Bitcoin (And Other Crypto) Use Cases Fizzle, Bit By Bit?

Much hype and hope surrounds the adoption of cryptocurrencies — bitcoin among them as the marquee name in the space, of course — beyond the Wild West of speculative trading that exists now.

Favor has met with disfavor, and bitcoin now trades at $3,990 — a bit above nadirs around $3,400 and well off highs that neared $20,000.  The whole sector has met a bit of a deep freeze, and some cryptos trade as much as 90 percent off highs. The fact remains that use cases — where one might, for example, walk into Starbucks and get a cuppa joe with a fragment of bitcoin — seem a ways off.

In the meantime, some attempts to bring cryptos to a broader investing landscape have fizzled here and there.  JPMorgan may have breathed life into the market, a bit, with news of the JPM Coin (though we point out that this one has been targeted to institutional investors, and not the general public).

As noted just this week, Citigroup has decided that it will scrap its plans to bring a crypto to market after several years of trying.

That’s according to CoinDesk, which cited Gulru Atak, head of Citi’s Innovation Lab, as saying that after working on a cryptocurrency since 2015, the bank came to the conclusion that while the technology had potential, there were other ways to improve payments.

“Based on our learnings from that experiment, we actually decided to make meaningful improvements in the existing rails by leveraging the payments ecosystem, and within that ecosystem, we are considering the FinTechs as well or the regulators around the world as well, including SWIFT,” said Gulru Atak, who helms the lab. Blockchain still is being mulled, according to reports, but for Citi it’s a technology seemingly more useful for trade finance.

Elsewhere, Intercontinental Exchange’s plans to launch bitcoin futures, known as bakkt, have been delayed in the wake of regulatory scrutiny.  The Wall Street Journal has noted that the Commodity Futures Exchange has yet to give the go ahead — and the holdup centers, at least in part, on how to protect customers’ funds.  The delay comes even as $182 million in investor funding is in place, while the ultimate goal is to bring crypto toward use cases that involve retail transactions.  For now, at least, it’s hurry up and wait.

The ICE news comes just days after at least one other exchange — this time, the Cboe Futures Exchange — is backing off from renewed efforts to bring new bitcoin futures to market (i.e., new issues that would trade after the current ones expire) as trading volumes are less than stellar.

The crypto bear market has also hit exchanges in other ways. Bithumb, the Korean exchange, has said it will cut its workforce in half by the end of the month as trading volume has decreased.  It’s a move toward layoffs that echoes actions at other exchanges such as Huobi and Liqui, which was based in Ukraine and shut down entirely earlier this year.

Spring’s here, according to the calendar.  But for bitcoin and crypto and the promise that was…winter’s still sticking around.

Sizzle

Dealmaking: Billions here, billions there. Clearly the payments space is heating up for mergers and acquisitions. The latest bit of evidence, of course, is the news that FIS will acquire Worldpay for $43 billion, eyeing a strategy that aims to build a global payment system and control both ends of the account. Elsewhere, cross-border is the name of the game, and infrastructure to get those funds flowing across time zones and currency is, well, catnip for acquirers.

Virtual Cards:  Juniper Research estimates that adoption of virtual card technology may see uptake in the B2B space, growing by 90 percent through the next few years, and will hit $1 trillion within the next three years, marked by financial services, which will see double digit growth through the same timeframe.

IPOs: Uber with a $120 billion valuation.  Lyft with $15B coming to market.  Pinterest is reportedly moving its IPO timeline forward to mid-April. Even Levi Strauss, which has its founding in the 1800s, relaunched as a public company with a few billion dollars worth of investor clamor.  A few issues coming to market are oversubscribed.  IPO could stand for … Investors Prefer to Own.

Fizzle

Direct Lending Probe: An SEC investigation has prompted the founder and CEO Brendan Ross to resign.  Regulators are investigating whether the company overstated its investment in small business lending firm QuarterSpot.

Facebook: Plain text and plain wrong?  News comes out this week that the social media giant stored hundreds of millions of passwords as plain text and exposed those passwords to just about anyone who had access to the internal files and workings of the company.  Plain asleep at the switch, too, it seems.

Retail Slowdown:  Wall Street is cutting profit estimates across more than 60 retailers, and amid weaker-than-expected holiday spending.  Seems no one is safe, even with online momentum, as Walmart estimates are down five percent, too, reports the Financial Times.