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DCC Emerges as Leader in Crypto Space: Clinches More High-Profile ICO Deals


Published 12-DEC-2017 09:56 A.M.


13 minute read

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Last week, Bitcoin surpassed AUD$25,000 for the first time, pushing its already monolithic price surge past the ten-fold mark.

All up, the once-obscure digital currency has advanced more than 1500% this year, and now boasts a market cap of some US$280 billion. That’s bigger than the likes of IBM, Disney, Nike and McDonalds.

If that doesn’t give you enough of an idea of the dizzying pace at which the thriving cryptocurrency ecosytem is growing, the total digital currency market now sits north of $US450 billion.

As we become increasingly aware that blockchain, the underlying class of technology that started with Bitcoin, is capable of disrupting the entire finance sector, it’s clear that the crypto space has now well and truly entered the mainstream domain.

Even mainstream financial institutions like Goldman Sachs are cottoning on to the investment potential of the crypto and blockchain boom.

This is set to take off even more seriously now that Bitcoin has smashed its most recent target, according to former Fortress Investment Group macro hedge fund manager, Mike Novogratz, who has joined this crypto craze.

Speaking of which, there are also now more than 120 hedge funds focused solely on Bitcoin.

One nimble ASX company that has rapidly established itself as the leading force in the burgeoning crypto and blockchain space is fintech growth story, DigitalX Limited (ASX:DCC).

As the only Publicly Listed Blockchain corporate advisory firm globally, the Perth-based DCC has a razor-sharp edge, harnessing years of industry expertise and technical muscle.

Running in parallel with Bitcoin’s skyrocketing performance, as well as positive regulatory changes around cryptocurrencies, DCC has had a major year.

It should be noted here that, DCC remains a speculative stock and investors should seek professional financial advice if considering this stock for their portfolio.

At the centre of DCC’s operations are three core business lines. The first of these focuses on the company’s proprietary blockchain tech assets — specifically, AirPocket, DCC’s award-winning remittance application designed to enable users to securely and cost-effectively make cross-border payments.

Then there’s DCC’s rapidly growing blockchain consulting division, which draws on an extensive body of tech expertise. This business has been working as an advisor to the National Cryptocurrency exchange, providing consulting expertise over a six-month term, and this advantageous deal is creating considerable monthly recurring revenue for two years.

DCC’s third and most recently created business division is dedicated to Initial Coin Offering (ICO) corporate advisory, and it’s quickly developing a reputation as the leading corporate advisor for high-profile ICOs.

An ICO is the fastest way to raise funds from a global marketplace, whereby investors are sold tokens in exchange for equity. It’s a burgeoning marketplace that has been described as a ‘gold rush’. This year alone, ICOs have managed to raise more than US$3 billion.

Especially noteworthy on this front has been DCC’s engagement in a strategic advisory role to blockchain energy trading company, Power Ledger. This transpired in Australia’s first major ICO, with more than AUD$34 million worth of Power Ledger tokens (POWR) sold.

Then, in September, another of DCC’s clients, Bankera, successfully closed the largest pre-ICO raising in history, with €25m raised through the sale of 2.5 Billion Bankers tokens (BNK) at €0.01 apiece.

The most recent development has seen DCC working with SingularityNET, a decentralised, open market for artificial intelligence (AI) algorithms, as well as exotic car ownership platform, BitCar, for upcoming ICOs to raise a combined US$61 million.

The SingularityNET token sale received over $150 million in bids during the first day of pledges. That was over 10,000 buyers registering for the token sale.

All in all, that’s a formidable track record for one ASX small-cap to be cultivating in a matter of months.

After receiving $4 million in funding, DCC has developed solid streams of revenue and a knack for identifying fast growing assets to generate an additional $14 million in funds in only a few months.

DCC is in an excellent financial position to plunge itself full-throttle into a hectic 2018, as it continues to expand its advisory divisions and seeks to clinch more strategic alliances with major industry players.

DCC is currently capped at a modest A$106.8 million and is rapidly growing. Bearing in mind Bitcoin’s immense surge, if DCC continues to ramp things up at the lightning-fast pace it’s maintained thus far, it may not be long before this innovative company leaves its small-cap days in the dust.

Without further ado, let’s catch up with:

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We last caught up with DigitalX Limited (ASX:DCC) in August with the article, New Kid on the Blockchain Takes on $150BN Crypto Market . In that piece, we walked you through DCC’s key three business strands, and took a microscope to the flourishing blockchain and cryptocurrency market. We also looked at the recent ICO boom, and at DCC’s critical role in this high-growth space.

At that point in time, DCC’s market cap stood at a tiny $11.26 million.

Today, the market is valuing DCC at $106.8 million. That’s an increase of almost 800% in a matter of four months. Its share price soared more than 200% in November alone.

With its exposure to cryptocurrencies like Bitcoin, DCC has clearly piqued the interest of forward-focused investors. 2017 has been a wild ride for DCC shareholders:

digital x share price

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

This echoes both the increased acceptance of the cryptocurrency market itself, as well as pointing emphatically to DCC’s ability to grow its business with impeccable timing.

On top of that, a quick glance at media coverage around DCC shows that this multi-faceted fintech company is attracting attention across the board.

For instance, last week, tracked Bitcoin’s ascent, and spoke to DCC chief executive, Leigh Travers...

Bitcoin record high

Australian Fintech also took notice...

digital x board

...And so did ( a related entity of S3 Consortium Pty Ltd as defined in Section 9 of the Corporations Act 2001).

digital x finfeed

Really, media coverage like this speaks for itself when it comes to DCC’s fast-growing reputation as a leading voice in the crypto and blockchain space.

DCC’s latest quarterly also shows some healthy specs to back this up. DCC recently raised funds to the tune of $4 million (both in cash and Bitcoin) from Blockchain Global Limited and associated investors.

DCC reported revenue for the quarter of US$225,000, as well as receipt of tokens for its advisory services to companies like Bankera, Etherparty and Power Ledger (which we’ll look at in more detail shortly).

As of September, DCC held total cash and cash equivalents of US$1.2 million. On top of this, it also holds 489.68 bitcoins and 430.8 ether coins, valued at US$2.2 million.

Given that digital currency is highly liquid, this can be converted into cash as required. It’s also worth noting that DCC has held its Bitcoin, which has appreciated more than 30% since it was originally acquired, and this reflects the company’s prudent crypto management.

In short, DCC is in fighting shape. Speaking of which, let’s look now at the latest developments on DCC’s ICO advisory front...

A burgeoning track record of leading ICO advice

We looked extensively at the ICO boom — as well as the workings of DCC’s ICO advisory services — in our October article . We’re not going to rehash all of that here, but the key takeaway is this...

Rather than looking to venture or angel investors for capital — the traditional fundraising process — cryptocurrency and blockchain start-ups have turned to the crypto community to crowdsource the purchase and usage of their tokens via ICO.

In fact, in the latter half of the year, the amount of money raised via ICOs has surpassed early stage venture capital funding.

There is risk involved in this and investors should take a cautious approach and seek professional financial advice if considering this as an investment strategy.

Since digital currencies like Bitcoin are open-source protocols that aren’t under the control of any one entity, ICOs don’t involve middle men or syndicates and brokers. Subsequently, they’re an efficient direct way to raise funds, not to mention quicker and cheaper than traditional methods. For investors, part of the appeal here is the expectation that the price of the cryptotoken in question will increase in value.

Over US$3 billion has been raised via ICO this year alone.

initial coin offering all time funding

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Where the Chinese government has recently outlawed all ICOs, countries like Australia are taking a more supportive yet cautious approach by encouraging operators to play by the rules.

In fact, Power Ledger, one of DCC’s clients, was the first ICO to be launched after ASIC’s proposed guidelines on the matter were issued in September.

So while this ICO craze is clearly major news for both investors and cryptocurrency itself alike, this is still a largely unregulated market, or one that’s only seeing the first seeds of regulatory guidance.

And this is where DCC’s ICO advisory service division comes into play.

With DCC’s expertise across the entire Blockchain ecosystem including mining, trading and development of crypto and blockchain products, it’s working as a trusted adviser to companies looking to conduct token sales. DCC’s emphasis here is on high levels of transparency, and best practices around the regulatory components.

On top of that, given its expansive experience and status as Australia’s only listed crypto company, DCC is also in an ideal position to play a key role in future discussions around public policy and regulation of this still new market.

As corporate advisor in these deals, DCC receives a percentage fee of the total funds raised in liquid digital currency, on top of a promoter’s percentage fee of free tokens native to the ICO.

Bankera and Power Ledger – some major milestones

Under DCC’s guidance, its first client, Bankera, successfully closed what ended up being the largest pre-ICO raising in history, with some €25 million raised through the sale of 2.5 BNK tokens at €0.01.

Bankera is strongly aligned with DCC’s underlying interests. It’s building a digital bank for the blockchain era, seeking to provide traditional banking and investment banking services to the blockchain marketplace, including payments, loans, deposits and investments. All of these services will support both traditional fiat currencies, as well as cryptocurrencies like Bitcoin, Ethereum, DASH, NEM, ERC20 compliant tokens, and more.

Throughout the entire pre-ICO process, DCC provided Bankera with a range of industry-specific and traditional corporate advisory services.

In return, DCC received an engagement fee of US$10,000, paid through 2.58 Bitcoin, approximately USD$100,000 in Ethereum for crypto investors introduced to Bankera, and around 130 million BNK tokens for corporate advisory services.

Building on this momentum, DCC was soon after engaged as strategic advisor to blockchain energy trading company, Power Ledger, to consult on what was Australia’s first major ICO.

This was successfully funded, with Power Ledger selling over A$34 million of POWR tokens...

Power ledger bitcoin IPO

This all got the ball rolling in a serious way for DCC’s ICO advisory arm, with significant interest generated from both Australian and international solar developers, energy companies and investors.

Due to the high level of demand for this ICO, DCC elected to receive its entire remuneration in POWR tokens, resulting in the issue of around 7.4 million tokens, valued at 11.5c each. It’s worth mentioning that POWR tokens trading on digital currency exchanges have recently been as high as US$0.70, currently trading at US$0.65, and have since entered the cryptocurrency top 100.

The newest development continues this momentum...

Humanoid robots, exotic cars and new frontiers: more ICOs

As announced in late November, DCC is now engaged as corporate advisor to SingularityNET and BitCar for their respective upcoming ICOs, to raise a combined US$61 million.

The SingularityNET ICO will be looking to raise up to US$36 million from the sale of 500 million tokens, while the BitCar ICO will raise up to US$25 million from 250 million tokens.

SingularityNET is an open-source market for AI algorithms. Intriguingly, its central platform consists of a population of AI agents that share data and knowledge with each other, and perform services for customers. Distributed ledger technology enables this network of AIs to operate in a completely decentralised way, so anyone can post an AI online and enter it into the network, and can issue a request for services.

The most vivid example of innovative applications for this platform is Sophia, SingularityNET’s chief humanoid: the only robot in the world that can exhibit human-like emotions and expressions:

Advanced AI humanoid

Here’s how this intersection between blockchain and AI works, as explained by SingularityNet CEO, Dr Ben Goertzel:

SingularityNET recently undertook a two-month global tour that has generated significant publicity, with DCC captaining the Australian portion of the roadshow.

The SingularityNET pre-sale is currently running until mid-December, when a public ICO will begin to raise additional funds for 24 days up to US$36 million through the sale of 500 million tokens.

DCC will receive around 0.8% of the one billion Artificial General Intelligence (AGI) tokens in the project for marketing and promotional services, plus additional fees for introducing the SingularityNET project to its own crypto investor network.

BitCar, on the other hand, is a car ownership platform that combines the two best performing asset classes — cryptocurrency and exotic cars — for an upcoming token sale.

BitCar’s upcoming ICO was covered in this Australian Financial Review article:

Bitcar initial price offering

Interestingly, BitCar was founded by some of the bright sparks behind Power Ledger, pointing towards DCC’s considerable network of key industry players.

Both BitCar and DCC, in turn, have received strong expressions of interest at the recent Block Asia conference in Singapore — a compelling location, with regulations and tax laws that are especially accommodating for cryptocurrencies.

From the BitCar token sale, DCC will receive around four million tokens for corporate advisory services, based on success.

Given all of this, DCC is carving out a name for itself as an ICO authority with a hefty track record of success after only a few months.

Although, the company still has a lot of work to do in this space and investors should seek professional financial advice if considering this stock for their portfolio.

Working with the highest calibre projects and receiving million-dollar token holdings for each, this ASX fintech is gaining traction very quickly, and there’s a lot more in the pipeline.

The crypto road ahead

Fully funded, DCC is coming into its own at what seems like an impeccable time for the crypto market.

Bitcoin’s powerhouse performance this year amply suggests that this space is poised for further growth and more in the way of attention from institutional investors.

This is serious stuff. In an increasingly fraught geopolitical landscape, some commentators have pointed out that Bitcoin has actually been drawing investors as an alternative safe haven to more traditional assets like gold.

Having established itself as a leading industry player in a relatively short period of time, and a lot more still up its corporate sleeve as it continues to build on its corporate advisory services and forge more high-impact collaborations, this $106.8 million-capped fintech company is one we’ll be tracking very closely in the coming year.

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S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

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