Top Stories of Last Week

Regulatory

  • Russia’s central bank reportedly to pilot its own CBDC at end of 2021, according to Bank of Russia’s head, Elvira Nabiullina. Central bank executive said pilot would be carried out with limited set of users at end of next year. Bank of Russia is currently receiving feedback on its report on digital ruble published earlier in October.
  • Swiss National Bank and Bank for International Settlements plan to test CBDC in proof-of-concept stage by end of 2020, according to BIS official Benoit Coeure. BIS also plans to work with more central banks, including Hong Kong Monetary Authority and Bank of Thailand, to test cross-border usage of digital currencies.
  • China’s central bank included digital yuan in latest version of proposed banking law, giving legal clarity to regulation of national virtual currency. Proposed law recognizes renminbi in both physical and digital form, and new version will essentially clear way for digital yuan to be one and only official yuan-pegged token in mainland China. Any other legal entity or individuals can not issue or sell tokens to replace circulation of renminbi.
  • Cambodia officially launched central bank-backed digital currency “Bakong”, an initiative of National Bank of Cambodia. Bakong, which supports transactions in dollar and riel, is expected to help Cambodians make payments and transfer money between individuals using smartphones. Japanese financial technology startup Soramitsu Co was involved in designing system.
  • Newly proposed rule changes from FinCEN and U.S. Federal Reserve would, if approved, drop transaction reporting threshold under international travel rule, including those made with cryptocurrencies and digital assets. Amendments would reduce threshold from $3,000 to $250 for funds transfers and transmittals of funds that begin or end outside United States. Document includes clarification to rules to ensure they are clearly applied to transactions involving cryptocurrencies and digital assets.
  • Iran cabinet amended recent legislation on digital assets to allow cryptocurrency to be used for import funding by Central Bank of Iran. Change means legally mined cryptocurrency in Iran can only be exchanged if used to fund imports from other nations. Miners will supply cryptocurrency directly to CBI within authorized limit.

Project Development

  • Avanti Financial’s banking charter approved unanimously by Wyoming State Banking Board, becoming second chartered bank in state after Kraken Financial. Along with charter approval, banking board approved Avanti’s future issuance of Avit, a programmable electronic currency that’s redeemable at par with a U.S. dollar.
  • JPMorgan created new blockchain unit called Onyx and also announced JPM Coin is ready for commercial use. Takis Georgakopoulos, global head of wholesale payments at JPM, said a large international technology company is already using JPM Coin for cross-border payments, although company’s name was not disclose. JPMorgan has also rebranded blockchain-based network called Interbank Information Network to Liink.
  • ConsenSys announced collaboration with Societe Generale to carry out research on CBDC. Societe Generale – Forge, the bank’s digital assets arm, will provide technology and expertise as part of ongoing CBDC pilot efforts, whereas ConsenSys will be involved in looking at CBDC issuance and management, delivery versus payment and cross-chain interoperability. Societe Generale – Forge previously issued bonds worth millions of euros over blockchain, with one of initiatives involving France’s central bank.
  • MicroStrategy President Phong Le said during firm’s earnings conference call that company is looking to add to its $521 million stash of bitcoin. Additionally, company’s BTC investment is estimated to be roughly $100 million in profit. 38,250 BTC holdings worth roughly $425 million at time of purchase in August were valued at more than $520+ million during recent price surge.
  • SoFi’s application to establish new national bank granted conditional approval by Office of the Comptroller of the Currency, opening door for new bank to custody cryptocurrencies. SoFi Digital Assets was granted money transmission license as well as BitLicense by New York Department of Financial Services last year. OCC said preliminary approval is conditional pending thorough evaluation of all information available.

Exchanges

  • DBS reportedly building digital assets trading platform, according to web page that appeared briefly, but was apparently posted in error and taken down shortly after. Details of DBS Digital Exchange were they would offer trading against Singapore dollar, HK dollar, Japanese yen and USD on four cryptocurrencies: bitcoin, bitcoin cash, ether and XRP. Exchange also offering tokenization services for businesses to raise funds by issuing digital forms of securities and assets, in addition to institutional grade custodian dubbed DBS Digital Custody.
  • According to document obtained by Forbes, Binance Holdings Limited allegedly conceived of elaborate corporate structure designed to intentionally deceive regulators and surreptitiously profit from crypto investors in U.S. 2018 document details plans for U.S. company dubbed “Tai Chi entity” as a strategic bait and switch. While the then-unnamed entity set up operations in U.S. to distract regulators, measures would be put in place to move revenue in form of licensing fees and more to parent company.
  • Coinbase announced launch of Visa debit card in U.S. next year, opening up waitlist for U.S. customers with intent to distribute “in first half of next year.” Coinbase Card allows users to spend crypto funds directly from Coinbase accounts and card is accepted at any retailer that accepts Visa debit cards.
  • FTX launched trading in fractional stocks offerings, tokenized products representing shares of global firms. Products were launched in partnership with German-licensed investment Firm CM-Equity and tokenization firm Digital Assets AG. More than one dozen equity, including fractionalized Tesla, Apple, and Amazon derivatives.
  • INX Limited agreed to buy broker-dealer Openfinance Securities. INX will also acquire Openfinance’s alternative trading system, digital asset listings, client base and licenses. Terms of deal were not disclosed.

Mining

  • MineSpot announced it is opening 160-megawatt mining venue in middle of Siberia that would be largest mining farm in Russia. Venue is located near Boguchany Dam in East Siberia near one of major hydropower plants in Russia. 

Fundraising

  • Figment, a crypto staking infrastructure provider, secured $2.5 million in Series A funding led by Bonfire Ventures, with participation from FJ Labs, XDL Capital Group, Leminiscap, BKCM, and Stephan Patnernot. Figment currently runs validator nodes for more than 30 blockchain networks and currently has around $200 million in assets staked to its validators.
  • Social money startup Roll announced raising of $1 million from Fabric Ventures, IOSG, William Mougayar and others. Roll allows people with followings to create their own currency and define usefulness of that currency. Company reports that $500,000 worth of daily volume is moving through Roll system, which is now used by 250 creators.
  • Bitt, a blockchain tech startup focused on central bank digital currency applications, sold another $8 million in equity to Medici Ventures, a subsidiary of Overstock. Deal gives Overstock controlling stake in company after Medici had invested $7 million across two earlier equity deals. 

Defi

  • Balancer announced it will be available via NEAR Protocol, an Ethereum competitor which promises reduced latency and fees compared to Ethereum. Native EVM support and NEAR Rainbow Bridge will make it easier to leverage speed and cost benefits of NEAR without rebuilding codebases and abandoning existing users.
  • Audius retroactively distributed 50 million of its native AUDIO tokens to artists and listeners using platform. Audius seeks to reward content creators and listeners by using blockchain technology to increase transparency and reduce middle-men across musical supply chain. Distribution came alongside launch of AUDIO governance token on Audius mainnet.

Things to Watch This Week

  • Bitcoin Difficulty Adjustment
    • The next difficulty adjustment is due in just over 24 hours, as of time of writing, and the difficulty is expected to decrease by anywhere between 13.89% to 15.12%. This would mark the largest difficulty decrease since March 26, 2020, shortly after the mid-March market drop that saw Bitcoin fall to under $4,000. The main reasoning behind this drop is being attributed to the general narrative of Chinese miners halting operations due to the end of the wet season that occurs around this time, but some are speculating that miners are intentionally withholding their power and operations, anticipating a more economical model with lower difficulty that they can capitalize on. Nevertheless, a difficulty decrease of this magnitude only happens every so often, with the most recent decrease of this size before March 2020 being recorded on December 3, 2018, and thus warrants our attention.  
  • U.S. Elections
    • The aforementioned event will also coincide very closely with the November 3rd election being held in the U.S. It goes without mention that this period could potentially see heavy volatility in traditional markets, but it remains to be seen what effect it will have on the price of Bitcoin. In recent weeks, we’ve seen a significant decrease in the correlation of Bitcoin with the S&P 500. However, this election could bring about unprecedented events, and amidst the turmoil, Bitcoin could potentially join in on the chaos that could overtake the world. 
    • Krüger@krugermacro
      JP Morgan, from “Bitcoin is a fraud and will blow up” in 2017 to “Bitcoin’s competition with gold” in 2020. We’ve come a long way.
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      Su Zhu@zhusu
      DBS, the largest retail and commercial bank in Singapore, has soft launched their crypto/fiat trading exchange! This will immediately become the easiest on-ramp for those who bank in Singapore BTC, BCH, ETH, XRP the listed crypto assets SGD, HKD, JPY, USD the listed fiat

      Joseph Young@iamjosephyoung
      Last three months in Bitcoin:
      -MicroStrategy buys $425m in Bitcoin
      -Square buys $50m in Bitcoin
      -Stone Ridge buys $110m in Bitcoin
      -PayPal integrates crypto purchases
      -JPMorgan writes about Bitcoin vs Gold competition
      -DBS soft launches crypto exchange
      What’s next?
      iang@iang_fc
      Growing pressure in USA to treat CBDCs as a competitive issue – country v. country.
      breitbart.com/politics/2020/…
      Although curious that they blame SEC – not their jurisdiction, it’s more the Fed or Treasury (FinCEN, USSS) that deals with the dollar.
      Raoul Pal@RaoulGMI
      Bitcoin is eating the world… It has become a supermassive black hole that is sucking in everything around it and destroying it. This narrative is only going to grow over the next 18 months. You see, gold is breaking down versus bitcoin…and gold investors will flip to BTC

      And the Nasdaq is next… retail specs are going to flip to bitcoin as it eats techs lunch…
      READ MORE

      Adam Cochran@AdamScochran
      1/x Been working on a list of problems facing decentralized ownership economies. So far I’ve identified 25 key issues that I’m going to start a blog series on. To help prioritize like/heart the issues you want to hear about. I’ll do an analysis breakdown & proposal solutions:

      2/x Problem #1: Lack of ownership definition. Unclear on the roles, responsibilities, liabilities and legal rights to parts of the system, IP, and assets.

      3/x Problem #2: Securities Regulation Not if something is or is not a security, but the burden of legal fees and opinions in this space that stifle innovation.
      READ MORE

      Ryan Sean Adams – rsa.eth @RyanSAdams
      See the blue part? Those are the insider coins retail will never access until they’re dumped on you. Might as well add the pink part too, since most treasuries are “on-chain governance” insider controlled anyway. The Ethereum killers are toothless. Distribution is everything.

      Emin Gün Sirer@el33th4xor
      Are there any uses for flash loans that are actually positive? Flash loans are cool, but so far, they have been used solely to exploit vulnerable contracts.

      The Block@TheBlock__
      MakerDAO issues warning after a flash loan is used to pass a governance vote
      theblockcrypto.com/post/82721/mak…

      Qiao Wang@QwQiao
      There’s a lot of ETH bearishness recently. I’m also of the view that ETH will underperform BTC in the next bull cycle. But only slightly. And I want to explore arguments for why this thesis may be wrong, ie, why ETH could outperform BTC.

      The pro-BTC argument goes: it took years for institutions to finally get onboard with the “digital gold” narrative. There’s no way they’ll get comfortable with ETH in this cycle.

      What this argument misses is that there’s also a significant % of the population who don’t get the “digital gold” narrative, but are more comfortable with the “tech platform” narrative that ETH represents.

      And remember these “digital gold” institutions (not the early individual adopters) are a bunch of boomers. Of course it takes them a while. The tech people are a lot nimbler and adapt more quickly. So it’s entirely possible that the ETH narrative spreads faster in the next cycle.

      And most of this new inflow from tech people is likely going to be in ETH because ETH is the best index play.

      It might be the case that the “digital gold” institutions have more capital to deploy than the pure “tech platform” ones. But it also takes a lot less money to move ETH than to move BTC given their relative size.

      Meanwhile proof-of-stake (soon) and fee burning (not soon) will fundamentally upgrade ETH’s value accrual mechanism. We’ve seen so cases of shitcoins that have no real users but accrue significant value thanks to their token economics. (Not implying ETH is a shitcoin).

      Anyway I’m bullish both BTC and ETH. Slightly more BTC than ETH, but open to being wrong for the aforementioned reasons. Either way there’s no reason to pick only one.

      Willy Woo@woonomic
      First signs of de-coupling behaviour spotted between BTC and stocks. Buying from an influx of new users provides price support preventing speculators from trading the correlation downwards. NVTP approximates a valuation for BTC with organic investor velocity on the blockchain.
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      Jeff Dorman, CFA @jdorman81
      A thread on Uniswap $UNI The rationale for owning $ETH as an investment is that Ethereum is a clear market leader, w/ strong growth/usage, & tangible fee generation even though none of this value accrues to ETH token holders yet. This is actually the same bull case for $UNI 

      Uniswap is the clear market leader in DEX trading. Like “ETH vs smart contract protocols”, there’s not even a close second to $UNI in DEX Trading (courtesy of @DuneAnalytics)

      With $ETH, EIP-1559 & ETH 2.0 are constantly in “the future”, but the $UNI “Fee Switch” is happening w/ near certainty Feb 16, 2021 (180 days after governance began). $UNI will then join a small list of tokens like $HXRO $MKR $FTT $BNB that accrue real value from earnings

      And these $UNI earnings are not immaterial (courtesy of @tokenterminal)

      Expected annual earnings for Uniswap: $380mm (based on $360mm avg daily trade volume @ 0.30% fee) -> $66mm distributed to $UNI token holders after the fee switch (1/6th of fees) -> 13% divd yield -> 1.30x Price/Sales -> 7.5x Price to distributed CFs That’s really cheap!
      READ MORE