BitGo: Crypto Water Cooler — June 21
GM. It’s Wednesday, June 21.
Newsmakers
BlackRock Applies for Spot BTC ETF Amid Strong Institutional Interest in Crypto
Despite the crypto winter and regulatory challenges, interest in cryptocurrency amongst institutional investors shows no signs of fading. A recent survey by Laser Digital, a subsidiary of Japan’s largest investment bank, Nomura, finds that 96 percent of asset managers, family offices, hedge funds, and investment funds see digital assets as an investment diversification opportunity with 88 percent saying they or their clients were considering investing.
Respondents also indicated an overwhelming preference for participating in crypto through a recognized traditional finance provider.
As if on cue, several TradFi firms made market moves last week — most notably BlackRock. The world’s largest asset manager with over $9T in assets under management (AUM) applied to the SEC to operate a spot Bitcoin ETF last week. BlackRock launched a spot Bitcoin private trust for its U.S. institutional clients last year. A spot Bitcoin ETF would give individuals and institutions alike easy, affordable access to Bitcoin, but the SEC has yet to approve one, rejecting applications from crypto firms like NYDIG and TradFi powerhouses like Fidelity, VanEck, and WisdomTree. The SEC has also rejected Grayscale’s application to convert its $13.5B Grayscale Bitcoin Trust to an ETF last year. Grayscale is in the midst of an ongoing lawsuit against the SEC over this rejection. The agency has repeatedly cited concerns about market manipulation of Bitcoin prices in previous rejections.
BlackRock’s application sparked hope for several reasons: the size and reputation of the firm; the fact that it offers hundreds of ETFs and has only had an application rejected once before; and its approach to addressing SEC concerns, which is a surveillance-sharing agreement with the Nasdaq. In previous rejections the SEC has stated that “an exchange that lists bitcoin-based ETPs (exchange traded products) can meet its obligations under Exchange Act Section . . . by demonstrating that the exchange has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets.”
In other developments this week, EDX Markets, a noncustodial crypto exchange backed by Fidelity and Charles Schwab, went live; Deutsche Bank applied for a license in Germany to custody digital assets; and investment firm Republic acquired a 9.5 percent stake in INX — a crypto broker dealer that only trades assets not considered securities by the SEC. The deal includes a non-binding agreement for Republic to purchase 100 percent of INX.
Read more →CoinDesk
Brazil’s Path to Financial Inclusion: Testing the Waters of CBDCs
With more than 200MM residents, Brazil is the world’s seventh most populous country and the most populous in Latin America. About 20 percent (34MM) of adults are unbanked, and the country had the third highest crypto adoption growth rate in 2022. All of this makes it an excellent testing ground for a central bank digital currency (CBDC). Conducted in collaboration with Visa, Mastercard, and other major payment firms along with local companies, tests began in March and will continue through 2024. The hope is to bring about greater financial inclusion through efficient, cost-effective, and democratized CBDC transactions.
Success with a CBDC would also further the country’s ambition to become a crypto hub. Unlike nearby Argentina, where crypto is popular as a hedge against runaway inflation, the Brazilian inflation rate is below 4 percent, exceeding its central bank’s hopes. Brazilians are not simply buying tokens as an investment; they’re also using digital coins to make purchases in stores. Crypto credit card use is on the rise, particularly in grocery stores but also in restaurants, for taxi fare, to pay for streaming services, and so forth. Vendors get paid in fiat while customers use crypto wallet funds.
The country is also moving forward with a regulatory regime. On June 14, Brazilian President Luiz Inácio Lula da Silva signed a law that adds more details to a December 2022 law that mandated a legal framework for digital assets. The central bank licensed crypto exchange Mercado Bitcoin this month as a payment institution and has also licensed foreign payment providers. Going forward, the central bank will create rules for exchanges, manage requirements for licenses, and provide oversight while the Comissão de Valores Mobiliários (CVM) — a securities commission — will continue to oversee assets determined to be securities.
Read more →Fortune.com ($)
Digital Sneakers and Tequila Tastings: How Web3 Could Transform Retail
Web3 technologies are having a moment in retail as brands look to transform online shopping into an immersive, interactive experience that more closely mimics the in-person one. Shoppers may soon be able to create avatars to engage with other customers and employees. Real-time human responses could replace chatbots, helping to boost engagement and retention and otherwise streamline transactions in customer-pleasing ways.
Early adopters are hopping on board, and Walmart is leading the pack with a new tech incubator program that will fund and mentor selected startups. The program will be conducted in tandem with Web3 accelerator, Outlier Ventures, which is also partnering with a Web3 fashion accelerator program, Dream Assembly Base Camp. These programs are aimed at helping startups foster customer and community engagement and build commerce and payment infrastructures as well as data infrastructures.
Web3 also featured prominently at last week’s annual, three-day, co-located D2: Retail Edition and Retail & Innovation Conference with top brands like Coach, General Mills, Liquid Death, NBCUniversal, Puma, Walmart, and more leading discussions about retail-related trends and technologies. Programming also included Web3 explorations. D2, which stands for “decentralized deciphered,” partnered with Passage Protocol to provide attendees with a free dynamic NFT that allowed them to interact with the brands in attendance. Through a QR code, the NFT provided access to a raffle and opportunities to join the D2 social communities.
In other retail-related Web3 news, footwear conglomerate Puma announced its 3D metaverse launch; called “Black Station,” people can learn about product drops while Puma Pass NFT holders will be able to purchase the Rulebreaker, a digital sneaker, and claim two digital wearables. And, Santo Spirits, Guy Fieri and Sammy Hagar’s tequila brand, launched an NFT loyalty program with tiered rewards, including a virtual tequila tasting with the two men and autographed guitars — the actual kind.
Read more →Forbes
News In Brief
Regulation and Security
Recommended by LinkedIn
Business of Crypto
DeFi and Web3
Midweek Market Pulse
Total Market Cap: $1,078,377,893,830–7 day change as of Tuesday 6/20/23 Noon EST: +3.0%
Bitcoin (BTC, +3.2%) staged a comeback this week, rebounding from the downtrend it entered after the SEC’s lawsuits against Coinbase and Binance. The top crypto was likely buoyed by the aforementioned news of BlackRock applying to launch a spot Bitcoin ETF. Without a major catalyst of its own, Ethereum (ETH, -1.2%) slid slightly.
Bitcoin dominance, the measure of how much of the total crypto market cap Bitcoin accounts for, spiked above 50% on Tuesday, its highest level since May of 2021. The surge is due to Bitcoin’s price rising while many smaller alt coins continue to slide in the wake of the SEC’s suits. Investors may be migrating out of more speculative digital assets and into Bitcoin, which is viewed as more of a safe haven.
Alt coins like Cardano (ADA, -7.3%) and Polygon (MATIC, -8.2%) that the SEC claimed are unregistered securities in its lawsuit continued to decline whereas Solana (SOL, +4.8%) went against this narrative, perhaps paring losses in a relief rally after falling over 30% in the two weeks since the SEC’s lawsuits.
Sui (SUI, +7.7%), the layer-1 created by former members of Meta Platforms’ blockchain team, enjoyed a climb up the charts as it introduced a new proposal that will enable liquid staking of Sui tokens if passed.
The Last Word
Bitcoin dominance
noun
: A measure of Bitcoin’s market capitalization as a percentage of the total digital asset market cap
/ Bitcoin dominance gauges whether alt coins are in an uptrend or downtrend versus Bitcoin and can be used to ascertain market sentiment.
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About BitGo
BitGo provides the most secure and scalable solutions for the digital asset economy, offering regulated custody, borrowing and lending, and core infrastructure to investors and builders alike.
Founded in 2013 — the early days of crypto — BitGo pioneered the multi-signature wallet and later built TSS to improve upon other companies’ MPC offerings. Between multi-sig and TSS, BitGo offers the safest technology on the market and safeguards over 600 tokens across a wide variety of blockchains.
Over the years, BitGo has expanded from offering wallets into providing a full-suite solution that lets clients hold assets safely and then put them to work.
BitGo launched BitGo Trust Company in 2018, providing fully regulated, qualified cold storage to complement BitGo Inc’s original hot wallet solution. In 2020, BitGo launched BitGo Prime, which allows its clients to trade, borrow, and lend. Moreover, BitGo also provides access to DeFi, staking, NFT wallets, and beyond, and serves as the world’s sole custodian for WBTC, or wrapped Bitcoin.
Today, BitGo is the leader in digital asset security, custody, and liquidity, providing the operational backbone for more than 1500 institutional clients in over 50 countries — a list that includes many regulated entities and the world’s top cryptocurrency exchanges and platforms. BitGo also processes approximately 20% of all global Bitcoin transactions by value.
For more information, please visit www.bitgo.com.
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