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First Crypto Firm IPO on London Stock Exchange Raises $32.5 Million

A crypto mining company has raised £25 million (about $32.5 million) through an IPO on the London Stock Exchange (LSE). 

U.K.-based Argo Mining (ticker: ARB), which provides “accessible” crypto mining via a subscription service, is the first crypto company to be listed on the LSE. The company raised £5 million (about $6.5 million) more than its initial goal of £20 million through the IPO. 

Argo kicked off on the exchange with about 156 million shares accounting for 53.2% of its issued shared capital, according to a company document. Shares were priced at 16 pence, giving the business a total market valuation of £47 million pounds (about $61.2 million).

“Argo’s admission to the London main market is a major step in the company’s development and will put us in a strong position to execute our long-term growth strategy,” executive chairman Jonathan Bixby said in the document. “We are delighted with the strong response from investors which will enable us to grow our business in multiple jurisdictions.”

The company won approval from the UK Listing Authority in May to be listed on the exchange, and subsequently released its crypto mining subscription service in June. According to its website, Argo offers consumers three packages differentiated by the capacity of the mining power provided. BTG, ETH, ZEC and ETC are currently supported. All of its packages are sold out.

Bixby told the Financial Times around the time of the release that Argo wants to be “the Amazon Web Services of crypto.”

“More than 90 percent of crypto mining is done by elites on industrial scale because it is technically very difficult to do,” Bixby was quoted as saying. “It is incredibly expensive to buy, up front, the hardware you need at $5,000 a machine.”

Several other mining companies in the space are also considering IPOs.

As previously reported by CoinDesk, market leader Bitmain is rumored to be conducting a pre-IPO funding round and to be considering going public. Two other China-based mining hardware makers, Canaan Creative and Ebang Communication have both filed IPO applications with the Hong Kong Stock Exchange.

London Stock Exchange image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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UK Financial Regulators Are Preparing for a World of Crypto Assets

Blockchain crowdfunding ideas may be ten-a-penny these days, but seeing the concept tested out by a financial regulator and a major stock exchange is pretty unique.

Still, that’s what’s happening now in the U.K. where the London Stock Exchange Group (LSEG) and U.K. financial regulator, the Financial Conduct Authority (FCA), are working with distributed ledger technology startup Nivaura and 20|30, a UK company building a blockchain platform for corporate equity issuance.

One of the more exciting projects within the fourth cohort of the FCA’s regulatory sandbox (some 40 percent of the cohort use distributed ledgers), the project will target institutional as well as accredited investors using the LSEG’s Turquoise, the hybrid exchange platform for European equities that allows trading both on and off traditional exchanges.

The aim is to demonstrate for the first time in a live deal that equity in a U.K. company can be tokenized and issued within a fully compliant custody, clearing and settlement system.

As such, the first company to test out a primary issuance of tokenized stock will be 20|30 itself in September of this year, a launch to be followed by a one year lock-in period according to Tomer Sofinzon, co-founder of 20|30.

20|30 says that as soon as the first testing phase is complete, there exists a pipeline of dozens of young companies looking to try the tokenizing process out. These include medical device makers, firms in the pharmaceutical space, agricultural companies, and software providers.

Since the equity tokens being issued will be built on ethereum, trading of these will presumably start to happen, at least on an OTC basis, once the lock-in period has passed.

“That’s absolutely possible,” said Sofinzon. “After the lock-in period, we can begin the next phase, to really test the tradeability.”

The test follows a number of similar efforts to make more liquid markets for equity crowdfunding using blockchain tech, including the Korea Exchange which launched the Korea Startup Market for trading tokens on an over-the-counter (OTC) basis back in 2016.

The London Stock Exchange said in a statement to CoinDesk it is exploring blockchain as a way to help SMEs and to “innovate the issuance and tokenization of securities enabled for execution and settlement within the LSEG Conduct of Business framework.”

“This project with Nivaura is exploring tools to help companies raise capital in a more efficient and streamlined way,” said the LSEG.

Equity tokens

But while a big step for incumbents, the project is also a boon for the startups involved.

Taking a gradual step-by-step approach Nivaura has shown that debt securities can be tokenized in a regulatory compliant manner and cleared and settled on a public blockchain such as ethereum. Nivaura has, in fact, executed three issuances in the FCA sandbox as a participant in two previous cohorts.

The ramifications of tokenized equity being distributed via an exchange are weighty, but the initial problem the project set out to solve is the inefficiency of equity crowdfunding, which essentially operates a bilateral relationship between the share issuer and the investor.

But, institutional investors don’t work like that. They require a trusted market infrastructure, supplied in this case by Nivaura, leveraged by the LSEG’s network and ability to generate sell orders and buy orders on a grand scale.

Speaking exclusively to CoinDesk about the project, Dr. Avtar Sehra, CEO and chief product architect at Nivaura, said: “Someone can use our technology to do all the legal documentation, tokenize these assets and execute them. LSEG has then been forward-thinking enough to help get these orders out to the existing market”

That said, tokenized equity is a tough nut to crack. Oftentimes, people talk about equity tokenization that’s just tokenized digital certificates which are not transferable, explained Sehra.

Debt is more straightforward, he said, because the token is the bond. “Equity is driven by legislation and the legislation makes it very hard for the token to be equity itself.”

Looking ahead

Designing the legal structure around the equity token meant creating a legal markup language and ensuring compliance with Central Securities Depositories Regulation (CSDR), which Nivaura has been working on with law firms like Allen & Overy and, as part of the latest FCA cohort, Latham & Watkins.

Once there is a certain legal structure around the token, that gives the holder of that token the right to the equity and the right to all the beneficial interest in that equity, said Sehra, permitting a forward glance at the next possible phase of the project.

“If we can guarantee this is the most commercially viable way to do this, it will not only allow efficient primary distribution but it’s also going to potentially allow very simple secondary trading as well.”

“There is a possibility that we are going to be launching that next year.”

It’s worth mentioning that since the settlement layer is the ethereum public blockchain it would be bounded by a throughput limit of about 15 transactions per second, for the time being at least until the technology improves.

Sehra acknowledged that throughput and latency are huge issues for public blockchains, but said that for the purpose of this project over the next two to three years it’s sufficient.

He concluded:

“The industry is going to become a world of tokenized assets – that’s inevitable. We don’t really care if it’s ethereum or bitcoin, the underlying infrastructure isn’t that important. But it is going to be a blockchain.”

Bitcoin image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Britain's Royal Mint Reveals Details on 'Live' Blockchain for Tracking Gold

You wouldn’t think you’d lose a 1kg gold bar worth more than $40,000.

But during the London Blockchain Summit this week, Nicola Robinson, senior strategic marketing manager at the U.K.’s Royal Mint, which owns 5.4 percent of the global bullion market, did just that.

Sure, Robinson had handed the bar over to audience members (it was eventually recovered), but the stunt was designed to give a sense of the difficulty inherent in tracking and managing gold, and to set up how a blockchain might relieve some of that.

While the blockchain can’t, obviously, store the physical gold, it has – through the group’s Royal Mint Gold (RMG) blockchain – proved helpful in managing the ownership of the commodity.

Originally revealed in November 2016 as a way to provide a reliable record of gold ownership and the near instantaneous sale of the precious metal, at the event, Robinson revealed that the first test transaction on the RMG blockchain was completed Aug. 2, with a genesis block that includes a picture of the developers.

Robinson said:

“It’s simple, it’s so simple, it’s just a digital representation of real gold. The most exciting thing about RMG is that it’s live, it’s out there, it’s working.”

And while the blockchain – which was created in partnership with financial market giant CME Group using wallet startup BitGo’s technology – is not yet open to the public, it has currently verified more than 50,000 blocks, Robinson said.

In her eyes, the blockchain could help manage smaller amounts (such as a single ounce) of gold, which some believe would lower the barrier to entry for potential gold investors and increase the liquidity of the market.

Robinson also used her talk at the blockchain event to hint at the Royal Mint’s broader initiatives.

For one, she revealed that the launch of a blockchain-based bullion trading platform was imminent. And touched on the fact that the RMG platform could someday be used to accommodate requests to prove the provenance of gold and, even more broadly, in the provisioning of collateral of global trades.

Currently the Royal Mint is in discussions with potential partners and traders, though Robinson didn’t give a specific date the platform would launch.

Robinson minced no words when describing the impact she believes the blockchain will have on gold trading:

“We think RMG is the start of a global revolution. We think it’s a bit of a game changer.”

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Bitgo.

Gold bars image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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London Stock Exchange Exec: Fiat Cash Impeding Blockchain Trials

Fiat currencies are hampering blockchain innovation – at least according to David Harris, head of commercial innovation at the London Stock Exchange Group (LSEG).

In a keynote address at the third annual London Blockchain Summit today, Harris told a crowd of about 150 global bankers, insurers and technology providers that he looks forward to a day when central banks will issue their own cryptocurrency.

While not a new aspiration, the reason Harris gives for wanting to move to a cryptocurrency equivalent notably stems from LSEG’s role on the Borsa Italiana project, which looks to issue some types of securities on a blockchain.

Even with tests underway, in which multiple unlisted companies have been given access to services normally reserved for public firms, LSEG continues to encounter obstacles related to paying for securities with cash.

“Eventually, and hopefully, central banks will issue their currency in a digital form on a blockchain, because then that will facilitate collateral movement,” Harris said.

The statements underscore that while some central banks have deemed cryptocurrencies a threat and moved to ban them, others are in fact exploring the potential benefits of issuing fiat currency on a blockchain.

But, Harris is conscious that there are factors that could impede a swift embrace.

As blockchain technology was in large part developed to make banks and other middlemen unnecessary, once a central bank decides to issue a cryptocurrency, that could call into question the entire concept of commercial banking, Harris said.

As Harris puts it, “nothing is easy.”

He concluded:

“You’re not going to wake up one day and suddenly have a crypto-dollar facilitating collateral movements. The policy decisions you have to make from here to there are huge.”

David Harris image via Michael Del Castillo

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.