Top Stories of Last Week

Regulatory

  • Goldman Sachs issued 81-page report stating DC/EP, China’s planned national virtual currency, could be more attractive alternative to existing digital payment services provided by fintech companies in cashless environment and would account for 15% of total consumption payments in ten years. It cited anonymity enabled by separation of bank account and digital yuan wallet, offline payment and interconnectivity with various payment options as contributing to digital yuan’s success. Other projections in report include DC/EP to reach 1 billion addressable users, 1.6 trillion rmb ($229 billion) in issuance, and 19 trillion rmb ($2.7 trillion) in annual Total Payment Value in ten years. 
  • Anthony Scaramucci’s SkyBridge Capital signaled two of its funds, SkyBridge G II Fund LLC and SkyBridge Multi-Adviser Hedge Fund Portfolios LLC, may seek exposure to digital assets in series of filings with SEC. Documents are meant to give SkyBridge green light to invest in other funds that have money in crypto markets or in companies supporting the ecosystem.
  • SEC issued no-action letter in response to request from avatar social platform IMVU issuing VCOIN digital asset under certain conditions. Commission will allow firm to offer token without registering as security. To abide by no-action letter, IMVU needs to keep stablecoin from looking like investment opportunity, needs to make token continuously available in unlimited quantities and at fixed price of $0.004, and won’t promote listing or trading of token on third-party platform.
  • Deutsche Bank’s research team published latest edition of Konzept periodical, in which they state CBDCs will replace cash in long term. Bank said coronavirus pandemic has accelerated use of digital payments over cash, and trend will eventually lead to CBDCs taking over. Marion Laboure, a macro strategist at Deutsche, said developed nations need to overcome two key challenges for issuance and adoption of CBDCs: Low interest rates and cultural/ privacy norms.
  • Digital asset custodian Anchorage applied to U.S. Office of the Comptroller of the Currency seeking national charter to convert to national bank. If application is approved, Anchorage would be first crypto company to get national bank charter, allowing it to do business in all 50 states and give Anchorage clear authority to act as qualified custodian for institutional investors.
  • Listing of China Construction Bank’s blockchain-based debt issuance bonds has been delayed at request of issuer until further notice, according to statement from Fusang Exchange where they were due to be traded. CCB planned to raise up to $3 billion in total through bond issuance, with initial tranche of $58 million due to launch for live trading this week.
  • SEC Chairman Jay Clayton announced he will leave role at end of this year after leading regulator for 3.5 years. Under his leadership, regulator has consistently rejected proposals for bitcoin ETF on grounds of concerns about fraud and market manipulation. SEC has also taken numerous actions against crypto ICO projects under his watch, though he has said token issuances can be effective way to raise funds as long as rules are followed. Clayton’s decision to step down comes ahead of impending change of presidential administration in White House.
  • Airbnb prospectus for IPO filed with SEC says company’s “future success will… depend on our ability to adapt to emerging technologies such as tokenization, cryptocurrencies and new authentication technologies.” It further lists distributed ledger and blockchain technologies as being possibly key at a future time.

Project Development

  • Mariner Wealth Advisors, a registered investment advisory whose network of independent financial advisors manage $29 billion, announced its 346 FAs will soon have access to bitcoin markets through separately managed account set up by crypto firm Eaglebrook Advisors. Bitcoin SMA will let Mariner FAs trade, custody and calculate tax burdens on clients’ behalf when fully rolled out later this year.
  • Zcash completed first halving at block height 1,046,400 to trigger event that cuts miners’ rewards from 6.25 ZEC to 3.125 ZEC and rolled out major upgrade that does away with Founders Reward. Miners will continue to receive 80% of block rewards, but remaining 20% will be divided among Major Grants Fund (8%), ECC (7%) and Zcash Foundation (5%).
  • 30 Japanese firms, including MUFG, Sumitomo Mitsui, Mizuho, crypto exchange DeCurret, Accenture Japan, Daiwa Securities Group, and Nomura Holdings, are set to trial private digital currency next year to improve payments. Two-layered digital currency model has common area, the core function of blockchain-based digital currency, and an additional area which implements business logic and smart contracts, to maximize programmability.
  • Galaxy Digital acquired two firms as it seeks to become “go to” platform for institutional access to digital assets. Two new portfolio firms are DrawBridge Lending, a white glove service for borrowing and investing in digital assets, and Blue Fire Capital, which focuses on providing two-sided liquidity for futures markets and digital assets. Terms of deals were not disclosed, but Galaxy did say move would bring DrawBridge’s $150 million in third-party assets to firm.

Exchanges

  • OKEx announced it will resume crypto asset withdrawals by November 27. News of resumption comes over month after OKEx suspended withdrawals because exchange’s founder Star Mingxing Xu was taken away by Chinese police to assist investigation. Rumors that Xu might soon be released from law enforcement surfaced Thursday. 
  • Binance Holdings Limited sued Forbes Media LLC for defamation over story last month that purported to reveal regulatory evasion tactics employed by exchange. Suit claims Forbes and two writers, Michael del Castillo and Jason Brett, harmed Binance by publishing story that contains numerous false, misleading and defamatory statements and denies list of allegations in story of “Tai Chi” documents. Binance demands that Forbes take down article and pay punitive damages to be determined at trial. 

Mining

  • Bitcoin mining pools representing over 54% of network’s current hashrate signaled support for protocol upgrade Taproot, with Bitmain’s Antpool and Slushpool joining other pools in Poolin’s Taproot Activation initiative. Taproot aims to improve transaction privacy and enhance Bitcoin’s smart contract functionality. 

Fundraising

  • Fireblocks closed $30 million Series B funding round led by Paradigm and joined by existing investors including Cyberstarts, Tenaya Capital and Galaxy Digital. Paradigm co-founder and managing partner Fred Ehrsam has also joined Fireblocks’ board of directors as part of deal. Series B to be used to expand global operations to meet institutional and retail market demand by providing tools for secure storage and transfer of digital assets. 
  • DEX aggregator DEX.AG raised $3.1 million and is rebranding to Slingshot. Round was led by Framework Ventures, with participation from Electric Capital, IDEO CoLab, Coinbase Ventures, Winklevoss Capital, Digital Currency Group, Robot Ventures and more.
  • OXIO announced $12 million Series A funding round, led by Brazilian VC monashees and Atlantico Capital, with participation from FinTech Collective and Multicoin Capital. OXIO allows brands to offer telco-type services by turning mobile data into tradeable digital asset using tokens on blockchains.
  • NFT platform Mintbase closed $1 million seed funding round led by Sino Global with participation from D1 Ventures, Block Oracle Capital, and Arweave, among others. Funding allows team to hire developers and designers to prepare for testnet launch on NEAR before end of this year.
  • Mask Network, a protocol that allows users to send encrypted messages, cryptocurrencies and even dapps over Twitter and Facebook, announced $2 million funding round co-led by HashKey and Hash Global. Other participants included Alameda Research, Sino Global and Balaji Srinivasan.

Other

  • Mexican billionaire Ricardo Salinas Pliego, the founder of Grupo Salinas, declared 10% of his liquid portfolio is now in bitcoin, with other 90% of investments tied up “in precious metals miners.”
  • Thomas Fitzpatrick, a managing director at Citibank, penned report drawing on similarities between 1970s gold market and bitcoin. In report intended for bank’s institutional clients, Fitzpatrick pointed to bitcoin’s weekly chart and used technical analysis of prior highs and lows to determine target of $318,000 by Dec 2021.

Things to Watch This Week

  • ETH 2.0 Phase 0 Launch
    • Ethereum’s possible launch of Eth 2.0 phase 0 has reached the halfway mark, with the deposit contract to activate that phase showing 268,576 ETH has been locked by validators at time of publication. This represents roughly 51.28% of the required amount that must be reached for Beacon Chain deployment. Although it looks unlikely that we’ll get the requisite number of ETH staked by Nov 24 for a December 1st launch, the amount of support has increased significantly over the weekend, with larger players such as Dubai investment firm IBC Group transferring $10 million worth of ETH to the deposit contract. Ethereum’s move above $500 coincided with this increase in deposits to the contract, so we’ll be keeping an eye on this activity throughout the week as we get closer to the long-awaited final launch date for Eth 2.0.
  • Bitcoin CME Futures Expiration
    • Open interest in bitcoin CME futures hit $1 billion last week before retreating slightly below the mark thereafter. But the market will witness over 70k bitcoin options expire later this week on Nov 27. Although heightened volatility is expected as it usually is before large expiry dates, recent expirations have had little impact on the price of Bitcoin. Nevertheless, this expiration comes at a time where Bitcoin has seen seven bullish weekly candles in a row, so the possibility of a pullback should not be ignored and will need to be monitored throughout the week. 
    • Clark Moody@clarkmoody
      Now tracking the aggregate Bitcoin held in corporate treasuries on the Dashboard
      Ryan Selkis@twobitidiot
      Bitcoin is now #16 vs. other global currencies by M1. AND fresh all-time highs this week versus the + Indian Rupee (#14) + Russian Ruble (#26) + Turkish Lira (#35) + South African Rand (#37) + Brazilian Real (#38) + Argentine Peso (#50) + Iranian Rial (#56)
      CryptoQuant.com@cryptoquant_com
      $BTC market cap hit the all-time high (329 Billion USD)
      CryptoQuant.com @cryptoquant_com
      By linear calculation, we’ll see the $ETH 2.0 mainnet on Jan 15, 2021. #eth #eth2 #phase0
      We’ll see 16,384 validators on Jan 15, 2021 as well.

       
      The EW Guy@TheEWGuy
      These violent delights will have violent ends….
      Su Zhu@zhusu
      investment bank trading desks in asia frantically building out crypto exposure products for their large clients as we speak
      Sam Trabucco@AlamedaTrabucco
      So, what is BTC doing right now? I don’t *know* what’s driving a lot of it directionally (I do have theories, of course, but I don’t exactly know), but given that “up” is the direction it’s chosen to go in general, there is some headway I can make in dissecting what’s going on.

      So, first off, why “up”? There’s been a lot of discourse about this — some reasons for BTC to go up I’ve seen postulated include lots of institutional buying, increased adoption, “whales,” outflows from faddish products back into BTC, influence from other markets, etc.
      READ MORE
      Peter Brandt@PeterLBrandt
      During the 2015-2017 bull market in Bitcoin $BTC, there were 9 significant corrections with the following averages: 37% decline from high to low 14 weeks from one ATH to the next ATH Since the early Sep low there have been two 10% corrections
      Image
      Squeeze@cryptoSqueeze
      Consolidations are getting shorter without much retracement. Blow-off top is coming soon.
      Image
      Ray Dalio@RayDalio
      I might be missing something about Bitcoin so I’d love to be corrected. My problems with Bitcoin being an effective currency are simple… (1/5)

      They are that 1) Bitcoin is not very good as a medium of exchange because you can buy much with it (I presume that’s because it’s too volatile for most merchants to use, but correct me if I’m wrong)… (2/5)

      2) it’s not very good as a store-hold of wealth because it’s volatility is great and has little correlation with the prices of what I need to buy so owning it doesn’t protect my buying power, and… (3/5)
      READ MORE

      Wu Blockchain(Chinese Crypto Reporter)@WuBlockchain
      Exclusive: Wu learned that Huobi, China’s largest exchange, is trying to acquire Japan’s largest exchange Bitflyer and Korea’s largest exchange Bithumb. The price of Bitflyer is US$500 million. However, as Huobi is investigated by the Chinese government, both will be suspended.
       
      Bitflyer is Japan’s largest crypto exchange with 2.5 million users. Bithumb is South Korea’s largest cryptoexchange. According to Coingecko’s spot data, Bithumb ranked 12th, Bitflyer ranked 19th, and Huobi ranked 7th.
      The globalization of Huobi is relatively slow. Most are Chinese employees. Investment, users and revenue mainly come from China. In November 2019, Huobi announced its withdrawal from the US market. Japan and South Korea are the only remaining international market parts.
      Huobi also recognizes the risk of relying too much on the Chinese market, so it is very urgent to expand overseas markets. But Japan and South Korea are not a good investment target. Their users are very closed, and the government has super strict supervision.
      This also shows that Huobi’s financial situation is very good. With the rapid rise of Huobi Contract derivatives and other businesses this year, a large amount of profits can be used for acquisitions. Bloomberg once disclosed that Huobi’s revenue in 2019 was approximately $680m..
      …the profit margin is estimated to be 50% or higher. Due to the sharp rise in currency prices this year, Huobi’s revenue is expected to rise by more than 50%.
      Both acquisition negotiations lasted for a while, but due to the sudden investigation in early November, both acquisitions will be suspended until the Chinese government’s investigation end. Founder of Huobi is not allowed to leave China since 2017.