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BY Risen Jayaseelan - June 13, 2018

Risen's Quick Take 0

Lithuanian Blues / Crypto comes to stock markets

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Lithuanian Blues

It’s great that Lithuania has come up with its ICO guidelines. Prospective ICO promoters must be pouring over the details now.

But while it does look good on paper, one group’s experience of taking its ICO to Lithuania over the last few months, has turned out to be a problematic experience. An advisor to the project, who spoke with CNA on condition of anonymity, said a few issues had derailed the ICO journey there. For one, the paperwork required for the registration process was enormous. What made it more complicated was that everything had to be filed in the local Lithuanian language, leaving the promoters and the advisors scurrying around for a good translator, which was neither easily available nor cost effective.

It also took up to three months just to incorporate the project there.

To top it all, banks in Lithuania did not provide any support to the project in the sense that they shied away from providing any services related to the project. For example, the banks declined to accept OTC deposits, which made it harder to operate the ICO. The advisors explained that this is because ICO funds from crypto wallets are converted from crypto-to-fiat through OTC agents (who then transfer the fiat into bank accounts).

To be sure, the support of banks for exchanges and ICOs is the biggest missing puzzle in the ecosystem the world over. Even when the biggest exchange Binance said it had opened a bank account in Malta, it did not reveal the name of the bank. CNA has speculated the bank is AgriBank of Malta, one of the smallest in the country and with total assets of a mere 24mil euros.

To be noted also is that this case may not necessarily be representative of the situation in Lithuania. Perhaps the project has just linked up with the wrong local partners there.

Whatever the case, the race will keep heating up among jurisdictions hoping to attract the foreign investment that comes with crypto projects.

The winner is likely to be one that provides the widest banking support and other support services and not those with well scripted regulations alone.


Crypto comes to stock markets

For traditional investors content with their stocks and shares, there has not been a need to figure out what the hoopla about bitcoin and its underlying blockchain technology is all about. That’s about to end. Two major IPOs are going to hit the Hong Kong Stock Exchange raising billions of dollars. Bitmain and Canaan Creative are the two largest producers of cryptocurrency hardware. (On a smaller scale, Argo Blockchain, which rents out computing power for crypto mining purposes, hopes to be the first blockchain company to list on the London Stock Exchange.) Once their prospectuses are out, analysts, fund managers and retail investors will be told all about the world of crypto mining. Crucial to that understanding will be the concept of bitcoin and blockchain.

Another new development will be how traditional markets value a mining hardware company. There’s a few mining companies listed on the Canada’s TSX Venture Exchange, but they are small stocks with a largely retail following. The closer peers would be AMD and Nvidia. But even then, there are significant differences. Both Bitmain and Canaan make end to end hardware for crypto mining. AMD and Nvidia benefited from record sales of their graphic cards to crypto miners. But those sales only make up an estimated 5% of revenues, say some analysts. Furthermore, what Bitmain and Canaan are producing now, are likely to end the demand from the traditional chip makers due to the formers superior technology. Hence it will be interesting to see how the market values them when they hit the Hong Kong stock market later this year.

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