Top Stories of Last Week

Regulatory

  • Office of the Comptroller of the Currency announced federally regulated banks can use stablecoins to conduct payments and other activities in letter addressing whether national banks and federal savings associations could participate in independent node verification networks. Letter states that blockchains have same status as other global financial networks, such as SWIFT, ACH, and FedWire. It also specifically mentions use of stablecoins for transactions, saying blockchain networks can mitigate costs for cross-border transactions as a “cheaper, faster, and more efficient” means of payment.
  • FinCEN announced intention to amend Bank Secrecy Act’s Foreign Bank and Financial Accounts regulations in rulemaking notice that means Americans must report if they have more than $10,000 in cryptocurrencies with foreign financial or virtual asset service providers. No timeline for when new proposal might be published or implemented was provided. Rule change would bring FBAR rules around crypto holdings in line with cash held outside U.S. by citizens. 
  • Ban on sale of crypto derivatives and exchange-traded notes began in U.K. Financial Conduct Authority now forbids sale, marketing and distribution of CFDs, options, futures and ETNs that reference cryptocurrencies to retail investors. Regulator reckons it will prevent in region of £53m in harm, but industry commentators have raised concerns that it will instead drive consumers onto unregulated exchanges or offshore beyond FCA’s reach.
  • Tetragon Financial Group, lead investor of Ripple’s $200 million Series C, is suing company to “enforce its contractual right to require Ripple to redeem” Series C preferred stock. Tetragon also wants to block Ripple from using any cash or other liquid assets until payment is made. Company has asked court for temporary restraining order, a preliminary injunction, and expedited trial.
  • Italian Banking Association affirmed support for implementation of sovereign European digital currency by beginning pilot studies on digital euro project. Association is working with its research and development arm, ABI Lab, and commercial banks in country to develop experimental digital euro. Italian enterprise network firm SIA will assist consortium in technical feasibility studies.

Institutional

  • Skybridge Capital confirmed launch of new bitcoin fund and said exposure to bitcoin has already reached $310 million. Increase in position was mostly due to market appreciation, with small amount of additional purchases.
  • Greenpro Capital (NASDAQ:GRNQ) announced it intends to set up Bitcoin Fund for investment. Greenpro provides cross-border financial services for businesses and high net-worth individuals, and will use subsidiary exchange CryptoSX to acquire bitcoin. CEO CK Lee said he’s instructed Greenpro investment bankers to raise debt in Q1 up to $100 million for BTC investment, and also plans to invest Greenpro’s cash in BTC.
  • Online lending startup Social Finance Inc said it has agreed to go public through merger with Social Capital Hedosophia Holdings Corp V, a blank-check acquisition company led by Chamath Palihapitiya. Deal values SoFi at around $8.65 billion and is expected to provide up to $2.4 billion in cash proceeds to SoFi. SoFi added crypto trading to its SoFi Invest platform in 2019.  

Project Development

  • Ukraine’s Ministry of Digital Transformation inked memorandum of understanding with Stellar Development Foundation, agreeing to cooperate on number of digital asset-related initiatives including assisting Ukraine’s central bank on its digital currency efforts and development of strategy for virtual assets in Ukraine.
  • Shenzhen giving away another 20 million digital yuan, worth $3 mil, as part of ongoing test of China’s CBDC. Shenzhen government will give away 100,000 red packets via lottery to residents with each packet worth 200 digital yuan, or $30. Lottery-winners will be able to spend digital yuan between January 7-17 among over 10,000 shops, restaurants and supermarkets in Shenzhen.
  • ShapeShift announced it is getting rid of entire trading desk and routing orders through DeFi applications in bid to get rid of KYC regulations. Firm will gradually phase out centralized trading activity and KYC policy in favor of decentralized alternative as it becomes 100% DEX-based for customers. Exchange has now integrated with multiple DEXs including Uniswap, Balancer, Curve, Bancor, Kyber, 0x, mStable and more.
  • Crypto custodian BTSE launched ERC-20 token that represents Monero on Ethereum blockchain. Represented by ticker symbol WXMR, Wrapped Monero is fully backed by Monero at ratio of one-to-one and is secured by BTSE.

Exchanges

  • Bakkt reportedly in advanced talks to go public via merger with special purpose acquisition company VPC Impact Acquisition Holdings, which is affiliated with Victory Park Capital. Deal would value combined company at more than $2 bil and could be announced as soon as next week.
  • Bithumb reportedly signed MOU with Nexon, the multi-billion dollar gaming conglomerate, to acquire exchange at price of 650 billion won ($460 million). Nexon will reportedly work with one of major shareholders in Bithumb, Vidente, to buy out exchange and take control with a 65% stake in Bithumb.
  • Argentina’s Ripio acquired BitcoinTrade, second-largest crypto exchange in Brazil, in bid to increase footprint across Latin American crypto market. Financial terms of the deal were not revealed.
  • Coinbase acquired trade execution startup Routefire, with mission of bringing advanced trading infrastructure to cryptocurrency markets through suite of institutional products. Additional resources in trading infrastructure realm has proven to be a necessity, as Coinbase has seen intermittent outages in recent days as bitcoin has surged to highs. Terms of deal were not disclosed.

Mining

  • Marathon Patent Group announced completion of $200 million capital raise, which company plans to use to pay for major purchases of bitcoin miners from Bitmain, as well as further expand business. Marathon has already bought 103,060 miners that, once delivered and deployed, are expected to produce approximately 10.36 EH/s in hash power. 15,200 units scheduled to be shipped in Q1 2021.
  • Canaan released Avalon Immersion Cooling Miner A1066I, a device designed to be liquid-cooled by submerging electrical components in special dielectric fluid that carries heat away directly from boards. Canaan claims each unit produces 50 TH/s for power consumption of 3,400 watts, while each tank reaches up to 7,200 TH/s and 306 kilowatts of energy usage when fully stacked.
  • Bitcoin mining firm Bitfarms closed fully subscribed private placement of common shares worth CAD$20 million, or over US$15 million. In total, sale consisted of 8,888,889 shares.

Fundraising

  • BC Technology Group, parent company of crypto platform OSL, raised HKD697 million (~US$90 million) in form of top-up share placement. Morgan Stanley was appointed as sole placing agent of 45,000,000 placing shares owned by firm, representing approximately 13% of BC Group’s issued share capital. BC Group CEO Hugh Madden said raised funds will help meet institutional trading demand and bolster software-as-a-service business.
  • TaxBit, a cryptocurrency tax automation software firm, secured investments from venture arms of PayPal and Coinbase, plus existing investor Winklevoss Capital. Amount invested not disclosed in announcement. TaxBit automates cryptocurrency tax compliance for consumers, businesses and exchanges.

Defi

  • DeFi aggregator Furucombo raised $1.85 mil in seed funding backed by SevenX Ventures, Defiance Capital, 1kx, Multicoin Capital, and Aave founder Stani Kulechov, among others. 

Things to Watch This Week

  • Bitfinex deadline for submission of documents to OAG
    • Bitfinex and Tether have till Jan. 15 to submit documents to the NY attorney general’s office regarding an investigation into their financial relationship and the matter of an $850 million loss of funds involving Crypto Capital, a Panama-based payments processor Bitfinex had allegedly used during this period. This case has been ongoing for quite some time, but the approaching deadline is allegedly the final delay that is being allowed by the courts. Although it is simply a deadline for submission and any additional reports will unlikely follow immediately after, the situation itself has reignited long-held arguments about Bitfinex/Tether’s legitimacy. In the short term, these debates will have markets on edge and potentially cause volatility as we approach the deadline. It will be important to keep an eye on how the situation develops.  
  • End of Trump Administration Countdown
    • The countdown has begun to the end of the Trump administration, whether it be naturally on Inauguration Day, via a second impeachment, or VP Mike Pence invoking the 25th Amendment to remove him from office. Events from last week at the U.S. Capitol have many concerned that Trump’s actions could become even more unstable over the next week, leading to these potential outcomes being considered. The risk of further rash actions have markets on edge and should be monitored throughout the week. 
    • Tatiana Koffman @tatianakoffman
      #Bitcoin on the front page of Financial Times

      Jeremy Allaire@jerallaire
      1/ Breaking major news from US Treasury OCC, the largest US banking regulator (@USOCC), with new guidance allowing US banks to use public blockchains and dollar stablecoins as a settlement infrastructure in the US financial system. https://occ.gov/news-issuances/news-releases/2021/nr-occ-2021-2.html…

      2/ This is a huge win for crypto and stablecoins – $USDC

      3/ The new interpretive letter establishes that banks can treat public chains as infrastructure similar to SWIFT, ACH and FedWire, and stablecoins like USDC as electronic stored value. The significance of this can’t be understated.

      4/ Decentralized, permissionless, open source and internet mediated software is literally becoming the foundation for not just the US financial system but for the global economy.

      5/ We are on a path towards all major economic activity being executed on-chain. It is tremendous to see such forward thinking support from the largest regulator of national banks in the United States.

      6/ This paves the way for the use of leading dollar digital currencies such as USDC as a mainstream payment medium for all forms of payments and settlement, and helps put the US in a leadership position in embracing the power of public blockchains.
      READ MORE

      Alex Krüger@krugermacro
      RIOT Blockchain is now valued at $1.15 billion. At that price, a back of the envelope calculation indicates they are paying $2,333 per S19 bitcoin miner and turning that into $33K. A frothy 14x. h/t/ @TZHammer
      Anthony Scaramucci@Scaramucci
      We @SkyBridge entered the #bitcoin market in Nov/Dec with a now ~$300mm position, and today launched a #bitcoin fund offering for accredited investors. We believe we’re in the early innings of a new asset class with tremendous upside.
      https://www.prnewswire.com/news-releases/skybridge-enters-bitcoin-market-with-new-allocation-fund-offering-301200301.html
      Mira Christanto@asiahodl
      JPMorgan #Bitcoin New Target = > $146,000 “as it competes with gold for investment flows”. Why so bearish?
      David Puell@kenoshaking
      $BTC: Few experiments with @glassnode‘s liquidity-supply metrics that were recently published, shown below (as of Jan. 3). 1/ A brief thread…
      Image
      2/ First, a look of market caps by liquidity, which serve as different versions of @coinmetrics‘s free-float market cap, based on alternate heuristics. Market cap: 610 billion. Illiquid market cap: 487 billion. Liquid market cap: 34 billion. Highly liquid market cap: 97 billion
      Image
      READ MORE

      Messari@MessariCrypto
      To date, investors have spent nearly $55 million on metaverse digital land and in-game items.

      The metaverse landscape is currently dominated by five players:
      @AxieInfinity
      @cryptovoxels
      @decentraland
      @SomniumSpace
      @TheSandboxGame
      messari.io/article/metave…

      Joseph Young @iamjosephyoung
      Absolutely massive. Korean media reporting Nexon, a multi-billion dollar gaming conglomerate, is preparing to acquire Bithumb, South Korea’s biggest crypto exchange. Valuation? below ~$460M. This is big for Bitcoin and the local crypto industry if the deal goes through. (1/3)

      Bithumb is the biggest South Korean crypto exchange by volume but has had major issues in the past. Nexon’s acquisition would improve the image around the most dominant crypto trading platform in the local market. (2/3)

      Nexon founder Kim Seong-ju will work with Vidente, a major stakeholder in Bithumb, to buy out the company and take control of the firm. Report says Nexon plans to take 65% of Bithumb. (3/3)

      Nothing finalized yet, hence “preparing.”

      Peter Brandt@PeterLBrandt
      Bitcoin $BTC is redefining the concept of “overbought.” Bull markets become and remain overbought. Major bull markets become overbought majorly. Historic bull markets become historically overbought. Red arrows mark midpoints of parabolic advances

      BTW, here is what the violation of the 2015-2017 parabolic advance looked like at the top in Dec 2017 from a Dec 21, 2017 Twitter post. Sorry for bad quality.

      Raoul Pal@RaoulGMI
      Does anyone have a handle on when Coinbase IPO is? Its going to suck a lot of institutional liquidity out of the space as it’s an equity that is easy to buy and will likely cause a short term, significant top.

      Its just a thought but… Let’s say there is a $100bn of institutional money ready to come into BTC in the next 6 months and $XX bn retail. Crypto is impossible to buy for some and hard(ish) for others.

      Then imagine an equity is launched that is worth $60bn on the grey market. If you are a fund manager, then why not just own Coinbase to get exposure? Easy. No, it ain’t bitcoin, but it will move sort of like it and you don’t have to beg your investment committee or trustees.

      Retail – well, they can now just buy on Schwab in 3 seconds. BTC exposure without the pain of new accounts, fear over hacks and all the other FUD. So, rational choice – buy Coinbase, regardless of whether good or bad as a company… Its BTC for Dummies.

      Job done. Boxes ticked. Move on. Get rich. (well, last part might work or not) Sadly, it soaks up $60bn of demand (or more) for BTC. Others who hate the bearer asset custody model will switch to rest their minds and also integrate into their prime brokerages or RIA accounts.

      That absorbs a lot of future demand. Maybe a few months worth and the institutional buying slows down… market corrects. All perfectly normal and reasonable. ..Then it goes to the moon. See 2013 for details. Who knows… but worth thinking about.