LBCC investors preparing to see huge upside from Stater Blockchain Acquisition and spin out of Long Island Brands.
Investors are going mad over anything "crypto." So much so, in fact, that their mission to find legitimate investment opportunity is getting replaced with cleverly written promotional hype. For instance, in the United States, a large handful of publicly traded companies have been quick to the task of filing for name change approval with the SEC. They use slick keywords that include "blockchain" and "crypto" within their petitions to attract investors toward their stock in hopes that a promise-filled press release can produce enough share price appreciation to hit the capital markets for much-needed capital. The truth for most of these newly minted "crypto" companies, though, is that the real substance behind the name is well guarded by a lengthy script of fiction.
In some cases, the strategy to attract attention has worked, and in others, the SEC has been quick to crash the party by placing trading halts on companies like The Crypto Company (OTC: CRCW) and requiring from others a substantial amount of necessary information to validate their abrupt change in strategic direction. Don't misunderstand the premise; several companies are making impressive strategic moves to capitalize on what is already a several hundred billion dollar industry for cryptocurrency trading alone. And, once investors sort through the daily name change filings and lengthy press releases from several of the unscrupulous players, several companies emerge that may offer prime opportunities for investors looking to stake a position in the cryptocurrency and forex trading sector. One of these publicly traded options for sector exposure is through Long Blockchain Corp (NASDAQ:LBCC).
Now, although LBCC was primarily focused as a beverage company only sixty days ago, it's the action taking place behind the scenes that make the potential of LBCC attractive, and quite frankly is the driver of the value proposition. And, while LBCC may play a role in the ultimate development of a publicly traded, global forex powerhouse, the driving force behind the innovation and cutting-edge technology comes from a power outside of LBCC. To that end, there is a single company that can transform LBCC into a several hundred million dollar company: Stater Blockchain Limited (“SBL”). SBL is developing decentralized applications for the foreign exchange market and is the parent company of FCA-regulated b to b forex and cryptocurrency trading powerhouse Stater Global Markets.
To be sure, Stater Blockchain Ltd. is the technological and financial engine responsible for the significant transformation taking place at LBCC, and whose mission it is to create substantial shareholder value through revolutionizing a multi-trillion dollar industry and allowing Long Blockchain shareholders to come along for the ride.
Stater Blockchain Ltd. On A Mission
As stated, LBCC serves as the public vehicle that brings the Stater Blockchain Ltd. (SBL) expertise to a publicly traded market. But, when considering the value opportunity, investors need to be aware that the massive intellectual foundation and financial platforms that SBL will deliver are the primary ingredient for success, and with Stater Blockchain Ltd. a part of the strategic alliance, LBCC investors are being gifted a billion dollar connection.
Stater Blockchain Ltd. is an established holding company with interests in financial services and blockchain technology, and manages brokerage assets including FCA-regulated (Financial Conduct Authority) institutional FX brokerage accounts through its wholly owned subsidiary, Stater Global Markets (SGM).
Investors in the United States might not be familiar with SBL just yet. However, the company is exceptionally well-rooted outside of the United States where, through its institutional clients, it currently accesses hundreds of thousands of active forex and crypto traders and is targeting additional investment opportunities in the cryptocurrency markets.
From a market position perspective, Stater Blockchain is ideally situated to take advantage of its current market base and to increase their focus toward the lucrative market of foreign exchange that brings with it an addressable trading universe in the trillions of dollars per day. In other words, SBL does now what will take others years to accomplish by utilizing its massive client base and an impressive book of institutional clients to roll up a proprietary platform using decentralized applications that run on blockchain technology designed to allow it the ability to transact business with institutional clients seamlessly.
Notably, while others are still trying to figure out an efficient and profitable way to enter the multi-billion dollar sector, SBL already has its infrastructure in place. Fortified by an impressive client book, SBL currently aggregates the trading volume of hundreds of thousands active traders that are anxious to trade in the cryptocurrency markets and remains one of the few financial companies that is properly permitted to participate in the cryptocurrency market.
The Pieces That Make Up The Whole
Playing the role of astute investor, you're probably trying to wrap your head around this opportunity, with a particular focus on trying to figure out how LBCC fits into the equation. Simply put, as an LBCC shareholder, consider it a lucky place to be. From the Stater Blockchain Ltd. perspective, however, many moving parts make the company ideally positioned to dominate what is a multi-trillion dollar global market opportunity.
Well into the process, SBL is actively developing a unique and all-rounded cryptocurrency and blockchain enabled platform, intent on bringing to the markets globally scalable distributed ledger technology applications that facilitate both transaction and settlement functions in the foreign exchange and soon-to-be-placed crypto markets. To enable the platform, SBL is well into the process of appointing bankers for a TSX, AIM, or NASDAQ listing in 2018 and is seeking an initial valuation of more than $250 million. Beyond the development of disruptive trading platforms and blockchain-integrated technology, SBL is preparing to launch its own cryptocurrency, which will be traded and used in the Stater Blockchain network of regulated institutions and brokers as well as by active traders.
Beyond the intellectual property, SBL is bringing even more wealth to the deal by incorporating a targeted program to acquire companies that will be accretive to the growth strategy. Namely, SBL will look for synergistic opportunities to facilitate growth in crypto mining, the acquisition of cryptocurrency trading and arbitrage specialists, and will seek out opportunities to partner with or acquire established cryptocurrency exchanges.
Well versed in trading, SBL will continue to utilize its wholly owned subsidiary, Stater Global Markets, to aid in developing its market and to take advantage of the more than hundred of billions of dollars in yearly trading volume already being handled by Stater Global Markets. Additionally, the company is aggressively active in identifying opportunities to acquire dedicated FX, crypto and regulated brokers that already control a substantial book of trading clients. To capitalize on the competitive front, SGM's efficient platform will enable substantially lower trading costs than others in the industry, will solidify their position to extend its proprietary blockchain technology to an existing user base, facilitate onboarding of clients, and to create multi-chain platforms for functional and settlement purposes.
Other competitive benefits will be accretive in the utilization of SGM's proprietary settlement platforms, taking advantage of the market position to set up the eventual introduction of their own security token through an ICO. The initial coin offering is expected to raise over $50m and enable and generate revenue, provide access to and use of the settlement platforms, and to bring the potential for significant appreciation of the ICO coin from the transactional and settlement volumes created in the organized and synergistic ventures.
The Stater Global Markets Differentiators
Led by Ramy Soliman and a talented team of advisers and partners, SGM is methodically transitioning itself into a premier global institutional cryptocurrency and Forex trading company. Notably, SGM is one of the few institutional platforms and one of the only FCA-regulated institutional platforms set up to trade and clear cryptocurrency CFD's and Futures.
Strengthened by these credentials, SGM is intent on securing a leading competitive position in the Asian markets and is in the process of applying for a crypto and forex license from the Japanese FSA. That approval will allow the company to build its Asian book, taking advantage of markets where cryptocurrency trading registers the majority of volume on the global stage.
Japan, by the way, is one of the few countries with clear regulation and oversight of both bitcoin and cryptocurrency trading and is one of the only countries that permit bitcoin to trade in its FX markets. Taking advantage as a first mover into the Japanese market, SGM intends to position its platform as the primary facilitator of trades and settlements in a market that is expected to surpass hundreds of millions of dollars per month in trading volume.
The majority of the business will be fueled primarily by the demand generated in CFD (Contract For Difference) transactions from registered brokers. In fact, to punctuate the potential about the markets that SGM is already actively addressing, consider the fact that, as of December 2017, the daily global cryptocurrency volume generated roughly $28 billion per day, with more than half of that amount coming from accounts brokered in Asia.
The beauty of the deal for SGM, SBL and LBCC investors is that SGM’s business model is what is called “straight Through Processing” and takes no proprietary trading risk. For their part, SGM earns revenue through the generation of the bid/ask spread and receives a commission based on the markets made for each trade. Beyond the income from creating a market, SGM insulates itself from risk by passing "flow through" to market and trading partners that include nine tier 1 banks that SGM services.
Focused On "Smart Settlements"
Working to solidify a prime broker position , Stater Blockchain, the parent of SGM, is working closely with blockchain development firm Hashcove, a firm which it is seeking to acquire as per last weeks announcement. SBL is also looking toward planned acquisitions to develop a comprehensive trading platform to address the more than $15 billion settlement market. Utilizing the Ethereum blockchain to settle trades, Stater Blockchain will earn revenue through the commissions from each settlement and transaction.
Remember, though, SBL is refining a blockchain enabled platform that is designed to be the most disruptive and efficient clearing mechanism for various product trades. Where competitors are limited, Stater can not only handle high volume FX trade clearing and settlement; they will complete the transaction using hybrid blockchain architecture. Using solutions like Swirlds to process high volume trades for clearing purposes, SBL executes the clearing with a Smart Contract-based platform that utilizes the Ethereum technology for final settlement and payment purposes. The advantage of using the Smart Contract-based platform is that accounts get maintained on the Ethereum Distributed Ledger, and payments can be settled instantly. And, for those that currently trade in the forex and cryptocurrency markets, settlement times can be far from instant which often complicates order execution and high volume trading.
SBL's approach to overcoming current transactional limitations is different. Consequently, because they are integrating a platform that can execute and settle trades instantly using blockchain technology and Smart Contracts, the platform will disintermediate prime brokerage, clearing, and settlement functions. The Stater Smart Settlement (SSS) project is set to become a global, scalable FX and cryptocurrency settlement platform that will solicit use by institutions looking to move their business onto the blockchain. Innovative Stater Smart KYC
Stater Smart KYC (Know Your Customer) is an additional distinction that leverages the distance between SBL and its competitors. Stater Smart KYC is an innovative and groundbreaking decentralized platform built over highly secure Distributed Ledger technology. The innovative features allow users to manage their digital identity when engaging with financial institutions, while at the same time providing businesses and financial institutions with a faster, more reliable, secure, and an almost entirely outsourced customer data management system.
The Smart KYC program keeps things simple and provides a seamless flow of transaction processes. But, just because it may allow for simplicity of transactions, the product itself offers cutting-edge technology that substantially eliminates the time delays and inefficiencies currently in place between client and broker. With Smart KYC, the days of providing notarized documentation, manual processing, and three-day approvals will become a practice of the past. Replacing the decades-old procedure will be Smart KYC.
Smart KYC is different right from the start, with the client submitting digital identification. From there, the broker queries SGM-KYC online services and gets instant trading approval. And last, but undoubtedly significant, the digital transaction replaces a long paper trail that must be maintained by the broker and made available to third parties under certain circumstances. The Smart KYC is designed to bring client and broker together in a quick, seamless and efficient manner and ultimately provides a unique and necessary tool for brokers that are looking to quickly build, verify and implement transactions from the retail base.
If Hashcove Ltd. Is Acquired, SBL Turns Golden
In the first week of January of this year, Slater Blockchain announced publicly that the company is in advanced talks to acquire Hashcove Ltd. The benefit of this deal should not be understated.
Hashcove has deep experience in blockchain, Smart Contracts and KYC, utilizing customized solutions including the Cove Identity App for blockchain-based document verification. Beyond that, the experienced team at Hashcove provides the most current technology fixed on both crypto exchanges and wallets. Further, the company's reputation in the industry boasts from having the best of the breed of blockchain technologists, having built a market-leading product to assimilate the wide variances that exist within the ecosystem of a distributed ledger and digital currency.
Stater Blockchain CEO Ramy Soliman reiterated the value Hashcove would bring:
This would be an excellent synergistic partnership on many levels. Kunal and his team have built advanced technology that fits with Stater Blockchain's existing development roll out of our Smart Settlement and Smart KYC products. Hashcove could help Stater Blockchain to deliver an institutional calibre product to our existing global client base....Additionally, Hashcove's expertise in settlements from their experience in India can be leveraged at Stater to service a fast-growing financial trading community.
Together, the integration of Hashcove brings a tremendous strategic fit to both Stater Blockchain and to Stater Global Markets to place into the market a comprehensive product set to facilitate global distribution strategies.
Beyond Hashcove, though, SGM is in a prime position to close on several additional and accretive acquisitions, potentially eying FX clearinghouses, cryptocurrency market makers, and arbitrage systems. One that comes to mind as a potential accretive target is a London and Warsaw-based arbitrage platform. Competitively positioned and connected to ten of the largest and most reliable cryptocurrency exchanges, the platform traded more than $1 million of bitcoin in November 2017 in beta testing and was reported to yield a 26% return on investment in its first month. This company could provide just one opportunity for near-term accretive growth. Investors can expect more.
The Best Way To Play SGM
The brief introduction to SGM doesn't tell the whole story by any means. But, by reading between the lines, investors may be able to take advantage of an opportunity by leveraging the SBL and SGM asset base through an investment into LBCC. Indirectly, and through investing in LBCC, investors may gain direct benefit from Stater's dedicated and committed strategy to develop a comprehensive vertical and horizontally integrated global financial services platform. In addition to that, investors may be beneficiaries of SGM's direct access to Spot FX liquidity for retail brokers and other small to medium-sized institutional firms by filling the vacancy left by other Prime Brokers that have left the space due to extreme market volatility.
Additional opportunities in front of SBL include clear access to Tier 1 brokers, whereby Stater can provide intermediary credit services as well as a full Prime of Prime broker offering. And, while the assets traded are enormous, well into the trillions, Stater's business model is significantly derisked by laying off trades to professional and eligible counter-parties to offset risk. Most important to the client, all monies are fully title-transferred and deposited with prime brokers to insulate and support client trading.
Importantly, with new players emerging on a daily basis that holds little to no experience in the complexities of the cryptocurrency arena, SGM is disciplined in its practices with no over-extension of leverage or balance sheet gap risk. Best of all, investors are protected by Stater Global Markets professional discipline and can be confident that advanced risk management systems are in place. Traders further benefit from SGM's multiple pre-trade credit checks that limit the client's ability for overexposure and from real-time risk-management including auto-closeout features that get actively managed at the venue level.Slater Blockchain Is A Prize
For investors, an opportunity may become visible if they take into consideration what is behind the move at LBCC. Hence, by taking a good look at what is developing on a macro level, they may discover the potential for superior returns through an eventual integration of the SBL platforms into LBCC. Despite being potentially misidentified as one of the unscrupulous players due to the timing of unrelated market events, LBCC may be in the best position to prosper significantly from a fully integrated deal with SBL to target the cryptocurrency and blockchain markets.
The cryptocurrency market is growing into a mainstream global opportunity, and despite what the paid TV anchors are reporting, usually supported by an agenda, the market is here to stay, and the most competitively positioned companies will earn the most significant rewards.
Although Stater Blockchain Ltd. is a privately held company, the opportunity through LBCC may be a way to leverage the potential and buy an early ticket into what may become one of the most influential cryptocurrency and forex companies in the world. It is indeed rare that investors get the chance to buy into a world-class organization at current LBCC prices, but because the integration of the two is still in early stages, the opportunity is at hand.
All said, investors would be wise to consider this risk-reduced, high return opportunity and join with one of the established leaders in the industry - Stater Blockchain Ltd. and their wholly owned subsidiaries.
This article was originally featured on CNA Finance