Environment Social Governance

CrossTower to acquire institutional prime brokerage BEQUANT

It comes after months of window shopping by CrossTower as crypto companies are still looking to expand despite the crypto market downturn.

Cryptocurrency exchange CrossTower Inc has agreed to buy digital asset trading platform BEQUANT, which comes after months of window shopping by CrossTower for crypto companies including a recently revised offer for Voyager Digital’s assets.

The Nov. 28 acquisition agreement will provide CrossTower with over 600 new professional exchange clients in addition to its existing clientele. The incoming clients are based across the United States, Europe, Asia and Latin America and are collectively turning over $400 billion annually.

The purchase agreement comes as CrossTower CEO Kapil Rathi stated on Nov. 24 that CrossTower has long been on the lookout to buy digital asset companies with a “good set of customers” and a “good balance sheet,” which included a second look at the now-bankrupt cryptocurrency lending platform Voyager, who is back on the market after its initial agreement with FTX recently fell through.

Rathi said the access to over 600 exchange clients through the BEQUANT acquisition would also better position the firm to assist in re-establishing industry trust, which has been significantly dampened by recent events with FTX.

CrossTower’s deal is being backed by London-based financial services firm Lydian Group, with CEO Gerard Lopez stating that he hoped CrossTower’s acquisition would lead the way in bringing more professionalism and transparency to the industry.

CrossTower introduces ESG Crypto Fund

The trading platform also announced its offering of an Environment, Social, and Governance (ESG)-focused Crypto Fund, which will invest in “promising” companies that demonstrate a sufficient level of social and governance accountability, in addition to efficiently managing energy costs.

While CrossTower didn’t disclose any potential companies that may become part of its new fund, but the trading platform said it would look for companies that aren’t fueled by “greed” and instead prioritize “the democratization of finance.”

CrossTower added it would look for digital asset companies with a “proper board structure […] checks and balances, and traditional business expertise,” adding the crypto companies “in trouble” today are due to “human failure.”

Related: Saving the planet could be blockchain’s killer app

The announcement of CrossTower’s ESG Crypto Fund comes as a number of industry leaders recently told Cointelegraph that the Ethereum Merge, which took place on Sept. 15, would become a “big factor” behind institutional investment decision-making, particularly for firms like Fidelity Investments, BlackRock and Goldman Sachs who have ESG mandates.

Interestingly, a June study by investment management firm Morningstar found that 80% of investors who hold ESG-themed investments also own cryptocurrencies, as reported by CNBC.

By contrast, the study also found that only 22% of non-ESG investors own cryptocurrencies.

‘Green ETH’ narrative to drive investment and adoption, says pundits

Post-Merge Ethereum has now detached itself from the “crypto mining is bad for the environment” narrative, following its transition to proof-of-stake.

The shedding of Ethereum’s energy-intensive proof-of-work (PoW) system is expected to see Ether (ETH) “flow into the institutional world,” according to a number of fund managers and co-founders.

On Sept. 15, Ethereum officially transitioned to a proof-of-stake (PoS) consensus mechanism, which is expected to cut energy consumption used by the network by 99.95%, according to the Ethereum Foundation.

The upgrade effectively ended the need for the Ethereum network to rely on miners and energy-guzzling mining hardware to validate transactions and build new blocks, as these functions are now replaced by validators who “stake” their ETH.

In a statement to Cointelegraph, Charlie Karaboga, CEO and co-founder of Australian fintech company Block Earner said the network’s transition to PoS would “drive the future of money to be more internet-based.”

He said that Ethereum would become “the settlement layer that everyone will accept and trust — especially when the spotlight is shining brighter than ever on the issue of sustainability in crypto mining.”

Markus Thielen, Chief Investment Officer of digital asset manager IDEG said that he had been in discussions with sovereign wealth funds and central banks to help build their digital asset portfolios, but direct investment had often been “voted down due to energy concerns.”

But now that the Ethereum network has transitioned to PoS, this issue is much less of a concern, he said:

“While demand has been strong, the missing link has been an underlying zero-emissions, financial infrastructure. With Ethereum moving to PoS, this clearly solves this last pillar of concern.”

Henrik Andersson of Apollo Capital told Cointelegraph that ESG had become a “big factor” behind institutional investment decision making in the last few years.

Andersson said he believes the 99.95% energy consumption cut on Ethereum would dramatically improve ETH’s ESG score, which in turn would “make it more appealing for institutional investors” over the long-term.

Blockworks co-founder Jason Yanowitz told his 92,900 followers on Sept. 15 that “Green ETH” will be the “best narrative” in crypto’s history, with crypto mining and PoW long plaguing the industry.

Related: How blockchain technology is used to save the environment

Yanowitz noted that until now, the “Bitcoin is bad for the environment” narrative has been “so impactful,” adding it spread like wildfire” and “has probably had the most negative impact on the asset’s performance.”

“Most large institutions now have ESG mandates,” said Yanowitz.

“Fidelity, BlackRock, Goldman, etc… whether or not they like it, they now have to consider the environmental impacts of their portfolios.”

But that is now old news for Ethereum, with Yanowitz adding that the most important takeaway from the Merge is that “Ethereum becomes green” which becomes highly appealing to large corporations who have ESG mandates to comply with:

“This will be the best narrative crypto and ETH has ever seen. It will flow into the institutional world, where investors will buy ETH because it satisfies their ESG mandate.”

‘Green ETH’ narrative to drive investment and adoption, say pundits

Post-Merge Ethereum has now detached itself from the “crypto mining is bad for the environment” narrative, following its transition to proof-of-stake.

The shedding of Ethereum’s energy-intensive proof-of-work (PoW) system is expected to see Ether (ETH) “flow into the institutional world,” according to a number of fund managers and co-founders.

On Thursday, Ethereum officially transitioned to a proof-of-stake (PoS) consensus mechanism, which is expected to cut energy consumption used by the network by 99.95%, according to the Ethereum Foundation.

The upgrade effectively ended the need for the Ethereum network to rely on miners and energy-guzzling mining hardware to validate transactions and build new blocks, as these functions are now replaced by validators who “stake” their ETH.

In a statement to Cointelegraph, Charlie Karaboga, CEO and co-founder of Australian fintech company Block Earner, said the network’s transition to PoS would “drive the future of money to be more internet-based.”

He said that Ethereum would become “the settlement layer that everyone will accept and trust — especially when the spotlight is shining brighter than ever on the issue of sustainability in crypto mining.”

Markus Thielen, chief investment officer of digital asset manager IDEG, said that he had been in discussions with sovereign wealth funds and central banks to help build their digital asset portfolios, but direct investment had often been “voted down due to energy concerns.”

But, now that the Ethereum network has transitioned to PoS, this issue is much less of a concern, he said:

“While demand has been strong, the missing link has been an underlying zero-emissions, financial infrastructure. With Ethereum moving to PoS, this clearly solves this last pillar of concern.”

Henrik Andersson of Apollo Capital told Cointelegraph that ESG had become a “big factor” behind institutional investment decision making in the last few years.

Andersson said he believes the 99.95% energy consumption cut on Ethereum would dramatically improve ETH’s ESG score, which in turn would “make it more appealing for institutional investors” over the long-term.

Blockworks co-founder Jason Yanowitz told his 92,900 followers on Sept. 15 that “Green ETH” will be the “best narrative” in crypto’s history, with crypto mining and PoW long plaguing the industry.

Related: How blockchain technology is used to save the environment

Yanowitz noted that until now, the “Bitcoin is bad for the environment” narrative has been “so impactful,” adding it spread like wildfire” and “has probably had the most negative impact on the asset’s performance.”

“Most large institutions now have ESG mandates,” said Yanowitz:

“Fidelity, BlackRock, Goldman, etc… whether or not they like it, they now have to consider the environmental impacts of their portfolios.”

But, that is now old news for Ethereum, with Yanowitz adding that the most important takeaway from the Merge is that “Ethereum becomes green” which becomes highly appealing to large corporations who have ESG mandates to comply with:

“This will be the best narrative crypto and ETH has ever seen. It will flow into the institutional world, where investors will buy ETH because it satisfies their ESG mandate.”