- The United Kingdom and the United States have more registered cryptocurrency exchanges than any other individual country, while the G20 grouping makes up the majority of Bitcoin transactions.
- As the crypto industry grows in value, so does the need for crypto insurance. Lloyd’s of London and other major insurance providers are poised to score big contracts in the hundred-million-dollar market.
- 40% of millennials would invest in cryptocurrency in a recession, unlike their Gen X and Gen Z counterparts.
- Digital asset brokerage Tagomi is making the traditionally arduous process of short-selling easier for its crypto traders.
A new report published by crypto analytics platform Crystal shows that the United Kingdom and the United States are leading the pack when it comes to registered crypto exchanges. The UK tops the list with 43 exchanges, while the US has 27 registered within its borders. Interestingly, between the two sits “Unknown” with 33 exchanges; this refers to crypto marketplaces that aren’t registered to a specific country. As a group, the countries that make up the European Union also have a strong presence, with 49 exchanges among them.
Hong Kong and Singapore round out the top five, with Australia and China close behind. On the flip side of the coin, 21 of the studied countries only had one crypto exchange apiece, among them Venezuela, Costa Rica, and Indonesia.
The report also specifically focused on the countries that make up the international forum known as G20. At the June 2019 G20 Summit in Japan, leaders showed support for the booming crypto industry, stating that it poses no threat to established currency. G20 countries made up about 70% of all Bitcoin transactions in 2018, down from 96% five years earlier.
As previously reported, G20 leaders reaffirmed their previous stance towards cryptocurrencies in a declaration following the G20 Summit in Osaka on June 29. The G20 leaders stated that cryptocurrencies do not currently constitute a threat to monetary stability, and that technological innovation can deliver significant benefit to the economy.
Although the U.K. is widely considered to be a global leader when it comes to crypto adoption and innovation, the environment is purportedly still confusing and complicated for exchanges, platforms and other related businesses, as the industry has been neglected in the push to protect consumers.
As cryptocurrency prices rise, so too does the need for buyers to protect their assets. As with any digital technology, the threat of hacking looms over crypto traders, even when backed by secure exchanges, making solid insurance policies a necessity. Legendary insurance provider Lloyd’s of London, which has also insured the Titanic, Whitney Houston’s vocal chords, and Michael Flatley’s legs, is quickly becoming one of the biggest providers of insurance to major players in the crypto industry.
While Lloyd’s of London has already organized hundreds of millions of dollars’ worth of crypto policies, other insurance provides are taking note as well. That includes Aon, which is also based in London; “Swiss behemoth” Chubb; and San Francisco startup Coalition.
Cryptocurrency exchanges and custodians—the venues where you can buy, sell and store assets—are hackers’ top targets, because they collectively hold billions of dollars in crypto. They face a unique challenge, because they need to let customers move their assets quickly while also storing them safely. Even Binance, the largest crypto exchange that has historically had a reputation for strong security, fell victim to a $40 million theft earlier this year. It reimbursed customers through its own “Secure Asset Fund for Users” or SAFU, a sort of self-insurance it announced last year. Binance says it diverts 10% of all trading fees into the fund in the event of theft, and it doesn’t purchase any outside insurance. The company declined to say how large the SAFU fund is.
Two years ago, the market for crypto insurance was “nonexistent,” Coalition CEO Motta says. Today he thinks it’s worth between $200 million and $500 million in premium revenue. Motta expects the market for crypto insurance to grow faster than the 20% to 25% pace at which the larger cybersecurity insurance sector is currently expanding.
Millennials are no stranger to recession. Many in that coveted demographic, which refers to individuals born between 1981 and 1996, remember the Great Recession of 2008 vividly. With some experts warning that we could be on the verge of another great economic decline, it’s not surprising that millennials have considered the alternative investments they would make in such a scenario. In a recent survey from eToro, 40% of millennial respondents indicated that cryptocurrency would be their preferred investment in a recession.
Interestingly, the generations coming before and after millennials had complete different answers; 38% of Gen Xers reported they would invest in commodities, while 50% of Gen Z would turn to real estate. That last stat is a bit surprising given Generation Z’s relative youth; the oldest of the group are still only in their early twenties, but real estate apparently never goes out of style.
A recession would purportedly fuel investors’ interest in fractional ownership and new asset classes, with 92% of those most concerned about a recession saying they would own fractions of famous artworks, landmark buildings
andprivate startups, among other types of investments. Of all respondents, 55% said that they would sell a portion of their stock portfolio to fund their investment in fractional ownership of these new types of assets.
Per Hirsch, investors want more freedom than the current financial status quo allows, which would help to engage younger investors.
A recent survey by Huru India showed that high net-worth individuals in India are more likely to invest in Bitcoin (BTC) than other cryptocurrencies. Digital currencies were the fourth most preferred asset overall, although almost half of the respondents didn’t know what cryptocurrencies were.
One of the biggest challenges for cryptocurrency is shorting, or selling crypto in a way that lets the seller benefit from a price drop. The process of short-selling tokens can be a tricky and complicated process, which isn’t great for an industry that’s supposed to eschew the bureaucracy of more traditional financial institutions. As Kevin Johnson, COO of digital-asset brokerage Tagomi, puts it, “In other asset classes this would be done with one click, but in crypto it’s very long and tedious to try and put a short on.”
That may be about to change, as Tagomi claims it’s found a better way to short crypto, starting with Bitcoin and Ethereum. The firm is planning to make the process easier by offering immediate access to multiple counterparties from a single platform. This is accommodated by a number of agreements with other trading counterparties; as a result, Tagomi’s clients can lend or borrow these tokens in either long or short sales.
The ability to short is an invaluable tool for traders, said Dennis Chou, director of trading at Pantera Capital in San Francisco. It’s not just for those who want to bet against digital assets, but can also be useful for relative-value trades, quantitative strategies and for hedging, he said.
“The crypto space is volatile, so if you can’t short, you’re missing part of the puzzle,” said Chou.
That’s the roundup for September 14th. Check in next week for the latest news of cryptocurrency innovation and regulation around the world!
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