BrokerDealers and Buyside: Bitcoin Coming to A Screen Near You

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Brokerdealer.com blog update courtesy of extract from Traders Magazine, the leading publication within securities industry’s sell-side (otherwise known as the universe of registered broker-dealers). Coverage for this story provided by TradersMag writer Gregg Wirth. Visitors to this page who may wish to know more about brokerdealers and institutional investors having an interest in bitcoins are invited to search the brokerdealer.com database.

bitcoinBitcoin, the crypto-currency that initially became infamous as the tender of choice for drug traffickers and mercenaries, may be coming to a trading desk or institutional portfolio near you – and sooner than you think.

“2014 is going to be the year Bitcoin hits Wall Street,” said Barry Silbert, founder and CEO of SecondMarket, a capital-raising platform for private companies and investment funds. Indeed, there is a growing consensus in some corners of Wall Street and the buyside community that the $7.8 billion  Bitcoin industry is going to become the new, flashy darling of investors, with dedicated digital currency funds, venture capitalists and asset managers all chasing after those 12 million bitcoins currently in circulation.

“Digital currencies like Bitcoin are not going away,” Silbert explained. “And Wall Street and the regulators know this, they’ve studied how to deal with it, and now they are starting to understand its potential.” SecondMarket has gone heavy into the Bitcoin phenomenon, launching the Bitcoin Investment Trust, a $70 million open-ended trust that invests exclusively in bitcoins, as well as a dedicated desk of 10 traders who buy and sell bitcoins for the trust and other institutional clients. SecondMarket is also creating what it hopes to be the largest, best-capitalized and well-run Bitcoin exchange in the U.S., and is enlisting banks and Bitcoin-related firms to be exchange members.

“The number of inquiries and requests from finance industry professionals for us to prepare compliant investor offering documents for crypto-centric funds is certainly keeping us busy”, said Paul Azous, CEO of Prospectus.com. “We don’t see this as some type of anomaly that is connected to a short-term fad, many of the funds we are working with are forward-thinking folks who realize that blockchain applications will be expressed in nearly every business process.”

In addition to preparing investment fund offering documents, Prospectus.com helps blockchain-based startups craft white papers, presentation decks that resonate with accredited investors and through a captive network of crypto industry consultants, the firm guides those advancing Initial Coin Offerings (ICOs).

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Single Winner of All Bitcoins in U.S. Auction

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BrokerDealer.com/blog update courtesy of extracts from today’s NYT DealBook

The United States Marshals Service announced on Tuesday that one bidder had won all of the nearly 30,000 Bitcoins auctioned on Friday.

“The U.S. Marshals Bitcoin auction resulted in one winning bidder,” Lynzey Donahue, a spokeswoman for the Marshals Service, said in a statement. “The transfer of the Bitcoins to the winner was completed today,”

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But the Marshals Service did not identify the winner or disclose the winning bid.

In instructions on its website and to bidders, the Marshals Service had said it would alert both winners and losers of the auction on Monday by 5 p.m. Eastern time. The deadline for winning bidders to transfer funds to the agency, according to the website, was 5 p.m. on Tuesday.

At least a handful of bidders were sent emails on Monday notifying them that they had not won the auction. So far, many prominent bidders have said they were outbid, including a syndicate run by SecondMarket, Pantera Bitcoin, the Bitcoin Shop and Coinbase. Rangeley Capital and Alex Waters at CoinApex also said they did not win any Bitcoins.

“While we are disappointed that our syndicate did not emerge as a winner in the auction, we are pleased to see such strong interest from other bidders,” Barry Silbert, chief of SecondMarket, said in a statement on Monday. “The auction was a clear success and the result quite positive for Bitcoin.” Mr. Silbert said his syndicate had received 186 bids from 42 bidders.

The Marshals Service said on Monday that 45 registered bidders had participated in the event and that the agency had received 63 bids over the course of the auction.

Since the Marshals Service first announced the auction in early June, there have been a number of missteps. A list of potential bidders was accidentally released on June 18 in an email from the agency. And apparent typographical errors in the initial instructions posted on the Marshals Service’s website made it unclear when the registration deadlines were.

Some bidders also said other aspects of the process had been vague. Mr. Waters, for example, said on Monday that he had bid on one block of 3,000 Bitcoins at $403 each, far below the market price of Bitcoin, because he thought syndicates would not be permitted by the Marshals Service.

The full article can be found at NYT DealBook.

Bitcoins, Broker-Dealers, Investment Bankers and New Business Models: The Race is On

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Bitcoin and the topic of “virtual currency” continues to gain traction, as evidenced by the increasing number of technology-savvy corporate executives focused on the world of transactions. Within the world of broker-dealers and investment bankers, bitcoins are increasingly intriguing when considering the global ramifications of a new tool that will be part of the toolset for trading securities and financial instruments; and certainly a tool for which start-up companies seeking capital can build a business plan around.

Ben Horowitz, co-founder of venture capital firm Andreessen Horowitz explains his outlook here: