Edit: This list of crypto layoffs was updated on January 14th to include the latest restructures.
Crypto Winter has hit hard. The sharp downturn in cryptocurrency prices has forced blockchain companies to take drastic measures to ensure their sustainability. Late in 2018, crypto startups began to announce layoffs and restructures, including some of the biggest names in blockchain. Here’s what we know so far:
ShapeShift (third of staff)
Crypto exchange ShapeShift is the latest to announce layoffs which will hit 37 employees – a third of its staff.
In a passionate and honest Medium post, CEO Erik Voorhees said: “It’s a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.”
Like many blockchain companies, ShapeShift’s balance sheet is comprised of cryptocurrencies, leaving them significantly exposed during the downturn. After rapid growth of 3,000% in 2017, ShapeShift expanded to include market tracker coincap.io and hardware wallet KeepKey. Voorhees cites a lack of focus on the recent decision to downsize: “they were pulling our attention in too many directions.”
Voorhees ended his statement with an apology to his former employees: “I am sorry this happened. Your confusion, your sadness, your anger… all of it is understandable, and I am sorry to put you through it. Your contributions — of effort, of personality, of experience — remain part of our fabric.”
ConsenSys (up to 60% of staff)
ConsenSys is a startup incubator for Ethereum projects. CEO Joseph Lubin was a co-founder of Ethereum and since moved on to foster Ethereum startups.
However, ConsenSys is now re-evaluating its future. Initial reports emerged in December that ConsenSys would lay off 13% of staff. However, further rumors point to a much larger restructure involving the layoffs of 50-60% of its workforce.
In a statement, Lubin said: “Our first step in this direction has been a difficult one: we are streamlining several parts of the business including ConsenSys Solutions, spokes, and hub services, leading to a 13% reduction of mesh members.”
In its bid to fund the next generation of Ethereum projects, ConsenSys reported burn rate was $100 million.
Bitmain (up to half of all staff)
Bitmain is the biggest name in cryptocurrency mining. The company has even filed an initial public offering (IPO) to list itself on the Hong Kong stock exchange.
However, crypto winter has hit Bitmain hard. It closed its research and development arm in Israel late last year. Rumors then began to circulate that half of all staff were at risk.
The rumors spread to social media network MaiMai (China’s version of LinkedIn) to which a verified Bitmain employee wrote: “It’s affirmative. The layoff will start next week and involves more than 50 percent of the entire Bitmain’s headcount.”
The layoffs are reportedly in Bitmain’s non-core departments such as artificial intelligence.
Steemit (70% of staff)
Steemit is a blockchain-based social media and blogging platform. Similar to Medium, but contributors are paid in cryptocurrency for their writing.
The platform laid off 70% of staff in 2018. Founder and CEO Ned Scott cited “the weakness of the cryptocurrency market, the fiat returns on our automated selling of STEEM diminishing, and the growing costs of running full Steem nodes” for the decision.
He also explained the need for sharp focus on the core product before expanding: “In order to ensure that we can continue to improve Steem, we need to first get costs under control to remain economically sustainable.”
Kraken (57 staff members)
Kraken is one of the oldest and largest cryptocurrency exchanges. It’s also considered one of the most secure. However, the exchange is not immune to falling prices and lower volume on its platform.
The company cut 57 staff members from its Halifax office in Canada in 2018. However, the company maintains it is still “aggressively hiring” in many areas of the business.
Huobi (exact figures not disclosed)
Another of the world’s largest cryptocurrency exchanges, Huobi, released a vague statement about “optimizing” its staff. Although exact figures have not been disclosed, this is widely assumed to mean broad layoffs and restructure at the company.
CEO Obi Nwosu said “We are currently working on a business restructure to ensure that we focus on our competitive advantages in the marketplace… As part of this restructure, we are making some staff changes and redundancies.”
Spankchain (more than 50% staff)
Spankchain ran a successful ICO, launching a coin to fund an adult entertainment platform. But when the coin’s market cap dropped from $190 million to just $6 million, the company was forced to rethink. It cut its employee and freelancer base from 20 to 8.
Blockfolio, a crypto portfolio tracker, has cut staff from 41 to 37 in an effort to restructure the company. Despite a recent $11.5 million injection of funding, Blockfolio has refocused its operations, putting an affiliated venture called Datablock on the backburner.
340 UK Blockchain Companies Shut Their Doors
Sky News in the UK scoured the Companies House and Open Corporates database and discovered that 340 blockchain or cryptocurrency companies in the UK closed down in 2018.
The harsh market conditions are forcing companies in the space to rethink their strategies, refocus, and concentrate on their core business. Let’s hope we see fewer headlines like this in 2019.
In a recent Reddit Ask Me Anything (AMA) session, Cameron and Tyler Winklevoss, the identical twin founders of crypto exchange Gemini, maintained their optimistic stance on bitcoin.
In one exchange, Tyler Winklevoss claimed that bitcoin’s market capitalization would surpass gold:
“Our thesis around bitcoin’s upside remains unchanged. We believe bitcoin is better at being gold than gold. If we’re right, then over time the market cap of bitcoin will surpass the ~7trillion dollar market cap of gold.”
Bitcoin’s market cap is currently at $71 billion, a far cry from gold’s $7 trillion.
“Crypto Needs Rules”
The Reddit AMA comes a week after Gemini launched a controversial new marketing campaign. Gemini posters erected near Wall Street in New York declared that “crypto needs rules.”
Further adverts in the New York Times claimed “the revolution needs rules” and promoted “crypto without chaos.”
Rules like mathematics? Sure. Crypto needs that. Rules like "KYC AML licencing taxation Patriot Act bitlicense bullshit?" No. Crypto doesn't need that. pic.twitter.com/8azzqCKlwa
It’s a controversial position among many in the cryptocurrency community who resent the presence of regulators in the space.
Since the launch of the Gemini exchange, the Winklevoss twins have operated within strict regulations and licenses. As Chris Roan, head of marketing at Gemini told the Wall Street Journal, “We believe that investors coming into cryptocurrency deserve the exact same protections as investors in more traditional markets.”
Committed to Bitcoin ETF
In the Reddit AMA, the Winklevoss twins also doubled down on their goal to launch a bitcoin exchange-traded fund (ETF). Cameron Winklevoss said, “We are committed as ever to making an ETF a reality!”
He also outlined some of the Securities and Exchange Commission’s concerns and how Gemini would work to satisfy them. This includes the addition of a Nasdaq-style market surveillance system.
There’s no other way to say it: 2018 was a true rollercoaster for the blockchain world.
While it started with a historic surge to an unbelievable crypto market capitalization of $900 billion at its peak, the market disastrously retraced by nearly 90% since those glory days.
Despite countless financial analysts and crypto experts predicting heights of up to $60,000 per bitcoin in 2018, the year, unfortunately, turned out to be one of the worst for the crypto market.
However, now it’s time to focus on the future. In order to effectively prepare yourself for the following year, you definitely want to take a look at the following sectors of the blockchain world.
1. Bitcoin Exchange-Traded Funds (ETFs)
Date to Watch: 27th of February, 2019 – VanEck and Solid X Bitcoin ETF Decision Date
Bitcoin ETFs have undoubtedly been one of the hottest topics during the past 12 months, especially since they are regarded as a potential catalyst for rapid price increases of bitcoin and other cryptocurrencies.
One ETF application, in particular, has been declared as a possible game-changer. The collaboration between investment firm VanEck, the blockchain company SolidX and the Chicago Board Options Exchange (CBOE). It is one of the few physical ETF proposals that is actually seen as promising by several financial experts.
If a trading vehicle of this kind was approved, the ETF issuer would need to actually buy real bitcoins from an exchange or, more likely, the over the counter (OTC). A potential ETF of this size requires tens of thousands of bitcoins, and the ensemble would need to acquire them, which could lead to a rapid increase in price.
Furthermore, an ETF would enable investors and traders to eventually trade bitcoin on a traditional stock exchange, which would also help the digital currency to gain popularity and availability.
Unfortunately, the US Securities and Exchange Commission (SEC) has not yet decided on the ETF submitted by VanEck and SolidX. The final decision has been postponed several times, however, the SEC announced an ultimatum on December 7, 2018. The Commission chose the 27th of February, 2019, as the day for either the approval or disapproval of the proposal.
Although dozens of established cryptocurrency specialists, like CNBC expert Bill Barhydt, believe that we will see an ETF approval in the following months, it remains to be seen if the SEC is convinced that the time is right to unleash the first physical Exchange-Traded Fund for Bitcoin.
“Security tokens, not utility coins, will attract significant amounts of Wall Street money next year.”
Security tokens or tokenized securities were definitely buzzwords that grew in the past 12 months in crypto. This is, of course, because tokenized assets are one of the most promising innovations in the blockchain sector, as they could disrupt the corporate and financial world.
Rohit Kulkarni, the managing director of SharesPost, one of the leading marketplaces for private securities, firmly believes that 2019 is going to be the year of tokenized securities. In a recent article on Nasdaq, Kulkarni stated that “security tokens, not utility coins, will attract significant amounts of Wall Street money next year.”
Despite missing regulations often being seen as a major stumbling block for the industry to grow, Kulkarni is confident that the space will mature in the near future. “We ultimately expect a more stable regulatory environment over the next six to twelve months,” he said.
In 2018, many companies already started engaging in the security token industry. Overstock, for example, became the first billion dollar company to start building their very own security token exchange, which is expected to open up trading during this year.
Moreover, Open Finance became the first U.S. based security token exchange that went live on December 13, 2018. With traditional stock exchanges, such as Switzerland’s and Malta’s main stock exchanges, forming partnerships to build security token exchanges, the industry is without a doubt worth to keep an eye on in 2019.
3. Nasdaq and New York Stock Exchange Get Involved in Crypto
Date to Watch: Late January – The expected launch of Bakkt.
The two biggest stock exchanges in the world will step into the crypto ring in 2019: the New York Stock Exchange and the Nasdaq.
Bakkt, a cryptocurrency exchange built by ICE, which is the parent company of the NYSE, planned to launch the first physical-backed bitcoin futures on January 24. Although the start has already been postponed several times, crypto enthusiasts still see the exchange as a potential game-changer for involving institutional investors into the market, due to the reputation and experience that is connected with its operator.
Meanwhile, Nasdaq is following Bakkt on its mission and recently announced it was working on Bitcoin future trading for 2019 as well. Further news from Nasdaq include the exploration of security tokens and a potential exchange for such assets in the following time.
While it is not yet certain what kind of future security token trading Nasdaq will be providing, it still shows that some of the biggest financial enterprises in the world are not scared of the overall bearish market sentiment of 2018. “The concept of having a digital currency that does allow for transfer of money across borders, that really transcends the banking system, and allows for a seamless transfer, is really really fascinating and one that we have to assume will become a part of the ecosystem of the internet,” Nasdaq CEO Adena Friedman commented on digital currencies such as bitcoin.
Fidelity: We’ll “make digitally native assets, such as bitcoin, more accessible to investors”
$1 billion in cryptocurrency was stolen in 2018 with high-profile crypto exchange hacks hitting the headlines. Keeping cryptocurrency on an exchange is risky. And, while holding bitcoin yourself in a personal wallet is safe, you risk losing the wallet.
That’s why custody and storage solutions will be a huge talking point in 2019.
As for institutional investors, bitcoin or storage solutions are seen as major hurdles for attracting the big fish to the crypto market. Most institutional investors are prohibited from investing in assets unless they are held in secure custody provided by highly specialized firms,
Coinbase and other blockchain companies already gave birth to novel crypto asset custodial solutions in 2018. Fidelity, an established asset management firm that administers its clients’ assets with a combined worth of about $7 trillion, also decided to “make digitally native assets, such as bitcoin, more accessible to investors,” and founded a new subsidiary that focuses on storing digital assets for its clients. According to CNBC, the company is already in the process of onboarding clients and is expected to launch its platform in early 2019.
Some say that we should even expect major banks to join Fidelity and Co. in providing services for storing bitcoin and other cryptocurrencies. As stated in several reports, Ripple CEO Brad Garlinghouse, at the Singapore FinTech festival in 2018, mentioned that banking institutions are about to offer blockchain asset custody solutions to their clients during the next year.
5. Over-the-Counter (OTC) Trading
The Circle Trade OTC desk
Circle reported $24 billion in OTC crypto trading last year
OTC or over-the-counter trading is another keyword that pops up here and there when scanning the blockchain related stories of 2018. OTC trading is the private buying and selling of cryptocurrencies, often in huge amounts, off the major exchanges.
Bitcoin OTC coverage has increased in the media and social networks, but the trading activity itself seems to have increased in 2018 as well.
With Goldman Sachs-backed Circle’s OTC trading platform recording $24 billion in OTC trading last year, it is regarded as a true money-making machine. “We have seen triple-digit growth enrolling in our OTC business. That’s a big growth area,” mentioned Jeremy Allaire, the CEO of Circle, in an interview with Bloomberg in October.
Consequently, some of the biggest cryptocurrency exchanges are now working on their own OTC trading desks or, in regard to Coinbase, quietly launched one in the matter of a few months.
Binance, on the other hand, decided to act in a different way, as its newly founded investment wing Binance Labs recently invested $3 million into a U.S. based OTC desk called Koi Trading.
With major exchanges moving into the OTC business, the field is likely to play a key role in the blockchain world during 2019.
Creating a “seamless experience for storing and managing digital assets”
Banking institutions around the globe are already experimenting with blockchain technology in order to improve cross-border trading and daily operations. In 2018, several achievements were made and they might give us an outlook of how the following 12 months could look like for banks.
The first real customer transactions between several big international banking institutions were conducted on the blockchain platform We.Trade on July 3, 2018. This event is considered a major milestone for blockchain adoption, as institutions across all industries were previously not interested in leaving their sandbox test environments.
While established banks are continuously pushing forward adoption of distributed ledger technologies, new players are also eyeing the creation of banks that are focused on blockchain assets.
Smaller offshore destinations in the Caribbean, e.g. Bermuda, recently announced an update of their banking legislation in favor of blockchain technology and assets. Additionally, a young enterprise called EQIBank, founded by previous bankers from HSBC, UBS and Credit Suisse, just opened their first customer accounts in December 2018.
EQIBank aims to provide a seamless experience for storing and managing both traditional and digital assets, as stated in a recent press release. This can definitely be considered as an upcoming trend since crypto startups around the world are currently applying for banking licenses in their countries.
7. The Cryptocurrency Insurance Industry
“The evolution is dramatic”
Insurance giants, such as MetLife and Allianz, are often regarded as notable blockchain researchers and adopters. Fair enough, considering that transparent ledgers and smart contracts seem to be the perfect enhancements for the daily business of an insurance company. The most promising use-cases include, but are not limited to, automating payments once the terms of a claim are met, increasing the transparency of transactions, storing information and enabling blockchain powered IoT processes.
Ryan Rugg, the global head of insurance at R3, believes the current evolution of insurance companies is a huge leap for the industry. “These developments would be innovative in any sector, but when you consider the processes underpinning the insurance industry have remained largely unchanged for hundreds of years, the evolution is even more dramatic,” Rugg explained in an article on BlockTribune. When talking about the future, Rugg further stated that “2019 will undoubtedly see the insurance industry enter the next stage of its digital transformation.”
“We need appropriate regulations to be put in place and enforced to safeguard the interest of investors”
2018 has definitely seen some considerable developments in terms of global blockchain regulations. With Malta officially becoming a blockchain island, smaller jurisdictions opening up to security tokens and the SEC finally cracking down on a majority of all the controversial ICOs, the blockchain space clearly advanced and is on its way towards becoming a matured industry. Still, there are countless regulatory issues left that hamper the global adoption of blockchain technology and services.
With 2018 as a foundation, we most probably will see exponential progress in the following year in the most important jurisdictions, such as the US and the EU. In fact, there are already several signs that validate this assumption. On October 18, the SEC announced the launch of a new FinHub, where regulatory approaches to novel financial technologies, like blockchain, are researched and evaluated.
After Singapore, Malaysia is another Asian country that wants to introduce new legislation for blockchain in the following year. “While some parties might still be skeptical of this space, there can be no doubt that we need appropriate regulations to be put in place and enforced to safeguard the interest of investors,” said Lim Guan Eng, Finance Minister of Malaysia. In Liechtenstein, the government is currently working on the Liechtenstein Blockchain Act, which should pave the way for institutional investors in 2019.
Further countries that are expected to unveil updated laws for blockchain include the United Arabian Emirates, Israel, Russia, Thailand and seven major states within the EU. The ball is finally rolling and global regulations in various areas of distributed ledger technology seem to be closer than ever before. We definitely have an exciting year ahead of us and might even be looking towards one of the most productive years for the blockchain industry ever.
Ledger, the world’s most popular crypto hardware wallet provider, has unveiled its next-generation product: Nano X.
The Nano X is an upgrade from the Nano S which sold over a million devices and featured in our best cryptocurrency wallets of 2018 roundup. The Nano X offers a host of new, improved features for safe bitcoin storage.
Here’s everything we know so far.
Ledger Nano X: Bluetooth Enabled
Ledger’s new hardware wallet will feature Bluetooth connectivity, allowing users to connect to a mobile device. The previous Nano S only connected to a laptop or desktop via USB.
It improves usability in a mobile-first world and it means the Nano X can be used on the go.
Ledger Live Mobile: A New Mobile App
Ledger will launch a mobile app to integrate with the device, Ledger Mobile Live. The app will enable users to make transactions and check their balance quickly.
In the past, Ledger users could only conduct transactions on the desktop software.
The app will be available on Google Play and Apple App Store on January 28th.
The Ledger Nano X features a larger screen than its predecessor. That’s a crucial upgrade as most of Ledger’s security features operate right there on the screen (PIN code access and transaction confirmations, for example).
The larger screen makes this process easier and more user-friendly. The buttons have also been moved from the top of the device to the front for a more intuitive experience.
However, the big problem with the Nano S is the inability to hold more than about ten cryptocurrencies at once on the device.
The Nano X aims to address that by increasing the memory.
Increased Memory: 100 Coins At One Time
By increasing the memory on the Ledger Nano X, users can hold significantly more cryptocurrencies at once.
That’s because Ledger stores each different crypto asset on its own wallet, using a separate app. It’s a security feature. If you want to hold bitcoin on a Ledger device, you’re not just storing bitcoin, you’re using memory to store a bitcoin wallet. If you then add ethereum, you also store an ethereum wallet or app.
The Nano X drastically increases the memory, meaning you can hold up to 100 different crypto assets at once.
The introduction of Bluetooth might send alarm bells ringing for some. A wireless connection does increase the risk of an attacker hijacking the connection.
However, Ledger claims it is still highly secure due to Bluetooth’s short range and the device’s built-in security features. Speaking to Bitcoin Magazine, CEO Eric Larchevêque said:
“The Bluetooth connection is only used to send public data, such as your public key. The transaction itself is encrypted end-to-end while using the highest level of encryption and security on the Bluetooth protocol … no private keys are on the Bluetooth connection. It’s the same as the USB cable. Security-wise, the architecture is the same.”
The private keys are stored in a microchip that remains in the device at all times. Additionally, all the most important security checks (like PIN access) take place on the device or in the app. The device itself will only respond to the corresponding user app which should limit attacker access.
The Nano X will launch at $119 including shipping. Its predecessor, the Nano S, will get a price cut.
The Ledger Nano X is available to pre-order now and will ship in March. The app will launch on January 28th.
Size: 72mm x 18.6mm x 11.75mm
Compatibility: 64-bit desktop computer (Windows 8+, macOS 10.8+, Linux) or smartphone (iOS 9+ or Android 5+)
Crypto finance company Circle says institutional money is flowing into cryptocurrency, but adoption is coming slowly, not in “the major sweeping manner some in the industry had exuberantly predicted.”
In a Medium post, Circle reported $24 billion in over-the-counter (OTC) trades in 2018, attributing much of it to growing interest from institutional investors.
OTC trading takes place in private and usually involve enormous sums of money. The trades are facilitated by brokers or private trading desks like Circle.
Hedge funds, VC firms, and Family Offices
Circle outlines a core group of clients including miners, exchanges, project founders, and developers. However, it also points to a new wave of institutional clients.
Circle is seeing new volume from crypto funds, hedge funds, venture capital firms, and family offices.
Despite the downturn in price, Circle maintains that institutional adoption is growing. It now counts 1,000 institutional partners including asset managers, high-net-worth individuals, and endowments.
According to Circle’s medium post, “institutional involvement in crypto grew steadily and incrementally rather than in the major sweeping manner some in the industry had exuberantly predicted.”
The company expects the trend to continue through 2019, pointing to the growth of stablecoins, regulatory clarity, and custody services:
“We anticipate further incremental growth in institutional adoption catalyzed by stablecoin usage, advancements in institutional custody solutions, increasing regulatory clarity particularly in the U.S., and improvements and innovation in core crypto infrastructure.”
Circle facilitated $24 billion in over-the-counter (OTC) trading in 2018. The OTC platform, known as Circle Trade, processed more than 10,000 trades from 600 different investors.