Top Stories of Last Week

Regulatory

  • FinCEN announced it will reopen proposed rulemaking period for additional 15 days for reporting rule that would require exchanges to store name and address info for customers transferring over $3,000 in crypto per day to private crypto wallets, and another 45 days for rule that would require exchanges to file currency transaction reports for customers transacting in over $10,000 per day. 15-day extension means that Treasury Secretary Steven Mnuchin, who is said to be spearheading effort, will be out of office by time comments close.
  • Gary Gensler expected to be named chairman of SEC in next several days by President-elect Joe Biden. A former chairman of CFTC, Gensler served as key financial regulator for Obama administration and also served in Treasury Department during Clinton administration. At MIT’s Sloan School, Gensler taught course on cryptocurrencies and blockchains, calling technology “a catalyst for change in the world of finance and the broader economy.”
  • U.S. Office of the Comptroller of the Currency announced Chief Operating Officer Blake Paulson will become Acting Comptroller of the Currency, replacing Brian Brooks who said he is officially stepping down on January 14, 2021.
  • SEC’s Acting Enforcement Director Marc Berger will leave agency this month. Berger assumed SEC’s top investigative post and presided over prosecution of Telegram ICO and unregistered securities suit against Ripple.
  • Anchorage became federally chartered digital asset bank by obtaining national bank charter from Office of Comptroller of Currency, giving it designation of qualified custodian under SEC. With banking charter, Anchorage Digital Bank National Association can provide sub-custody services for financial institutions. 

Project Development

  • Dan Larimer left Block.one, the company that raised $4 billion to build EOS blockchain. Larimer co-founded company and had served as chief technical officer since April 2017. Block.one confirmed departure, saying Larimer “left to pursue new personal projects.”
  • Fireblocks partnering with staking infrastructure providers Staked and Blockdaemon to offer hosted proof-of-stake services for Ethereum 2.0, Polkadot and Tezos tokens. In return for maintaining the service, Fireblocks takes a 10% slice of the yield the staker earns
  • Propine, a Singapore-based digital asset custody provider, announced it has been awarded capital markets services license from MAS after graduating from MAS FinTech Regulatory Sandbox. Firm also exits sandbox with what it claims is first ISO 27001 certification, an international standard providing framework for preserving confidentiality and integrity of vital data, for crypto custody provider.

Institutional

  • Morgan Stanley boosted stake in MicroStrategy by almost 650,000 shares since end of Q3, according to filing made with SEC, and now owns 792,627 shares, bringing total ownership in company to 10.9%. Shares of MicroStrategy have soared over 300% since company bought its first bitcoin on Aug. 11, 2020.
  • Bakkt inked business combination deal that will result in ICE subsidiary becoming publicly traded company. Agreement will see Bakkt merge with VPC Impact Acquisition Holdings, a Victory Park Capital SPAC, to create Bakkt Holdings and will be listed on NYSE with expected valuation of $2.1 billion. Gavin Michael, former head of technology of Citi’s Global Consumer Bank, is joining Bakkt as CEO. Investor presentation released in connection with new plan also notes cryptocurrencies could grow fivefold by 2025 into $3 trillion market.
  • Deltec Bank & Trust, Tether’s Bahamas-based bank, announced it was investing customer funds in bitcoin, which raises new questions about whether USDT stablecoin, in theory backed by cash and “cash equivalents,” as well as “other assets and receivables made by loans,” is actually backed by bitcoin.
  • HSBC has allegedly begun restricting customers in the U.K. from transferring funds to or from crypto exchanges and HSBC bank accounts, according to report in The Sunday Times. Unclear as to why restrictions have been placed, as no reply from bank has yet been given.
  • NYDIG acquired Digital Assets Data to enhance crypto research and analytics offerings for institutional base. Digital Asset Data’s co-founders will join NYDIG as head of product and to oversee mergers and acquisitions.
  • Visa called off acquisition of Plaid, the fintech firm serving as fiat bridge for number of crypto and DeFi applications, in wake of DOJ’s lawsuit that sought to block deal. DOJ filed civil antitrust suit on Nov. 5, 2020 to stop merger, claiming Visa is monopolist in online debit.

Exchanges

  • Nexon representative said that firm “has not invested in Bithumb and has no plans to acquire company,” clarifying claims to previously alleged sale of South Korean crypto exchange Bithumb by local media.

Mining

  • Chinese sports lottery firm 500.com announced entering of purchase agreement to acquire bitcoin mining machines, expecting to issue $14.4 mil-worth of Class A ordinary shares as consideration to acquire mining machines from unnamed seller. Company will issue around 11.8 million shares valued at $1.21 per share, with transaction expected to be completed in first quarter of this year to acquire S17, T17 and S9 mining devices from Bitmain and M20s from MicroBT.
  • Poolin launched ERC-20 token backed by its bitcoin hash rate capacity in effort to bridge PoW mining and yield farming. Token called pBTC35A represents 1 TH/s of hashing power owned by Poolin at power efficiency of 35 Joule per TH. Users who stake pBTC35A in one of two liquidity pools on Mars Protocol can receive rewards in form of Mars governance token as well as wBTC.
  • Galaxy Digital announced launch of miner financial services and proprietary mining operations. Galaxy Digital Mining will integrate existing business lines to miner-focused financial services, including lending, investment, and risk management offerings, and will also oversee proprietary mining operation.
  • Mining company Bitfarms closed second private placement of shares worth CAD$20 million (US$15 million) a week after closing another $15 million placement. Proceeds will fund acquisition of additional mining machines and expansion of mining facilities.

Fundraising

  • Arca announced it closed $10 million Series A round of funding, led by RRE Ventures with additional participation from Alex Tisch, President of Loews Hotels & Co. and coalition of financiers led by Littlebanc Advisors. James Robinson, Founder and General Partner of RRE, will join Arca’s advisory board.
  • Conflux received over $5 million research grant from Shanghai Science and Technology Committee and Changning District government to develop public chain’s research. Project will also support aerospace supply chain proposed to be built on Conflux Network. Conflux’s project has also been included in latest Five-Year Plan by Shanghai government.
  • Fidelity Investments’ international subsidiary Fidelity International increased investment in BC Technology Group Ltd, operator of crypto exchange OSL. FIL Limited purchased 3.3 million shares of BC Group for HK$52.3 million (US$6.7 mil), bringing ownership stake to 6.29%.
  • Storage and infrastructure network Filestar received US$5 million in form of grant from Hong Kong’s HashKey Capital to steward Filestar’s network before decentralized autonomous organization is established. Filestar said it aims to improve upon Filecoin and its distributed storage mechanism by removing initial pledge collateral requirement.

Defi

  • Internet hosting company Cloudflare unveiled direct gateway to support distributed web by connecting to domains hosted on Ethereum Name Service and Interplanetary File System by new indexing service. New resolver for distributed web gives alternative way to resolve queries to responses where IPFS content indexed by Ethereum Name Service can be accessed.

Things to Watch This Week

  • Biden Administration
    • After a relatively quiet conclusion to last week for crypto markets, all eyes are set on the inauguration of Joe Biden this week. Aside from any more turmoil that Trump enacts in his last few days, the attention will now shift to Biden’s “First Ten Days” memo, which promises a shock-and-awe campaign for his first days in office to signal a dramatic change for America and global affairs. It will be important to keep an eye on traditional market’s reactions to the events that unfold throughout the week, as signs of positivity in American affairs could provide crypto markets with a much-needed boost in sentiment after last week’s correction. 
  • Bitfinex-Tether Resolution
    • Last week’s deadline for Bitfinex to produce documents requested by the NY Attorney General related to a loan Tether allegedly provided Bitfinex to cover up the loss of $850 million in funds passed without any further notice. With no answers as to whether said documents were received, this situation will need to be monitored throughout the week. In the meantime, speculation has risen to a crescendo, with several heavyweights in the industry coming to Tether’s defense after a blogpost titled Bit Short: Inside Crypto’s Doomsday Machine began making the rounds last week. Clarity is needed and until further notice from the NYAG office, the debate will continue to hang over crypto markets for the foreseeable future. 
    • Elias Simos@eliasimos
      Addresses with more than 1k $BTC [twitter.com] continue growing at the expense of all others–even as this most recent downturn is taking effect. While you were selling, whales were gobbling up your Bitcoin…
      Image[twitter.com]
      Image

      Previous benchmark for reference:

      Addresses with more than 1k $BTC are growing much faster than all other clusters, since Oct 15 2020. The herd is…here?!
      Image

      Vijay Boyapati@real_vijay
      1/ Coinbase did 3.5 billion dollars of volume on #Bitcoin [twitter.com] alone in the last 24 hours.

      My guess it they did about 5-7B of total volume for a PROFIT somewhere in the ballpark of $100m to $175m *in one day*. There will be massive demand for their IPO.
      Image

      2/ As much as I dislike Coinbase, their IPO is going to be a major catalyst for the entire market when it happens. A lot of capital from the stock market is going to flow into the #Bitcoin [twitter.com] market in this way.

      3/ It is a perfect time for an IPO. Wall Street and retail will be dazzled by the bull market profits and won’t understand the cyclical nature of the business – that exchanges make the vast majority of profits in a short period during the bull and suffer long dry spells afterward

      Alex Saunders @AlexSaundersAU
      Retail has arrived. @PayPal [twitter.com] cleared $242M in crypto sales yesterday. That’s nearly double the previous record.
      Image

      CoinDesk@CoinDesk
      Tether minted a record 2 billion USDT last week.
      Report by @zackvoell https://trib.al/PrqPkwp

      Sam Trabucco@AlamedaTrabucco
      BTW, to connect some dots here — a lot of the people seeking access to a coin like USDT *aren’t* doing so via creation. They’re often doing so via just sorta buying it in the markets — and they’re buying a LOT, and REALLY aggressively.

      The premium with which USDT trades to $1 is pretty volatile as a result — as I type this, the average BTC/USDT market (as compared to BTC/USD) is trading about 15bp lower, implying USDT = $1.0015 or so. And that’s all from people AGGRESSIVELY selling BTC vs. USDT to get USDT.

      And note, *these* are the best markets to use to determine where USDT is trading — the combo of BTC/USDT and BTC/USD markets, e.g., are WAY more liquid than any exchange’s USDT/USD market, so the prices from these (even though it’s a two-leg trade) matter way more.

      Brian Brooks@BrianBrooksOCC
      Decentralized finance, or DeFi, is coming. The banking system and the rest of us need to get ready.

      Bryan Hubbard@BryanKHubbard
      Get ready for self-driving banks by @USOCC’s @BrianBrooksOCC #DeFi #Cryptocurrency
      https://ft.com/content/c1caca5b-01f7-41be-85a4-3ecb883f2417… via @financialtimes

      Mark Cuban  @mcuban
      Watching the cryptos trade, it’s EXACTLY like the internet stock bubble. EXACTLY. I think btc, eth , a few others will be analogous to those that were built during the dot-com era, survived the bubble bursting and thrived, like AMZN, EBay, and Priceline. Many won’t

      Along the way MANY fortunes will be made and LOST and we find out who has the stomach to HODL and who doesn’t. My advice ? Learn how to hedge.

      As during the dot-com bubble “the experts” try to justify whatever the pricing of the day is. Crypto , much like gold , is a supply and demand driven All the narratives about debasement, fiat, etc are just sales pitches. The biggest sales pitch is scarcity vs demand. That’s it

      ceteris paribus@ceterispar1bus
      tough thing about crypto markets now is that the biggest risk is prob macro related. unless catastrophic regulation gets passed it’s basically number go up szn until shit hits the fan and cools off all markets. makes looking at crypto adoption cycles in isolation less useful imo.
      jack@jack
      The reason I have so much passion for #Bitcoin [twitter.com] is largely because of the model it demonstrates: a foundational internet technology that is not controlled or influenced by any single individual or entity. This is what the internet wants to be, and over time, more of it will be.
      DCinvestor | Aftab@iamDCinvestor
      It makes sense for every centralized crypto exchange (CEX) to IPO this cycle into the hype. After this cycle, fiat on-ramps will be covered by mainstream banks & brokerages, and most token-to-token trading will occur on-chain. What’s the use for CEXes then?

      Ryan Watkins@RyanWatkins_
      Uniswap is a globally accessible, always available, decentralized exchange with programmatic liquidity. At its current pace to start 2021 it may facilitate more than $25 billion in trading volume in January. How much is it worth?

      Mira Christanto@asiahodl
      @UniswapProtocol [twitter.com] and DEXs are off to a roaring start with volumes to smash Sept-20 highs. But how valuable are DEXs actually? We price the largest in the world, $UNI [twitter.com]. Thread
      READ MORE [twitter.com]