their recent report) shouldinstead be planning such an act. Plusa new, positive, taskforce reportproperly addressing theopportunities, not just worryingabout the threats – which loom somuch larger because of the lack of adeeper understanding in governmentand the taskforce itself.Perhaps someone, possibly Stuart
Davis who’s moderating the ‘City &Financial’ session), should ask themwhen, having had what amounts tosomething like a risk assessment, wecan have a proper report providingreal vision, support and direction?Plus a Blockchain enabling bill. As
well as a proper debate: On creatingnational and global publicinfrastructure built on openBlockchain technology not closed‘DLT’, and who will benefit from it (ifwe nothing it will be again owned bygreedy incumbents and run for theirbenefit). For a start. For now pleasesearch for and sign UK petition230869!
Email [email protected] or listen to the latest at ICOrad.io
Why We Need A Blockchain Bill
Rob Nance,ManagingDirector,CityBlockCapital
It’s more important to have
a trustworthy,secure,
and accessibleexchange
Right now, there is a shift frompublic token offerings toregulated token offerings,
often in the form of equity tokens. A number of blockchain compa-
nies around the world are busy cre-ating their own digital standardsfor tokenised corporate shares.David Siegel, Chairman of 20|30, astart-up in the FCA sandbox that istesting the primary issuance of to-kenised equity, sees the need tocreate an industry standard for eq-uity tokens. David is leading an in-ternational working group todevelop an open-source equity-token standard that will serve cap-
ital markets for generations.Lawyers, technologists, and policy-makers will meet on November 28and 29 at the Lithuanian Embassyin Brussels for the first workshopto begin drafting an equity tokenstandard. ‘People have been veryreceptive to us,’ says David, ‘theChamber of Digital Commerce inthe US, various law firms, and vir-tually all our competitors recog-nise the importance of enhancingindustry cooperation in thisemerging market. Developing a worldwide equity
token standard will allow tradingplatforms to use the same data for-
mat, which will increase world-wide liquidity for private sharesand beyond.’ 20|30, a member ofCrypto UK, is committed to advanc-ing frameworks that promote thecooperation of policy makers andregulated institutions with leadingplayers in the blockchain industry. David will be at the Pillar Project
meet-up at 6:30pm on the 30th ofNovember at Barrio Shoreditch andwelcomes interested parties to joinfor further discussion on the eq-uity token project.
Contact [email protected] for moreinformation
David Siegel, Chairman of start-up 20|30
BLOCKCHAIN COLLABORATORS ENVISION A NEW DIGITAL TOKEN
STANDARD FOR SHARES
MJAC on November 30th will see ahost of key industry playersdiscussing and debating the hot
topics within the blockchain andcryptocurrency spheres. Obi Nwosu,Coinfloor’s CEO, and Nick Chong of Liquidby Quoine will deliver the two keynotespeeches.
Claire Wells and Marieke Flament fromCircle will discuss Opportunities andThreats for the Tokenisation ofEverything. eToro’s Iqbal V. Gandham willask: Will STOs replace IPOs? Steve Swain,CEO of Lendingblock, will discuss howsecurities lending will lead to theinstitutional adoption ofcryptocurrencies. David Fauchier,CEO/CIO at Cambrial, will discuss Thestate of crypto funds: challenges,opportunities, what next? Saar Levi,
CEDEX CEO will discuss How digitizingdiamonds is revolutionizing the financialinvestment markets, and what’s next forCEDEX.
Attendees will have a front row ticket toICO presentations and panel discussionsincluding: Crypto and how it has evolvedas an asset class over 2018, theRegulatory Panel Discussion and theInstitutional Trading in the Crypto Marketpanel.
Delegates can enter the PowerSnookerprize draw for the chance to play againstsnooker legend Tony Knowles and boxingsuperstar Johnny Nelson on a full-sizedprofessional snooker table.
For a 30% ticket discount use code -CRYPTOAM For event details and tickets:http://www.mjac.io
Showcasing leaders of theblockchain industry
MJAC & CRYPTO COMPARE LONDONDECENTRALIZEDEXCHANGES ARETHE SOLUTIONTO HACKINGSAND CUSTOMERPRIVACY
Revolutionising micropaymentssatoshipay.io/cityam
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