Crypto Companies Successfully Closing In On Bank Purchase
WEG Bank AG, a small bank in Germany, became a sudden sensation after 30 percent of its equity was brought out by companies invested in the cryptocurrency industry. According to CoinDesk, 9.9 percent of the bank now belongs to startup Nimiq. TokenPay and the Litecoin Foundation are the two other part-owners of the said bank.
The bank, located in Munich, operates under German Law--foreign ownership of 10 percent or greater needs additional regulatory approval. With the acquisition, TokenPay joins its counterparts in becoming the first crypto companies to own bank equities. Litecoin Foundation director Charlie Lee also joined the bank's board as part of the deal. Nimiq, meanwhile, was enlisted by WEG Bank to help to create internal infrastructure for the institution.
Nimiq, as part of its process to take its shares, raised $12.8 million in 2017 through token sales. It then went through a process similar to TokenPay, where it has invested ICO funds into other assets through diversification. As part of its portfolio, Nimiq funneled resources into real estate and, this time, the WEG Bank equity.
It shows how cryptocurrencies can become so successful, but news from Next Web reported the contrary. According to reports, 30% of cryptocurrency startups experienced failure in 2018. The perfect example was how Mercado Bitcoin of Brazil's account was closed. Though the bank handling the account, Banco Santander, had to pay the bitcoin company $350,000, it still speaks volumes about how the bitcoin company might've experienced bankruptcy.
Forbes got on top of these companies and found out that 1,811 of the 9,000 blockchain-based platform companies listed on GitHub have 'stopped operations'. Twenty percent of these companies have seemingly declined operations, while the others appear to have just vanished in thin air.
However, a silver lining in the report pinpointed the most profitable sector in blockchain development--education and academia. In this sector, around 10% of companies fail, lower than in any other sector. It is troubling, however, that cryptocurrency appears to be in some sort of 'dry spell,' where the less established companies dealing in blockchain may fail.
This is why, during this long drought for cryptocurrency in 2019, the WEG Bank transaction is a big thing. Companies like Nimiq and TokenPay have shown how cryptocurrency can be a volatile thing--at one point, it may fail. However, given the right opportunities and the right moves to make, it's a very profitable business to do.