Publications

Maven’s Insights - October 2020

29 October 2020
  • During these times of historically low interest rates, extraordinary quantitative easing and fiscal measures and exponentially increasing central bank balance sheets, we are starting to see large companies entering the digital asset space. This month Square, the NASDAQ listed payments company, announced that it has purchased 4,709 Bitcoin for the Treasury. They bought these assets at an aggregated price of $50mln as a hedge against their largely USD-denominated balance sheet. Square joins the list of companies that invested into Bitcoin recently after another NASDAQ listed company MicroStrategy and Stone Ridge Asset Management entered the space by investing a total of $425mln and $115mln in Bitcoin as a hedge against macro economic developments.
  • Another major asset manager, Fidelity, has also been outspoken about digital assets recently. Fidelity has been researching Bitcoin and published another report. It states the following on Bitcoin; “Bitcoin is a unique investable asset with compelling differences relative to traditional asset classes as well as conventional alternative investments that could make it a beneficial addition to a portfolio”.
  • PayPal announced this month that it will enable its 346 million users to buy, hold and sell cryptocurrencies directly from their PayPal account from early 2021. We previously wrote about those plans in our June 2020 monthly, as rumours about them had been surfacing for a while. PayPal customers will be able to use cryptocurrencies to shop at the firm’s 26 million merchants worldwide. Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees. There will be no additional costs imposed on merchants either, as all transactions will be settled with fiat currency at their current PayPal rates.
  • The Group of Twenty (G20) published a report on working with the IMF and the BIS to formalize the use of central bank digital currencies (CBDC) in banking systems. By the end of 2022 the G20 members, the IMF, the World Bank and the BIS will have completed regulatory stablecoin frameworks, research and selection of CBDC designs, technologies and experiments. Furthemore, the IMF and the World Bank will have the technical capabilities to facilitate CBDC transactions involving the countries by the end of 2025.
  • This month the Bank of Thailand issued their first blockchain based bond. Within two weeks of the launch, the central bank sold more than $1.6 billion worth of savings bonds. As reported by IBM, who ran the platform, the use of blockchain technology reduced the bond issuance time from 15 days to 2 days which resulted in reduced costs and removed redundant documentation.
  • MetaMask passed the 1 million monthly active users mark in October. Since last year, that number increased over 400% and can be attributed to the recent launch of MetaMask Mobile as well as significant growth in the adoption of DAOs, DeFi and Web3.0.
  • Chairman of the SEC Jay Clayton stated in a webinar that all stocks could become tokenized assets on a blockchain in the future. Furthermore, Clayton believes that the current regulatory framework is sufficient for the crypto space as it has been time-tested through many innovations already. Finally, he added that the SEC’s door is “wide open” if someone wants to show how to “tokenize the ETF product in a way that adds efficiency”.
  • BitMEX, one of the largest crypto derivatives exchanges in the world, has been on the radar of the Commodity Futures Trading Commision (CFTC) which stated that BitMEX has been facilitating unregistered derivatives trading. Similarly, in the UK the Financial Conduct Authority (FCA) has targeted crypto derivatives and decided to ban them for retail consumers in the UK starting from 6th of January 2021. It indicates that regulators are dedicated to removing bad actors from the industry.
  • Breitling announced this month that it is partnering with Arianee to issue certificates of authenticity on Ethereum for its luxury watches. Instead of relying on physical certificates, the watchmaker gives their customers a unique digital passport that certifies the origin of the watch. By using Ethereum Breitling ensures that its digital passports remain future proof.

 

  • DBS, Singapore’s biggest bank, is launching a fiat-to-cryptocurrency exchange. Dubbed “DBS Digital Exchange”. The exchange will be available to institutional investors directly, including financial institutions and professional market makers. The bank stated that it is awaiting regulatory clarity prior to going live.
  • Download the full report Maven’s Insights.