By Gregory Bilecki
TWIDW 3/1/22: Russia & Ukraine market impact updates, and Ukraine asks exchanges to bar and sabotage Russian user accounts on the heels of officially legalizing the trade of crypto in the country this week. iCapital’s new supergroup plans to implement blockchain solutions for the alternative investment ecosystem, Vesta Equity leads the way with tokenized Real Estate on Algorand, CoProcure spearheads the SALT space, with some new trends in fintech M&A. Lastly, supply chain related credit-based friction between purchasers and suppliers aims to be a non-issue with Actyv.AI.
Fed News & Market Impacts
The case of volatility in the crypto space over the last week took a lot of unexpected turns. If this was the third week of any other month where the war drum was beating softer worldwide, we would know among other things that this was also the week of crypto futures expiring on Friday. Leading up to last Friday however, the digital asset sector proved to us instances of some uncommon and also rare use cases for crypto with the present turmoil in the former USSR territory.
First, it was a haven for maintaining liquidity between institutions and individuals alike when fiat currency would have provided more friction in relation to the $10+ million Ukrainian donations which were received as reported by analytics group Elliptic yesterday. This comes promptly right after Ukrainian parliament legalized the trade of crypto in the country this past Thursday where they concurrently drafted a preparatory framework for the new regulation.
Second, we saw Russia’s access to the SWIFT payments network by involved ally countries become restricted due to new sanctions imposed, destabilizing the price of the ruble. This is now leading to the conclusion that Russia just may turn to crypto over the next week as to circumvent sanctions. If this happens, we may see new volatility as an exodus to other asset class types happens by investors as this move by Russia has the ability to trigger a large scale sell-off globally. Bitcoin closed Friday at $39,009 USD. US pre-market activity on February 28th saw the token at approx. -0.03% at the week’s open.
Just yesterday Ukrainian NFT marketplace, DMarket Place (and at the request of Ukrainian Finance Minister Mykhailo Fedorov) restricted access to their users from Russia as well as Belarus. Along with the initial request came another to sabotage those user accounts by taking all of the funds associated with them and transfer it all in its entirety to the Ukrainian army’s defense fund against Russia. As it so happens, this is exactly what Ukraine did to the tune of about $4.5 million.
The Fed released recently the new whitepaper, “Money and Payments: The U.S. Dollar in the Age of Digital Transformation” which was designed to review and compare the pros and cons of a potential CBDC in the US. Current state of the digital asset space is discussed as well as similar implementations and their current states globally. The paper is up now on the Fed’s website along with a request for public comment on 20 questions which will be open for submittal over 120 days.
Tokenization of Real Estate and Other Alt-Investments
iCapital Network, now known as simply, “iCapital”, recently pulled together an industry supergroup for an industry-wide initiative combining the likes of firms Apollo, BlackRock, Blackstone, BNY Mellon, Carlyle, KKR, Morgan Stanley, State Street, UBS, and WestCap to implement blockchain technology within their alternative asset spaces. The time-consuming reconciliations between the multiple party deals of yesterday are gone, with new efficiencies created on iCapital’s “flagship” platform in the form of more highly-curated menus within private equity, private credit, hedge funds, structured notes, and other alternative investments areas designed to better help meet their clients investing needs in much more synchronized and auditable approach while also enhancing their services overall reliability, security, and efficiency. On Tuesday they also announced they have acquired the private market feeder fund platform from Bank of Singapore, as part of their ongoing plan to increase their global footprint.
Los Angeles-based firm Vesta Equity recently launched their global real estate-backed NFT platform on Algorand. This makes it the first peer-to-peer marketplace for NFT’s which allow homeowners to leverage and sell their own home’s equity to investors on the ALGO chain, increasing the number of avenues available to traditional real estate investors and providing them with the opportunity for additional, alternative ways to trade.
The platform’s innovation comes from providing access to a home’s value in real time, where investors can “buy-in” on the home’s projected appreciation value, which would otherwise be the debt component in a traditional home equity sale model. As trailblazers in the NFT space, Vesta aims to shift investor focus away from the digital asset model and provide enhanced value by linking NFT’s with real, tangible property.
Deals, Deals, and more Deals
CoProcure, one of the bigger players in the SALT marketplace start-up space, just raised a $22 million Series A, led by CEO Mariel Reed. CoProcure is a new type of startup, where they aim to converge buyers for State & Local governments onto one universal platform, as those governments means of doing so are still highly antiquated.
The new trend in the fintech arena has to do with companies and other start-ups building out their own internal M&A teams post-IPO or post-fundraising, albeit with smaller budgets than their (usually) larger institutional banking counterparts which feature their own M&A groups. Since at these phases liquidity isn’t quite as accessible, this means that for those fintech companies they need to poach and hire bankers that are usually lean more towards the junior level.
This will ultimately shift the need to more careful M&A planning work, since deals crafted by a junior team of bankers could be left to be overvalued, or undervalued in the future leading to much longer (or much shorter) acquisition timeframes.
The Payment Space
San Francisco-based Zebec, a continuous and programmable cash stream protocol on Solana, is leading the way for blockchain-based payroll functionality. It’s the first tax compliant, on-chain payroll processing system where employees now have the ability to get paid by the second in various stablecoins including USDC and have their money readily accessible. Zebec is the first DeFi-native model of its kind and the premier payment solution for DAO’s, Web3, and Metaverse related projects. Only months after its initial launch, Zebec features more than 250 projects built upon its protocol.
Mumbai-based Actyv.AI, an Enterprise SaaS platform powered by AI, is a BNPL platform for the B2B space just raised $5 million in a pre-Series A round. it’s used at Enterprise level for supply chain partners, where the entire onboarding process happens digitally. The Actyv.AI component checks potential supply chain related information, and this data is then reviewed one step further at the enterprise level. Based on both the enterprise score and Active.AI score received, a provision for closed loop credit (BNPL for B2B) is then created, which the supplier/partner would be able to then use for working capital.
Gregory Bilecki is a freelance editor at Digital Wealth News, as well as full-time finance, digital marketing, and sushi aficionado. Follow him on Twitter and Instagram at @omgreaktmedia.