Market Overview:

Positive momentum continued across the digital asset market, with many major projects posting double-digit weekly growth.

• Bitcoin broke through several major price points in a week of continued growth that included a high of $48,080 and an 8th consecutive green daily candle for the first time since July 2021
• On Monday, upon exceeding $46,700, Bitcoin also marked a return to year-to-date growth, after a first quarter featuring many challenges including changing monetary policy and war
• Bitcoin’s current price of $47,120 marks an increase of around 9.4% in seven days
• Ether followed Bitcoin’s lead, hitting a weekly high of $3,468 on Tuesday
• Ether managed another week of double-digit growth, with the current $3,402 price representing an 11.9% increase over the week
• Only three of the top 100 digital assets by market capitalisation (excluding stablecoins) failed to post weekly growth
• Total market capitalisation crossed the $2tn mark for the first time since pre-conflict, growing by almost $200bn for a current value of $2.16tn
• Total value locked in DeFi grew to $83.4bn, according to industry analytics platform DeFi Pulse

 

Digital assets showcased bullish momentum this week, as BlackRock’s CEO Larry Fink acknowledged growing client demand, and recognised that the outcomes of current conflicts could have benefits for the category. Other major institutional names featured in the news too this week; including Goldman Sachs, Visa, and Grayscale, alongside significant entities from outside the finance world, such as Exxon Mobil, MicroStrategy, and Sotheby’s.

 

What happened: BlackRock CEO confirms growing client interest in digital assets

 

How is this significant?

• In his annual chairman’s letter to shareholders, BlackRock CEO Larry Fink outlined the world’s largest asset manager’s evolving view on digital assets, indicating that increasing client demand would likely lead to crypto asset services being offered
• He wrote that “As we see increasing interest from our clients, BlackRock is studying digital currencies, stablecoins and the underlying technologies to understand how they can help us serve our clients”
• Fink also cited the current war in Ukraine as a factor causing reappraisal of traditional assets; “The war will prompt countries to re-evaluate their currency dependencies. Even before the war, several governments were looking to play a more active role in digital currencies and define the regulatory frameworks under which they operate”
• He cited numerous advantages of “thoughtfully designed” digital assets, such as international settlements, remittances, and “reducing the risk of money laundering and corruption” by virtue of their decentralised and transparent nature
• Crucially, as a letter reflecting Fink’s personal views, it appears to confirm an evolution from digital asset sceptic five years ago, to a (tentative) advocate now
• Fink also predicted the war could have an effect on the adoption of renewable energy; “Higher energy prices will also meaningfully reduce the green premium for clean technologies and enable renewables, EVs and other clean technologies to be much more competitive economically”
• Although Fink didn’t directly tie this point to digital assets, it could theoretically address one of the key concerns about digital assets—the carbon footprint of Bitcoin mining

 

What happened: Exxon Mobil pilots program to use waste gas for Bitcoin mining

 

How is this significant?

• Energy giant Exxon Mobil appears to be moving into the Bitcoin mining space, using waste gas that would otherwise be burned off in the process of oil extraction
• According to Bloomberg sources, the company has an agreement with Crusoe Energy Systems at North Dakota oil wells to “take gas from an oil well pad in the Bakken shale basin to power mobile generators used to run Bitcoin mining servers on site”
• The project has not yet been publicly disclosed, but according to the sources has thus far saved 18 billion cubic feet of gas per month from being “flared” or burned off into the atmosphere
• Sources said the company is now considering expansion of the scheme into five additional territories
• Last month, fellow energy giant ConocoPhillips confirmed they were supplying flare gas from Bakken shale operations to Bitcoin mining farms in North Dakota
• In other mining news, carbon-neutral mining company Greenidge Generation secured $100m in new financing, for the purpose of tripling their existing mining capacity

 

What happened: MicroStrategy uses Bitcoin-collateralised loan to fund more Bitcoin purchases

 

How is this significant?

• MicroStrategy—through its recently-established Bitcoin-specific subsidiary MacroStrategy—confirmed a $205m loan from Silvergate Bank this week, for the purposes of increasing the company’s corporate Bitcoin holdings
• SEC filings indicate the $205m loan value “was collateralized at closing by Bitcoin with a value of approximately $820.0 million placed in a collateral account with a custodian mutually authorised by the Lender and the Borrower”, indicating a continued long-term Bitcoin appreciation view by MicroStrategy
• The interest-only term loan is secured by a portion of the company’s Bitcoin holdings, with Silvergate CEO Alan Lane lauding the company’s “innovative approach to treasury management [as] an exceptional example of how institutions can utilise their Bitcoin to support and grow their business”
• MicroStrategy CEO Michael Saylor was similarly enthusiastic about the deal, and what it implies for corporate Bitcoin holdings in general; “Using the capital from the loan, we’ve effectively turned our bitcoin into productive collateral, which allows us to further execute against our business strategy.”

 

What happened: Data reveals digital asset SPAC deals outperform other SPAC companies

 

How is this significant?

• Market appetite for digital assets seems to extend for crypto-related companies that have gone public via SPAC (or blank cheque company) merger deals, with data from Bloomberg confirming they are more profitable than other SPAC deals
• The De-SPAC Index of 25 companies that went public after blank-cheque deals is down about 9% since mid-January
• However, SPAC companies related to digital assets have bucked the trend; “Core Scientific Inc., one of North America’s largest Bitcoin miners which premiered on Jan. 20, rose 1.5% through Wednesday as of 10:05 a.m. Bakkt Holdings Inc. and Cipher Mining Inc. rose 43% and 11%, respectively, over that period”

 

What happened: Opera web browser adds native support for additional digital assets

 

How is this significant?

• Less than three months after its initial launch, web browser Opera added support for several digital assets to its native browser wallet
• After initial support for Ethereum, users can now experience integrated storage and transaction for Bitcoin, rising smart contract platform Solana, Layer-2 Ethereum scaling chains StarkEx and Polygon, as well several others
• Opera ranks as the 6th-most used web browser in the world, so whilst it doesn’t have the same impact as native integration in Firefox or Chrome, it does nonetheless represent a significant amount of users in terms of overall numbers, citing 380 million worldwide
• Additionally, the wide breadth of supported chains surpasses many web3 wallets
• Jorgen Arnesen, Opera’s mobile EVP said in a press release “Web3 is on its way to becoming a mainstream web technology and users won’t need to know they’re interacting with it. They need to get a superior user experience and a true benefit”

 

What happened: Goldman Sachs survey reveals increasing institutional investor appetite

 

How is this significant?

• According to a client survey obtained by industry media platform TheBlock, Goldman Sachs clients are generally seeking to increase their digital asset exposure
• Of 172 clients surveyed, 60% expected to increase their investment in digital assets within the next 12 to 24 months
• Of those, around a third expected to “significantly” increase their exposure
• A narrow majority (51%) of clients reported existing digital asset exposure; but this represents more than 25% growth from last year’s figure (40%)
• 55% of respondents were willing to allocate up to 5% of their total assets to the category
• The survey also reflected a growing interest in digital assets beyond Bitcoin, Ether, and stablecoins; “15% of respondents took an interest in altcoins, 14% in DeFi token exposure, and 9% in NFTs”
• The news follows aptly from last week, when Goldman Sachs became the first major bank to execute an OTC crypto options call
• In other survey news from Wall Street, BNY Mellon’s recent poll of family offices included a section dedicated to “Cryptocurrencies: The Digital Assets That Can’t Be Ignored”
• Their findings revealed that over three-quarters of family office respondents “have at least some interest or involvement in cryptocurrencies”
• BNY also found that 53% of those invested deemed it at least somewhat important to their overall investment strategy, and over 70% of those invested planned to increase their holdings

 

What happened: NFT News—Visa, Sotheby’s, and Jeff Koons

 

How is this significant?

• In the NFT world, there were several significant developments after a relatively quiet month-to-date
• Jeff Koons, the world’s most expensive living artist, announced his debut NFT project, “Moon Phases”; featuring physical sculptures with NFT counterparts to be launched onto the surface of the moon, in the first manned moon mission since the 1970s
• Visa launched an NFT creator program to help bring small businesses into the Web3 space, saying “Large merchants and brands are asking every day how they can get involved… The thing that’s so exciting to us about NFTs is we think it lowers the barrier to entry for people to build a business and sell online… We think NFTs represent a new form of e-commerce”
• Sotheby’s will host two auctions of 24 NFTs in an official collaboration with Liverpool Football Club, with the NFTs offering additional real-world benefits, and proceeds going towards the club’s charitable foundation

 

What happened: Grayscale prepared for legal action in case of ETF rejection

 

How is this significant?

• Digital asset investment firm Grayscale are keen to turn their $30bn Bitcoin trust (GBTC) into the first physically-backed Bitcoin ETF—and have announced willingness to take legal action against the SEC if their application is denied
• Thus far, the SEC has granted permission for Bitcoin futures ETFs, but steered clear of officially endorsing any products based on direct rather than derivative exposure
• Grayscale CEO Michael Sonnenschein said “I think all options are on the table come [final decision deadline] July… GBTC today has been traded since 2015 and it’s been an SEC-reporting company since January of 2020, so every single day that it is trading and being bought and sold by investors and is not being folded into the familiarity and the protections of an ETF wrapper, we really don’t feel that the SEC is doing everything they can to actually protect investors”
• He believes that the lack of any spot ETFs is to the detriment of investors, by forcing them to only seek out futures-based products
• Sonnenschein also pointed out that the fund currently trades below its Net Asset Value, and that the NAV and price should converge under an ETF format
• Regardless of whether Grayscale are ultimately the first to be granted a coveted spot ETF, Sonnenschein believes that market forces will eventually make it an inevitability; “It’s a matter of when, not a matter of if, a spot Bitcoin ETF is approved”

 

What happened: Hackers exploit gaming sidechain for $600m

 

How is this significant?

• In one of the largest digital asset exploits of all time, hackers managed to drain around $600m worth of Ether and tokens from leading blockchain gaming project Axie Infinity; the second-largest exploit in history
• The funds were held in the “bridge” of the company’s Ronin sidechain—a cross-chain solution designed to help users send funds from one blockchain (such as the main Ethereum chain) to another (such as Axie’s own Ronin chain built on top of Ethereum)
• Of the hundreds of millions drained from the bridge, only $17m have thus far been sent to exchanges in an attempt to cash out, with the hacker’s address blacklisted from transactions
• Axie’s parent company Sky Mavis said they are “working with law enforcement officials, forensic cryptographers, and our investors to make sure there is no loss of user funds”

 

Market Overview:

Digital assets continued last week’s recovery, including Bitcoin and Ethereum reaching landmark figures once more.

• Bitcoin displayed upward trajectory throughout the week, topping out at $43,220 early on Thursday, from a weekly low of $40,700 on Monday
• Bitcoin’s current price of $43,080 marks a 5.7% increase on last week
• Ether overcame a mid-week dip and breached the $3,000 mark several times throughout the week, but was unable to sustain a lengthy run above that mark, reaching a 7-day high of $3,068 on Thursday
• Ether managed double-digit growth this week, with current prices of $3,038 representing a 10.2% weekly rise
• Total market capitalisation moved back towards the $2tn mark, with a current value of $1.96tn
• Total value locked in DeFi grew alongside Ether, to $80.1bn, according to industry analytics platform DeFi Pulse

 

Digital assets performed strongly throughout the week, seemingly buoyed by the Biden administration’s positively-received executive order last week. Institutional adoption was at the forefront this week, featuring Goldman Sachs, the world’s largest hedge fund, a century-old Wall Street boutique investment bank, and more major raises in the VC sphere.

 

What happened: Goldman Sachs executes first OTC crypto options trade by Wall Street bank

 

How is this significant?

• This week, Goldman Sachs became the first major Wall Street institution to execute an over-the-counter crypto options trade, in a move Bloomberg analysts called “a notable step in the development of the crypto market for institutional investors”
• Due to current regulatory uncertainty, the options were cash-settled, but the move nonetheless represented an expansion of digital asset trading choices for Wall Street investors
• The trade was facilitated by Galaxy Digital, the digital asset investment firm founded by former Goldman Sachs partner Michael Novogratz
• A Galaxy Digital representative said they anticipate the move will “open the door for other banks considering OTC as a conduit for trading digital assets”
• Damien Vanderwilt, Galaxy’s co-president of global markets said that the trade should help reinforce the legitimacy of the asset class in the eyes of institutions and legislatures; “What helps is for regulators and government to see that firms like Goldman that they know and trust for decades are also going to be participants”

 

What happened: Haun Ventures successfully raises $1.5bn for two crypto industry VC funds

 

How is this significant?

• Haun Ventures—founded by former Andreessen Horowitz (a16z) general partner Katie Haun last year—successfully concluded $1.5bn worth of fundraising this week, in a continuation of the venture capital industry’s commitment to digital assets
• The total is spread across two funds; $500m for early-stage startups, and $1bn for more mature businesses operating in the digital asset field
• According to Pitchbook data, this represents the largest ever debut fund by a female-founded VC
• Haun noted the historical significance of the launch, but signalled it could pave the way for more diverse investor participation in the crypto sphere; “It feels, honestly, like a lot of pressure. But I think that motivates everyone on the team…Web3 is the new era of the internet and it deserves a new era of investors”
• Haun Ventures will invest via both start-up equity, and direct token allocations, depending on the project

 

What happened: World’s largest hedge fund believed to be backing crypto fund

 

How is this significant?

• Ray Dalio’s Bridgewater Associates—the world’s largest hedge fund—are in the process of investing in a crypto fund for the first time, according to numerous press reports this week
• Sources told industry publication Coinbase that the firm is interested in the industry, but will begin with only a small amount of their AUM deployed into crypto assets; “Bridgewater is in a first-half plan this year… planning on having a small slug of their fund deployed directly into digital assets”
• Investment would likely be done through “an external vehicle”, rather than direct purchase of digital assets, as the US-based company seeks to remain fully compliant
• Although the hedge fund itself hasn’t had any exposure to the digital asset industry thus far, founder Ray Dalio has been a public advocate of digital assets—especially Bitcoin—saying that “a 1% to 2% portfolio allocation is reasonable”, and that he himself holds Bitcoin
• In other news of high-profile financiers this week, Pimco co-founder Bill Gross revealed his conversion from prominent Bitcoin sceptic, to somebody who has “invested to a small extent in Bitcoin”

 

What happened: Boutique Wall Street investment bank offers crypto spot trading

 

How is this significant?

• Although not one of the largest firms on Wall Street, 104-year old boutique investment bank Cowens appear to have placed themselves at the vanguard of institutional digital asset adoption, through their new crypto-focused unit Cowen Digital
• Cowen Digital will provide clients with direct access to spot trading for digital assets, rather than seeking indirect exposure through investment vehicles
• The new unit will aim to leverage the bank’s family office, hedge fund, and mutual fund clients, allowing them to trade 16 different digital assets on launch, including Bitcoin, Ether, and rising smart contract platform Solana
• Co-president Dan Charney believes their willingness to try new approaches puts them at a significant advantage compared to some larger Wall Street institutions; “We have a big first mover advantage in this space… Because of our culture, we’re able to work with our legal and compliance and our regulators in a way that maybe our bigger competitors aren’t, and we’re just able to get to solutions faster”

 

What happened: Florida governor proposes digital assets for tax payments

 

How is this significant?

• Florida governor Ron DeSantis affirmed plans this week to allow residents of the state to pay their tax bills using digital assets, as part of a wider push to make the state a leading hub for the digital asset industry in America
• Speaking at a press conference, he declared “I’ve told state agencies to figure out a way that if a business wants to pay tax in cryptocurrency to Florida, we should be willing to accept that… So we’re working through that”
• He also spoke about his personal preference for decentralised digital assets like Bitcoin or Ether, compared to CBDCs, due to concerns that the latter could have spending decisions blocked or dictated by central entities
• Miami mayor Francis Suarez is another prominent supporter of digital assets in Florida, taking paycheques entirely in Bitcoin as a show of support for the asset class
• In other news of regional adoption, Malaysia’s Communication Ministry this week proposed the adoption of Bitcoin and other digital assets as legal tender, putting them on the path to be the next nation after El Salvador to adopt such a policy
• Deputy minister Zahidi Zainul Abidin told the Malaysian government that the move would help the nation’s younger demographics; “We hope the government can allow this… We are trying to see how we can legalise this so that we can develop youth participation in crypto and assist them”

 

What happened: NFT creators Yuga raise $450m in venture capital

 

How is this significant?

• Yuga Labs, creators of the highly-successful BAYC NFT collection (turned lifestyle brand), confirmed a $450m funding round and $4bn valuation this week
• Investment came from a variety of sources, including Andreessen Horowitz (a16z), Animoca Brands, and the venture capital arm of digital asset exchange FTX
• The funding will be used to help Yuga build out their BAYC metaverse project, expand its development team, and foster partnerships and collaborations
• BAYC recently attracted attention in the digital asset space by launching their own Ethereum-based ERC-20 token for utility within their metaverse and collections, which quickly listed across several major exchanges, and currently sits at a market capitalisation of over $3.5bn
• In other VC news this week, a16z also participated in a $150m Series B round for Ethereum scaling solution Optimism, valuing the company at $1.65bn
• Leading crypto VC Paradigm co-led the Series B round with a16z

 

What happened: Jefferies executives depart to join digital asset space

 

How is this significant?

• Following recent news of C-suite departures from e-Bank Revolut and Citigroup in favour of roles in crypto asset startups, Jefferies became the latest financial institutions to lose executives to the digital asset space
• FX prime brokerage head Brandon Mulvihill, and FX prime distribution lead Anthony Mazzarese both announced their departures in separate Linkedin posts this week, leaving the company on Friday to form a new crypto industry venture
• Mazzarese commented that “After 18 years of working in FX, I am excited to enter crypto as I fully believe cryptocurrencies and blockchain technology will transform traditional financial markets”
• Mulvihill was similarly bullish, stating “We are incredibly excited and passionate to announce the launch of our entrance into digital assets… Anthony and I have been overwhelmingly inspired by the innovation and growth within the industry, as well as the challenges the industry faces due to such growth”

 

What happened: Crypto.com secures FIFA World Cup sponsorship

 

How is this significant?

• Digital asset exchange Crypto.com has used sports as a marketing platform since last year, including a record purchase of naming rights for the former Staples Centre in Los Angeles
• This week, the company confirmed a position as a lead sponsor for the 2022 FIFA World Cup in Qatar—perhaps the world’s most prominent and widely-viewed sporting event
• The announcement of the sponsorship didn’t specify details regarding financial commitments or duration of the deal, but it puts Crypto.com in a prominent position amongst other official partners, such as Adidas, Coca-Cola, and Visa
• The last FIFA World Cup broke viewership records, with more than half of the global population watching at least some of the tournament (including 655 million viewers from China, who didn’t even qualify for the 2018 tournament)

Market Overview:

Digital assets rose slightly but traded within a relatively tight range this week, amidst continuing global macroeconomic uncertainties.

• Bitcoin spent the majority of the week trading between $37,800 and $39,650, before rallying on Wednesday and peaking around $41,320 early on Thursday
• Bitcoin’s current price of $40,690 marks a 3.3% increase on last week
• Ether performed similarly, spending the majority of the week trading between $2,525 and $2,595, before rallying back above $2,700 on Wednesday, hitting a weekly high of $2,781
• Ether is currently priced at $2,754; a healthy 6% increase from last week
• Total market capitalisation grew slightly to $1.81tn
• Total value locked in DeFi grew in line with Ether’s rise in value, to $76.5bn, according to industry analytics platform DeFi Pulse

 

General market uncertainty continued globally due to the war in Ukraine, but institutions demonstrated a continued appetite for digital asset investment. Three separate companies concluded funding rounds above $1bn valuation, the EU confirmed broad support for the industry by voting against a de facto Proof-of-Work consensus ban, and big names like Microsoft, American Express, HSBC, SoftBank, Temasek Holdings, and Three Arrows Capital all featured in the news this week.

 

What happened: Ethereum ecosystem developer Consensys valued at $7bn after Series D

 

How is this significant?

• Consensys, a blockchain development company specialised in the Ethereum ecosystem, confirmed the successful conclusion of a $450m Series D raise this week, valuing the company at $7bn
• Backers in this round included Singaporean sovereign wealth fund Temasek holdings, tech giants Microsoft, Japanese financial group SoftBank, and billionaire Dan Loeb’s Third Point hedge fund
• Consensys CEO (and Ethereum co-founder) Joseph Lubin described the fundraising process as “relatively easy”, indicating support for the broader Ethereum ecosystem from established institutions
• According to a statement released announcing the raise, the company’s Metamask browser wallet currently has 30 million active monthly users, up more than 40% from 4 months ago
• The company plans to increase their headcount to over 1,000, compared to a current employee base of around 700, as well as using the funding to further develop Metamask, and purchase Ether for their corporate treasury

 

What happened: Binance awarded exchange licences across multiple gulf state jurisdictions

 

How is this significant?

• Binance, the world’s largest digital asset exchange, was granted a licence on Tuesday to conduct their business in Dubai—one day after being granted similar permission for Bahrain
• Bahrain’s central bank accorded them “crypto asset service provider” status, whilst in Dubai they will be the first anchor in the Dubai World Trade Centre economic free zone
• The moves are part of a wider push into the Middle East region by Binance, addressing demand in a region underserved by digital asset trading infrastructure
• Binance identified Dubai as a “base for expansion into the region”, whilst representatives from Dubai said the licence was “symbolic of Dubai’s confidence in the potential of this future economy driver—if introduced with prudence and legitimacy”

 

What happened: Crypto startup founded by ex-Diem employees valued above $1bn

 

How is this significant?

• After Meta abandoned their long-planned Diem stablecoin project, several employees decided to launch their own digital asset startup; one which achieved a “unicorn” valuation within four months of founding
• Aptos Inc. confirmed a $200m funding round including investment from Andreessen Horowitz (a16z), Three Arrows Capital, Tiger Global, Coinbase, FTX, and ex-a16z partner Katie Haun’s new crypto-focused VC
• Whilst declining to share exact figures, chief executive Mo Shaikh did confirm a valuation above $1bn
• Shaikh says the Aptos blockchain plans to build on the work that the team did during Diem’s development; “We did not feel right that something like this couldn’t make its way to market despite all the work that we had done”

 

What happened: Mark Zuckerberg confirms upcoming NFT integration into Instagram

 

How is this significant?

• Speaking at the SXSW festival this week, Meta CEO Mark Zuckerberg said that social media platform Instagram would be integrating NFT technology “in the near term”
• Zuckerberg didn’t provide exact details, but did tease that it could include “the ability to bring some of your NFTs in, and hopefully over time be able to mint things within that environment”
• This follows initial statements that Instagram was exploring the NFT space back in December, and aligns with parent company Meta’s overall vision of a metaverse featuring digital goods accessible across multiple platforms

 

What happened: Gauntlet joins digital asset unicorns club

 

How is this significant?

• Gauntlet, a risk-modelling platform for crypto lending achieved a $1bn valuation this week, following a $24m Series B round
• Co-founded by Tarun Chitra—a former employee of hedge fund billionaire David Shaw’s D.E. Shaw Research—the company features several major DeFi protocols (including Aave and Compound) as clients
• Gauntlet essentially “stress tests” smart contracts and DeFi protocols “to help DeFi companies decide optimal lending and collateral levels”
• Chitra said the company plans to use new funding to expand Gauntlet’s services across more different blockchains, as DeFi increasingly grows outside of its formative space on Ethereum

 

What happened: EU legislation confirms support for Proof-of-Work blockchains

 

How is this significant?

• A late addition to the EU’s Markets in Crypto Assets (MiCA) bill that sought to impose “minimum environmental sustainability standards” was defeated on Tuesday
• The new clause was seen as an updated version of a previous clause that called for an outright ban on Proof-of-Work (PoW) protocols—including Bitcoin—and would likely have resulted in a de facto ban on PoW within the EU
• MicroStrategy CEO Michael Saylor said “Bitcoin won that vote…You need energy to create real property”, and EU lawmaker Markus Ferber called it a “clear signal” that the EU leans towards supporting the nascent digital asset industry; “If we want to foster innovation, we should be open for new technologies, not banning them”

 

What happened: Revolut executive departs company to found digital asset startup

 

How is this significant?

• Alan Chang, chief revenue officer of popular UK e-bank Revolut, is founding his own digital asset startup, according to sources speaking to Bloomberg this week
• He has already invested several million of his own money in the venture, and now seeks $100m of financing, “in exchange for future access to tokens”
• As Revolut’s fifth-ever employee, he spent seven years at the company, helping grow it to a $33bn valuation, after investment from companies including SoftBank and Tiger Global
• Chang can now be found as director of a company called Fuse Supply Limited on the Companies House website, although it isn’t clear whether this is (or will be the final name of) his digital asset company
• On the same day as Bloomberg’s report, news also emerged that Citigroup’s co-heads of digital assets Greg Girasole and Alan Krete were leaving to launch their own crypto asset venture

 

What happened: American Express and HSBC become latest to enter metaverse race

 

How is this significant?

• Two more major financial institutions joined JP Morgan’s recent foray into the metaverse this week, as AmEx and HSBC moved to establish a presence in blockchain-based virtual environments
• HSBC became the first global banking institution to buy virtual real estate on popular metaverse platform The Sandbox (and the second overall, after Thailand’s Siam Commercial Bank)
• HSBC’s chief Asia-Pacific marketing officer, Suresh Balaji commented: “The metaverse is how people will experience Web3, the next generation of the Internet—using immersive technologies like augmented reality, virtual reality and extended reality… we see great potential to create new experiences through emerging platforms… we are making our foray into the metaverse, allowing us to create innovative brand experiences for new and existing customers”
• Meanwhile, American Express were less vocal about their plans, but trademark filings showed the company wants to protect a host of its intellectual property across various metaverse platforms
• An AmEx spokesperson told industry publication Coindesk that “American Express is always monitoring emerging technologies to see how they could benefit our customers, and the metaverse is a space we’re following… We have no plans to share at this time but are watching as this space evolves”

 

Market Overview:

Digital assets shed some of last week’s gains amidst macroeconomic uncertainties, but bounced back slightly with positive regulatory recognition.

• Bitcoin declined over the weekend as military conflict in Ukraine and resultant sanctions against Russia continued to cast a global shadow
• Bitcoin dropped to a weekly low of $37,290 on Monday, but rallied sharply on Tuesday evening as news about a benign Biden administration executive order on crypto assets was leaked via the Treasury department website
• Bitcoin’s recovery took it up to a high of $42,370 early on Wednesday, before slipping below $40,000 on Thursday morning, with current prices of $39,020 marking a 10.4% drop from last week’s strong growth
• Despite falling in dollar value over the weekend, Bitcoin reached a new all-time high against the Ruble, soon after Visa and Mastercard suspended operations in Russia
• Trade volumes against the Ruble fell however, undermining concerns that crypto assets might be used as an avenue to evade sanctions
• Coinbase released a blog post on crypto technology enhancing sanctions efforts, blocking “over 25,000 addresses related to Russian individuals or entities”
• Ether once again performed in tandem with Bitcoin, hitting a low of $2,458 on Monday, before recovering to $2,762 on Tuesday
• Ether is currently priced at $2,583; an 11.3% decline from last week
• Total market capitalisation dropped to $1.75tn
• Total value locked in DeFi remained steady, with only minor losses to $74bn, according to industry analytics platform DeFi Pulse

 

War in Ukraine continued to influence markets this week, as growing sanctions and military conflict led to investor uncertainty. However, a broadly positive executive order from the White House returned some confidence to digital asset investors, alongside a raft of positive news featuring names like Bain Capital, Goldman Sachs, Santander, Credit Suisse, Tencent, and Temasek Holdings.

 

What happened: Bain Capital launches $560m Crypto Fund

 

How is this significant?

• Bain Capital Ventures ($105bn AUM) announced the launch of Bain Capital Crypto this week, a division dedicated to investment in the digital asset space
• Their BCV Fund I actually closed in December, raised $560m, and has thus far invested around $100m into 12 projects, although Bain Capital representatives declined to comment how and where they allocated
• The fund is being run by managing partner Stefan Cohen, who commented “We have high conviction we are at the beginning of a multi-decade technology shift…We really needed a dedicated team and a dedicated fund structure. That’s really what led to the addition of Bain Capital Crypto”
• Another managing partner commented that they see themselves as “long-term believers” with a decade-long investment horizon
• Additionally, their strategy features multiple means of exposure, including equity, token allocations, liquidity contributions, and even governance participation in so-called DAO (Decentralised Autonomous Organisation) projects common in the world of DeFi

 

What happened: Biden administration issues innovation-friendly executive order on crypto

 

How is this significant?

• On Wednesday, the White House released an executive order on digital assets, hailed as “historic” by Treasury Secretary Janet Yellen, and warmly received within the digital asset industry too, with industry media calling it “fairly benign”
• Yellen said in a statement on the Treasury website that the order strikes a balance between the importance of supporting innovation, and the need to ensure rigorous consumer protection
• Alongside confirmation of digital dollar development efforts proceeding with “great urgency”, the executive order focused on six key areas; consumer protection, financial stability, illicit activity, U.S. competitiveness, financial inclusion and responsible innovation
• Of particular note is perhaps the Department of Commerce’s task in “establishing a framework to drive U.S. competitiveness and leadership in, and leveraging of digital asset technologies”
• White House National Economic Council director Brian Dees stated that the order will “reinforce U.S. leadership in the global financial system and safeguard the long-term efficacy of critical national security tools like sanctions and anti-money laundering frameworks… [and] identifies the Administration’s policy priorities, both for cryptocurrencies and any future U.S. central bank digital currency, to help guide the evolution of the digital asset ecosystem in a way that is consistent with our values”
• The order requires federal agencies to run studies—varying in duration from three months to a year, depending on the subject—on a variety of factors from consumer protection to climate impact, but stopped short on providing any absolute clarity on forthcoming regulation
• Although there was some criticism that the order was vague in areas, it was nonetheless recognised as “the kind of signal that the Washington, D.C., establishment is becoming more comfortable with cryptos and that is bullish”
• Jeremy Allaire, CEO of Circle (issuers of the USDC stablecoin) spoke favourably about the order, dubbing it “a watershed moment for crypto and Web3, akin to when the government in the 90s realized the commercial power of the internet”

 

What happened: Goldman Sachs offers clients Ether exposure

 

How is this significant?

• According to regulatory filings on Tuesday, Goldman Sachs are expanding their clients’ potential digital asset exposure by offering them access to Galaxy Digital’s Institutional Ethereum Fund
• They are one of several institutional entities offering exposure to this fund, with the filing noting that “Goldman Sachs & Co. LLC will receive an introduction fee” for any clients who use the investment vehicle
• This builds on previous access to Bitcoin exposure, which Goldman introduced last year
• The fund comes with a minimum investment of $250,000, and has thus far attracted $50m investment from 28 clients, although it cannot be ascertained from the documents how many invested via Goldman Sachs

 

What happened: Nickel Digital releases new report on Professional Investors in digital assets

 

How is this significant?

• This week, Nickel Digital released the findings from a digital asset survey of 100 professional investors, managing a combined $110bn worth of assets
• The results revealed a broad enthusiasm for involvement in the digital asset space; nearly three-quarters of respondents for example view Bitcoin as a legitimate hedge against inflation, due to its finite issuance
• 78% believed that Bitcoin’s favourable supply-side dynamics will yield more institutional investment in the asset
• They almost unanimously agreed the asset class has grown too big to ignore—91% of respondents believed that digital assets are becoming more mainstream
• Covid-19 marked a turning point in institutional investors’ awareness and perception of digital assets; 78% “now have a positive or constructive view of Bitcoin”, a figure nearly mirrored at 77% saying the same for Ethereum

 

What happened: Santander issues tokenised commodity-backed loans

 

How is this significant?

• Spanish bank Santander agreed a deal with an Argentinian company this week, on the issuance of “agrotokens” backed by a ton of soy, corn, or wheat
• The SOYA, CORA, and WHEA agrotokens allow farmers to utilise their crops in multiple ways; “trading them on a traditional commodities exchange; trading them on a cryptocurrency exchange; using them as collateral for loans; and paying for agriculture-related goods and services at participating merchants”
• Agrotoken recently featured as a case study for Accenture, who praised the development of “new financial options to the multi-trillion-dollar agribusiness sector by letting farmers convert tons of soybean crops into a commodity-backed stablecoin that could be spent with merchants and investors”
• Now, in a 1,000 farmer test alongside Santander, farmers will generate tokens by selling them to grain elevators in a Proof of Grain Reserve test (thereby verifying the authenticity of the backing), allowing them to use the tokens as collateral for loans
• In a blog post, Santander said that the agrotoken system “will allow farmers and the agro ecosystem to have easy and fluid access to a new financing system, expanding credit capacity by using tokenised grains”
• When farmers agree a loan with Santander, the tokens (proving the farmers’ collateral) are held in escrow on a smart contract, until the credit is repaid with either government currency, or crypto assets

 

What happened: Credit Suisse analysts predict Bitcoin benefits from macroeconomic upheaval

 

How is this significant?

• A new Credit Suisse report this week, authored by former Federal Reserve official Zoltan Pozsar, posited that current global economic conditions and supply tensions could ultimately benefit Bitcoin
• He wrote that recent G7 sanctions against Russia illustrate a “commodities crisis” which could signal the end of the current global monetary order; “Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves”
• He further argued “We are witnessing the birth of Bretton Woods III—a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West”
• The cost of sanctions now could have very long-term geopolitical and geofinancial consequences according to Pozsar; “If you believe that the West can craft sanctions that maximise pain for Russia while minimising financial stability risks and price stability risks in the West, you could also believe in unicorns”
• He predicts a knock-on effect in terms of dollar hegemony and rising inflation, drawing parallels to the Nixon Shock; “This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971—the end of the era of commodity-based money”
• Pozsar concluded that “After this war is over, “money” will never be the same again…and Bitcoin (if it still exists then) will probably benefit from all this”
• These views were somewhat echoed by Piyush Gupta, CEO of Singapore’s leading bank DBS, who this week stated that “I do think that private money (crypto) will continue to grow as a meaningful store of value, much like gold is today”

 

What happened: NFT developers Immutable backed by Temasek in $2.5bn valuation

 

How is this significant?

• Singapore’s sovereign wealth fund Temasek followed up their recent investment in Amber Group with another major digital asset investment this week, as they led a $200m investment round into Australian NFT and Ethereum scaling startup Immutable
• This new Series C round bestowed “unicorn” status upon Immutable, bringing their valuation to $2.5bn
• According to reporting in Singapore’s Business Times newspaper, Immutable will use funding to more than double headcount over the next year, expand into new verticals, explore potential acquisitions, and scale their platform to meet growing demand
• Other investors included Chinese gaming giant Tencent, and Liberty Global
• Immutable held a $15m Series A round in 2019, followed by a $60m investment round last year

 

What happened: Alan Howard and Paul Tudor Jones increase crypto asset exposure

 

How is this significant?

• According to a Wall Street Journal report this week, prominent hedge fund billionaires Alan Howard and Paul Tudor Jones have both been increasing their financial allocations toward the digital asset space
• Sources told the WSJ that firms owned by both billionaires are “expanding their crypto trading”
• The paper notes the creation of BH Digital as a crypto-specific entity of Brevan Howard with a $250m warchest to invest in digital assets, whilst Tudor Jones “has been buying cryptocurrencies to try to protect against rising inflation”
• Institutional presence in the space is growing exponentially, according to Coinbase data cited in the article; “institutional investors as a whole traded $1.14 trillion of cryptocurrencies in 2021, up from $120 billion the year before, and more than twice the $535 billion for individual investors”
• Mina Nguyen of Wall Street giants Jump Capital (who recently set up a crypto-specific subsidiary) believes the current trend points towards more growth; “A wider range of funds are getting in and trading more”
• Strong growth means that “More funds see crypto as a fifth asset class”, alongside the traditional grouping of bonds, commodities, currencies, and stocks
• Despite this massive rise in overall value and legitimacy, the WSJ writes that the space is still young enough to offer ample opportunities; “Unlike stocks, bonds and other traditional asset classes, the crypto market is relatively new with ample ‘inefficiencies’, or opportunities for big firms with access to timely and accurate information to profit… Wall Street firms haven’t established dominance, creating potential opportunities for new players”
• Interestingly, the paper also frames the market’s oft-maligned volatility as a possible benefit, writing that “Most hedge funds are avoiding shorting cryptocurrencies… worried that these currencies might shoot up in price, leading to quick and big losses”

 

Market Overview:

Digital assets bounced back strongly as they demonstrated their viability within conflicts, posting the largest single-day gain in over a year.

• Bitcoin grew steadily throughout the first half of the week before experiencing rapid growth on Monday and Tuesday, breaking back above the $40,000 and (briefly) $45,000 marks, posting a weekly high of 45,080
• Bitcoin’s current price of $43,330 equates to a 21.7% weekly increase
• Bitcoin overtook the overall market capitalisation of the Russian Ruble, in a week when both Russian and Ukrainian digital asset trading volume climbed sharply
• Alongside Bitcoin’s visible use as a safe haven asset, the market also benefited from macro conditions such as Jerome Powell signalling lower-than-expected rate hikes
• Ether experienced similar performance patterns, briefly breaking above $3,000 again on Tuesday and Wednesday, but proved unable to form a strong price floor there
• Ether is currently priced at $2,897; up 21.2% on last week
• Total market capitalisation climbed above $2tn once again on Tuesday, before retracing slightly to current levels of $1.92tn—a weekly recovery of more than $200bn
• Total value locked in DeFi climbed $10bn to $78.4bn, according to industry analytics platform DeFi Pulse

 

News cycles, including those of the digital assets market, were understandably and unfortunately dominated by war in Ukraine this week, where the asset class appeared to demonstrate its viability as a decentralised safe haven against conflict and extreme economic policies. Away from the conflict zone, regular development and adoption continued; the EU moved closer to a regulatory framework, Cambridge University created a world-leading private-public partnership for digital asset research, and State Street, Citadel, and JP Morgan were just some of the many other names active in the sector over the last seven days.

 

What happened: Digital assets provide economic lifeline on both sides of Ukraine conflict

 

How is this significant?

• Russia’s recent invasion of the Ukraine has understandably dominated reporting this week—despite challenges faced by citizens on both sides of the conflict, the decentralised (and thus unblockable) nature of digital assets proved their value and utility in uncertain times
• The Ukrainian government became the first to ever accept donations via crypto assets, as e-cash transfers were suspended within the country due to martial law
• Within days of tweeting their request for aid, the government received tens of millions of dollars worth of digital asset donations
• By Wednesday night, that figure reached approximately $52m
• A report released by sector analysts Arcane Research on Tuesday revealed that Ukrainian Bitcoin purchase volumes more than doubled from pre-conflict levels, indicating perception of crypto assets as a “safe haven”
• Meanwhile, on the other side of the conflict, trading volume on Bitcoin:Ruble pairs grew to their highest levels in over 9 months, as the government enacted drastic protectionist measures towards their currency amidst a host of international economic sanctions
• The rise in Bitcoin trading volume came in apparent response to the Ruble crashing over 25%, trading being cancelled on the Moscow stock exchange, restrictions on foreigners withdrawing assets, and—perhaps most importantly—the Russian Central Bank more than doubling its key interest rate to 20%
• On Tuesday, Bitcoin (and the wider digital asset market) saw its largest single-day rise since February 2021, growing over 20% in certain 24 hour timeframes
• Christine Lagarde this week stressed the need for ECB regulation to ensure Russia can’t evade sanctions through use of digital assets, showcasing the increased relevance of the asset class on the international stage
• The proposed regulation would include crypto assets under the purvey of a new EU authority on anti-money-laundering
• Germany’s finance minister Christian Lindner said the G7 is working on similar measures, citing a need for “maximum ability to sanction—and that also includes crypto assets”
• Some centralised exchanges such as Binance refused calls to block Russian-based customers’ accounts, arguing that whilst they would follow the international sanctions list of specific individuals such as politicians and oligarchs, regular users would remain unaffected
• Binance CEO Changpeng “CZ” Zhao told the BBC “Crypto is meant to provide greater financial freedom for people across the globe… we are not in a position to sanction populations of people… We are not political—we are against war but we are here to help the people”

 

What happened: State Street works with US regulators for “mega” digital asset custody plans

 

How is this significant?

• State Street is one of the leading American financial institutions moving into digital assets; the country’s second-oldest bank and with nearly $4tn AUM
• They publicised wide-ranging plans for crypto asset custody this week, declaring “We’re literally investing in the future”
• Nadine Chakar, leader of the bank’s new digital division, told Bloomberg that “the minute we get the [regulatory] nod, we’ll be ready… We know clients are out there looking for this”
• She revealed the institution has “mega plans” for digital wallet custody, saying “We think a custodian bank like State Street can continue to do what it’s best at, which is keeping order and safety into the system”
• Chakar also stated their internal research revealed “great adoption” by institutional investors, and theorised that as institutional allocation increases, the volatility traditionally associated with the asset class will become less of a concern

 

What happened: EU legislators remove proof-of-work concerns from crypto markets bill

 

How is this significant?

• The EU continued development on a regulatory framework for crypto assets this week, removing language that had caused concern over possible misinterpretation
• An earlier draft version of the current Markets in Crypto Assets (MiCA) bill had a section proposing a ban on any assets created with “environmentally unsustainable consensus mechanisms” by 2025
• Many interpreted this to mean proof-of-work consensus mechanisms, most notably employed by Bitcoin, which could have rendered the world’s leading digital asset illegal in the EU within 3 years
• Stefan Berger, the parliamentarian behind the bill, removed the paragraph in its entirety, citing concerns it could be “misinterpreted and understood as a POW ban”
• Voting on MiCA has yet to be scheduled, but it could prove a watershed in European crypto asset regulation; creating a framework to “establish uniform rules for crypto-asset service providers and issuers at EU level”

 

What happened: CME group launches micro Bitcoin and Ether options

 

How is this significant?

• The Chicago Mercantile Exchange (CME) Group issued a press release this week detailing the launch of new micro options for both Bitcoin and Ether
• According to the release, “Micro Bitcoin and Micro Ether options contracts will be one-tenth of their respective underlying tokens in size and will offer a wide range of market participants – from institutions to sophisticated, active, individual traders – more ways to manage their exposure” to the top two digital assets
• Existing Bitcoin options contracts (launched in 2020) are sized at five Bitcoins each, so the new micro contracts will provide half a Bitcoin’s worth of exposure
• Clients will have “a choice of monthly as well as Monday, Wednesday and Friday weekly options expiries” on the micro contracts
• Tim McCourt, CME’s Global Head of Equity and FX Products said the new products were building on the success of previous micro releases; “At less than a year old, nearly 5.2 million combined Micro Bitcoin and Micro Ether futures contracts have changed hands”

 

What happened: Cambridge University partners with institutions for digital asset research

 

How is this significant?

• Cambridge University’s Centre for Alternative Finance (CCAF) announced a collaborative research project with a variety of leading financial institutions this week, dubbed the Cambridge Digital Asset Programme (CDAP)
• CDAP seeks to provide insights on the digital asset industry, and “aims to meet the resulting need for greater clarity by providing data-driven insights through collaborative research involving public and private sector stakeholders”
• 16 major companies and institutions are collaborating with the university’s research efforts, including the IMF, World Bank, Accenture, Ernst & Young, Fidelity, Goldman Sachs, Invesco, Mastercard, and Visa
• Terry Angelos, SVP and Global Head of Fintech at Visa praised the programme’s potential in demystifying the benefits of digital assets to a variety of stakeholders; “Industry collaboration and public-private partnerships will be vital in bringing the benefits of digital currencies to life in a sustainable, inclusive and secure way”
• Other CDAP participants are
  • The Bank for International Settlements (BIS) Innovation Hub
  • British International Investment (BII)
  • Dubai International Financial Centre (DIFC)
  • UK Foreign, Commonwealth & Development Office (FCDO)
  • Inter-American Development Bank (IDB)
  • London Stock Exchange Group (LSEG)
  • MSCI

 

What happened: Ken Griffin confirms Citadel Securities move into crypto market-making

 

How is this significant?

• In a wide-ranging interview with Bloomberg this week, hedge fund billionaire Ken Griffin seemed to declare himself a crypto convert, and confirmed that recent sales of equity in Citadel Securities signalled a move towards the digital asset market
• In January, Citadel accepted $1.15bn in investment from Sequoia and Paradigm, two firms with a distinct digital asset focus
• Griffin said the growth of the digital asset market left them with virtually no choice but to offer services; “To the extent that we’re trying to help institutions and investors solve their portfolio allocation problems, we have to give serious consideration to being a market maker in crypto. It’s fair to assume that over the months to come, you will see us engage in making markets in cryptocurrencies”
• He admitted that despite retaining some scepticism, he regrets his previous position on the market; “Crypto has been one of the great stories in finance over the course of the last 15 years. And I’ll be clear, I’ve been in the naysayer camp over that period of time. But the crypto market today has a market capitalization of about $2 trillion in round numbers, which tells you that I haven’t been right on this call”
• Griffin also revealed concerns about current US sanctions, making a case for the value of alternative or decentralised assets; “When we put on the table the possibility that your dollars will become seized, or that you can’t move dollars, we’re telling the rest of the world to embrace other currencies in their portfolio, and we diminish the value of the dollar as the reserve currency”

 

What happened: Venture Capital continues to seek digital asset exposure

 

How is this significant?

• VC investment continues to pour into the digital asset market
• Hack VC launched a $200m crypto seed fund for early-stage digital asset and blockchain startups, backed by Andreessen Horowitz (a16z)
• JP Morgan announced a “strategic investment” in blockchain analysis company TRM Labs, with JPM’s blockchain leader Umar Farooq saying “leading infrastructure companies like TRM will help usher in the future of secure blockchain and crypto use cases”
• Billionaire investor Alan Howard participated in a $7.5m Series A round for social trading platform and “financial NFT” creators Nested
• Coinbase Global senior manager Amy Wu left the exchange for early-stage crypto VC Archetype, joining as a venture partner
• AT&T Capital completed a $100m capital raise to launch a blockchain and crypto venture fund

Market Overview:

Digital assets fell sharply alongside most global markets, as recent geopolitical conflicts continued to escalate.

• Bitcoin declined throughout most of the week amidst the backdrop of international tension, opening at highs around $44,000 on Thursday, hitting lows of $34,460 on Wednesday morning as Putin announced mobilisation
• Bitcoin currently trades at $35,330, a double-digit decline from last week
• The last time Bitcoin was at these price levels was exactly one month ago, the 24th of January
• Ether followed the same movements, posting a low of $2,309 early on Wednesday after opening the week around $3,100
• Ether is currently priced at $2,371, a weekly fall of over 20%
• Total market capitalisation declined to $1.58tn; the same overall value as a month ago
• Total value locked in DeFi declined accordingly to $68.3bn, according to industry analytics platform DeFi Pulse

 

Digital asset prices dropped sharply in value this week, as global markets were spooked by escalating geopolitical conflicts in Eastern Europe. However, there were numerous positive developments in the digital asset industry; approval from major sovereign wealth funds, legislators, and traditional asset exchanges, alongside more involvement from names including Sequoia, BNY Mellon, Morgan Stanley, State Street, UBS, and BlackRock.

 

What happened: Singapore sovereign wealth fund participates in $200m crypto funding round

 

How is this significant?

• Temasek Holdings, one of Singapore’s state investment firms, participated in a $200m Series B raise by digital asset exchange Amber Group this week
• Other investors included Coinbase Ventures, Sequoia, Pantera, Tiger Global Management, and True Arrow Partners
• The funding round gives Singapore-based Amber a valuation of $3bn, and appears to build on reported ambitions of the city-state to become a global hub for digital assets
• Amber Group CEO Michael Wu was keen to stress the importance and impact of investment with government ties, saying they specifically extended the duration of their Series B to secure Temasek’s support; “They are very strategic, so we made this special effort to bring them in”
• He also indicated the company would likely undertake another funding round this year, with aims to increase hiring in Europe and America, expand the reach of their mobile app, and possibly run an IPO in the USA before the end of next year

 

What happened: EU legislators are open to digital assets—with greater regulation

 

How is this significant?

• One of the issues discussed at this week’s Munich Security Conference was adoption of digital assets within the European Union, and their existence seems to be supported by EU Commissioner for Home Affairs Ylva Johansson—albeit with more regulation
• She supports the concept of both decentralised digital assets, as well as government-issued CBDCs, but stressed the need for strong fraud prevention practices in light of the anonymity provided on many blockchains
• Johansson told delegates at the conference that “I’m not uncomfortable with digital currencies but we need to regulate them in a proper way”; marking the EU’s stance as more open than China’s, which banned most crypto asset activity last year
• Sam Bankman-Fried, the CEO of leading digital asset exchange FTX also attended the panel, speaking about enhanced oversight mechanisms across exchanges helping to reduce fraudulent transactions or illicit fund movements

 

What happened: London Stock Exchange boosts digital asset capabilities in $325m acquisition

 

How is this significant?

• On Tuesday, the London Stock Exchange Group (LSEG) confirmed a deal worth £239m to purchase trading technology company TORA
• Pending regulatory approval, the deal is expected to be finalised later this year, integrating TORA into LSEG’s data and analytics division
• Of particular interest to industry analysts was the fact that TORA’s acquisition allows LSEG to integrate digital asset trading capabilities into their portfolio of services
• Dean Berry, the exchange group’s head of Trading & Banking Solutions, identified the acquisition as “an important extension of our global Trading business… at a time when institutional market participants are increasing their exposure to crypto and other digital assets”
• In other news related to stock exchanges integrating digital assets this week, ICE (the parent company of the New York Stock Exchange) purchased a stake in tZero—a blockchain-based exchange allowing the trade of tokenised stocks and shares
• As part of the deal, ICE Chief Strategy Officer David Goone has been appointed the new CEO of tZero

 

What happened: BlackRock rumoured to be developing crypto investing services

 

How is this significant?

• According to insiders who first spoke to agency publication Coindesk, global asset management giant is currently developing digital asset trading services for clients
• Although no date was provided for the launch of such services, sources told Coindesk that they would likely be provided to institutional clients (including pension schemes and sovereign wealth funds) through BlackRock’s integrated investment management platform, Aladdin
• Sources also reported the company currently has a 20 person working group dedicated to the development of digital asset analysis, and that the move was precipitated by the drastic growth of the sector over the last year; “They see all the flow that everyone else is getting and want to start making some money from this”
• If true, this would mark the latest step in a continuous exploration of the crypto industry by the world’s largest asset manager; a few weeks ago they filed for an ETF product tied to companies with blockchain and crypto exposure
• BlackRock also featured in the news this week as part of a consortium of companies behind a new blockchain-based trading service for alternative assets, developed by iCapital
• Institutional backers of the platform include several financial industry heavyweights; Apollo, Blackstone, BNY Mellon, Carlyle, KKR, Morgan Stanley, State Street, UBS, and WestCap
• Blockchain technology was praised for its potential in streamlining complex financial processes by the CIO of iCapital, Tom Fortin; “The value in a private, permissioned, distributed ledger solution is that it creates one single golden source of data—eliminating the need for multiple reconciliations, allowing all the parties in a transaction to read from and write to the same record”
• Jerry Pascucci, Head of Global Alternative Investment Solutions at UBS Global Wealth Management agreed, stating “We see the potential distributed ledger technology has to significantly improve both efficiency and security across the alternatives industry”

 

What happened: Stablecoin issuer Circle doubles company valuation to $9bn

 

How is this significant?

• Circle—the developers and issuers of the USDC stablecoin—doubled its valuation to $9bn this week, as terms of an SPAC merger with Concord Acquisition corp changed
• Concord, headed by former Barclay’s chief executive Bob Diamond, recognised “material improvements in Circle’s financial outlook and competitive position” due to increased adoption of USDC
• Diamond acknowledged Circle’s growth, saying in a press release that “Circle is one of the most interesting, innovative and exciting companies in the evolution of global finance and will have an historic impact on the global economic system”
• Jeremy Allaire, CEO of Circle, also spoke about improvements in the regulatory landscape, saying stablecoins are “being acknowledged by the White House as a critical area that’s going to play a major role in the growth of the dollar and the dollar on the internet… We’ve gotten clarity that the federal government wants to ensure that well-run clearly defined rules around large-scale dollar stablecoin issuers like Circle is actually a critically important thing”

 

What happened: Sequoia Capital launching new crypto investment fund worth up to $600m

 

How is this significant?

• Venture capital giants Sequoia are currently raising funds for three new investment sub-funds; including one aimed exclusively at the digital asset industry, which is seeking $500m to $600m of capital
• The Sequoia Crypto Fund will mainly invest in established coins and tokens trading on third-party exchanges, rather than providing early-stage growth funding to companies before token launches
• Sequoia partner Shaun Maguire told the Financial Times “The area in crypto where we have the most opportunity for improvement is really in the liquid stuff… Our founders have asked us for a lot of help there, and we just haven’t been able to deliver in the traditional venture capital model”
• Around 20% of Sequoia’s VC funding last year went towards companies in the digital asset space, and the new fund will allow additional support for projects in their portfolio
• The investments are being made with a “20 year lens”, avoiding trading of the assets outside of “exceptional circumstances”
• Maguire acknowledged the likelihood of incoming regulation making some changes to the investment landscape, but cautioned against too much legislative restriction; “We expect regulation, but there’s a balance that we need to find between protecting consumers and maintaining innovation in a really important space… It reminds me of early internet regulation”

 

What happened: South Korea’s largest bank launching crypto ETFs

 

How is this significant?

• According to an announcement this week, Kookmin Bank—South Korea’s largest by net assets—is launching crypto ETFs with a focus on retail investors
• They confirmed the formation of a Digital Asset Management Committee to develop and launch such a product as soon as regulators permit
• Hong-Gom Kim, head of Kookmin Bank’s index quant management division said “We will launch a virtual asset-themed equity fund, etc., as soon as possible… We will also publish periodicals”
• Kookmin are also developing a virtual currency index, and investigating the feasibility of hybrid funds trading digital assets alongside traditional assets
• South Korea is a major digital asset trading market, with the FT reporting the Korean Won as the third-most-popular currency for digital asset pairings, after the US Dollar and Japanese Yen

 

What happened: Multiple jurisdictions propose official Bitcoin integration

 

How is this significant?

• This week, Mexican senator Indira Kempis announced she would submit a bill to recognise Bitcoin as legal tender across the country, citing benefits she perceived in a recent visit to El Salvador, and the impact of digital assets towards financial inclusion
• In an interview, she stated “Making Bitcoin a legal tender means putting a level playing field for people who are excluded in almost all countries…We need bitcoin to be legal tender in Mexico, because if it is not so, if we do not make that decision as El Salvador did, it is very difficult to take action”
• Colorado governor Jared Polis revealed that his state aims to accept digital assets (particularly Bitcoin) as payment for taxes from this summer onwards, as well as endorsing “a digital token bill that would effectively allow state-created digital tokens to be utilized for state reserve purposes and other purposes. Assigning value to them”
• Senator Sydney Kamlager of California proposed a bill to do the same in California, allowing state agencies to accept digital assets as payment for government services, including taxation

 

What happened: FTX launches gaming division to grow digital asset adoption in video games

 

How is this significant?

• FTX exchange diversified their portfolio further this week with the launch of a new gaming unit, aimed at offering “crypto as a service” to established video game developers
• Despite the growth of NFTs and “play-to-earn” gaming models over the last year, and the endorsement of major gaming studios like Ubisoft, Square Enix, and Take Two, many gamers remain skeptical of digital asset integration into video games
• FTX US president Brett Harrison acknowledged the current backlash, saying they aim to integrate digital assets unobtrusively; “I think the backlash is primarily out of concern that the focus on cryptocurrency will divert the efforts of game studios away from making the best game possible for the players…the enjoyability of the game for all players, including those who don’t wish to participate in these kind of economies, should always be the primary objective regardless of whether blockchain tech is involved”
• However, he also cited that the technology just adds benefits to existing player behaviours, rather than forcing new ones; “We believe that blockchain technology takes features of games that already exist, such as in-game avatars, skins, and rewards, and makes it possible for players to own, invest, and trade these items outside of the game”

Market Overview:

Digital assets experienced relatively flat performance this week, as renewed tensions over Ukraine sapped investor enthusiasm.

• Bitcoin hit a weekly peak of $45,600 on Friday, before hitting weekly lows around $41,700 on Monday as concerns over US-Russian tensions escalated
• Bitcoin moved back into recovery as reports of de-escalation emerged, but performance remained more tentative than the previous week’s double-digit growth
• Bitcoin currently trades at $43,450, down about 1.7% from last week
• Ether peaked at $3,270 early in the week, before the macroeconomic uncertainties led to a weekly low of $2,842 on Monday
• Ether recovered to a current price of at $3,063—a 4.2% weekly decline
• Total market capitalisation fluctuated around the $2tn mark, with a current value of $1.97tn
• Total value locked in DeFi declined to $77.4bn, according to industry analytics platform DeFi Pulse

 

Digital assets performed tentatively this week, amidst global geopolitical tensions and their effects on a variety of markets. Adoption marched on regardless of those headlines though; Fidelity launched a new physically-backed Bitcoin ETF in Europe, Mastercard moved to expand their expertise in the field, Uber confirmed interest in crypto assets as payment, and JP Morgan, DBS, and PwC’s Luxembourg office all looked toward growth potential within the space driven by customer demand.

 

What happened: Fidelity launches Bitcoin ETF in Europe

 

How is this significant?

• Despite a current lack of progress from the SEC on approving them in America, Bitcoin ETFs continue to garner investor demand internationally
• After launching a physical Bitcoin spot ETF in Canada back in December, Fidelity have now launched a similar product in Europe
• The Fidelity Physical Bitcoin ETP (FBTC) launched in Germany on the Deutsche Börse this week, with a listing on Switzerland’s SIX exchange planned for the near future
• A physically-backed product, FBTC is centrally cleared by Eurex Clearing with Fidelity Digital Assets acting as custodian
• The launch by Fidelity’s follows a similar physically-backed product from Invesco, which debuted on Deutsche Börse late last year
• Fidelity International’s Europe MD Christian Staub said client demand was behind the new launch: “The underlying Distributed Ledger Technology (DLT) has the potential to revolutionise the financial system… As this technology becomes increasingly accepted, our clients are rightly asking for an efficient way to benefit from this trend. FBTC offers clients an institutional quality solution to enter the market in a familiar, simple and secure way”
• Fidelity had a busy week in the realm of digital assets, releasing a new report on institutional Bitcoin investment titled “Bitcoin first”, which argued that many clients may underestimate Bitcoin’s potential upside due to its significant market capitalisation
• Fidelity analysts argued that despite this, investors should be wary of underestimating the benefits of Bitcoin’s massively decentralised distribution, which makes it in their words “the best monetary good in the digital asset space”
• Additionally, Fidelity Charitable, the largest grant-makers in the United States, released data showing that digital asset donations (in the form of donor-advised funds) grew 12-fold year on year
• The organisation received over $330m in digital asset donations last year, compared to around $28m the year before

 

What happened: Mastercard embarks on hiring spree to bolster crypto industry expertise

 

How is this significant?

• According to an interview with Raj Seshadri, president of Mastercard’s data and services division, payments processor Mastercard are heavily engaged in recruitment efforts to improve their crypto asset capabilities and expertise
• They aim to make around 500 hires this year in the fields of digital assets, data, and open banking
• “When we see a pattern of work and a trend and enough momentum, that’s when we formalise it into a practice… So this is the next three we’re adding to the list”
• Mastercard, like rivals Visa, offers crypto consultation services for existing clients, helping banks to navigate the implementation of digital currencies and assets, as well as developing loyalty programs and releasing credit or debit cards linked to crypto assets

 

What happened: Uber CEO confirms plans to integrate crypto as a payment option

 

How is this significant?

• Following similar admissions from Airbnb CEO Brian Chesky, the CEO of transport and delivery giant Uber this week admitted that accepting digital assets as payment appears to be an inevitability for the company
• Dara Khosrowshahi said that the company is not currently ready to accept digital assets, but that they will “at some point”
• In an interview with Bloomberg TV, he indicated that current technological constraints of scalability and transaction fees, along with PR concerns like Bitcoin mining’s carbon footprint, were key factors delaying immediate implementation
• “We’re having conversations all the time… As the exchange mechanism becomes less expensive and becomes more environmentally friendly, I think you will see us leaning into crypto a little bit more”

 

What happened: Crypto asset lenders BlockFi pay SEC and state regulators $100m settlement

 

How is this significant?

• This week BlockFi agreed to pay the SEC and various American state regulators an industry record $100m settlement regarding the company’s high-yield digital asset interest products
• The amount was split $50m towards the SEC, and $50m towards a variety of local state regulatory bodies
• BlockFi CEO Zac Prince stated that it was “a neither-admit-nor-deny settlement” where they cooperated with regulators throughout, and that the settlement now “clearly lays out a path to registration of a crypto interest-bearing security”; a regulatory path which had been absent previously
• Prince praised the clarity that the settlement now provides, despite (crypto-friendly) SEC commissioner Hester Pierce calling the size of the settlement “disproportionate” and worrying that it could drive innovation away from the United States
• Another key aspect of the settlement was that although BlockFi cannot sell the interest-bearing products to new customers, existing customers are allowed to keep earning via those products, rather than being migrated to alternatives
• Prince said the company is now in the process of developing new interest-bearing options more squarely aligned with SEC requirements; “The crypto industry writ large is at a stage today where it’s becoming part of the national political dialogue… There’s an increasing amount of work being done by regulators and the industry to help create clarity… We intend for BlockFi Yield to be a new, SEC-registered crypto interest-bearing security, which will allow clients to earn interest on their crypto assets”
• In other regulatory news, there were indications from the US Treasury Department this week that digital asset miners and stakers will be spared from reporting obligations that were feared due to ambiguous language in crypto taxation legislation

 

What happened: JP Morgan becomes first bank with virtual presence in the metaverse

 

How is this significant?

• JP Morgan Chase & Co., an institutions whose lineage can be traced back to at least 1895, became the first major bank with a presence in the metaverse this week, setting up a property in the popular blockchain-based virtual world Decentraland
• Carrying the branding of the company’s Onyx blockchain division, JPM’s virtual property also includes a portrait of their notoriously crypto-ambivalent CEO Jamie Dimon, and includes spaces where observers can follow expert conversations on crypto asset markets
• This move follows a few weeks after the company published a report titled “Opportunities in the Metaverse”, which identified the potential of persistent virtual worlds as seemingly “limitless”
• Their report noted a host of major consumer brands establishing metaverse presences, seemingly catalysing them to become the first financial institution to do so, after concluding “The metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion in yearly revenues”
• Christine Moy, the global head of Liink, Crypto & the Metaverse for JPMorgan, identified the Decentraland move and the report’s purpose as “help[ing] clients cut through the noise and highlight what we would love to see built or scaled next in commercial infrastructure, tech, privacy & identity, workforce, and social governance”
• L’Oreal also featured in metaverse news this week, as multiple metaverse-centric trademark filings emerged related to a broad range of the beauty conglomerate’s subsidiary companies

 

What happened: DBS seeks to expand Bitcoin trading to retail customers

 

How is this significant?

• Leading Singaporean bank DBS announced during their latest earnings call that they are now looking to increase access to their digital asset exchange, from just institutional investors to retail investors as well
• CEO Piyush Gupta did clarify that it could take until the end of the year for such an expansion to happen, as all regulatory and compliance safeguards must be undertaken
• He also noted the increasing institutional appetite for crypto assets, as trading volumes on their exchange reached over $595m in Q4—more than twice the volume of the previous three quarters

 

What happened: PwC Luxembourg releases bullish report on digital asset investment

 

How is this significant?

• Following on from last week’s news about KPMG Canada adding Bitcoin and Ether to its corporate treasury in order to better serve and advise clients on digital assets, another regional office of the “Big 4” released a report on rising crypto adoption
• PwC Luxembourg this week published “Crypto-assets: Paradigm shift or short-term trend?”; a report detailing the rising appeal of digital assets within the key European financial services hub
• Of 123 financial industry professionals surveyed in the Grand Duchy, 61% are “embarking or planning to embark on a crypto journey”
• 18% already considered digital assets a strategic priority, whilst a further 43% expected them to become a priority within the next 2 years
• Lack of regulatory clarity was identified as a key limiting factor, but report author Thomas Campione sounded a bullish conclusion overall, writing “It is becoming clear however that 2022 shall be a pivotal year when it comes to crypto-assets management… Taken into consideration that Luxembourg is the second investment funds hub in the world, these results clearly set the tone on what to expect in the market in the very near future”

 

What happened: Coinbase moves into remittance market

 

How is this significant?

• Publicly-listed American digital asset exchange Coinbase this week announced a move into the money-transfer business, through a pilot project allowing the free transfer of digital asset remittances to Mexico
• Receivers will be able to either convert the assets directly into Pesos, or download them onto a Coinbase account
• Coinbase estimates that blockchain and digital assets will allow them to provide services “25% to 50% cheaper” than existing companies in the $700bn global remittance market
• Whilst first implementations are limited to Mexico, the program will be expanded to wherever the company perceives a suitable product-market fit; “We recognize this is a global issue. And while we’re starting in Mexico, over time we’ll consider other regions where customers face similar challenges”

 

What happened: SoFi CEO confirms personal digital asset investment during “Crypto Bowl”

 

How is this significant?

• On Sunday, the Super Bowl—America’s largest media and advertising event of the year—was nicknamed “the Crypto Bowl”, due to the large presence of digital asset companies in the year’s most-expensive advertising lineup
• In a CNBC interview, Anthony Noto, the CEO of personal finance company SoFi (the sponsors of the host stadium) acknowledged the “Crypto Bowl” perception, and outlined his own personal involvement with digital assets
• Whilst giving a general disclaimer that digital assets are volatile and can lose value, he did say digital assets could play a role in a small position within a diversified portfolio, and noted that his family “…we’re invested in cryptocurrency. We own Bitcoin, we own Ethereum, we own some of the more obscure cryptocurrencies”
• He also praised the potential of decentralised finance, stating “I believe if you don’t innovate, if you don’t use cryptocurrency as a technology platform, you’ll get left behind. Your business will be smaller, you’ll be less competitive, you’ll have less innovation, less of a value proposition for consumers, and you’ll lose ground”
• Coinbase spent $14m for airtime on a one-minute advert that primarily featured a QR code directing people towards their website; they were momentarily victims of their own success as 20 million people scanned it simultaneously and overloaded their servers, but the exposure nonetheless led to a 4% rise in their share value

Market Overview:

Digital assets returned to positive momentum this week, with Bitcoin and Ether recovering above $40,000 and $3,000 respectively.

• Bitcoin grew from weekly lows around $36,400 to briefly trade above $45,000 on Tuesday, following recovery back above the $40,000 mark on Friday
• Indeed, Bitcoin experienced its longest rally since September, amidst a wider market movement back towards risk assets
• Bitcoin currently trades at $44,200; a commendable 19.1% weekly appreciation
• Ether followed a similar trajectory to Bitcoin (but peaked a day later, at $3,250 on Wednesday), recovering from weekly lows of $2,593 to break through the $3,000 mark on Saturday
• Ether is currently priced at $3,199—representing a 19.4% weekly growth, and a second consecutive week of double-digit growth
• Total market capitalisation moved above $2tn again, with a current value of $2.02tn
• Total value locked in DeFi grew by over $8bn, to $87.7bn, according to industry analytics platform DeFi Pulse

 

Digital asset markets bounced back this week, featuring double-digit growth across the majority of leading projects. This performance was matched by ringing endorsements from the likes of KPMG, Wells Fargo, and Tesla, whilst major VC investments continued, law enforcement from the United States secured the largest-ever recovery of stolen crypto, and lawmakers from Russia sought to recognise digital assets as analogous to currencies.

 

What happened: KPMG Canada adds Bitcoin and Ether to corporate balance sheet

 

How is this significant?

• KPMG’s Canadian office confirmed this week that they have invested in both Bitcoin and Ether, “as part of a commitment to emerging technologies and asset classes”
• As one of the traditional “Big Four” accounting firms, they are now one of the most prominent financial services firms to make a direct investment into digital assets
• Although they did not disclose the amount invested, they confirmed that they used the services of the Winklevoss-owned Gemini exchange to make the purchase, and that carbon offset credits were also purchased to mitigate any environmental impact
• The move is another illustration of Canada’s more progressive policies towards crypto assets than their neighbours to the south, following Fidelity Canada’s launch of a Bitcoin spot ETF back in December
• A KPMG spokesperson indicated the investment was not executed solely for their own investment aims, but do give them the expertise to assist clients in doing likewise; “Having gone through this process ourselves now, we’re confident we can guide clients and prospective clients through the process of crypto asset treasury allocation,… Our investment allows us to share our journey, our experiences, our challenges with them so that we can help them navigate the crypto asset world”

 

What happened: SEC invites public feedback on proposed Grayscale Bitcoin spot ETF

 

How is this significant?

• After rejecting numerous previous applications for a Bitcoin spot ETF, the SEC this week indicated some possible confidence in applications from both Grayscale and Bitwise, inviting feedback from the public about the proposed investment vehicles
• In particular, the commission is looking at investor perceptions around the possibility of market manipulation for the ETFs
• Grayscale’s application is seen as particularly significant, as it would involve the conversion of their current GBTC investment funds, currently the largest holdings of Bitcoin in any investment vehicle
• GBTC is currently worth a total of $27bn, having served as an early gateway into Bitcoin investment for financial institutions—a fact that has traditionally caused a price premium compared with actual Bitcoin value
• Bloomberg analysis recently found sustained demand for Bitcoin spot ETFs despite price volatility

 

What happened: US Department of Justice seizes billions of dollars in stolen Bitcoin

 

How is this significant?

• This week, American law enforcement successfully recovered around $3.6bn worth of Bitcoin from one of the largest exchange hacks ever; the 2016 hack of crypto exchange Bitfinex
• At the time of the theft, the Bitcoin was valued around $71m, but upon recovery this week, the value had risen to more than $4.5bn
• The recovery is by far the largest coup thus far for the National Cryptocurrency Enforcement Team of the Justice Department, founded 4 months ago. The previous largest recovery of funds was $2.3m

 

What happened: Russian lawmakers agree to treat digital assets as currency

 

How is this significant?

• According to reports in Russian newspaper Kommersant this week, Russia’s central bank and government have come to a consensus (as encouraged by Vladimir Putin) regarding the regulation of digital assets in the country
• Kommersant quoted documents from a government meeting last week, and wrote that “The government and the Bank of Russia have agreed on a future regime for the circulation of cryptocurrencies in Russia. Before February 18, they will prepare a draft law on the circulation of digital currencies in the Russian Federation, in which cryptocurrencies are recognised as an analogue of currencies, and not digital financial assets”
• The draft document recognises the scale of digital asset adoption, and the power of their decentralised nature, making regulation rather than banning a much more feasible option; “The establishment of rules for the circulation of cryptocurrencies and control measures will minimise the threat to the stability of the financial system and reduce the use of cryptocurrencies for illegal purposes since a complete ban on the segment of operations related to their circulation is impossible”
• The article also noted a reporting obligation on any transactions valued above 600,000 Rubles (roughly $8,000), and that crypto asset possession and transacting will remain legal, but must be conducted through regulated channels such as banks or licensed exchanges
• This regulation will likely take effect from the second half of this year, or 2023, according to the Kommersant report

 

What happened: Wells Fargo declares crypto assets are approaching “hyper-adoption phase”

 

How is this significant?

• In a special “Understanding Cryptocurrency” report this week titled “Cryptocurrencies — Too Early or Too Late?”, analysts from Wells Fargo emphatically concluded that it’s “still early” in the investment evolution of the assets
• Dismissing the opinion that it may be too late, the report states that digital assets “are viable investments today, even though they remain in the early stages of their investment evolution”
• Analysts wrote “We understand the ‘too late to invest’ argument but do not subscribe to it… We believe that focusing too much on past performance, especially with cryptocurrencies, can be misleading to new investors”, due to the fact that historical performance numbers may appear skewed when most major digital assets began from a price point near zero
• Instead, they believe investors should look to the future, rather than the past, when anticipating digital asset performance, likening adoption now to the internet in the 1990s; “cryptocurrency adoption rates look to be following the path of other earlier advanced technologies, particularly the internet. If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption”

 

What happened: Alfa Romeo integrates NFTs for service history

 

How is this significant?

• Although NFTs are currently primarily viewed as a digital art delivery model, the technology has numerous possible applications where tamper-proof, transparent data can be of value
• Italian automobile manufacturer Alfa Romeo has recognised this, announcing that its Tonale SUV will be “the first car on the market equipped with an NFT digital certificate”
• Their “blockchain card” will “record of the main stages in the life of an individual vehicle”, allowing for more transparency in matters of insurance and second-hand resale
• Francesco Calcara, Alfa Romeo’s head of communications, stated that “Upon customer’s consent, the NFT will record vehicle data, generating a certificate that can be used as a guarantee of the car’s overall status, with a positive impact on its residual value”
• In other NFT news this week, the CEO of hit gaming franchise Grand Theft Auto spoke out about the potential of the technology in video games, telling an industry publication “We’re highly convinced there’s an opportunity for NFTs to fit with [our] offerings in the future… We believe in rare goods, we believe in collectibles”
• He did also caution against exploitative integration of NFTs based primarily on speculation, noting that companies need to strike a balance between rewarding gameplay and implementation of assets with real-world value

 

What happened: Tesla confirms nearly $500m gain on Bitcoin holdings

 

How is this significant?

• Elon Musk’s Tesla confirmed in their latest SEC filings that at the close of 2021, their corporate Bitcoin holdings were valued at $1.99bn
• This represents a gain of almost $500m since they invested one year ago, despite selling approximately $128m worth last March in order to demonstrate the asset’s liquidity
• Barrons summarised the company’s performance in regards to Bitcoin thusly; “Tesla disclosed an initial $1.5 billion position in its 2020 annual report, filed in early February 2021. The company’s position has grown to $2 billion, net of sales, even though the carrying value of the Bitcoin is $1.26 billion”

 

What happened: Sequoia, SoftBank, Tiger Global amongst $450m investors in Polygon token

 

How is this significant?

• Several major VC groups participated this week in the sale of tokens for Polygon, an Ethereum scaling solution operating as a Layer 2 blockchain
• More than 40 investors participated in the funding round, including SoftBank Group Corp.’s Vision Fund 2, Mike Novogratz’s Galaxy Digital, Tiger Global, and Reddit co-founder Alexis Ohanian
• Purchasing tokens is seen as the closest equivalent to equity investment in many digital asset protocols, effectively forecasting growth in protocol adoption and therefore token value
• Layer 2 solutions building on Ethereum are a key potential growth area for blockchain, as many teams favour Ethereum’s established position and developer mindset in the smart contract space, but users struggle with its current transaction fees before the network completes its transition to proof-of-stake consensus mechanisms
• According to Polygon, use of their Layer 2 is growing astronomically; “more than 130 million unique users, over 3 million daily transactions and in excess of 3.4 billion transactions since the company’s founding in 2017”

 

What happened: Private equity giant KKR participates in $500m metaverse funding round

 

How is this significant?

• KKR this week joined notable investors including the Winklevoss brothers and George Soros as investors in Animoca Brands, a leading project in the digital asset metaverse space
• KKR’s involvement was a late addition to a $358m round (featuring the above investors) first announced in January
• This investment brought Animoca’s current valuation to around $5bn, with the company aiming for another round this year to double its valuation to $10bn
• This follows KKR’s previous participation in a $350m round for crypto industry bank Anchorage Digital, which valued the custodians at over $3bn