Jacquelyn Melinek

<div id="highlights-block_613a1313489d4" class="highlights">
 <ul>
 <li>“Digital assets have the potential to reimagine commerce, from everyday acts like paying and getting paid to transforming economies, making them more inclusive and efficient,” said Ajay Bhalla, president of Cyber &amp; Intelligence at Mastercard</li>
 <li>As digital assets like cryptocurrencies and non-fungible tokens (NFTs) become more mainstream, they will require solutions and greater intelligence to scale the crypto ecosystem in the same trust and security that traditional payment methods currently have, Mastercard said</li>
 </ul>
 
</div>



Mastercard is extending its coverage into the field of digital assets with a new agreement to acquire a crypto intelligence company CipherTrace, the company announced on Thursday.



The credit card company plans to close the acquisition before the end of the year to “enhance” its crypto capabilities for insight into more than 900 cryptocurrencies currently monitored by CipherTrace, which is funded by the US Department of Homeland Security.&nbsp;



The deal will help mastercard customers and stakeholders build upon and benefit from CipherTrace’s solutions as consumers “build their own virtual asset offerings,” it said.&nbsp;



CipherTrace was founded in 2015 and has provided “blockchain forensics” for over 150 of the largest banks, exchanges, financial institutions and regulators across over 7,000 cryptocurrency entities, it said. The company said its mission is to protect financial institutions from virtual asset laundering risks and crypto-related threats, while also growing the blockchain economy by making it safer for users and trusted by the government.&nbsp;



“We help companies – whether they are banks or cryptocurrency exchanges, government regulators or law enforcement to keep the crypto economy safe,” said Dave Jevans, CEO of CipherTrace. “Our two companies share this vision to provide security and trust throughout the ecosystem.”



As digital assets like cryptocurrencies and non-fungible tokens (NFTs) become more mainstream, they will require solutions and greater intelligence to scale the crypto ecosystem in the same trust and security that traditional payment methods currently have, Mastercard said.&nbsp;



“Digital assets have the potential to reimagine commerce, from everyday acts like paying and getting paid to transforming economies, making them more inclusive and efficient,” said Ajay Bhalla, president of Cyber and Intelligence at Mastercard. “With the rapid growth of the digital asset ecosystem comes the need to ensure it is trusted and safe. Our aim is to build upon the complementary capabilities of Mastercard and CipherTrace to do just this.”



The integrated offering will build on CipherTrace’s suite of digital assets and Mastercard’s cyber security solutions to provide businesses with more transparency in identifying and understanding risks and to help companies manage regulatory and compliance obligations, Mastercard said.&nbsp;



CipherTrace will continue to work with partners in financial technology, crypto-wallet providers, governments and other entities, it said.&nbsp;



“The acquisition is part of Mastercard’s mission in the digital assets space to help provide customers, merchants and businesses with more choice in how they move digital value,” it said.



Earlier this week, Mastercard also announced its agreement to acquire a European open banking technology company, Aiia.&nbsp;



“The addition of Aiia anchors our European open banking efforts and allows us to continue to meet our customers where they are,&#8221; said Craig Vosburg, chief product officer at Mastercard. &#8220;As open banking continues to ignite innovation, we’re committed to providing a unique set of technology platforms, data connectivity and infrastructure combined with data privacy and security principles,” Vosburg said.&nbsp;



In July, Mastercard added seven startups to its engagement program focused on supporting fast-growing digital assets, blockchain and cryptocurrency firms as the payment company continues its push in the space, Blockworks previously <a href="https://cms.blockworks.co/mastercard-adds-crypto-startups-to-engagement-program/" target="_blank" rel="noreferrer noopener">reported</a>. 



Mastercard has developed a handful of investments, including partnerships with Uphold, Gemini and BitPay to create <a href="https://cms.blockworks.co/gemini-mastercard-to-launch-crypto-rewards-card/" target="_blank" rel="noreferrer noopener">crypto rewards cards</a>, the development of new platforms to test and support potential Central Bank Digital Currencies, as well as programs to support blockchain technology and NFTs, and the potential to support select stablecoins directly on the company’s network, it said.



Are you a UK or EU reader that cant get enough investor-focused content on digital assets?<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.

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Mastercard to Acquire Crypto Intelligence Company CipherTrace

Ben Strack

<div id="highlights-block_745669edbce069409888d7015248807e" class="highlights">
 <ul>
 <li>LedgerX has cleared more than 10 million crypto options and swap contracts since its launch in 2017</li>
 <li>Other FTX.US expansion plans include applying for BitLicense to offer spot products in New York and enhancing NFT marketplace</li>
 </ul>
 
</div>



<a href="https://ftx.us" target="_blank" rel="noreferrer noopener">FTX.US</a> is set to acquire the parent company of digital currency futures and options exchange <a href="https://www.ledgerx.com">LedgerX</a>, the company announced Tuesday.



The US affiliate of Sam Bankman-Fried’s crypto exchange FTX will buy the exchange — regulated by the Commodity Futures Trading Commission (CFTC) — as a way to bring crypto derivatives to its US user base.



The acquisition is expected to close in October. The financial terms of the deal have not been disclosed.



LedgerX, which launched in 2017, offers physical settlement of all contracts, block trading and algorithmic trading opportunities for institutional investors. It has cleared more than 10 million crypto options and swap contracts and pioneered the bitcoin mini contracts that enable granular trading.&nbsp;



The combined company will look to create products for retail and institutional traders and will put resources toward developing a strong working relationship with the US regulatory community, specifically with the CFTC.



Hong Kong-based FTX in May 2020 launched its US business, which currently only offers spot trading in coins such as bitcoin, ether, bitcoin cash, litecoin, paxos gold token and tether.&nbsp;



More volume trades globally in crypto derivatives than in spot crypto, as the market is more attractive to many investors from an efficiency and hedging perspective, explained FTX.US president Brett Harrison.



“It’s only natural to want to engage the largest capital market in the world inside the US with that same product through all of our existing institutional and retail customers who want to trade these products,” he told Blockworks.



Instead of spending what could have been years applying for and receiving licenses in this space, Harrison added, FTX.US decided to acquire. LedgerX is classified as a Designated Contract Market (DCM), a Swap Execution Facility (SEF), and a Derivatives Clearing Organization (DCO).



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
“They have the relationship with the CFTC, they have a number of licenses, they have an excellent team,” Harrison said. “We have the capital, we have the technological expertise and we have a great platform as well, so it was kind of a perfect fit.”
</blockquote>



FTX.US will first look to offer bitcoin and Ethereum futures and options, which LedgerX currently provides, the executive said. Over time, the two teams will work with the CFTC to bring more products to its platform under the FTX.US brand.&nbsp;&nbsp;



“US crypto derivatives is an incredibly underserved market, and it took time and resources for us to become a regulated entity under the existing frameworks,” LedgerX CEO Zach Dexter said in a statement. “FTX.US has taken the view, which we share, that US regulators are ready and willing to partner on innovative products, and it&#8217;s the responsibility of the industry as a whole to step up and work with agencies like the CFTC.”



FTX.US <a href="https://www.prnewswire.com/news-releases/ftxus-reports-mid-year-trading-results-and-provides-operational-update-301344071.html" target="_blank" rel="noreferrer noopener">reported in July</a> that its average daily volume grew 150 times from June 2020 to June 2021, peaking at $993 million during a 24-hour period on April 22.



Amid the growth, FTX.US has focused on its brand exposure in recent months, <a href="https://www.mlb.com/news/mlb-ftx-cryptocurrency-exchange-partnership" target="_blank" rel="noreferrer noopener">partnering with the MLB</a> and making Shark Tank’s Kevin O’Leary <a href="https://cms.blockworks.co/ftx-partners-with-shark-tanks-kevin-oleary/" target="_blank" rel="noreferrer noopener">an ambassador</a>.&nbsp;



FTX <a href="https://cms.blockworks.co/ftx-closes-900m-series-b-round-valuing-exchange-at-18b/" target="_blank" rel="noreferrer noopener">raised $900 million</a> for its Series B round, valuing the company at $18 billion. Bankman-Fried has said publicly that FTX.US is looking to get licensed where it can, noting that the fundraise would be used to ensure regulatory compliance.



As for further plans to expand FTX.US, Harrison told Blockworks that the business is focused on increasing its retail users and plans to apply for a <a href="https://www.dfs.ny.gov/apps_and_licensing/virtual_currency_businesses/bitlicense_faqs" target="_blank" rel="noreferrer noopener">BitLicense</a> to offer spot products to New York customers.



FTX.US is also working to enhance its marketplace for non-fungible tokens, he added. The exchange <a href="https://cms.blockworks.co/ftx-launches-nft-marketplace/" target="_blank" rel="noreferrer noopener">launched its NFT marketplace</a> about three months ago, and the market has boomed. OpenSea, the largest marketplace in the space, just <a href="https://cms.blockworks.co/opensea-hits-3b-in-monthly-nft-volume/" target="_blank" rel="noreferrer noopener">hit $3 billion in monthly volume</a>.&nbsp;

FTX.US Brings Crypto Derivatives to Users with LedgerX Acquisition

<div id="highlights-block_610b0716638ea" class="highlights">
 <ul>
 <li>Over the last three years, the startup established the Zabo API to connect users to any crypto exchange platform, wallet, protocol or account</li>
 <li>Coinbase is scheduled to announce its Q2 earnings on August 10 with an expected earnings per share of 2.57 and an expected revenue of $1.83 billion</li>
 </ul>
 
</div>



Coinbase is acquiring a cryptocurrency data aggregator, Zabo, according to a <a href="https://zabo.com/blog/zabo-is-joining-coinbase/#" target="_blank" rel="noreferrer noopener">blog post</a> announcement on Wednesday.



Zabo began in 2018 with a mission to build new tools to bring cryptocurrency into mainstream financial services, co-founders Christopher Brown and Alex Treece wrote in the blog.



Over the last three years, the startup established the Zabo API, which is a single application programming interface that connects users to any crypto exchange platform, wallet, protocol or account.



“The cryptocurrency industry is still early, and there are many fundamental technologies which need to be built to make the stack work for mainstream participants. Ultimately the technology needs to be safe and usable even as we see more groundbreaking innovation within the cryptocurrency space,” Brown said in an email to Blockworks. “We think this acquisition will help drive the development of key technologies.”



Zabo could not share the value of the deal or what the integration into Coinbase’s platform will look like. However, Brown said that the acquisition will take place “as soon as possible,” and the two companies are in the final stages of the process.



Coinbase’s mission “of increasing economic freedom in the world is bold and important,” Brown said. “Once we understood there is mutual benefit to be had with our team and technology, then it became an easy decision for us,” he added.&nbsp;



In March 2020, Zabo announced a $2.5 million seed raise led by Moonshots Capital and was joined by Blockchange Ventures, Castle Island Ventures, Digital Currency Group, CoinShares, Tezos Foundation, Capital Factory and others.



In the last <a href="https://cms.blockworks.co/?s=coinbase" target="_blank" rel="noreferrer noopener">few months</a> alone, Coinbase has has launched crypto savings high-yield <a href="https://cms.blockworks.co/coinbase-compound-labs-launch-usdc-high-yield-accounts/">USDC accounts</a>, a prime brokerage <a href="https://cms.blockworks.co/coinbase-launches-revamped-prime-brokerage-services/" target="_blank" rel="noreferrer noopener">service</a> and expanded into <a href="https://cms.blockworks.co/coinbase-expands-borrowing-using-bitcoin-as-collateral/" target="_blank" rel="noreferrer noopener">borrowing bitcoin </a>as collateral, among other developments.&nbsp;



The first half of 2021 was one of the most active periods on record for crypto, said Brian Foster, a member of Coinbase’s Institutional Sales, Trading, and Prime Services team and Coinbase Ventures, in the company’s H1 2021 Review report. The first six months brought in new all-time highs in asset prices, user adoption and trader activity, Foster said.&nbsp;



In Q1 2021, Coinbase had a net revenue of $1.597 billion, up 792% from $179 million in the year-ago quarter. During Q1, Coinbase also acquired Bison Trail, which will allow companies to send and store crypto, accept crypto payments and build their businesses with crypto-native infrastructure, it said in a shareholder <a href="https://s27.q4cdn.com/397450999/files/doc_financials/2021/q1/Q1'21-COIN-Shareholder-Letter.pdf">letter</a>.&nbsp;



At the time, the company said that the rapid expansion of the crypto economy creates new challenges as competition is increasing among the marketplace as new groups join the space every month. While Coinbase said they welcome these challenges, they said they have to continue to move quickly to address them through action and growth.&nbsp;&nbsp;



Coinbase is scheduled to announce its <a href="https://investor.coinbase.com/financials/quarterly-results/default.aspx" target="_blank" rel="noreferrer noopener">Q2 earnings</a> on August 10 with an expected earnings per share of 2.57 and an expected revenue of $1.83 billion.&nbsp;



Want more investor-focused content on digital assets?&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a>&nbsp;September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.

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