Digital assets retraced sharply alongside most global markets, as geopolitical tensions continued to escalate in eastern Ukraine.
Bitcoin declined throughout most of the week amidst the backdrop of international tension, opening at highs around $44,000 on Thursday, before hitting lows of $36,490 on Tuesday
Bitcoin currently trades at $35,630, down about 18% from last week
Ether followed the same movements, posting a low of $2,513 on Tuesday after opening the week around $3,100
Ether is currently priced at $2,632—a 17% weekly drop
Total market capitalisation declined to $1.71tn
Total value locked in DeFi declined accordingly to $71.1bn, according to industry analytics platform DeFi Pulse
Digital asset values dropped sharply in value this week, as global markets were spooked by ongoing geopolitical tensions 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.
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
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
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”
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”
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
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”
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”
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”
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
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
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”