Publications

Maven’s Insights - January 2021

01 February 2021
  • The start of 2021 brought new investments into Bitcoin. Nasdaq-listed Marathon Patent Group announced that it has purchased around 4,813 bitcoin for about $150 million. The investment is part of the company’s treasury funds. Marathon argues that “holding Bitcoin will be a better long-term strategy than holding US dollars”. This is similar to the reasoning put forward by MicroStrategy which has been buying Bitcoin as part of their treasury strategy, as a hedge against the USD, for a while now, effectively giving their shareholders Bitcoin exposure. This activity was noticed by investors such as Morgan Stanley, the major US-based investment bank which reported a purchase of 10.9% stake in MicroStrategy. Finally, some of the largest university endowment funds in the U.S. such as Harvard, Yale, and Brown, buying digital assets over the past 12 months. The trend of institutional allocation into digital assets seems to increase over the past months. The view most institutions take is that Bitcoin is a hedge against macro economic developments. This view is supported by the recent opinion on Bitcoin by Ray Dalio and his fund Bridgewater in which they perceive BTC as a “gold-like asset” that can possibly protect investors against the macroeconomic risks.
  • There was positive regulatory news in January. First, the Office of the Comptroller of Currency (OCC) published an interpretive letter stating that banks in the US could run node(s) in blockchain networks. In addition the OCC said blockchain networks “may be more resilient than other payment networks”. Second, the upcoming FinCEN interpretation of the travel rule has been frozen by the new administration in the US. We previously wrote about the (harsh) interpretation of the travel rule of the previous administration. This delay shows that the new administration is considering taking a new, more positive stance to the regulatory environment in our industry.
  • More governmental news this month came from Miami. The major of the city, Francis X. Suarez, has shown great interest in the digital asset industry. The first step to embracing digital assets is the fact that he uploaded the Bitcoin whitepaper onto the governmental website. While this might be a minor step of adoption for many, Suarez has gone a step further. Citizens of Miami can now pay their taxes in Bitcoin and the mayor is actively exploring putting part of the city’s treasury into Bitcoin. This is all part of his efforts to “turn Miami into a hub for crypto innovation”.
  • What is another edition of Maven’s Insights without news from the central banks? While pretty much every central bank has mentioned their plans for CBDC this time the Bank of International Standards issued a survey on the topic of CBDC’s and stablecoins. The survey states what we already knew for a while, nearly all central banks are looking into CBDC’s. However, something more novel in that matter is the fact that central banks are also looking closely into stablecoins, with ⅔ of the surveyed central banks “studying the impact of stablecoins on monetary and financial stability.“. As per our 2021 predictions, we believe the payment use-case to take off and in doing so stablecoin adoption to become more widespread. Therefore, central banks studying that as a central bank makes sense.
  • One of the largest social media platforms (over 50M daily users) in the world, Reddit, has closed a partnership with the Ethereum Foundation. In the post, which appeared on the /r/ethereum subreddit, Reddit states “we will be increasing our commitment to blockchain.”. Furthermore, Reddit wants to use this partnership for “contributing more to the broader Ethereum ecosystem”. This is obviously an exciting opportunity for Ethereum and blockchain at large to reach a broader audience.
  • While we recently brought attention to DBS Bank of Singapore for rolling out a digital asset trading platform, other entities in Singapore are also actively exploring blockchain technology. The Singapore Exchange (SGX) is working on utilizing blockchain to speed up traditional asset trading. SGX wants to use blockchain (or DLT) technology to streamline the issuance and trading of financial products. The news follows recent trials with bond issuance and fixed income securities made by SGX which could indicate that the pilots have been successful and justify further adoption by the exchange.
  • We, Maven 11 Capital, were proud to announce our participation in the seed round of Nayms this month. As explained in our announcement we view insurance as one of the critical areas that need further development to advance the blockchain space. This is both related to digital assets in general and decentralized finance specifically. We are keen to support this amazing team as they roll out the infrastructure for the next step as an industry.
  • Download the full report Maven’s Insights.