Top Stories of Last Week

Regulatory

  • SEC pushed back making decision on VanEck’s proposed Bitcoin ETF to at least June. Regulator announced it was designating longer deliberative period for application, saying it needed to ensure it has “sufficient time” to evaluate proposal. Commission designated June 17, 2021 as date by which Commission shall either approve or disapprove.
  • New German law approved by Germany’s parliament last week is expected to take effect on July 1 if approved by upper house, the Bundesrat, and could bring as much as €350 billion of institutional investment into cryptocurrency market. Wealth and institutional investment fund managers known as Spezialfonds will be able to invest up to 20% of portfolio in crypto.
  • Paxos became third crypto-native company to be granted federal trust charter through U.S. Office of the Comptroller of the Currency, letting firm bring its new Paxos National Trust entity online as federally regulated entity offering custody services, stablecoin management, payment, exchange and other services. Paxos will set up Paxos National Trust to operate under OCC charter, while maintaining New York Department of Financial Services-chartered Paxos Trust Co.
  • Head of Turkey’s central bank Governor Şahap Kavacıoğlu ruled out total ban of cryptocurrencies and said wide range of crypto regulations is coming within two weeks. Without giving details about coming regulations, Kavacıoğlu indicated they would clarify legal definition of cryptocurrencies and regulate how they should be stored by institutions.
  • Iran’s central bank reportedly allowing country’s financial institutions to use cryptocurrency, derived from sanctioned miners, to pay for imports. Central Bank of Iran notified money changers and banks of amended regulatory framework for crypto payments, which said institutions will now be able to pay for goods and services from other countries in bid to circumvent U.S. economic sanctions.

Project Development

  • Deutsche Börse and Commerzbank working together to create blockchain-based marketplace for real estate and art. Fintech firm 360X will help to build digital asset marketplace with first reference transaction for each tokenized asset class planned for later this year.

Institutional

  • JPMorgan Chase allegedly preparing to offer actively managed Bitcoin fund to certain clients, with JPMorgan Bitcoin fund possibly rolling out as soon as this summer. NYDIG will reportedly serve as JPMorgan’s custody provider. Fund will be for private wealth clients and first product of JPM directly dependent on Bitcoin’s performance.
  • Video game publisher NEXON said it made $100 million purchase of Bitcoin, or 1,717 bitcoins at average price of around $58,226, including fees and expenses. Purchase represents less than 2% of Nexon’s total cash and cash equivalents on hand. CEO added that given current economic environment his firm believes Bitcoin offers “long-term stability and liquidity” while also maintaining value of cash for future investments.
  • JPMorgan, DBS Bank and Temasek teaming up to create blockchain-based joint venture for payments, trade and settlement. Platform “Partior” will seek to disrupt traditional payments model and is intended to develop wholesale payments rails based on digitized commercial bank money, allowing instantaneous settlement between financial institutions.
  • South Korea Financial Supervisory Service set to approve crypto-related fund application by Hanwha Asset Management, a subsidiary of Hanwha Life Insurance. “Digital Hero” fund will reportedly invest in crypto-related firms, including exchanges and mining establishments.
  • Tesla sold some of Bitcoin stash in first quarter for $272 million in proceeds. Sale trimmed Tesla’s position by 10%, according to CFO Zach Kirkhorn during company’s first-quarter earnings call. Kirkhorn also said on call that Tesla invested in bitcoin to earn yield on excess cash in low-interest-rate environment and that Telsa will continue to accumulate bitcoin through customer transactions.
  • Investment app Wealthfront is offering cryptocurrency to clients later in 2021, according to announcement as part of broader shift allowing users to customize their portfolios. Wealthfront Chief Strategy Officer Dan Carroll said crypto exposure in any given account would be limited to “likely no more than 20%.” Wealthfront did not disclose which firm it’s using for crypto custody.
  • Bitwise Asset Management filing to register flagship crypto fund as SEC reporting company. Shares of Bitwise 10 Crypto Index Fund would be registered under Exchange Act of 1934 if approved, meaning it would have to regularly file public updates on holdings and quarterly reports with SEC. Bitwise 10 Crypto Index Fund would become first non-Grayscale-owned crypto product with that distinction and first reporting company to offer investors broad exposure to coins.
  • U.S. Bank, to offer new cryptocurrency custody product in partnership with unnamed sub-custodian. U.S. Bank also announced it has been selected to administer NYDIG’s Bitcoin ETF, should it be approved.

Exchanges

  • Gemini partnered with Mastercard to launch crypto rewards credit card this summer. Gemini cardholders will be given option to transfer crypto rewards into interest-earning program Gemini Earn, and card will be made available to American investors across all 50 states later this year.
  • Binance said it plans to launch NFT marketplace in June. Marketplace is aimed at creators and traders of collectibles in visual arts, music, games, sports and more, will run on Binance Smart Chain and Ethereum network will be supported as well, meaning users will be able to view Ethereum NFTs in their Binance wallet account. Premium events will feature select works and high-end exhibitions, while trading market will be for users to create and deposit their own NFTs for processing fee and royalty of 1%.

Mining

  • Bitmain releasing ASIC miner for Ethereum called Antminer E9, which it claims will do work of 32 GPUs. Machines can produce up to 3 gigahashes per second, and product release follows Nvidia’s rollout of mining-specific graphics cards.
  • Mining firm Genesis Digital Assets ordered $93.63 million worth of new machines from Canaan for latest AvalonMiner A1246 model. Machines will help Genesis add 117 MW of Bitcoin computing capacity to existing 140MW power. Genesis claims to have 1.2% share of global mining hashrate.
  • Core Scientific completed purchase of 112,800 ASIC Bitcoin mining machines from Bitmain. Company bought S19, S19 Pro, S19J and S19J Pro Antminers to double inventory of mining machines. Shipment will reportedly help Core Scientific increase global share of Bitcoin’s hashrate from 5% to 12%.

Fundraising

  • Paxos raised $300 million Series D funding round valuing company at $2.4 billion led by Oak, a growth capital firm focused on health care and fintech. Previous investors Declaration Partners, PayPal Ventures, Mithril Capital and others were also involved. Paxos CEO and co-founder Charles Cascarilla said funds will help to “scale the business and take advantage of opportunities to make acquisitions.” 
  • Institutional cryptocurrency infrastructure firm Securrency closed $30 million funding round, backed by U.S. Bank and State Street. Firm’s strategic Series B also included Abu Dhabi Catalyst Partners and WisdomTree Investments.
  • Finoa, a digital asset platform for institutional investors, closed $22 million Series A funding round. Finoa, which provides custody and staking to clients, serves more than 250 firms. Funding round led by Balderton Capital.
  • Early-stage venture firm Volt Capital announced $10 million fund backed by CMT Digital, Balaji Srinivasan, Union Square Ventures’ Albert Wenger, Founders Fund’s Brian Singerman and others. VC firm made equity plays in analytics provider Nansen, BuyCoins.Africa, DeFi trading platform Parsec and others.
  • Alchemy raised $80 million in round co-led by Coatue Management. Also involved in round was Addition, The Chainsmokers and the Glazer family, who own Manchester United and Tampa Bay Buccaneers. Alchemy’s suite of cloud-based infrastructure powers over $30 billion worth of transactions a year and supports almost all non-fungible token platforms in existence today.
  • Blockchain infrastructure provider Figment launched $16 million investment fund, Figment Capital, to support decentralized protocols and applications including Cosmos, Terra and Livepeer. New venture fund will be investment arm of Figment stack, and capital will support blockchain protocols and early-stage projects.
  • Cryptocurrency wallet provider ZenGo received $20 million from Series A funding round led by Insight Partners. Other funders include Distributed Global and Austin Rief Ventures, among others. ZenGo allows users to send, receive, buy, sell, trade, earn and soon pay with over 50 cryptocurrencies in 180 markets.

Defi / NFT

  • Aave launched liquidity mining incentives for v2 protocol, paying out governance token rewards exceeding 20% to users. Users who deposit stablecoins into protocol can earn yield of between 4.78% and 13.49% on top of regular gains in form of staked AAVE tokens. Liquidity mining program was passed through governance vote, with 2,200 staked AAVE set to be distributed until July 15. 
  • Uranium Finance lost $50 million in tokens in exploit, where attacker took advantage of vulnerability present in Uranium’s v2 contracts. After sending minimum required tokens into Uranium’s “pair contracts,” attacker drained liquidity pools for multiple token pairs.
  • Polygon launched $100 million fund aimed at making DeFi more accessible to end users. #DeFiforAll Fund will focus on efficiently onboarding users to decentralized products and platforms. Funding, in MATIC tokens, will come from network’s ecosystem fund and be deployed over next two to three years.

Things to Watch This Week

  • Bitcoin Mining Difficulty Adjustment / China Mining Regulatory Notice
    • Bitcoin’s mining difficulty fell 12.6% in the most recent adjustment, representing the network’s largest downward correction since Nov. 3, 2020’s 16% downturn. This adjustment followed the events of mass miner outages after coal mining accidents caused subsequent inspections in Xinjiang, leading to Bitcoin’s hashrate falling by over 25%. The event in Xinjiang highlights several themes that are growing louder each day. First is the on-going concern of the high concentration of Bitcoin mining activity in China, with the effects still being felt currently from the Xinjiang events of two weeks ago. Additionally, new concerns arose after China announced last week that cryptocurrency mining may be set for stricter supervision in the future. The country issued an “urgent notice” for authorities to carry out a thorough assessment of the data processing centers where Bitcoin is mined after concerns about the energy consumption of Bitcoin mining in particular were brought up. This marks the second narrative that has been growing larger each day, with attacks on the sustainability of Bitcoin and cryptocurrencies in general coming from several sources worldwide. Although this debate has been raging for quite some time, the growth of this message being voiced in mass media is being felt and should be monitored going forward. 
  • Uniswap v3 Mainnet Launch
    • A much-anticipated event will take place this week, with Uniswap launching its third version of the platform midweek. Along with Aave liquidity mining incentives having launched to ring in their v2 protocol release, it seems a lot of the focus this week will be placed on the developments happening in decentralized finance. One thing to keep an eye on is the recent drop in Eth gas fees due to several reasons, from layer 2 solutions to the Berlin upgrade, as well as increasing the network’s gas limits, plus MEV and Flashbots also potentially contributing to reduced congestion in the network. This comes at a time when the competiton is heating up in Defi, as Binance Smart Chain platforms have been eating away at Ethereum’s Defi dominance, with Pancake Swap TVL nearly matching the likes of Ethereum’s biggest platforms and trading volumes for BSC dexes also rivaling their predecessors. Nevertheless, with the price of Eth hitting all-time highs as of the time of this writing, the potential for a 2nd “Defi Summer” surge spanning multiple chains should be watched closely. 
    • Coiner-Yadox@Yodaskk
      btc Update 2 : of version of the Options Expiry/ Max Pain chart

      Travis Kling@Travis_Kling
      This is a thread about The Everything Bubble. And about #Bitcoin being for the people. 

      There’s a story from David Foster Wallace that goes like this – there are these two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, “Morning, boys. How’s the water?”

      And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, “What the hell is water?”

      Ask a 24-yo, who was 12 the first time the US did QE, if we’re in an asset price bubble. Then ask a 74-yo the same question. You’ll get 2 very diff answers. The former hasn’t experienced much at all, & that whole time has only been one way. While the latter has seen much more.
      READ MORE

      BitMEX@BitMEX
      Volatile markets aren’t for the weak handed, but just when should you actually take profit? @CryptoHayes provides a valuable framework that just might help – all this and more in the latest edition of Crypto Trader Digest:
      bit.ly/3t8WfKa

      Avi Sanyal@AviFelman
      Larry Summers on BTC: 1/ I think that Bitcoin, and perhaps crypto more generally, is emerging as a kind of digital gold. And there’s a kind of social convention around ultimate risk protection assets. I think there’s a good chance that they are going to occupy that niche.

      2/ They are an inherently finite supply, and more and more people are deciding that they occupy that niche. So my best guess is that they are here to stay.

      3/ … on digital currency Do I think that there is some risk that we need to be attentive to not so much on the economic side of the foreign policy house, but on the geopolitical side .. our ability to pursue sanctions policies is going to be diminished when the dollar loses

      4/ some monopoly as a means of international payments? Yes, I do think that that is a significant risk….I think that my instincts would be to be a bit more aggressive about thinking about central bank digital currencies than I think the Fed is.

      Nice piece here: cfr.org/event/c-peter-…

      In some ways the lack of coverage around this is evidence of the supercycle theory, becoming so common of an opinion that BTC is here to stay that it’s not worth talking about even from prominent economists

      Frank Chaparro@fintechfrank
      http://Binance.US went from effectively a non-player in the US a few quarters ago to doing more than 1/4 Coinbase’s volumes ($28.39bn in April). Brian Brooks thinks he can build an exchange that’s bigger than CB with the right products, licenses, and customer service

      Image

      As one source put it, re outstanding licenses: “yeah the fact that they still don’t have texas, ny etc. is actually incredibly bullish for them.”
      dave the wave@davthewave
      Quite the picture for BTC.dom. The ratio has plunged the full height of the head and shoulders. Surely, you’d think there has to be a correction at some point….
      SantΞago R Santos@santiagoroel
      “BTC is more of a crypto commodity than currency & competes with gold as a store of value, whereas ETH is the backbone of the crypto-native economy. To the extent owning a share of this potential activity is more valuable…ETH should outperform BTC over the long run” – JP Morgan

      Alex Thorn @intangiblecoins
      As the price of #Bitcoin soared to new all-time highs in Q1 2021, so did the amount of capital invested by venture investors in the cryptocurrency ecosystem. 

      Until recently, most $ invested in the cryptocurrency ecosystem went to early-stage startups. $ invested in early stags peaked in 2018. In 4Q20, $ invested in early and later stage deals reached parity, and in 1Q21 most venture $ went to later stage startups for the first time.
      READ MORE

      Evan Van Ness @evan_van_ness
      THE BULL CASE FOR THE BULL MARKET 

      $ETH leads bull markets. $BTC leads bear markets. Nothing else in crypto is big enough to matter. By any date that you pick for “bear market is over,” $ETH has outperformed $BTC by a substantial amount.

      $BTC was first and has all the advantages of incumbency. Better name recognition, more media mentions, friendlier media, etc But Bitcoin is a small market. Digital gold. Gold is less than 1% of total wealth, most estimates have it around 0.5%
      jmbullion.com/investing-guid…

      Gold as a % of total wealth has been declining over time, because people prefer productive assets $ETH is a much much bigger opportunity.
      READ MORE

      Matthew Ballensweig@MattBallen4791
      1/ Examining the @GenesisTrading Q1 loan portfolio, there a few key stories are important to highlight: 1. Decline in $BTC borrowing demand as as % of book 2. DeFi driving growth in $ETH and alt borrow 3. Persistence of basis driving cash demand (~$2B of cash on loan)

      2/ BTC basis and funding arb still very much present- turning a lot more institutional heads to seriously look at crypto yield opps.

      3/ Monster quarter for @GenesisTrading across lending, spot and derivs with $9B+ on active loan, $35+B in Q1 spot volume and $10+ B in derivs volume – full press release here:
      businesswire.com/news/home/2021…

      kain.eth@kaiynne
      Something I’m a little concerned about given the recent interactions I’ve had with the BSC and SOL communities is that they seem to be genuinely gaining organic traction. Much more so than say EOS or Tron last cycle. I have some thoughts about this…

      Firstly Solana is pretty clearly an upgrade on the previous generation of ETH killers. Primarily because they have managed to hide the scaling trade-offs much more effectively.

      The likelihood of EOS devolving into plutocracy was called out by many people including Vitalik pretty early on, but obviously the reality was even worse than most people including myself expected. And it was fairly easy to point out where they had forsaken decentralisation.

      BSC on the other hand is like a natural experiment to answer the question, “do end users care about decentralisation?”. It seems like the answer is kind of. I’ve always argued it is developer demand that drives decentralisation rather than user demand.

      But with BSC you are seeing a bunch of forks and clones of ETH projects which very effectively routes around developer demand. You don’t need many developers if you are EVM compatible. So we have very high user demand for low fees and the market is stepping in and satisfying it.

      The real question is whether BSC/Solana have sufficient momentum to maintain a meaningful percentage of DeFi activity once we have multiple ETH scaling solutions in production. Previously I would have said no chance, now I’m not so sure.
      READ MORE

      Squish@SquishChaos
      Ethereum, The Triple Halving My report on the investment case for $ETH is finally finished. It is 79 pages long, my pride and joy, the cumulative product of years of learning and a week of insane effort.

      The impetus for this piece realizing that my thread on the $ETH triple halving was mostly interpreted as a nice meme-able crypto pump. The triple halving may become a meme, but there is a serious investment case here.
      READ MORE

      Ryan Berckmans@RyanBerckmans
      1/ Bitcoin’s cost problem Yesterday, it cost BTC holders an annualized run rate of $17B to run the bitcoin blockchain. Ethereum costs a lot, too, but the cost goes away by switching to proof of stake this year. imo, bitcoin’s cost problem is big for BTC holders. Here’s why

      2/ BTC may enjoy a compelling narrative as a store of value, however, BTC runs at a permanent net loss, in part because transaction fees are paid to miners, not to BTC holders. Yesterday, it cost BTC holders $45M to run the bitcoin blockchain.

      3/ Today, ethereum runs on a net loss because, like bitcoin, ethereum’s transaction fees are paid to miners, and proof of work is expensive in general. Later this year, ethereum is stopping mining forever and switching to proof of stake.
      READ MORE