Banking Crypto

SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

Brazil’s leading cryptocurrency exchange, Mercado Bitcoin raised $200 million from the SoftBank Latin America Fund, Mercado’s parent company 2TM Group announced today. The investment values 2TM Group at $2.1 billion and is SoftBank’s largest capital injection in a Latin America crypto company.

Following closely on the tails of SoftBank’s investment in the $250 million round raised by Mexican cryptocurrency exchange Bitso in May, the deal shows a growing interest in bringing bitcoin and other cryptocurrencies to Latin America.

“This series B round will afford us to continue investing in our infrastructure, enabling us to scale up and meet the soaring demand for the blockchain-based financial market,“ says Roberto Dagnoni, executive chairman and CEO of 2TM Group. “We want to be the main solution provider for corporate players.”

The São Paulo-based exchange aims to increase the number of listed assets (the exchange currently lists approximately 50 tokens) and grow its 500-member team to 700 by year’s end. Further plans involve regional expansion with focuses on Mexico, Argentina, Chile and Colombia and growth acceleration across 2TM Group’s portfolio, which also include digital wallet provider MeuBank and digital custodian Bitrust (both are subject to regulatory approval).

Founded by brothers Gustavo and Mauricio Chamati in 2013, Mercado Bitcoin has become the largest cryptocurrency exchange in the country. In January, it scored its first financing round co-led by G2D/GP Investments and Parallax Ventures with participation from an array of other investors.

Like many of its counterparts, Mercado Bitcoin has seen significant growth over the past year, with its client base reaching 2.8 million in 2021 – more than 70% of the total number of individual investors on Brazil’s stock exchange B3. Approximately 700,000 clients signed up just between January and May.

Over the same period, trade volume on the exchange had increased to $5 billion, surpassing the total for its first seven years combined. “Every single month [of this year], we are trading the full volume of 2020,” says Dagnoni.

“Mercado Bitcoin is a regional leader in the crypto space and the leading crypto exchange in Brazil. They are tapping into a huge local and regional addressable market measured by potential use cases for crypto,” says Paulo Passoni, managing partner at SoftBank’s SBLA Advisers Corp. (which manages the SoftBank Latin America Fund).

“At SoftBank we look to invest in entrepreneurs who are challenging the status quo through tech-focused or tech-enabled business models that are disrupting an industry – Mercado Bitcoin is doing just that.”

Despite the rapid growth of the local crypto market, Brazilian regulators have been lagging behind. In 2018, Brazilian antitrust watchdog, the Administrative Council for Economic Defense (CADE), opened an investigation into the country’s largest banks for allegedly abusing their power by closing accounts of crypto brokerages. The probe was ongoing as of last year.

In April 2020, Senator Soraya Thronicke proposed an extended set of rules for Brazil’s “virtual asset” businesses, custodians and issuers, consumer protection, crypto taxation and criminal enforcement, however no apparent action has been taken on the bill so far. Nonetheless, Dagnoni says the nation’s regulatory environment is favorable, and the company is closely working with regulators “to build a consistent framework for alternative digital investments in Brazil, in line with its vision of a convergence of the traditional and blockchain-based financial markets.”

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Nina Bambysheva

I report on cryptocurrencies and emerging use cases of blockchain. Born and raised in Russia, I graduated from NYU Abu Dhabi with a degree in economics and Columbia University Graduate School of Journalism, where I focused on data and business reporting.

Source: SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

Critics:

SoftBank Group Corp. is a Japanese multinational conglomerate holding company headquartered in Minato, Tokyo. The Group primarily invests in companies operating in the technology, energy, and financial sectors. It also runs the Vision Fund, the world’s largest technology-focused venture capital fund, with over $100 billion in capital, backed by sovereign wealth funds from countries in the Middle East.

The company is known for the leadership by its founder and largest shareholder Masayoshi Son. It operates in broadband, fixed-line telecommunications, e-commerce, information technology, finance, media and marketing, and other areas.

SoftBank was ranked in the Forbes Global 2000 list as the 36th largest public company in the world, and the second largest publicly traded company in Japan after Toyota.

The logo of SoftBank is based on the flag of the Kaientai, a naval trading company that was founded in 1865, near the end of the Tokugawa shogunate, by Sakamoto Ryōma.

Although SoftBank does not affiliate itself to any traditional keiretsu, it has close ties with Mizuho Financial Group, its main lender.

Phemex Is Empowering Everyone To Trade Simply and Manage Risk Efficiently

Led by 8 former Morgan Stanley Executives, Phemex’s goal is to build the worlds most trustworthy cryptocurrency derivatives trading platform. Its leverage a “User-Oriented” approach to develop far more powerful features than any existing exchange.

Above all, they place customers first. All of the features and tools are designed with this philosophy in mind. This is why their development team is directly available and constantly gathering feedback, comments, and requests from our community on social media.

Back in 2017, as experienced professional Wall Street traders and investors, Jack Tao and other founding members of Phemex identified a lack of professionalism, trustworthiness, and customer support within the crypto industry. In the following two years, the number of users engaging in cryptocurrency trading increased significantly.

Nevertheless, existing exchanges showed little to no improvement. Realizing the seriousness of the problem, the team left Wall Street and founded Phemex in the summer of 2019. They then dedicated themselves to building a simple, efficient, but most importantly, a trusted cryptocurrency trading platform. Then, on November 25th, 2019, the Phemex platform officially went live.

Pheme (Fama) is the personification of fame and of the public’s voice in Greek mythology. While MEX stands for mercantile exchange. This name was chosen to highlight our vision and their dedication to stand as the most trustworthy trading platform.

From day one, their mission was and will always continue to be the empowerment of individuals. They want everyone in this world to have access to the right set of tools that will allow them to manage risk efficiently and trade simply. They sincerely believe this to be a fundamental right that all traders should enjoy.

For its crypto derivatives products, Phemex allows you to trade with leverage. This means that you can receive a higher exposure towards a certain crypto’s price increase or decrease, without actually holding the necessary amount of assets. You do this by “leveraging” your trade. In simple terms, this means that you borrow from the exchange to bet more. You can get as much as 100x leverage on this platform.

Leveraged trades are risky though. For instance, let’s say that you have 100 USD in your trading account and you bet this amount on BTC going long (i.e., going up in value). If BTC then increases in value with 10%, you would have earned 10 USD. If you had used 100x leverage, your initial 100 USD position becomes a 10,000 USD position so you instead earn an extra 1,000 USD (990 USD more than if you had not leveraged your deal).

As we mentioned above, in terms of Spot Trading, Phemex has adopted a zero trading fee model. Instead they just charge for monthly Premium Memberships (prices are $9.99 for 30 Days, $19.99 for 90 Days and $69.99 USDT for 365 Days). Becoming a premium member will also allow you to set conditional spot orders, you will enjoy hourly withdrawals with no limits, and will be able to gift trial premium memberships to friends.

With respect to contract trading, Phemex separates between “takers” and “makers”. Let’s describe these terms real quick. Every trade occurs between two parties: the maker, whose order exists on the order book prior to the trade, and the taker, who places the order that matches (or “takes”) the maker’s order. We call makers for “makers” as their orders make the liquidity in a market. Takers are the ones who “take” this liquidity by matching makers’ orders with their own..

Phemex previously didn’t accept any other deposit method than cryptos, so new investors were restricted from trading here. Starting 18 June 2020, however, they partnered with a company called Banxa which is a payment gateway that accepts credit and debit card purchases of crypto.

Since then, Phemex has also partnered with Koinal, Coinify, MoonPay, and Mercuryo. You have a variety of payment options (ranging from bank transfers to Apple Pay) and rates to fit your needs.

To our understanding, Phemex does not charge any fees of their own when you withdraw crypto from your account at the platform. Accordingly, the only fee you have to think about when withdrawing are the network fees. The network fees are fees paid to the miners of the relevant crypto/blockchain, and not fees paid to the exchange itself. Network fees vary from day to day depending on the network pressure.

Generally speaking, to only have to pay the network fees should be considered as below global industry average when it comes to fee levels for crypto withdrawals.

Source: https://phemex.com

Mexican Bitcoin Exchange Bitso Raises $250 Million, Becomes Latin America’s First Crypto Unicorn

Today, Bitso, the largest cryptocurrency platform in Latin America, announced it raised $250 million in Series C investment. The round, co-led by hedge fund giant Coatue and investment firm Tiger Global, puts the company’s valuation at $2.2 billion, making it one of the largest fintechs in the region and its first crypto unicorn. Other investors in the round include Paradigm, BOND, Valor Capital Group, QED, Pantera Capital and Kaszek. In December 2020, Bitso raised a $62 million Series B at an undisclosed valuation.

The investment will be used to continue providing access to cryptocurrencies for local residents and expand operations, says Bitso’s co-founder and CEO Daniel Vogel. “We want to make sure that folks in the region really benefit from accessing these global financial services that are getting built on top of blockchain.”

Founded in 2014, the Mexico City-based company offers multiple cryptocurrency products and services to more than 2 million customers across Mexico, Argentia and Brazil. These include the Bitso App that lets users buy, sell, send, or receive bitcoin and 8 other cryptocurrencies; Bitso Alpha, a professional-grade crypto trading platform; and Bitso Business, a suite of cross-border products for local enterprises.

The company claims it has more than a 95% crypto market share in Mexico and more than a 60% share in Argentina. In January 2021, Colombian regulators reportedly chose Bitso as one of the nine companies allowed to test crypto use cases under the government’s pilot program. Bitso is also preparing to introduce a crypto derivatives trading platform and interest-bearing crypto accounts.

In the U.S., Bitso is perhaps better known for its crypto remittances services conducted in partnership with San Francisco-based Ripple, which also invested in the company. Last year, Bitso processed about $1.2 billion in remittances, amounting to 2.5-3% of the yearly remittances volume between the U.S. and Mexico, according to Vogel. The lion’s share of those flows was powered by Ripple’s On-Demand Liquidity Service (ODL), delivering instant cross-border payments without pre-funding through Ripple’s cryptocurrency XRP.

In December, several cryptocurrency exchanges and platforms, including Coinbase and Crypto.com, delisted XRP following SEC’s lawsuit accusing Ripple of running a $1.38 billion unregistered offering of XRP, which the regulators deemed a security and not a cryptocurrency. Vogel noted that the joint initiative “lost some of the momentum” but declined to provide details on the company’s current relationship with Ripple. The company later issued a separate statement in an email to Forbes: “Bitso has not made any changes to XRP trading at this time and will keep monitoring the regulatory situation.”

Regional trends

In Latin America, crypto is used primarily for speculation, trading and capital mobilization, driven by remittance needs, the devaluation of local currencies and expensive financial services.

But even though steep exchange rates and the constant devaluation of fiat or local currencies favor crypto adoption, there are still barriers to entry for new users, explains Samuel Gómez Milano, executive director and co-founder of CoinGroup, a Venezuelan research firm specialized in crypto and blockchain technology.

According to Gómez Milano, there is no overarching body that regulates crypto and blockchain-related financial services in the region. Mexico was the first country to enact a comprehensive fintech law in March 2018, but the legislation is ambiguous about crypto, providing a clear framework only for banks and fintechs’ use of virtual assets.

Another disadvantage of crypto usage in the country is the economy’s over-reliance on cash, which accounts for 90% of all transactions, and a largely unbanked population. Instead of setting up their own crypto wallet through popular platforms, those interested in venturing into crypto prefer to find experienced individuals who already have a wallet and offer their services for a commission.

“WhatsApp, Telegram, Facebook Messenger, are the default channels people use to buy and sell crypto in Latin America. They prefer to find an experienced user with a good reputation, even when there are platforms like LocalBitcoins, Buda and Panda, because they think it’s easier,” says Gómez Milano. Even though there’s a higher risk of getting scammed using these popular messaging apps, he thinks people prefer this method because crypto is still confusing to many, and direct communication helps bridge that information gap.

Despite these challenges, remittances could be one of the main drivers of increased crypto usage. Mexico alone took in $4 billion in remittances in March last year, up 35% from the year prior. In 2020, amid the economic slowdown, remittance flows into the region remained largely the same compared to the previous year, at $96 billion.

Banks like Western Union WU -0.6% are the most expensive channel to send remittances, with an average fee of 10.9% per transaction, requiring the recipient to collect the money at an agent location if it’s needed immediately. Direct account deposits can take up to five days. In comparison, the transfer cost via cryptocurrency is 0.1% and goes directly to the recipient in a matter of minutes.

“In Mexico, Bitso made evident the advantages of using crypto for remittances. The exponential growth of this platform proves that it is really helping [recipients],” says Eloisa Cadenas, CEO of consulting firm CryptoFinTech and professor at the Mexican Stock Exchange Group.

Cadenas believes this inefficiency provides ample opportunity for crypto exchanges to grow in the financial services industry. Banks in Latin America are known for lending at high interest rates and charging exorbitant fees with APRs as high as 70% in countries like Mexico, compared to 5.9% crypto platforms like Nexo charge.

Mass adoption has a long way to go, with the region representing between 5% and 9% of all crypto activity per month over the last year. But remittances and high lending fees from the incumbents are not going anywhere, which will continue to incentivize crypto usage.

“The remittances market will continue to grow as long as the U.S. is rich and Latin America isn’t,” says Gómez Milano. “There will always be migration, driven by the financial and labor disparities [between them].”

*Interviews with Samuel Gómez Milano and Eloisa Cadenas were conducted in Spanish and translated by co-author Maria Abreu.

Nina Bambysheva

Maria Abreu

I’m an assistant editor at Forbes covering money and markets. Before joining Forbes, I worked at NextEra Energy, Inc. developing and implementing successful media relations and public relations campaigns in the energy industry.

I graduated from Stetson University with a degree in Finance, and have a master’s degree in Journalism and International Relations from New York University, where I worked as a staff writer for Latin America News Dispatch and New York Magazine’s Bedford + Bowery.

Source: Mexican Bitcoin Exchange Bitso Raises $250 Million, Becomes Latin America’s First Crypto Unicorn

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UK Hedge Fund Reportedly Plans To Invest $84M In Crypto

The firm’s co-founder Alan Howard already has a personal stake in One River Digital Asset Management’s crypto ventures.

Brevan Howard, a United Kingdom-based asset management firm, is reportedly planning to directly invest in digital assets after more than a year of exposure to the crypto space.

According to a Bloomberg report, Brevan Howard Asset Management will be allocating 1.5% of the $5.6 billion in its main hedge fund to crypto — roughly $84 million. A source with knowledge of the matter said two co-founders of crypto investment firm Distributed Global, Johnny Steindorff and Tucker Waterman, would be leading Brevan Howard’s foray into crypto.

The asset management firm will reportedly be focusing on “a wide range” of cryptocurrencies in addition to Bitcoin (BTC), betting that the price of the crypto asset will continue to rise. At the time of publication, BTC’s price is $62,775, having fallen 1.3% in the last 24 hours.

The potential investment from a major hedge fund wouldn’t be the first time Brevan Howard has had exposure to the crypto market. The firm’s billionaire co-founder Alan Howard has a 25% stake with One River Digital Asset Management, a United States-based hedge fund that purchased $600 million worth of Bitcoin and Ether (ETH) last year.

Part of a seemingly growing trend among hedge funds, Brevan Howard is not alone in dipping its toes into crypto markets. In February, New York-based global investment firm M31 Capital filed paperwork with the U.S. Securities and Exchange Commission to launch a Bitcoin hedge fund. Billionaire hedge fund manager and philanthropist Ray Dalio has also called Bitcoin “one hell of an invention” and compared it to gold.

By: Turner Wright

Source: UK hedge fund reportedly plans to invest $84M in crypto

Bitcoin Poised For ‘Massive Transformation’ Into The Mainstream, Citi Says

Bitcoin

Bitcoin could be at the start of a “massive transformation” into the mainstream and on the path to become “the currency of choice for international trade,” according to leading investment bank Citi, which noted the cryptocurrency’s meteoric rise in value in recent years and a growing interest from institutional investors as potentially setting the stage for widespread success.

In a report published Monday, Citi analysts said the world’s most popular cryptocurrency was at a “tipping point” between widespread adoption or a “speculative implosion.”

Bitcoin’s growing use as a payment tool, the increasing availability of digital wallets, and institutional interest from the likes of Tesla and Mastercard have all helped buoy confidence in the cryptocurrency and could see it become the leading medium for international trade in the future, Citi said.

The analysts described Bitcoin as the “North Star” of the blockchain ecosystem, with its underlying technology launching an entirely new domain of the digital economy around it.

However, there are a number of risks and obstacles that could see the Bitcoin bubble burst, the analysts warned, and widespread changes to the market would be required for Bitcoin to be adopted more widely.

Dampened institutional investment in the post-Covid-19 world would remove a key pillar of support for Bitcoin, Citi said, and anticipated regulation and oversight—which runs counter to the anti-establishment ideology underpinning the cryptocurrency—could also “cause many of the most innovative developers and entrepreneurs to exit the ecosystem,” the analysts wrote.

Key Background

Bitcoin is one of the most volatile asset classes around. It has a bumpy and storied history since it was outlined in a paper in 2009, moving from practically worthless to an all time high of over $58,000 a coin in February 2021 (the price has since dropped to around $47,000) with several significant troughs and peaks in between. At its highest, Bitcoin’s market capitalization exceeded $1 trillion. As with the bulk of its history, Bitcoin is still driven by retail investors, who billionaire philanthropist Bill Gates warned not to get drawn in by the “mania” and enthusiasm of Elon Musk who has money to spare should things go wrong.

Crucial Quote

“I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people,” Tesla CEO Elon Musk said on Clubhouse earlier this year.

Tangent

In October, PayPal finally welcomed cryptocurrencies to its platform, believed by many to be a precursor to it moving into the mainstream. PayPal will support four different cryptocurrencies—bitcoin, ethereum, litecoin and bitcoin cash—and will expand the service to Venmo in 2021.

Category: Banking Crypto

SoftBank Invests $200 Million In Brazil’s Largest Crypto Exchange

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