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INSTITUTION

Goldman Sachs and Galaxy Digital Invest Up to $15 Million in BitGo

Rocket Launch

BitGo secures Wall Street

According to Bloomberg, Goldman Sachs and Galaxy Digital have invested up to $15 million into crypto custody startup BitGo.

The new investment brings BitGo’s latest Series B fundraising amount up to $57.5 million and BitGo’s total fundraising amount to $70 million.

The startup hopes the new investment from a Wall Street giant like Goldman Sachs will attract more institutional investors to store digital assets with their custody service.

💡 What is BitGo? BitGo was founded in 2013 as a blockchain security company that protects customers digital assets. Recently, BitGo gained approval as a qualified custodian in the state of South Dakota and now offers protection for more than 75 cryptocurrencies.

Why custody is enabling big money

While everyone is waiting for institutions to enter the space, institutions are waiting for a safe, riskless, custody service to protect their digital assets.

While everyone is waiting for institutions to enter the space, institutions are waiting for a safe, riskless, custody service to protect their digital assets.

However, because cryptocurrencies are a relatively new asset class and hackers have only gotten more threatening, crypto custodians are sparse and perhaps even worse, fund managers don’t quite yet trust crypto custodians.

Mike Belshe, BitGo cofounder, commented on the current environment:

“If you were investing in any other asset class, you’re probably not worried about the asset just disappearing — but this one, people still have that fear. We’ve got to conquer that.”
It’s coming nonetheless

Goldman Sachs’ investment in BitGo comes just after Fidelity Digital Assets announced it will be offering security and storage systems in addition to settlement services.

But Fidelity isn’t BitGo’s only competitor. Yesterday, U.K.-based security firm G4S launched its own “high-security offline storage.”

Still, the crypto custody industry has a long way to go with both regulations and investor sentiment before institutions begin lining up outside the door.


REGULATION

SEC to Launch New Division to Service ICO Startups

Connecting ICOs with regulators

On Thursday, the United States Securities and Exchange Commission (SEC) announced plans to open a new division with the specific mission to educate financial technology startups (including ICOs) on the regulations relevant to their business. The division will be called the Strategic Hub for Innovation and Financial Technology (FinHub).

FinHub will be the go-to spot for information on regulations that relate to financial technology and ICO companies. Companies will be able to talk face-to-face with regulators at FinHub to ensure that they are compliant with regulations.

FinHub has already planned a “FinTech Forum” specifically on the topic of distributed ledger and technology and digital assets. The Forum will occur sometime next year, no specific date was disclosed.

Valerie Szczepanik, the SEC’s senior advisor for digital assets and innovation will run FinHub. Szczepanik said in a statement:

“SEC staff across the agency have been engaged for some time in efforts to understand emerging technologies, communicate the agency’s stance on new issues, and facilitate beneficial innovations in the securities industry. By launching FinHub, we hope to provide a clear path for entrepreneurs, developers and their advisers to engage with SEC staff, seek input and test ideas.”
Not hindering innovation

It seems the SEC realizes the potential of blockchain technology and doesn’t want to slow its growth. The SEC has always taken the stance to protect investors, rather than outright banning cryptocurrencies.

However, the SEC does have rules in place that rule over securities and some cryptocurrencies are no doubt securities. If a crypto is a security, it must follow SEC regulations.

Everyone is waiting for more clear regulations from the US government. Maybe the regulations already exist since a handful of regulators have classified cryptocurrencies using already existing laws.


ADOPTION

Elon Musk (Doesn’t) Begin Accepting Crypto Payments at The Boring Company

Caught with fake news

Yesterday, The Next Web reported that Elon Musk has now added crypto payment options to his new venture The Boring Company.

The Boring Company was started in 2016 with the mission of creating an underground web of tunnels to eliminate traffic but has since begun selling hats and other merchandise, as well as a flamethrower? Yeah, we don’t know what the company is either.

According to the report, customers were allowed to purchase items with Bitcoin, Litecoin, Bitcoin Cash, and Ethereum.

However, now updated, it looks like the screenshot was from a fake website and The Next Web has stated that the article is ‘fake news.’

Musk and crypto?

While Musk has had little involvement in the crypto industry, he has run into the technology before.

In March, Musk was spotted reading a cryptocurrency book in public. Following that, Musks’ twitter account was bombarded with crypto scammers running fake Ethereum giveaways and he commented that the bots had “mad skillz.”

However, Musk hasn’t made a significant investment just yet. Although he did admit he owns 0.25 Bitcoin that a friend sent him years ago.



NEWS

U.S. Marshals Auctioning Off $4.3 Million in Bitcoin

Marshals have weak hands

The US Marshals Service has announced plans to auction off 660 Bitcoins (roughly $4.3 million). The Bitcoins being sold were seized from various federal criminal, civil and administrative cases.

The Bitcoins will be partitioned into 7 tranches: 6 of 100 Bitcoins and 1 of 60 Bitcoins. Bidders will be required to make a $200,000 deposit before having the right to bid on the Bitcoins. The auction will occur on November 5th.

The US Marshals have a history of holding Bitcoin auctions as a result of criminal forfeitures. In March and January of this year, it auctioned off 2,100 and 3,600 Bitcoins respectively.

While many criminals think that they are able to protect illicit funds from the government by storing them in Bitcoin, the government has proven its ability to track and seize cryptocurrencies.