Former JPMorgan Energy Trader Forecasts Coinbase Competing With NYSE
Danny Masters, a former JPMorgan energy trader who is also the chairman of London-based crypto investment firm CoinShares, recently made a big move by launching a bitcoin and ethereum fund that will be publicly traded. The funds asserts are experiencing a significant amount of traction among financial service firms.
Masters is recognized for his experience at JPMorgan Chase, which he accumulated before leaving in the late 90s to establish his own commodities fund, Global Advisors. The fund currency owns 75 percent of CoinShares, which manages $1 billion in crypto assets after transitioning to bitcoin and other cryptocurrencies in 2014 – well before it was fashionable among Wall Street.
Masters recently interviewed with Business Insider and discussed that the CoinShares Platform, which focuses on providing investors with professional-grade access to cryptocurrency, was something that was difficult to understand.
As he stated,
“We’ve gone from a renegade character to a more confusing animal for people to view. You needed to be a true believer and you need to suck it up for 2014, ’15, and ’16. And the ’17 was just off the charts good.”
The transition took place the year Bitcoin reached its famous all-time high of $20,000, thus compelling incumbents to look into an emerging asset-class, despite many Wall Street professionals spending 2017 and 2018 deriding the cryptocurrency.
“We heard [JPMorgan Chase CEO] Jamie Dimon called Bitcoin a fraud. There are some very, very high profile – but usually, deeply legacy entrenched – people who are just outright dismissive. The clock has lapsed. It is no longer acceptable to dismiss it.”
In addition, Fidelity recently has started looking into and potentially providing a new cryptocurrency offering, thus leading to the appearance of a crumbling of a united front by big banks and legacy firms in the face of cryptocurrency.
Masters also interviewed with Bloomberg hosts Pimm Fox and Lisa Abramowicz and therein, he outlined the next phase of cryptocurrencies during the Fidelity Digital Assets and its overall goal of providing service to custody and crypto trading for institutional investors. According to him, the move by Fidelity was certainly due.
“I think they’re going to do very well with that. I think the narrative changes very rapidly in crypto. It is an evolutionary process, for sure, maybe a revolutionary process. And the way I’m currently thinking is, really, that what is happening now – and the timely entry of Fidelity and others – is really what I call the third wave of the crypto movement. First wave: Bitcoin arrives. It disrupts gold and money. The second wave: We see Ethereum, a new blockchain that has the ability to form capital. That happens very rapidly and in a very large way. The SEC doesn’t like that – initial coin offerings. The SEC doesn’t like that for obvious reasons and that comes to essentially a screeching halt.”
“The third wave, in my opinion, will be the so-called security token. So you cannot do an initial coin offering with these anymore but you can do a security token. What does that mean? That will be, in the first instance, one of the exemptions from the Securities Act, either a Reg A, an A+, a Reg D, Reg S whereby a token will represent equity in a private company, and it will exist in this space between what has traditionally been private companies and public companies. And it’ll be a hybrid, which is transparent and liquid and transferable.”
“There is potentially a tremendous value to be accrued to a smaller investor coming in on the lower end of that P/E spread because those assets are typically not available to the average person.”
“XBT Provider has been a wonderful journey for us. We started very small and we got – I think we peaked at around $1.7 billion when the prices were high last year, and we obviously receded with the price drop. It’s been an interesting episode and journey with Nasdaq themselves because it’s a controversial asset class. It has characteristics like security of the assets themselves which don’t exist in other asset classes. I think you’ve seen Nasdaq themselves now starting to talk about security token exchanges as well going forward. So, it was an embryonic and early adoption, and it got a lot of traction. And I think it is going to be the first of not only trackers in other markets and other jurisdictions on Bitcoin and other cryptos, but I think it will prove to be the precursor to the larger exchanges actually looking at security token markets themselves.”
“It’s not actually outside of the regulatory structure. It’s outside of the piping and infrastructure of the conventional marketplace. When you look at how the Chicago Merc or the New York Stock Exchange work, there is a bunch of electronic piping that goes around making the transfer and the trading of these shares happen, and that is a considerable infrastructure. And there has been talk about deploying distributed ledger technologies to these exchanges in order to get the advantages of distributed ledger technology. What are the advantages? They are real-time settlement, low latency, transferability, portability…”
“Rather than re-engineer the CME so that they re-pedal their old systems and put in distributed ledger databases and so on, what you do is you turn securities into cryptos, and you trade them on crypto exchanges.”
“You’ve seen Coinbase do this. The structure that they’re putting together is a registered broker-dealer, a registered investment advisor in all 50 states, and an automated channel zone to trading system, and once you put those three things together, plus their 12.5 million customers, they have their own stock market. And once they issue tokens on it, this is a competitor to NYSE and Nasdaq.”