cropped-Weekly_Wrap_Article_Image-scaled-4.jpg

 

1. The B Word Panel

The Facts:

  • On July 21, Tesla and SpaceX’s Elon Musk, Twitter and Square founder Jack Dorsey and ARK Invest’s Cathie Wood discussed the merits of Bitcoin in an online conference.
  • Musk disclosed that SpaceX also holds Bitcoin and that he personally owns Bitcoin, Ether and Dogecoin.
  • Tesla might further engage in the space through its connection to the renewables and solar energy industry.

Why it’s important:

  • As the founders of some of the few non-crypto companies that hold Bitcoin on their balance sheet, both Musk and Dorsey have been a factor in shaping public opinion about the space.
  • Prices responded with short-term volatility during the event and after Musk’s disclosure of his personal holdings.

 

2. Stablecoin backing: USDC and EURT

The Facts:

  • Circle, the issuer of USDC, has revealed the composition of its reserves backing the stablecoin.
  • 61% is held in cash and cash equivalents, followed by roughly equal allocations to Yankee CDs (13%) and U.S. treasuries (12%).
  • Bitstamp has also announced that it is looking to support EURT, the euro-pegged version of Tether’s stablecoin.

Why it’s important:

  • Proper backing of stablecoins has been a long-standing concern in the crypto industry, mainly coming from Tether’s USDT and opaque reserve disclosure policies before 2021.
  • The introduction of additional currencies beyond dollar-pegged stablecoin could bring about more liquid and active forex markets in DeFi and simplify arbitrage between exchanges (which increases market efficiency).
S01E21_USDCreserves
Source: Circle

 

3. Chinese mining dominance declines

The Facts:

  • The market share of Chinese miners of the overall Bitcoin mining hash rate has been declining from April 2020 to April 2021, according to the Cambridge Centre for Alternative Finance.
  • In April, Chinese mining pools had about 46% of the overall hash rate, versus 65% one year earlier.
  • The Chinese crackdown on mining in the past three months likely led to further declines.

Why it’s important:

  • China has long been a major factor in Bitcoin mining, but its relevance is declining and competitors in other countries are catching up.
  • A better distribution of the hash rate is also desirable to improve decentralization.
  • I really do believe that bitcoin will be much more environmentally friendly certainly than gold mining or the traditional financial services sector. In many ways, it already is
    Cathie Wood

 

4. Mastercard simplifies card offering

The Facts:

  • Mastercard has announced that it will enhance its offering for crypto exchanges and wallets to simplify crypto to fiat conversions.
  • The firm is working together with Paxos and Circle for the new service.
  • Just recently, competitor Visa disclosed that its crypto-linked card usage exceeded $1 billion in the first half of 2021.

Why it’s important:

  • Infrastructure around cryptocurrencies continues to be built, which is a crucial part to achieve more widespread adoption.
  • Data from Visa shows that the demand to spend crypto using credit cards is growing – as such, it was unlikely its competitors would ignore this trend.

 

  • Number of the Week
    45%
    - of family office clients at Goldman Sachs are interested in crypto exposure, another 15% is already invested

 

5. EU plans to regulate crypto transfers

The Facts:

  • In a proposal on Tuesday, European lawmakers suggested that companies involved in the transfer of cryptocurrencies must collect information on sender and recipients.
  • It would apply the travel rule as recommended by the FATF to crypto transfers.
  • Anonymous crypto wallet would also be prohibited.

Why it’s important:

  • The trend towards clearer regulation in the space has already been ongoing for some time. The new proposal by the EU aims to enable full tracking of digital assets.
  • How much privacy there remains, or should remain, is an important point of debate – some proposals for a digital euro, for example, contain privacy features for transactions below a certain threshold.

 

In other news

  • FTX closes $900 million round at $18 billion valuation (via The Block)
  • Silvergate bank took $4.3 billion in deposits from crypto customers in Q2 (via CoinDesk)
  • NFT marketplace OpenSea reaches $1.5 billion valuation (via TechCrunch)
  1. Homepage
  2. Research
  3. The Weekly Wrap – 2...