Top Stories of Last Week

Regulatory

  • FinCEN further extending comment period for proposed rule that would require crypto exchanges to gather and store counterparty information for transactions to unhosted wallets. FinCEN announced all comments are due 60 days after change is submitted to Federal Register, the U.S. government’s logbook. FinCEN previously extended comment period by 15 days for proposed currency transaction report rule and 45 days for counterparty data collection rule.
  • Office of the Comptroller of the Currency put former acting Comptroller Brian Brooks’ controversial “fair access” banking rule on hold pending review by new administration. “Fair access” rule sought to prohibit federally chartered banks from denying financial services such as lending to would-be clients on political or ideological grounds. OCC rushed to finalize rule, but it was never published in Federal Register.
  • Bank of International Settlements Innovation Hub listed priorities and programs for 2021, among which will be new platform for testing wholesale central bank digital currencies. Proof of concept platform will use multiple CBDCs to explore feasibility of faster and cheaper cross-border payments. Projects will be carried out across three Innovation Hub Centres in Hong Kong, Singapore and Switzerland.
  • Sber, Russia’s largest retail bank, applied for license with country’s central bank to issue its own digital token for corporate clients. Digital stablecoin will be tokenized form of rubles that companies hold on their Sber accounts and will allow companies to use smart contracts on Sber’s platform based on Hyperledger Fabric blockchain. Sber is first Russian mainstream company that has publicly announced application for digital asset registration.
  • Beijing and Shanghai mayors said they will both hasten development of demonstration zones for fintech and professional services over 2021, and effort will include promoting pilot application for DCEP. Report cites industry observers as saying announcements mark bigger push to promote digital currency before launch in near future.

Project Development

  • Reddit announced it was expanding work with Ethereum Foundation to provide development resources to scaling tools, saying partnership will be focused on bringing Ethereum to Reddit-scale production to launch applications like Community Points on Ethereum. Partnership could result in Reddit working on layer 2 scaling tools or pushing projects from a prototype stage to production.
  • Singapore Exchange and Temasek Holdings announced joint venture launching digital assets business focusing on capital market products, using Temasek’s knowledge in blockchain technology for digital asset business catering to products using smart contracts, ledger, and tokenization technologies. Firms are looking to partner with fixed income issuance platforms for post-trade infrastructure.
  • ConsenSys partnered with Blockchain-based Service Network to bring enterprise ledger Quorum to China’s nationwide blockchain project. ConsenSys Quorum will be available in about 80 different cities through BSN’s public city nodes throughout mainland China. BSN will include Quorum in BSN’s training programs in 2021 to accelerate enterprise adoption of blockchain technology and Ethereum-based solutions in China.

Institutional

  • Bridgewater founder Ray Dalio said he expects firm to soon offer alt-cash fund and storehold of wealth fund, adding “Bitcoin won’t escape our scrutiny.” He also stated Bitcoin was “one hell of an invention” and said it could fill growing need for alternative to gold. Hedge fund manager bestowed praise in daily newsletter, saying, “I greatly admire how Bitcoin has stood the test of 10 years of time.”
  • Coindesk reported some of largest university endowment funds in U.S. have allegedly been quietly buying cryptocurrency for past year through accounts held at Coinbase and other exchanges. Sources say Harvard, Yale, Brown and University of Michigan as well as several other colleges have been buying crypto and some of university endowment funds in question may have held accounts with Coinbase for as long as 18 months.
  • Rothschild Investment Corporation recently increased position in Grayscale Bitcoin Trust to 30,454 shares, according to filing with SEC and representing 24% increase from October. Institutional investment manager disclosed its shares in trust were worth $975,000 at end of 2020.
  • Valkyrie Digital Assets filed application for Bitcoin ETF called Valkyrie Bitcoin Fund, which would be listed on NYSE if accepted. Coinbase Custody Trust Company, LLC would serve as custodian for proposed ETF.
  • Kingfisher Capital, a North Carolina wealth manager, scooped up 10,667 shares of Grayscale Bitcoin Trust, according to recent filing with SEC. Kingfisher reportedly had no exposure to Grayscale’s product as of November 2020, which means purchase was recent.

Exchanges

  • Coinbase alerted shareholders that firm would launch secondary market for private stock on Nasdaq Private Market ahead of firm’s public market debut, saying it would provide further details to shareholders Monday. Nasdaq Private Market offers services for companies ahead of IPO, including controlled liquidity programs for pre-IPO companies looking to raise secondary capital.

Mining

  • Marathon Patent Group bought $150 million in bitcoin for around $31,100 apiece through NYDIG, becoming latest publicly traded company to swap cash treasury for bitcoin. Marathon CEO Merrick Okamoto said bitcoin buy accelerates his mining company’s transformation into “pure-play bitcoin investment option.”
  • Blockstream bought $25 million worth of mining machines from MicroBT to expand mining operations. Machines are to be deployed through Blockstream’s facilities in Canada and US.

Fundraising

  • Union Square Ventures said it will invest roughly 30% of freshly minted $250 million 2021 Core Fund in crypto-related investments. Venture capital firm said planned crypto-related investments will include holding tokens directly as well as equity in early-stage blockchain-related projects.
  • Terraform Labs raised $25 million in new round from Galaxy Digital, Coinbase Ventures, Pantera Capital and others. Stablecoin for e-commerce creator plans to use funds for building key pieces of infrastructure in Mirror Protocol for synthetics, Anchor Protocol for savings and other DeFi applications.
  • dYdX raised $10 million in Series B funding round led by Three Arrows Capital and DeFiance Capital. Startup plans to use funds to increase product offering, further decentralize platform and increase presence in China. Three Arrows was joined by Wintermute, Hashed, GSR, SCP, Scalar Capital, Spartan Group, RockTree Capital, Andreessen Horowitz and Polychain Capital. 
  • Stellar Development Foundation invested in blockchain payments company Wyre to boost support for financial applications in Stellar ecosystem. Foundation said $5 million Enterprise Fund investment in Wyre will introduce variety of payment application programming interfaces that can be used by apps on Stellar network.
  • ParaState, a project that offers Ethereum developers access to Polkadot blockchain, raised $1.3 million in seed fundraising round led by CMS Trading, with participation from Kenetic Capital, FBG Capital, and JRR Capital. ParaState provides Ethereum apps and smart contracts an on-ramp onto Polkadot blockchain, and funds will be used to expand team and launch mainnet. 

Defi

  • Grayscale Investments filed to register five new trusts for cryptocurrency assets, with several connected to DeFi space. Delaware corporate registry now lists trusts for Aave, Cosmos, Polkadot, Monero and Cardano. Filings only indicate that asset manager is laying groundwork for potential launches.

Things to Watch This Week

  • Ethereum CME Futures Launch
    • CME ETH futures will launch in one week. Barring any unforeseen last minute setbacks, this will be a big market structure development for ETH derivatives as well as spot markets. The launch will undoubtedly increase liquidity and offer institutional investors another gateway to participate in the second-leading cryptocurrency. However, it should be noted how Bitcoin’s price reacted after the launch of BTC CME futures in 2017. After reaching $20,000 for the first time ever immediately after the launch, Bitcoin proceeded to drop over the next few months, resulting in the bear market we witnessed throughout 2018. It remains to be seen what impact the launch of ETH futures trading on the CME will have on the price of Ethereum, as market conditions in late 2017 were quite different from today. Nevertheless, we’ll be closely eyeing this situation as anticipation builds for the launch.  
  • GME Reddit Fallout
    • Events from last week regarding Gamestop, Robinhood and the Reddit community board known as wallstreetbets will have our attention throughout this week. Aside from the fervor that ensued around Gamestop and a few other heavily shorted equities, some of the community’s focus was turned toward Dogecoin at one point last week, leading to DOGE experiencing over 800% returns in two days. More importantly, we need to consider the situation from a regulatory standpoint, as Janet Yellen and the SEC have both indicated that they are actively monitoring what transpired last week as well as Congress planning to host hearings that will look into how Robinhood and several other brokerages restricted trading of these equities as things began to overheat. We’ll be watching how traditional markets open tonight and continue monitoring developments throughout the week. 
    • CZ  Binance@cz_binance
      Insightful article from Ray Dalio and team about #bitcoin, with sound analysis. Their views are different from mine. Very helpful to understand their views and concerns.
      bridgewater.com/research-and-i…

      Motherboard@motherboard
      More than half of all Robinhood users own at least some GameStop stock. They are now unable to freely trade it; the app is only allowing users to close out their positions. https://vice.com/en/article/m7ak7y/robinhood-stops-users-from-trading-gamestop-stocks-other-reddit-yolo-picks…

      Alexandria Ocasio-Cortez@AOC
      This is unacceptable. We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit. As a member of the Financial Services Cmte, I’d support a hearing if necessary.

      Inquiries into freezes should not be limited solely to Robinhood. This is a serious matter. Committee investigators should examine any retail services freezing stock purchases in the course of potential investigations – especially those allowing sales, but freezing purchases.

      Mayor Francis Suarez@FrancisSuarez
      The City of Miami believes in #Bitcoin and I’m working day and night to turn Miami into a hub for crypto innovation. Proud to say Miami is the first municipal government to host Satoshi’s White Paper on government site.
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      Ryan Todd@_RJTodd
      My latest is a deep dive on one of crypto’s hottest companies: BlockFi >$8B in client balances, +125K accounts ~$100m rev in ’20 (+22x FY19) Is profitable entering 2021 Impressive to watch @BlockFiZac @FounderFlori and team execute at such a high level
      READ MORE
      Travis Kling@Travis_Kling
      #Bitcoin delivers REALLY good risk-adjusted returns over longer timeframes. How good? A portfolio of 10% #Bitcoin/90% cash has outperformed the SPX over any trailing four year period in BTC’s history.
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      CoinDesk@CoinDesk
      Ark Investment CEO Cathie Wood said the SEC likely won’t approve a bitcoin ETF until the cryptocurrency’s market cap reaches $2,000,000,000,000.
      trib.al/OHUWf1q

      Watch the full interview here: youtu.be/_PNbg4TTpuw

      Fei Strife@FeiStrife
      /1 are you wondering what all this talk about the Gamestop ( $gme ) is about? let me try and summarize it for you, @GameStop was apparently the most shorted stock in the market, a chad CEO steps in and there is renewed faith in the company,

      /2 Short sellers begin to get squeezed and a company named Citron Research publishes this tweet:
      twitter.com/CitronResearch…

      3/ this angers the members of a subreddit known as /r/wallstreetbets who believe Citron and friends are wrong about the stock. /r/wsb clearly had a bone to pick with hedge fund bros,

      4/ one of the subreddits mods posted this message “What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living,”

      5/ members of the 2m member sub start buying up $gme and short sellers have no more stock to short. @chamath joins the party and adds fuel to the fire; twitter.com/chamath/status…
      READ MORE

      Yassine Elmandjra@yassineARK
      A sensible allocation into bitcoin by institutions would have a $500,000 impact on price. Consider the opportunity cost of ignoring this.

      ARK’s Big Ideas 2021 is officially here.
      ark-invest.com/big-ideas-2021/
      Bloqport@Bloqport
      17 publicly traded companies now hold a total of 104,142 #Bitcoin worth $3.5 billion on their balance sheets Source: @BTCtreasuries
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      Matt Hougan@Matt_Hougan
      I did a webinar today with >1,000 financial advisors. According to the [live, unscientific] poll we conducted, 28% expect the price of bitcoin to exceed $100,000 within five years.

      In our live, unscientific poll:
      * Roughly 10% said they held crypto today in client accounts;
      * Roughly 30% said they planned to allocate in the next 12 months.

      Mira Christanto @asiahodl
      DeFi is the most important innovation in #crypto. The next wave will be Fixed Income Protocols Credit markets are 3x equity markets. Interest rates are the largest derivs markets DeFi will penetrate fixed-rate lending and i/r derivatives but there are no clear winners yet

      Fixed rate lending the most common lending in TradFi. DeFi has done a fantastic job of innovating with the below sectors but what’s next?
      Lending: $MKR$COMP$AAVE
      Trading: $UNI$SUSHI$CRV
      Aggregation: $YFI$RARI, $1INCH
      Synthetics: $SNX$UMA
      Insurance: $NXM$COVER
      READ MORE