Building Blocks #41

Your route to web3 alpha in the MENA region. Whether you’re a seasoned HODLer or just getting into crypto - we’ve got something for everyone to keep you ahead of the curve. By the community, for the community - Building Blocks.

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Birds Eye View (vs Last 7 Days)

💵 Overall Crypto Market Cap: $3.61 Trillion (+11.7%)

🔶 BTC Dominance: 54% (-0.4 PPT)

💵 Price Snapshot:

🟠 Bitcoin: $102855 (+8.2%)

🔵 Ethereum: $3410 (+3.17%)

⚫ XRP: $3.25 (+41%)

🟣 Solana: $219 (+14.7%)

Crypto set for ‘dozens of smaller victories’ in 2025: Grayscale Exec

Following the crypto industry's "two major breakthroughs" with spot crypto exchange-traded funds and Republican Donald Trump's US election victory last year, 2025 is expected to bring numerous "incremental achievements," according to a senior Grayscale representative.

"For this year, I anticipate we'll see dozens of incremental wins across the industry," Grayscale's head of research Zach Pandl stated during a recent webinar, pointing to increased institutional participation, more comprehensive congressional regulations, and the possibility of Bitcoin becoming part of US reserves.

During a Jan. 15 conversation with Digital Assets Council of Financial Professionals founder Ric Edelman, Pandl suggested it's not "completely unrealistic" to envision Bitcoin reaching $500,000 by 2030.

Pandl, who has been engaging with increasingly crypto-interested fund managers who previously avoided the sector for ten years, suggests greater institutional adoption could emerge from pension and endowment funds.

Many pension and endowment funds have begun implementing crypto into their portfolios, with some approvals potentially coming within six to twelve months, according to Pandl.

Some portfolio managers are already dedicating up to 5% to crypto investments despite being "in early stages of exploration," Pandl noted.

Additionally, Pandl expects non-US sovereign wealth funds to enhance their crypto exposure in upcoming months.

Discussing Ethereum, Pandl highlighted its vast institutional adoption potential, describing it as potentially the most significant open-source software project ever developed.

He added that institutional investors might also focus on decentralized finance, real-world assets, and artificial intelligence tokens through private funds.

Pandl's positive outlook comes five days before Trump's inauguration. The next US president is anticipated to lead the most pro-crypto administration yet.

Dubai based Sigma Capital’s $100M fund plans to invest in 100 Web3 projects

Investment firm Sigma Capital has unveiled a $100 million fund focused on cryptocurrency ventures, announcing its intention to support Web3 startups both in the United Arab Emirates and internationally.

The firm stated that the funding will target early-stage Web3 enterprises and liquid tokens across multiple sectors including decentralized finance, blockchain infrastructure, metaverse, gaming, and real-world asset (RWA) tokenization markets.

The investment will also encompass fund-of-fund distributions, implementing an investment approach that spreads capital across multiple funds.

Spearheading the fund is Vineet Budki, who previously served as CEO and managing partner at Cypher Capital, a Web3 investment firm that backed several blockchain initiatives, including Mysten Labs, Sei Network, and Manta Network.

Polygon co-founder Sandeep Nailwal remarked on the fund's launch, highlighting it as evidence of the UAE's growing significance as a blockchain technology center.

In December, Blockdaemon's Andrew Vranjes shared that the UAE has become a prime location for blockchain ventures, citing supportive regulations and increasing talent migration.

A clear indicator of the crypto market's bullish trend is the increase in venture capital investment. As per reports, crypto and blockchain VCs invested $13.6 billion in 2024, representing nearly 5% of total VC investments that year.

Galaxy Research predicts that lower interest rates and improved regulatory clarity in the United States will drive a 50% increase in crypto VC activity this year.

"Crypto VC fundraising typically follows broader crypto market patterns, and we expect significant catching up over the next four quarters," noted Galaxy Research's Alex Thorn and Gabe Parker.

Similar to Sigma Capital, HashKey Capital's CEO Deng Chao identified RWA tokenization as a key focus for 2025. In an interview, Chao predicted substantial growth in RWA funding rounds this year.

Projections suggest the RWA tokenization industry could expand fifty-fold within five years, potentially reaching $30 trillion.

Circle’s USDC beats Tether USDT in Market Cap surge during 2024

Circle's USD Coin stablecoin emerged as the frontrunner in market capitalization growth among all stablecoins in 2024, marking a significant recovery from its downturn in 2023.

According to Circle's third annual State of the USDC Economy Report published on Jan. 14, USD Coin's circulation experienced a remarkable 78% year-over-year increase, surpassing the growth rates of all other global stablecoins.

The substantial USDC market expansion in 2024 came after a challenging 2023, during which the stablecoin's market value plummeted by approximately 45% following the Silicon Valley Bank's (SVB) collapse.

USDC, ranking second in market capitalization behind Tether's USDt, began 2024 with a market value of $24.4 billion and witnessed a dramatic 79% increase, reaching $43.9 billion by year-end.

Despite this impressive growth in 2024, USDC remains approximately 22% below its peak market cap of $55.9 billion, which was achieved in June 2022.

The stablecoin faced significant challenges in 2023 due to banking complications when Circle was unable to access portions of USDC's $40 billion reserves held at SVB. This situation triggered a substantial USDC sell-off, causing the stablecoin to temporarily lose its peg to the US dollar.

In comparison, Tether's USDT demonstrated more steady growth in 2024, with its market cap growing approximately 50% from $91.7 billion at 2023's close to $137.5 billion by the end of 2024.

Unlike USDC, USDT's 50% growth in 2024 represented continued expansion, with its market cap reaching unprecedented heights last year.

Since late 2020, USDT has achieved a 552% market cap increase, while USDC has shown a more substantial 1,135% growth.

However, USDT's market value has grown by 74% since 2021, while USDC's market cap shows a modest 8.8% increase from late 2021.

In its 2025 outlook, Circle attributed USDC's rapid adoption to increasing regulatory clarity in the stablecoin sector, where its industry leadership continues to set standards for safety and transparency.

Circle highlighted the significance of regional regulatory frameworks, particularly the European Markets in Crypto-Assets Regulation (MiCA), as the company achieved a milestone by becoming the first MiCA-licensed stablecoin issuer in July 2024.

"While USDC's expansion has been widespread, we've observed particularly robust adoption in regions where clear regulatory frameworks are facilitating deeper integration of digital assets into traditional financial systems, such as the European Union under MiCA and emerging markets where remittances and cross-border transactions are essential," a Circle spokesperson stated in an interview.

Despite Circle's positive stance on regulatory certainty, industry leaders like BitGo's stablecoin director Ben Reynolds have emphasized that regulatory ambiguity and transparency concerns will continue to pose significant challenges in 2025.

The report also emphasized USDC's extensive reach, noting its availability across more than 180 countries as part of its mission to serve 1.5 billion unbanked or underbanked individuals worldwide.

Throughout 2024, USDC's key markets were concentrated in regions with high remittance activity, including Latin America, Africa, and Southeast Asia, where stablecoins serve as an efficient alternative to traditional payment systems, according to a Circle spokesperson.

The company anticipates significant regulatory developments for stablecoins in several countries, including the United Kingdom, Brazil, Singapore, and Japan in 2025.

"The UK, Brazil, Singapore, Japan and other jurisdictions globally are currently developing consistent and transparent regulatory frameworks for stablecoins. This will ensure industry-wide adherence to high operational standards," the representative explained.

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BlackRock launches new Bitcoin ETF on Cboe Canada

Investment giant BlackRock is debuting a fresh Bitcoin exchange-traded fund (ETF) on Cboe Canada, as announced by the Canadian securities marketplace on Jan. 13.

The ETF aims to provide Canadian investors exposure to BlackRock's premier US spot Bitcoin vehicle, iShares Bitcoin Trust (IBIT). The fund will place "all or substantially all of its assets" into IBIT, according to Cboe Canada's announcement.

Named iShares Bitcoin ETF, the Canadian offering will share the same ticker, IBIT, as BlackRock's US instrument. Units priced in US dollars will be available under the ticker IBIT.U, the exchange announced.

"The iShares Fund offers Canadian investors a [...] method to access bitcoin exposure while eliminating the operational and custodial challenges of direct bitcoin ownership," stated Helen Hayes, BlackRock's head of iShares Canada.

The fund will join approximately twelve other Bitcoin ETFs currently trading on Canadian exchanges, based on Nasdaq data.

BlackRock's US IBIT ETF has become the globe's most successful BTC fund. Following its January 2024 launch, the fund has attracted over $37 billion in net inflows, as reported by Farside Investors.

Collectively, US Bitcoin ETFs recorded more than $35 billion in total net inflows for the year, averaging roughly $144 million in net inflows per trading day, according to Farside.

This calculation includes over $20 billion in net outflows from Grayscale Bitcoin Trust (GBTC), which the investment firm introduced in 2013, initially as a non-listed trust. GBTC imposes notably higher management fees compared to recent competitors.

In November, US BTC ETFs surpassed $100 billion in net assets for the first time, Bloomberg Intelligence data shows. Analysts at Steno Research predict Bitcoin ETFs will draw approximately $48 billion in additional net inflows during 2025.

Bitcoin has "evolved into [a] more significant element [...] of investors' portfolios fundamentally" as they increasingly look to protect against geopolitical uncertainty and inflation, investment bank JPMorgan noted in a December report, referencing the "record capital inflow into crypto markets."

Rising institutional investments could trigger positive demand shocks for Bitcoin, potentially driving BTC's value significantly higher in 2025, according to asset manager Sygnum Bank's December assessment.

Malaysia considers crypto policy after talks with UAE and Binance founder CZ

The Malaysian administration is currently considering implementing a cryptocurrency framework that could potentially legitimize the sector and transform the country's financial infrastructure.

Malaysia's Prime Minister, Datuk Seri Anwar Ibrahim, held discussions about potential cryptocurrency regulations with representatives from Abu Dhabi and Changpeng "CZ" Zhao, the creator and previous chief executive of Binance, one of the largest digital currency platforms globally, according to the New Straits Times report on Sunday.

Anwar stressed Malaysia's necessity to implement crypto-friendly policies to remain competitive in global financial advancement.

"I engaged in extensive talks with Abu Dhabi's leadership and Changpeng Zhao, who co-established Binance, the world's biggest cryptocurrency exchange platform," Anwar reportedly stated to the NST following his three-day formal visit to Abu Dhabi.

"This transformation is occurring rapidly and demands equally swift responses. We believe Malaysia cannot afford to lag while constrained by traditional financial systems," he remarked, further stating:

Anwar indicated that UAE policymakers express readiness to establish strong collaboration with Malaysia in developing its cryptocurrency regulatory framework.

"We must examine this thoroughly, abandon outdated business practices, and implement meaningful digital finance policies," he explained.

Following the policy's implementation, further comprehensive analysis from various Malaysian entities, including the Treasury, Securities Commission, and Bank Negara Malaysia, would be necessary to address potential issues, Anwar noted.

Anwar's push for crypto-friendly regulations in Malaysia follows recent industry investigations by the nation's securities authority.

On Dec. 27, the Malaysian Securities Commission directed major cryptocurrency exchange Bybit to stop operations within the country, citing unauthorized digital asset exchange activities.

This action followed the regulator's earlier decision to include crypto wallet provider Atomic Wallet in its investor alert listing of unauthorized operators within the country on Dec. 23.

Besides Atomic Wallet, the alert listing presently contains prominent industry players including Paxful, KuCoin, and MEXC, suggesting these platforms operated cryptocurrency exchanges in Malaysia without proper registration.

NYDFS launches exchange program with Bank of England on crypto expertise

The Superintendent of New York Department of Financial Services, Adrienne Harris, has unveiled a collaborative exchange initiative designed to enhance understanding of how international regulators manage emerging payment systems and digital currency matters.

According to a January 13 statement, Harris announced the launch of the Transatlantic Regulatory Exchange, initially facilitating staff exchanges between NYDFS and the Bank of England, focusing on digital asset expertise. The superintendent emphasized that this program was "essential for regulatory alignment."

The TRE program's exchanges, starting with the Bank of England in February, will extend for a minimum of six months. Harris indicated that participants would be expected to bring back enhanced knowledge of financial services regulation, particularly regarding digital assets.

As the primary crypto regulatory body in New York State, the NYDFS oversees numerous companies benefiting from the region's business and regulatory framework. The agency introduced the BitLicense framework in 2015 and has recently granted approval to projects like Ripple Labs' RLUSD stablecoin in December.

In Britain, organizations such as the Bank of England face their own regulatory challenges regarding digital assets. The bank's regulatory division, the Prudential Regulation Authority, is set to assess institutional exposure to cryptocurrencies and develop digital asset regulations for the UK.

Harris, serving as New York's regulatory chief since 2022, previously held a position in President Barack Obama's administration. During a Ripple Swell conference in October, she urged American crypto companies to maintain open dialogue with regulators before launching new services.

The potential outcomes of this exchange program for both nations remain uncertain. While the Bank of England continues to investigate the potential of a central bank digital currency, the upcoming US administration has indicated resistance to implementing any government-backed digital dollar.

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