Top Stories of Last Week

Regulatory

  • New U.S. Congressional bill would require stablecoin issuers to secure bank charters and secure regulatory approval prior to circulating stablecoins. U.S. Reps Rashida Tlaib, Jesús García and Stephen Lynch introduced Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act. Bill would specifically require stablecoin issuers to obtain banking charter and approval from Federal Reserve, FDIC and bank regulator to issue stablecoin and also require issuers to have FDIC insurance or maintain reserves for conversion back into U.S. dollars.
  • European Central Bank President Christine Lagarde made bullish case for digital euro while throwing shade at cryptocurrencies and stablecoins, saying stablecoins could “threaten financial security” if widely adopted. Lagarde said main risk of cryptocurrencies is that cryptos rely purely on technology and there is no identifiable issuer or claim, in addition to suffering from lack of liquidity, stability and trust. Stablecoins “pose serious risks,” Lagarde said, due to possibility of triggering large shift of bank deposits to stablecoins, which may have impact on banks’ operations and transmission of monetary policy.
  • South Korean government officially postponed new tax regime on cryptocurrency gains, passing amendments to country’s tax laws wherein new cryptocurrency tax regime will come into effect in January 2022 instead of October 2021.
  • Central banks of Saudi Arabia and United Arab Emirates concluded CBDC pilot, finding that distributed ledger technology can improve cross-border transactions and meet demands of financial privacy in digital context. 93-page overview of “Aber” project found that distributed payment system offers improvement over centralized payment systems for domestic and cross-border commercial bank settlements. Six local commercial banks ran nodes and contributed money from reserves deposited at central banks. Pilot was built on Hyperledger Fabric and researchers noted there were early issues in coordinating nodes across jurisdictions. 

Project Development

  • Visa said it is linking payments network of 60 million merchants to USDC stablecoin developed by Centre, the consortium founded by Circle and Coinbase. Circle will help Visa credit card issuers integrate USDC software into platforms and send and receive USDC payments. Visa reportedly will also support issuance of credit card that lets businesses send and receive USDC payments directly from any business using card. Companies are targeting 2021 launch.
  • S&P Dow Jones Indices, a division of S&P Global Inc, to launch cryptocurrency indices in 2021. S&P DJI-branded products will use data from Lukka on more than 550 of top traded coins and S&P’s clients will be able to work with index provider to create customized indices and other benchmarking tools on cryptocurrencies.
  • New York Digital Investments Group raised $150 million for two new funds to invest in cryptocurrencies, as revealed in two SEC filings showcasing NYDIG Digital Assets Fund I raising $50 million from institutional investors while NYDIG Digital Assets Fund II raised $100 million. Two unnamed investors appear to have participated in NYDIG’s $50 million bitcoin fund, while it seems Fund I got all its cash from just one investor.
  • First stage of Ethereum 2.0 went live as of 12:00 UTC Tuesday, concluding opening act, or “phase 0,” of Ethereum’s consensus mechanism transition, which will see network change how it settles payments. Beacon Chain will be backbone of new Ethereum blockchain, but Eth 2.0 has two more technical hurdles to hit before launching: breaking PoS Ethereum blockchain into multiple datasets called “shards” and adopting Rollups, a throughput solution for decentralized applications. Both milestones are projected to be completed over next 1-2 years. 
  • Libra Association rebranding in further efforts to distance itself from original Facebook-led vision, announcing it was changing name to Diem as it gears up for potential 2021 launch of single, dollar-pegged stablecoin. 
  • Hauck & Aufhäuser, a German mid-sized bank founded in 1796, announced launch of passively managed crypto fund in January 2021 featuring large-cap cryptocurrencies like Bitcoin, Ethereum, and Stellar. HAIC Digital Asset Fund I aimed at high-net worth investors and institutional clients with minimum investment is €200,000 ($243,000).

Exchanges

  • 100x, Bitmex’s parent company, announced former chief executive officer of Borse Stuttgart GmbH, Alexander Hoptner, will take over as CEO in January 2021. Hoptner will also join 100x’s board of directors, and will report directly to group’s chairman, David Wong. Hoptner takes over from 100x’s current interim-CEO, Vivien Khoo, who was promoted from COO as emergency replacement for Hayes. 

Fundraising

  • DEX aggregator 1inch closed $12 million funding round led by Pantera Capital, with other backers including ParaFi Capital, Nima Capital, LAUNCHub Ventures, Spark Capital, gumi Cryptos, Blockchain Capital and angel investors Josh Hannah, Kain Warwick and Alexander Pack.
  • U.K.-based cryptocurrency app Ziglu raised over $8 million in crowdfunding campaign on Seedrs platform. Support from some 1,250 investors brought Ziglu’s total fundraising to $14.8 million. Crowdfund turned out to be five times oversubscribed and average investment amount was $6,445.

Defi

  • Yearn.Finance announced another merger with SushiSwap, in which development resources will merge and total value locked would combine. Current TVL of Yearn is around $455 million, and SushiSwap’s TVL is $730 million. SushiSwap will also help Yearn develop and launch upcoming project, Deriswap.
  • Crypto custodian Copper looking to connect institutions to DeFi with CopperConnect, a infrastructure system between Copper’s existing storage services and DeFi apps that provides security throughout custody, transfer and lock-up process as asset makes its way to DeFi smart contract.  

Other

  • Larry Fink, CEO of BlackRock, said in speech at Council of Foreign Relations that Bitcoin had “caught the attention and imagination of many people” and was poised to grow as an asset class. Fink noted that Bitcoin remains niche market with massive potential for upside. “It’s a thin market. Can it evolve into a global market? Possibly,” Fink stated.
  • Guggenheim Partners wrote in SEC filing that it might “seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value” in Grayscale’s Bitcoin Trust product through its Macro Opportunities Fund. Macro Opportunities Fund has more than $5 billion in assets under management and seeks to offer exposure “to the investment team’s highest-conviction ideas in the current market environment through an unconstrained approach.”
  • Research arm of AllianceBernstein stated in research note produced for clients that asset manager now has “to admit [bitcoin] does” have a role in asset allocation, at least over long term. Inigo Fraser Jenkins, co-head of portfolio strategy team at Bernstein Research, said firm had previously ruled out bitcoin as investment asset back in January of 2018, but post-pandemic changes to policy environment, debt levels and diversification options for investors changed dynamic. Fraser Jenkins said “significant reduction” in volatility of bitcoin’s price makes it more attractive both as store of value and as medium of exchange. Additionally, when it comes to role in hedging against inflation, “the driver of bitcoin is similar to that as for gold.”
  • MicroStrategy revealed Coinbase Prime unit, which spans prime brokerage and OTC trading services, served as primary execution services partner for $425 million bitcoin purchase made earlier this year. Bitcoin purchase took place in two tranches, with first $250 million investment being executed over 5 days and Coinbase’s algorithms chopping up MicroStrategy’s order into 200,000 fills where average fill size was less than 0.3 BTC.
  • United Overseas Bank seeking candidates for position of VP Crypto Security Administrator to get expert advice on how to design secure solution for managing crypto keys. Job includes managing installation of hardware security module, setting up centralized key management solution, and maintaining crypto keys, among other responsibilities. Position suggests UOB looking to develop crypto custody solution, but plans are still in early phase.

Things to Watch This Week

  • Spark Token Airdrop for XRP 
    • This week will see XRP holders receive Spark tokens, the native token of a system meant to bring Ethereum-like functionality to the XRP Ledger called the Flare Network. The airdrop has received significant support over the past few weeks, with Coinbase announcing this weekend that they would join the ranks of exchanges that will honor the airdrop for customers’ balances of XRP. The airdrop is currently scheduled for midnight UTC on Dec. 12, so we will be keeping an eye on XRP activity before and after the airdrop. 
  • Mt. Gox Rehabilitation Plan
    • We’ll also see a potential resolution for Mt. Gox in the coming week, as the deadline for a rehabilitation plan to refund users of the hacked exchange approaches. The Mt. Gox rehabilitation trustee reportedly holds 150,000 BTC to repay users of the exchange that lost bitcoin due to a hack in 2014. However, the refund process has been delayed multiple times since 2019. A resolution of this scale could have implications on the price of Bitcoin in the short term, so we’ll be keeping a close watch on developments.  
    • Andrewstotle@Andrewstotle
      CEO of Blackrock Larry Fink discussing #bitcoin with Mark Carney
      WATCH
      KING CO฿IE@CryptoCobain
      PTJ mentions Ethereum. Bitcoin is a gateway drug. These 1% allocations from funds are going to increase in size and diversity into other crypto. Ain’t no way they just buy Bitcoin now.
      WATCH
      Evan Van Ness@evan_van_ness
      The top 7 zombiechains have 30+ billion in market cap ($XRP/ $BCH/ $LTC/ $ADA/ $BSV/ $EOS/ $XTZ)
      The top 7 DeFi protocols ($AAVE/ $UNI/ $YFI/ $SNX/ $MKR/ $COMP/ $UMA) have 1000x more users than the zombiechains and are together about $3.5b
      Which do you think is overvalued?
      I felt bad including $bch in there, but every time I’ve checked their block explorer there are very few transactions
      Congresswoman Rashida Tlaib@RepRashida
      Preventing cryptocurrency providers from repeating the crimes against low- and moderate-income residents of color traditional big banks have is critically important. That’s why I’m proud to introduce the #STABLEAct with @RepChuyGarcia and @RepStephenLynch

      Especially amid the #COVID19 pandemic, their vulnerabilities could be exploited and obscured by bad actors looking to issue stablecoins, like other shadow money issuers in the past. The #STABLEAct combats that threat.

       
      @RepRashida@RepStephenLynch and I previously led this letter to the @USOCC Brooks blasting the bureau’s unilateral actions in the digital financial activities space. While they have yet to respond, we know action is urgent. Our communities need the #STABLEAct protections now.
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      Ryan Watkins@RyanWatkins_
      Ethereum often gets criticized for its “loose” monetary policy. However after Phase 1.5 (ETH 1.x merge into ETH 2), it is likely ETH’s annual inflation rate will drop well below 1% if not 𝗻𝗲𝗴𝗮𝘁𝗶𝘃𝗲. At this point ETH’s inflation rate would be far lower than BTC’s. 1/

      If you’re an Ethereum skeptic you’re probably thinking “how is this possible?” It all starts with Ethereum’s shift to Proof of Stake (PoS).
      READ MORE

      Raoul Pal@RaoulGMI
      Amongst all this BTC bullishness, we will surely have some existential gut checks along the way… like forks in 2017. Something or things will shake a lot of peoples beliefs out and nasty corrections will occur. Be ready.

      Also, as more money managers come in, and BTC rises, things like month end rebalances will put huge selling pressure on BTC from time to time. New, different supply and demand will come as institutions come in. It wont be the same market, but will have different dynamics.

      vitalik.eth@VitalikButerin
      The roadmap I made back in March updated with (very rough and approximate!) progress bars showing what has been done and some of the recent tweaks to the roadmap itself. A lot has been accomplished, but still a lot remains to be done!
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      Dan Held@danheld
      I certainly didn’t expect to see a headline like this from mainstream press.
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      Willy Woo@woonomic
      Views on 2021 (THREAD): My Top Model suggesting $200k per BTC by end of 2021 looks conservative, $300k not out of the question. The current market on average paid $7456 for their coins. You all are geniuses.
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      I’ve never been so bullish for 2021. This re-accumulation phase coincides with spot market inventory depletion roughly 2x longer and deeper than the last cycle. It will send BTC. (Data:@glassnode)

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      Also the $ gain in market cap per $ invested has significantly increased over past cycles, HODLers holding stronger. It was $2.00 in the 2013 bull run, $2.50 in 2017, and $3.50 or more for 2021. All pointing to reflexivity increasing; an amplified 2021 bullish feedback loop.

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      Mira Christanto@asiahodl
      @woonomic ‘s data shows a 6x impact for each dollar invested in $BTC. So $1 invested increases the BTC market cap by $6. If these funds invest 1% in BTC, then price would be $57,000. (and no one just invests 1%) twitter.com/woonomic/statu…
      Travis Kling@Travis_Kling
      I call this chart “The Traditional Onslaught”. We’ve been talking about “The Herd” for 3+ years. The Herd requires career risk cover. This is that. They are by definition not early adopters, but their pockets are deep & their capital is sticky. #Bitcoin is just getting started.
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      Niall Ferguson@nfergus
      We are living through a monetary revolution so multifaceted that few of us comprehend its full extent. And Bitcoin is winning it: bloomberg.com/opinion/articl…

      This article also contains, to my knowledge, the first reference in financial journalism to @Doug_D_Stuart‘s brilliant, Booker-winning novel “Shuggie Bain,” which everyone should read. bloomberg.com/opinion/articl…

      The crux of the argument is that Bitcoin is not only scarce but (as Wences Casares argues) sovereign. “No one can change a transaction in the Bitcoin blockchain and no one can keep the Bitcoin blockchain from accepting new transactions.” bloomberg.com/opinion/articl…

      I also enjoyed drawing attention to my old friend @Nouriel‘s recent change of heart on Bitcoin, “the biggest conversion since St. Paul’s.” bloomberg.com/opinion/articl…