The ‘smart money’ continues to pile into crypto as a portfolio diversification strategy. Nowadays, family offices, hedge funds, and legacy money managers have a very different sentiment on crypto products and services, considering that a whopping $17 billion worth of institutional capital was poured into the space this year alone. Just last month, Apollo Capital, a fund manager with over $500 billion in assets under management, launched the Apollo Capital Frontier Fund, which will focus on NFT infrastructure, decentralized finance and multichain infrastructure. And financial heavyweights Charles Schwab, Citadel Securities and Fidelity Investments, also announced the launch of a new crypto exchange, EDX Markets. Although there is a lot of pent-up demand from institutional investors to participate in the digital asset class, most aren’t able to access the ecosystem directly, making companies like Coinbase Global, Inc. (NASDAQ:COIN), Hut 8 Mining Corp. (NASDAQ:HUT) (TSX:HUT), CleanSpark (NASDAQ:CLSK), Citigroup Inc. (NYSE:C) and WonderFi Technologies Inc. (TSX:WNDR) (OTCQB:WONDF) which can provide that access attractive to investors.
WonderFi Technologies Inc. (TSX:WNDR) (OTCQB:WONDF) is a technology company focused on creating better access to digital assets through centralized and decentralized platforms. The company provides unified access to digital assets, including crypto, DeFi, gaming, and NFTs.
On November 2, WonderFi Technologies announced that, through its subsidiary Bitbuy, it is now the first TSX-listed digital currency trading platform to receive approval from Canadian securities regulators to offer staking to Canadian investors.
Recent metrics show that due to the ongoing cryptocurrency and stock market downturn, investors are now holding onto their crypto at an increasing rate. Until recently, Canadians primary option for access to cryptocurrency staking was through unregistered platforms.
Bitbuy Staking, which is expected to launch November 28, will allow users to leverage their crypto balances to earn crypto rewards through on-chain staking. Crypto assets associated with proof-of-stake blockchains like Solana (SOL) and Ethereum (ETH) may be bonded to the protocol to help validate transactions and secure the network, in exchange for receiving additional crypto assets as a reward.
“Until recently, Canadian investors only had the option to stake on unregistered platforms,” said WonderFi President and Interim CEO, Dean Skurka. “As a result, this placed undue risk on Canadian investors, and provided limited oversight in the event that things went wrong. By working with our regulators, and utilizing our external custodian, BitGo, and our institutional staking provider, Figment, we are focused on reducing counterparty risk for our clients. We are excited to offer Canadians the option to stake their crypto in a regulated and transparent environment.”
At launch, WonderFi estimates that Bitbuy users will be able to stake Solana for an annualized reward rate of 5-7%. The company expects Ethereum staking and other proof-of-stake supported assets to be added in the near term. Bitbuy plans to pay earned rewards weekly, calculated from the protocol reward rate, which is variable and different for each network.
In response to market trends, user demand, and lifting gaming restrictions, WonderFi Technologies announced new organizational changes to expand product offerings and maximize the revenue potential from its 600,000 customers in Canada.
Leading the organizational change is Dean Skurka, who will become Chief Executive Officer of WonderFi, effective immediately. Skurka formerly served as President of Bitbuy and was instrumental in the company increasing its registered users from 2,600 in 2018 to over 400,000 in 2021 and driving annual revenues from less than $1 million to over $32 million during the same period. In December 2021, Bitbuy became the first regulated crypto marketplace in Canada through the OSC and CSA’s exemptive relief program and facilitated over $4 billion in trading volume last year.
Ben Samaroo will remain on WonderFi’s Board of Directors to provide continuity to WonderFi with its key stakeholders, regulators and in relation to strategic activities and capital markets.
Apart from making significant investments in the crypto space this year, WonderFi Technologies is expanding into traditional financial assets. The company’s subsidiary Bitbuy Technologies recently partnered with AlpacaDB, Inc. to enable Bitbuy to offer its users fractional trading and investing in most of US stocks and exchange-traded funds (ETFs) in an integrated experience within the existing Bitbuy platform. Alpaca is a developer-first embedded financial technologies platform that offers crypto and stock trading, market data, and end-to-end brokerage infrastructure through modern APIs.
WonderFi Technologies’ Bitbuy will utilize Alpaca’s Broker API to provide its customers with real-time fractional trading and instant settlement. Bitbuy will offer its stock trading in partnership with Alpaca and brokerage services through one of Canada’s leading investment bank and IIROC member. WonderFi’s banking partner will route, execute, clear and custody all customer accounts and trades. The stock trading feature is expected to go live in Q1 2023, and the official launch date will be announced soon.
WonderFi Strategic Investor Kevin O’Leary noted, “This is an excellent move for WonderFi and Bitbuy – Alpaca is an excellent partner to team up with on the launch of Bitbuy Stocks. Stock trading through Bitbuy promises to be extremely efficient, low cost and innovative in the Canadian market.”
Investment in crypto infrastructure is still increasing
Coinbase Global, Inc. (NASDAQ:COIN) recently partnered with BlackRock Inc. to make it easier for institutional investors to manage and trade Bitcoins following another announcement that it would offer its first-ever investment product directly in the token, marking a significant move into crypto markets by the world’s largest asset manager. According to a statement by BlackRock Inc., its top clients will be able to use its Aladdin investment-management system to track their exposure to bitcoin in addition to other portfolio assets like stocks and bonds. The system will also facilitate financing and trading on Coinbase. Blackrock’s new private Bitcoin trust will track the price of the biggest cryptocurrency and respond to demand from large institutional clients looking for exposure to the asset despite its price plunging this year, New York-based BlackRock said in a statement.
Hut 8 Mining Corp. (NASDAQ:HUT) (TSX:HUT), one of North America’s largest crypto assets mining pioneers and high-performance computing infrastructure provider, recently provided a corporate update showing that its infrastructure investments were paying off. For the period ending September 30, the company reported a 277 increase in its bitcoin holdings to a total of 8,388 mining bitcoin. Over the past month, the more efficient miners at Hut 8’s Medicine Hat site were consolidated, resulting in an 11% increase in hashrate efficiency. Excluding some legacy miners the company plans to replace, the installed hashrate capacity was 3.07EH/s producing 90.2 BTC/EH for the month.
While some miners have been scaling back mining operations or restructuring their facilities to become more efficient, some well-capitalized mining firms like Nevada-based CleanSpark (NASDAQ:CLSK) have taken this opportunity to expand by acquiring infrastructures such as data centers and machines at a discount. CleanSpark recently announced that it had agreed to buy Mawson Infrastructure Group Inc.’s Sandersville, Georgia, Bitcoin Mining Facility and 6,468 ASIC Bitcoin Miners for $42.5 million, subject to reaching specific earn-out commitments. The deal is expected to close in early October.
Citigroup Inc.’s (NYSE:C) venture capital investing group revealed that it made its first digital asset seed investment in a Hong Kong-based digital-asset management firm. Citi Ventures co-led a $6 million initial capital financing round for xalts, which seeks to take advantage of what the company says is increasing institutional investor participation in the digital currency ecosystem despite the disappointing performance this year. The firm intends to introduce several fund products associated with digital assets, such as mutual funds and ETFs, in several global exchanges. Furthermore, xalts will leverage its platform to partner with different asset management firms and staking infrastructure providers to launch and manage mutual funds and ETFs jointly.
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