Anton Golub, co-founder and CEO of flovtec, joined host Paul Gordon to discuss the latest crypto market activity. There has been a great deal of excitement in the cryptocurrency industry since bitcoin has broken through the USD 20,000 level. A number of deals have been announced, including SBI’s strategic investment in Switzerland-based Sygnum Bank. Sygnum was the first digital asset native and licensed bank to go in the direction of tokenizing its own shares, which are now on the blockchain.
(1:50) “We really need a lighthouse project, a lighthouse company, a poster child of our industry to actually show that STOs work, tokenization works so you can have actually a huge success story,” said Anton.
While there has been a great deal of hype surrounding security token offerings (STOs) in the past year, the industry has fallen short. Sygnum has a great opportunity to demonstrate that it works and to put their money where their mouth is and show that STOs can be a huge success story, Anton added.
SBI’s acquisition of UK-based cryptocurrency trading firm B2C2 took Anton by surprise.
(3:30) “But it’s a bigger vote of confidence and a demonstration that the big players are thinking about how do we establish gateways toward the digital asset industry in a safe, secure, fast way that’s in line with expectations of institutional investors,” said Anton, adding that perhaps 2021 will be the year of M&A.
A lot of thoughts have been developed about bitcoin as a store of value, aka digital gold. But if you look at the numbers we are a long way away from that.
(5:15) “I think it will be really realistic, actually, that at some point we end up at USD 100K…Of course…that will not go in a straight line. But I’m extremely bullish on it both in terms of the price action, volume, new instruments, turnover, new companies, however you want to look at it, our ecosystem is growing like hell,” said Anton.
(7:28) Grayscale Investments has been around since about 2014. They’ve seen exponential growth. Many investors ask Anton about the inflows and what is going on there, as it looks quite exotic. Grayscale was clever to introduce in-kind investments, meaning you can come to them and invest your bitcoins into their vehicle. This is relevant because you have a huge premium at which their vehicle is being traded.
When a one-year lock-up period is over, you can sell the units at quite a significant premium. People ask if it’s inflows or an arbitrage investment. According to Anton, it’s about 50/50 with slightly more on the arbitrage play side. There are big market players coming in from the traditional financial space who have the balance sheet and capacity to make it an arbitrage play. The AUM growth is impressive but based on Anton’s behind-the-scenes information, it’s more the arbitrage play than the inflows. The lending desk also plays into it.
Big names have been active in the past week, including Big River, which could open up the floodgates even further, noted Paul. In Switzerland and throughout Europe, family offices are already very invested in the space. Now we are seeing big allocations of USD 600 million and USD 700 million, said Anton. If we talk about that and pushing transactions of that size through the exchanges and the OTC desks, the markets move so much because there is no liquidity.
(10:39) “The players are clever. They don’t just press the buy button and wait for the order book. They do it in a very clever way,” said Anton.
Square, for instance, did it through algos to liquidity providers and market makers. The market moves so much because there is no liquidity. If there was more liquidity on the sell-side, the price would not move. It’s positive when the price is going up. It might not be so much fun when the price is going down, Anton said, adding that he remains bullish.