Hello and welcome to this week's edition of Overbit News.
Big news today in the investment world, as the crypto behemoth Digital Currency Group is selling shares to SoftBank and Alphabet's venture capital arm in a transaction worth more than $10 billion.
On Monday, the private firm located in Manhattan announced a secondary round in which existing investors are selling shares to new investors. SoftBank led the $700 million investment, which also included Ribbit Capital and CapitalG, a part of Google's parent firm Alphabet.
Digital Currency Group is the parent company of several well-known cryptocurrency brands. Its valuation has been a mystery until today, given it had only raised $25 million in basic capital since its inception six years ago.
"We're the best proxy for investing in this industry," Barry Silbert, founder and CEO of Digital Currency Group, told CNBC in an interview. "We were looking for the type of backers that could be, and hopefully will be with, with us on this journey for the next couple of decades."
Grayscale Investments, one of the company's subsidiaries, is the world's largest digital asset manager, with $50 billion under management. Grayscale Bitcoin Trust, the company's flagship, is the world's largest bitcoin fund, and it just sought to become an ETF. As it's often known, DCG controls Genesis, a prime brokerage and institutional lending business, as well as the news site CoinDesk, and has invested in over 200 blockchain startups.
Along with Ripple, Kraken, and Circle, DCG is now one of the most valuable privately held companies in the space. Silbert added that while an IPO isn't out of the question, it's "not in the plans" and "not being discussed right now." According to the company's CEO, the company is profitable and on track to exceed $1 billion in revenue this year. In addition, Silbert stated that he did not sell any shares in the secondary sale.
Closing out this week's edition of Overbit News, we take a look at a recent stablecoin report issued from the Biden administration.
On Monday, 1 November, the "President's Working Group on Financial Markets", a committee composed of several key economic advisors to President Biden, issued a statement on crypto and, more specifically, stablecoins.
According to the report, stablecoins could "support faster, more efficient, and more inclusive payments options,". "Moreover, the transition to broader use of stablecoins as a means of payment could occur rapidly due to network effects or relationships between stablecoins and existing user bases or platforms."
Senior government officials told CNBC that while their research focuses on vulnerabilities, the country's top regulators believe stablecoins are a viable digital payment alternative that requires significantly greater legislative control.
The Biden team specifically advised that Congress approve legislation restricting stablecoin issuance to insured banks, giving regulators significantly more control over the business. The report's authors write, "Congress [should] act promptly to enact legislation to ensure that payment stablecoins and payment stablecoin arrangements are subject to a federal prudential framework on a consistent and comprehensive basis."
Government institutions, such as the Federal Deposit Insurance Corp. and the Federal Reserve, would have more authority over stablecoin issuers' operations, risk management, and general health if they were classified as banks.
As we have reported many times, it seems the theme of governments increasing their control over crypto markets in 2021 only continues to dominate the headlines.
That's all for this week's edition of Overbit News. Thanks so much for reading, and take care until next time!