James Cirrone

CitiGroup has developed a permissioned blockchain for institutional customers to interact with digital assets.&nbsp;



The new product, called Citi Token Services, intends to provide clients access to tokenized deposits, cross-border payments and automated trade finance solutions 24 hours a day.



Citi’s head of global services Shahmir Khaliq said this development advances the goals of the Regulated Liability Network, a <a href="https://regulatedliabilitynetwork.org/">whitepaper</a> published in November 2022 professing the desire to get the world’s financial system to a place where on-chain, 24/7 programmable, final settlement in sovereign currencies is possible.&nbsp;



“Digital asset technologies have the potential to upgrade the regulated financial system,” Khaliq said. “The development of Citi Token Services is part of our journey to deliver real-time, always-on, next generation transaction banking services to our institutional clients.”



Maersk partnered with Citi Treasury and Trade Solutions (CTTS) for Citi&#8217;s digital asset trading service, which would serve the same purpose as “bank guarantees and letters of credit” in traditional finance, according to a <a href="https://www.businesswire.com/news/home/20230918024720/en/Citi-Develops-New-Digital-Asset-Capabilities-for-Institutional-Clients">press release</a>.



Both companies reported that the pilot program was able to provide instantaneous payments to service providers via smart contracts, something that would be beneficial to companies with many vendors.&nbsp;



Ensuring liquidity for premier banking clients is also emphasized in this new product launch, highlighted by the inclusion of a cash management pilot.



“Citi Token Services provides corporate treasurers with a new tool to manage global liquidity on a just-in-time, programmable basis. Frictions related to cut-off times and gaps in the service window will be reduced,” CTTS global head of digital assets Ryan Rugg said in a statement.&nbsp;



It appears that Citi has beaten JPMorgan to this, as the largest bank in the US by assets is still in the “early stages” of exploring a similar private blockchain service, according to <a href="https://www.bloomberg.com/news/articles/2023-09-07/jpmorgan-jpm-explores-blockchain-deposit-token-for-payment-settlement">Bloomberg</a>.&nbsp;



<a href="https://blockworks.co/news/deposit-tokens-stablecoins-defi-jpmorgan">JPMorgan first showed interest in bank-issued deposit tokens</a>, different from CBDCs or stablecoins, in February 2023.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Citi to pilot private blockchain services for institutional clients

Ben Strack

Dunhill Family Office is joining forces with Mocha Ventures to lead a 30 million euro fund set to invest in traditional companies moving into the Web3 space.&nbsp;



The London-based family office and its advisory arm are contributing 3 million euros to the fund. It so far has two commitments from family offices in the UK and EU, said Mocha Ventures General Partner Renato Brioni, who did not name the firms.&nbsp;



Mocha Ventures, a regulated digital assets fund in the EU, operates under the Liechtenstein Blockchain Act. The regulation, passed in 2019, was designed to create an innovation-friendly framework for rendering services on so-called “trustworthy technologies” systems.&nbsp;



Dunhill Ventures — the advisory division of Dunhill Family Office — is set to assist Mocha Ventures in raising the rest of the money through its “inner circle” of family offices by the end of the year, the companies said Tuesday.



Offering bespoke finance products, Dunhill Ventures co-invests with other family offices into disruptive tech and blockchain-focused deals. It <a href="https://dunhillventures.io/">lists</a> crypto, the metaverse and NFTs as some of its areas of focus.



But the company is set to move away from some of those segments to differentiate itself from other blockchain-related funds, according to Brioni.



“Unlike many funds in the space, we will shift our investment target from NFTs, metaverses, and gaming to [business-to-business] Web2 companies,” he told Blockworks. “Our priority is to work with traditional companies looking to enter Web3 and solving real-life issues.”



Brioni said he expects layer-1 infrastructure, DeFi protocols in emerging markets and zero-knowledge proof projects as segments that could see the largest scalability.&nbsp;&nbsp;&nbsp;&nbsp;



“In the current environment, tangible utility is the key prerequisite for growth,” he added. “Web2 companies with clear use cases have immense potential to evolve into Web3 and scale rapidly via existing sales channels.”



The family office’s interest in crypto’s underlying technology comes as investment in the segment across such wealth management firms is mixed.&nbsp;



Though 26% of family offices are invested in crypto, <a href="https://blockworks.co/news/family-office-crypto-interest-plummets">a May Goldman Sachs report found</a> — up from 16% in 2021 — those that show no interest in entering the space have grown from 39% to 62% in the last two years.



<a href="https://blockworks.co/news/crypto-family-offices-regulatory-clarity">A separate study commissioned by capital markets firm Ocorian</a>, which included 134 family office professionals managing roughly $62.4 billion in assets, <a href="https://www.ocorian.com/press-release/us-family-offices-look-alternative-asset-classes">found</a> 90% noticed a client-driven push to include crypto in their investment strategies. Amy Collins, Ocorian’s family office head, noted, however, that 80% of respondents labeled the lack of adequate regulatory and reporting support as a challenge.



Read more: <a href="https://blockworks.co/news/miami-family-office-backing-nft-fund-launch-helmed-by-fine-art-collector">Miami family office backing NFT fund launch helmed by fine art collector</a>



&#8220;This partnership underscores our dedication to identifying transformative technologies and supporting visionary entrepreneurs who are reshaping the future generation,” Dunhill Family Office Principal Piers Dunhill said in a statement.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Family office to anchor fund investing in firms transitioning to Web3

Andrew Thurman

There’s a few superstitions that you can credibly rely on in crypto, and the dreaded “conference dump” is among them.&nbsp;



On the first day of Blockworks’ own Permissionless conference, attendees were greeted by a market-wide plunge driving the price of majors like BTC and ETH down 2.8% and 4.8%, respectively.&nbsp;



Nonetheless, price was rarely on the minds of conference-goers. In fact, the bulk of energy and attention was pointed toward the future.&nbsp;



The products being hawked in my laps around the booths had a particular customer: insurance offerings, institutional custody and tech stacks, and compliance solutions. Attendees have their eyes on the long game, and it’s easy to catch conversations about forthcoming narratives keeping bulls’ hopes up, including ETF approvals, institutional DeFi adoption, and real-world asset tokenization.



This is far cry from the usual chatter on Twitter. Between airdrop farming, listing snipers and emerging social verticals, there are whole new sub-sectors being birthed — and all three of these flavors of the month were notably absent on the main conference floor.



So here’s a question on my mind on the first day of Permissionless. Is the focus on institutional adoption a step ahead (preparing for a customer that hasn’t fully embraced this technology) or a step behind (not keeping up with the on-chain degens)?&nbsp;



In three dozen conversations, I met just one person who had set up a friend.tech account. Banana Gun, the latest sniper bot to disastrously launch a token today, wasn’t mentioned even in passing.&nbsp;



It’s clear that the habitual gambling crowd — perhaps the most reliable users of blockchain tech available today — and the Permissionless crowd are not the same. So who’s right?



The thing about the institutional crowd is that they’re putting their money where their mouth is. Huge quantities of resources and talent have been devoted to a particular vision of adoption. That vision doesn’t align with where the activity or users are right now, but the thesis is the TradFi rotation into crypto is where they will be.&nbsp;



Is that a good or a bad thing? Let me listen to a panel or two the next few days and I’ll get back to you.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Permissionless day 1: Prepping for institutional adoption

Fireblocks CEO and co-founder Michael Shaulov had some harsh truths to share for institutionally-minded crypto natives —&nbsp;that is, people who want to see Fortune 500 companies develop blockchain solutions and dive headfirst into Web3.



“The crypto native crowd is a subset of the market that they are interested in going after,” Shaulov said during the Permissionless conference today in Austin, Texas. “Most of their addressable market is actually people that have never interacted with crypto or Web3 before.”



That’s why, Shaulov said, it’s even more complicated for large, household-named corporations to launch successful Web3 ventures.&nbsp;



Meta’s <a href="https://blockworks.co/tag/meta">Diem</a> project is a perfect example of a big company misfiring in the blockchain space. Formerly known as Libra, Diem was Meta’s ultimately unsuccessful attempt to introduce a stablecoin.&nbsp;



But this isn’t something that’s just an issue with Meta, according to Shaulov.



He cited a recent Coinbase <a href="https://www.coinbase.com/blog/more-than-half-the-fortune-100-are-developing-blockchain-initiatives-to-stay">survey</a>, which found that 52% of the Fortune 100 have established some kind of initiative relating to Web3 or crypto since 2020.&nbsp;



Looking at that number in isolation makes the state of adoption look rosy, but Shaulov said he believes that fewer than 50 recognizable brands have launched major Web3 initiatives that are repeatable.



That’s simply because there’s too much risk, which exists mainly on the regulatory front, Shaulov said. The confusion companies deal with boils down to things as foundational as how to structure a balance sheet when crypto is involved.



“If you have [ether] <a href="https://blockworks.co/price/eth">ETH</a> you need to pay for transactions or you’re holding assets for your clients, how do you account for it?” Shaulov remarked.



Additionally, companies may be wary of entering crypto because of all the different licensing regimes worldwide, Shaulov contended. Finally, security concerns linger for companies that might debut wallet-based products.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Institutions remain risk-averse about crypto, says Fireblocks CEO

Shalini Nagarajan

Coinbase is launching a cryptocurrency lending platform targeted at U.S. institutional investors, aiming to fill the gap left by lending companies that collapsed during the industry’s crisis last year.



The new lending service permits institutions to loan out digital assets under standardized terms and is structured to qualify for a Regulation D exemption, which allows for capital raising without full SEC registration, Coinbase reportedly said.



Users of Coinbase&#8217;s Prime service have already invested $57 million in the new lending program, according to a Sept. 1 regulatory <a href="https://www.sec.gov/Archives/edgar/data/1986579/000198657923000002/xslFormDX01/primary_doc.xml">filing</a> signed by CFO Alesia Haas.



Crypto exchanges incorporate lending services into their operations for multiple strategic objectives.&nbsp;



Such services augment revenue channels beyond transaction fees, and also enhance customer retention by delivering a broader suite of financial solutions on a single platform.



Blockworks has reached out for comment.



This move comes about three months after the SEC <a href="https://blockworks.co/news/sec-sues-coinbase">sued</a> Coinbase for allegedly functioning as an unregistered exchange and not registering its cryptoasset staking service.



The SEC claimed that Coinbase&#8217;s failure to register deprived investors of key protections, including SEC scrutiny, obligatory record-keeping and mechanisms to mitigate conflicts of interest.



Despite ongoing legal challenges, the National Futures Association recently <a href="https://blockworks.co/news/coinbase-regulated-crypto-futures-us">granted</a> the exchange permission to provide eligible US clients with direct access to crypto futures through its platforms.



Coinbase recently <a href="https://blockworks.co/news/coinbase-lending-repayment">decided to phase out</a> its prior lending service, Coinbase Borrow, citing low user engagement.&nbsp;



The Borrow service allowed individual users to leverage up to 40% of their bitcoin holdings to secure fiat loans of up to $1 million, with an 8.7% annual interest rate.



In July, the exchange announced that existing loan holders must clear all outstanding balances by Nov. 20.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Coinbase cajoles institutional market with new crypto lending service

Jack Kubinec

As tech executives are forced to account for <a href="https://cms.blockworks.co/big-tech-trading-like-bitcoin-on-a-bad-day-after-disappointing-earnings/">tumbling revenues</a> to investors, a new scapegoat has emerged: crypto.



Philipp Schindler, Google’s chief business officer, <a href="https://cms.blockworks.co/google-summer-ad-business-falls-after-crypto-winter/">blamed</a> the company’s growth slowdown in part on a drawdown in ad spending by crypto companies during a third quarter earnings call.&nbsp;



Semiconductor company AMD similarly <a href="https://www.theverge.com/2022/11/1/23435504/amd-q3-2022-earnings-profits-revenue-pc-sales">pegged</a> its own revenue disappointment, among other things, on falling demand for graphics processing units (GPUs) that can be used to mine crypto. Revolut, the upstart finance app, <a href="https://www.bloomberg.com/news/articles/2022-11-02/revolut-crypto-revenue-plunges-yet-ceo-storonsky-still-believes">said</a> crypto revenue fell from 30-35% to 5% of the company’s total since 2021.



Crypto has reached a milestone in its institutional adoption journey that most in the space would be happy to detour around.



“This is the first real quarter where you&#8217;re hearing these companies actively bringing up crypto as a reason for missed revenues,” Griffin McShane, head of insights and communication at MPCH Labs, said.



But crypto companies had to become intertwined with other tech companies for this revenue shortfall to happen in the first place.



In 2018’s crypto winter, Google was <a href="https://www.cnbc.com/2019/02/04/alphabet-earnings-q4-2018.html">exceeding</a> earnings expectations, regardless of whether crypto companies were purchasing ads. But as venture capital and talented young coders created excitement around the potential of blockchain, the rest of the tech economy had no choice but to shift toward crypto. In 2022, crypto and tech prices <a href="https://cms.blockworks.co/crypto-is-more-correlated-with-tech-stocks-than-ever-how-do-we-decouple/">tend to move in tandem</a>.&nbsp;



“If you&#8217;re running a profit-focused [tech] operation, you have to be supportive of blockchain and digital assets, because that seems to be where we are going,” David Tawil, CEO of ProChain Capital, said.



Crypto’s move to the mainstream has been fragmented and beset by unimpressive trading returns in 2022. Bitcoin mining, the original crypto-tech integration, was <a href="https://bitinfocharts.com/comparison/bitcoin-mining_profitability.html#1y">80% less profitable Monday</a> compared to a year ago.&nbsp;



But tech companies do seem to be headed in crypto’s direction, despite the revenue headaches. <a href="https://cms.blockworks.co/meta-pins-web3-hopes-on-instagram-creators-minting-nfts/">Meta</a> and <a href="https://cms.blockworks.co/reddit-makes-pfp-nfts-cool-again-marketplace-trading-volume-surges/">Reddit</a> are integrating NFTs on their platforms. Google Cloud is <a href="https://cms.blockworks.co/google-signals-major-crypto-push-with-ethereum-solana-support/">launching new partnerships</a> with the Ethereum and Solana communities.



Companies further from Web3 development are likely less affected by crypto’s rising and falling. Caterpillar, for example, hasn’t shown much desire to move its manufacturing to the blockchain, and metaverse real estate doesn’t need heavy equipment to build.



But in the tech sector, a world where every company sees itself partly as a crypto company may not be so far off.



“In many ways, I think we&#8217;re already there,” McShane said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the day’s top crypto news and insights delivered to your inbox every evening. <a href="https://cms.blockworks.co/newsletter/?source=end" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a> now.



<hr class="wp-block-separator has-alpha-channel-opacity"/>