The Weekly Wrap - 02 July 2021

Jul 2, 2021

1. DAOs treated as LLCs

The Facts:

  • On July 1, a new law in Wyoming concerning decentralized autonomous organizations (DAOs) went into force.
  • The law classifies DAOs as a form of limited liability companies (LLCs).
  • DAOs can be algorithmically managed or member managed.

Why it’s important:

  • DAOs are a typical way to manage decentralized protocols. They are used, for example, in many DeFi protocols such as Uniswap, Aave or Compound.
  • The legislation provides regulatory clarity for the treatment of DAOs within traditional laws, and might lead to a stronger presence of DAOs in the analog world.
2. Twitter and WWW NFTs

The Facts:

  • Twitter is engaging in the NFT space and handing out 140 NFTs.
  • The NFTs are available on on Rarible, an NFT marketplace, with the cheapest being already priced at 3.3 ETH (ca. $7’000).
  • This week, an NFT of the original World Wide Web code was also sold for $5.4 million.

Why it’s important:

  • NFTs continue to attract interest from mainstream media and investors. A large company like Twitter entering the space speaks to the longevity of the concept of NFTs.
  • Current applications mostly focus on art and digital property. There exist, however, other applications of NFTs – for example, Uniswap is using NFTs to represent liquidity provider positions in their v3.
3. Binance faces regulatory scrutiny

The Facts:

  • The UK’s Financial Conduct Authority (FCA) published a consumer warning on June 26 saying that Binance Markets Limited and Binance Group are not authorized to “undertake regulated activity” in the UK.
  • It later clarified that this does not equal a full ban of Binance’s activities.
  • Binance also had to close down its service to customers from Ontario.

Why it’s important:

  • As the crypto industry and overall market capitalization of the space grows, it faces increased regulatory scrutiny and interest in potential risks to financial stability.
  • In the longer term, a dialogue with regulators is crucial and will open up the space to more participants, especially from the institutional side.

Number of the Week

total stablecoin market capitalization

4. Compound launches Treasury

The Facts:

  • Compound launched a new platform called “Treasury” targeting institutional investors, with traditional onboarding procedures.
  • The platform offers a 4% p.a. yield on USD.
  • It uses the Compound protocol in the background to generate yield, coming from regular USDC lending rates as well as the COMP liquidity mining program.

Why it’s important:

  • Compound’s new platform represents an easy interface to DeFi, which is needed to expand the scope of DeFi and might push assets locked in DeFi to new highs.
  • Other DeFi protocols, such as Aave, are also looking to attract institutions with new products. These might come with some restrictions on the otherwise permissionless nature of DeFi.

What has been holding up real world assets for years is the basic question of legal recourse – how do you legally enforce a claim by a decentralized organization (DAO)?

5. BIS encourages CBDCs

The Facts:

  • The Bank for International Settlement (BIS) published a report on central bank digital currencies (CBDCs).
  • The report mentions benefits to settlement process, liquidity, and innovative competition.
  • It also outlines potential cross-border possibilities using internationally coordinated “multi”-CBDCs.

Why it’s important:

  • Many central banks are working on CBDCs, and the BIS’s guidance might further boost research and experiments in the sector.
  • Longer term, private stablecoins and CBDCs might also coexist, giving the consumer choice over which means of payment to use.
In other news
  • CoinMarketCap integrates Uniswap (via The Block)
  • Ark Invest files for Bitcoin ETF (via CNBC)
  • TP ICAP launches crypto trading (via The Block)

Bitcoin Suisse