Top Stories of Last Week

Regulatory

  • French Finance Ministry set to implement stringent new measures for country’s cryptocurrency sector, including hardening KYC rules for crypto firms and regulating crypto-to-crypto transactions. Reason for proposed stricter measures attributed to recent terrorist attacks on France, after French police arrested 29 people suspected of funding Islamist extremists in Syria using cryptocurrency. First proposed measure decree will mandate full KYC for all crypto transactions, including crypto-to-crypto transactions. Other proposed rule change is mandatory registration for crypto-to-crypto exchanges.
  • CFTC chairman Heath Tarbert intends to resign early next year. Tarbert’s term was set to expire in 2024, which also coincided with deadline for CFTC’s holistic framework for crypto assets. Tarbert firmed up cryto regulation during his tenure by asserting that ether is a commodity and falls under CFTC’s purview. SEC Enforcement Division director Stephanie Avakian will also leave post at end of year. Avakian led creation of SEC’s Cyber Unit, which addressed blockchain technology and digital asset violations. Deputy Director Marc P. Berger will fill vacancy left by Avakian as Acting Director.
  • Paxos General Trust filed application for national trust bank charter from U.S. government, which would broaden range of services offered and geographic area to which it can offer services. If approved, application would mark first time a steward of digital assets was regulated at both state and federal levels within U.S. to hold cryptocurrencies and execute duties of regular trust bank.
  • Crypto payments firm BitPay applied to Office of the Comptroller of the Currency to organize federally regulated bank called BitPay National Trust Bank. Total capitalization the national bank would receive for shares issued would fall just under $12 million, with 120 million shares to be issued.
  • U.S. Representative Maxine Waters, who chairs House Financial Services Committee, issued letter requesting President-elect Biden to rescind or monitor all cryptocurrency-related guidance issued by Office of Comptroller of the Currency, including ruling that national banks may hold stablecoin reserves as service to bank customers and that federally chartered banks and federal savings associations may provide cryptocurrency custody services for customers.
  • Monetary Authority of Singapore approved licenses for Ant Group Co, Grab Holding Inc., Sea Limited, and Greenland Consortium out of 14 applicants that had to meet list of requirements and licensing pre-conditions before MAS granted banking licenses. Approved digital banks will be able to start operating from Singapore in early 2022.

Institutional

  • MicroStrategy announced it raised $650 million via senior convertible note offering as part of push to buy more bitcoin. Final figure is $250 million more than when it first made announcement. Move follow’s MicroStrategy $50 million purchase of bitcoin last week, with its currently known holdings now above 40,000 BTC.
  • DBS Bank of Singapore announced digital assets exchange trading to start this week. It will also provide tokenization of securities and other assets, and bank-grade custody for digital assets. SGD, USD, HKD, and JPY will be tradable against bitcoin, ether, bitcoin cash and XRP. Security token offering will comprise regulated platform for issuance and trading of digital tokens backed by financial assets, such as shares in unlisted companies, bonds and private equity funds.
  • Massachusetts Mutual Life Insurance Co. announced $100 million investment in bitcoin and $5 million equity stake in NYDIG. NYDIG provided MassMutual with $100 million buy.
  • JPMorgan announced it executed blockchain-based repo transaction using JPMCoin two months after unveiling rebrand of blockchain unit Onyx and its stablecoin-like product going into production. Bank plans to make product available to other counter-parties in future, with Goldman Sachs having already conducted successful trade simulations with BNY Mellon serving as tripartite agent.
  • Fidelity Digital Assets will allow institutional customers to pledge Bitcoin as collateral against cash loans in partnership with BlockFi. Fidelity Investments will hold digital asset and not make loans itself, and BlockFi will risk-manage volatility of Bitcoin by offering cash worth 60% of loan backed by digital asset.
  • BBVA poised to enter cryptocurrency trading and custody space, according to Coindesk sources, with launch of Europe-wide crypto initiative from Switzerland. Expectation is to be live Jan 2021, and BBVA is rumored to have integrated same custody solution for digital assets, called SILO, as Russia’s Gazprombank.
  • Standard Chartered’s fintech investment unit, SC Ventures, and Northern Trust to launch U.K.-based cryptocurrency custodian for institutional clients called Zodia Custody, which is currently pending approval by U.K.’s FCA. Company will provide custody services for bitcoin and ethereum, initially, with litecoin, bitcoin cash and XRP to follow. Zodia expected to begin operating in London in 2021.
  • Bitwise Asset Management announced shares of its crypto index fund will begin public quotation on OTC markets under BITW ticker, effectively making index fund tradeable using brokerage accounts. Bitwise reported crypto index fund contained $120 million in assets under management.

Project Development

  • Chinese city of Suzhou launching another trial of China’s digital yuan initiative. Suzhou government announced it will give away 20 million yuan, or about $3 million, in form of DC/EP via 100,000 red packets in a lottery before annual Double 12 online shopping festival. Lottery winners can spend free digital yuan from December 11 to December 27 at retail shops and selected online shops.
  • Hong Kong Monetary Authority said it is working with People’s Bank of China to test digital yuan use cases and is currently discussing technical pilot testing of using e-CNY for making cross-border payments. No clear timeline yet for official launch of digital yuan in city. 

Fundraising

  • Latin American crypto exchange Bitso raised $62 million Series B funding round led by fintech VC firms QED Investors and Kaszek Ventures. Also involved in round were Coinbase Ventures and Pantera Capital. Nigel Morris, co-founder and managing partner of QED Investors, and Nicolas Szekasy, co-founder and managing partner at Kaszek Ventures, are also joining board of Bitso.
  • S&P Global and State Street Corp. announced $15 million investment in Lukka, the blockchain data startup set to power upcoming cryptocurrency indices from S&P Dow Jones. CPA.com, the for-profit arm of American Institute of Certified Public Accountants, also participated in Series C.
  • YIELD.app, a DeFi banking platform, raised $5 million in hybrid funding round led by Alphabit and Digital Strategies. Funding came from multiple sources including BnkToTheFuture, PALCapital, Yeoman’s Capital and Chronos VC. YIELD allows users to earn returns from investing in DeFi products and sets out to simplify learning process associated with new sector.

Defi

  • Curv, a custody startup that specializes in multi-party computation, teaming up with MetaMask to allow institutions to be able to invest in DeFi protocols with institutional-grade custody options.

Things to Watch This Week

  • Mt. Gox Rehabilitation Plan Deadline
    • The latest deadline for the Mt. Gox rehabilitation plan is expected this week on Dec. 15. Users have already been subjected to two postponements in the deadline previously as they await some form of resolution on the payout scheme for the 140,000 Bitcoin that Mt. Gox trustees still hold, worth around $2.6 billion at today’s prices. Although no indications have yet been given, users of the exchange who lost their bitcoin are hoping to receive around 15% of their losses, yet lack of clarity on how the reimbursement figures will be calculated is adding to the complications surrounding the case. Although the general sentiment is an expectation for further delays in the ruling, a potential decision could have significant ramifications on the markets, so we’ll be watching closely for further updates. 
  • Brexit / U.S. Covid Relief Package Negotiations
    • The dominant focus for markets this week will be on Brexit talks, as Britain and the E.U. agreed to extend a deadline on trade negotiations in an attempt to avoid a no-deal outcome before Dec. 31. Additionally, the U.S.’ stimulus talks will also play a significant role in this week’s outlook, as House and Senate negotiators agreed to split the stimulus package into a $748 billion proposal for small business loans, jobless benefits and vaccine distribution and a $160 billion proposal for state and local aid for businesses and other entities. Resolutions on either front will undoubtedly factor into the performance of traditional markets and thus determine the possible direction Bitcoin takes as we hover around all-time high figures. We’ll be keeping a close eye on developments throughout the week.   
    • Jeremy Allaire@jerallaire
      1/14 The rise of crypto has brought policy and regulatory issues to the forefront and are going to become massively important very quickly. The departing administration and the incoming Democratic forces are both eager to leave their mark.

      2/14 The stakes are very high for society and the economy; the far-left wants to paint crypto as an anti-big tech and consumer protection issue, the far-right wants to paint crypto as a national security threat; the libertarians and moderates see the human economic potential.

      3/14 Big banks want to limit it, tech entrepreneurs and silicon valley want to foster the innovation and disruption it heralds for the world.
      READ MORE

      Willy Woo@woonomic
      My best estimate is 1.7% of the world population has exposure to Bitcoin. 1.3% is the lower bound.
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      Bitcoin crosses the chasm in 2021. Buckle up for the ride.
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      At 1.7% Bitcoin hasn’t even started on this adoption s-curve. It’s about to etch a path, at current growth, it will be one of the fastest climbs in history yet.
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      Hans HODL@hansthered
      Corporations now hold $17 Billion USD of #Bitcoin on their balance sheets…. that we know about.
      Source: bitcointreasuries.org twitter.com/hansthered/sta…

      Muneeb@muneeb
      BREAKING: Reuters on the expected changes to US trading and securities status of the Stacks cryptocurrency.
      https://reuters.com/article/crypto-currencies-blockstack-idUSL1N2IM0JH…

      Marco Santori@msantoriESQ
      1/ If true, this is amazing. Unprecedented. This would represent the first ever transmogrification of a token from a security to a non-security, where the journey was explicitly blessed by the SEC.

      2/ “Dude I don’t care about a new internet or staxxx or whatever” You should. The question of how a utility token can enter the world a security but then become a non-security has been open – painfully open – for years. SEC just blessed one very specific answer.

      3/@muneeb is really the one who should be doing this thread, since he lived this struggle. But from what I could see as a lawyer sometimes involved in Stacks transactions, it has been a long and complex road to compliance, complete with forks and detours.

      4/ Blockstack published its whitepaper in 2017, but when it came time to sell tokens, they didn’t follow the SAFT framework (SEC Reg D), and they didn’t do an ICO (SEC jail).

      5/ Instead, they structured a more complex side-by-side offering: One sale only to non-US persons, under SEC Reg S. PLUS One sale to US persons, under SEC Reg A+.
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      Hasu@hasufl
      They all fall eventually and Ray Dalio is that close. Source: just now in a Reddit AMA
      (h/t @RainDogDanceold.reddit.com/r/IAmA/comment…
      Jeremy Allaire@jerallaire
      1/30 Just this week, $USDC crossed over 3 Billion in circulation, and has handled over 230B in on-chain transactions. We *are just getting started*! Here’s how we got here, and here’s the path to 1 Trillion USDC in circulation.
      medium.com/centre-blog/us…
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      Mira Christanto@asiahodl
      Chief Global Strategist & Head of Emerging Markets Equity @ Morgan Stanley Investment Mgmt ($20 bn AUM) Ruchir Sharma: “…fearful that central banks led by the US Federal Reserve are debasing the value of their currencies, many people have bought bitcoin in bulk since March.”
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      Dave Chapman@IamDaveChapman
      Will #Bitcoin end the dollar’s reign? @MorganStanley Chief Global Strategist: “Digital currency poses a significant threat to greenback’s supremacy.” “The dollar’s reign is likely to end when the rest of the world starts losing confidence that the US can keep paying its bills.”
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      Raoul Pal@RaoulGMI
      A few things to make you think… If bitcoin is the digital pristine collateral, the size of global gov bond market is $123trn. Pretty amazing opportunity for bitcoin.

      The size of the global custody system is $23 trn That will accrue to bitcoin and more likely maybe ETH.

      The settlements layer is over $4 QUADRILLIAN per annum Probably BTC and ETH and other blockchains, including private ones.

      My hunch is BTC is a perfect collateral layer but ETH might be bigger in market cap terms in 10 years for the reasons above. Money and collateral is just the base layer. Everything builds on top. The store of value is collateral, the trust layer and exchange of value is bigger
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      Avichal Garg (Electric Capital) @avichal
      2/ There are 1500 new developers coming in to crypto every month! The number of new devs is growing for the first time since 2017. 15.3k new devs through Oct 2020, compared to 12.6k in all of 2017 and 27.5k in 2018. Dev growth follows price so perhaps we see more devs in 2021

      READ MORE