Digital asset markets begin 2021 on a strong note, as we see more traditional asset managers include bitcoin in their offerings. Pension funds and endowments begin to invest in the digital asset markets. In altcoin news, the “god protocol” flips “digital silver” in terms of market capitalization, Enjin Coin becomes Japan’s first regulated cryptocurrency and Stellar aids a government in issuing their own cryptocurrency. Lastly, other major developments roll out in the space as talks of a bitcoin ETF are revived, a key piece of US regulation may have just ignited the DeFi revolution and one US city wants to become the crypto capital of the world.
It was discovered that several of the largest endowments, which include Harvard ($40B AUM), Yale ($30B AUM), Michigan ($12.5B AUM) and Brown ($4.7B) have been buying bitcoin directly from exchanges, although the amount allocated by each institution is not stated (Coindesk). Meanwhile, the largest crypto asset manager in the world, Grayscale, states that not just endowments, but pension funds have also made their way into the cryptocurrency market and the “sizes of allocations they are making are growing rapidly as well”(Cointelegraph). Blackrock, the largest asset manager in the world with $7.8T AUM (250x larger than Grayscale), has filed a prospectus stating that several of their funds could invest in bitcoin’s CME cash settled futures. Larry Fink, CEO of Blackrock, has stated that bitcoin “could evolve into a global asset market” (Blockworks).
In altcoin markets, Chainlink, otherwise known as the “god protocol”, has overtaken Litecoin to become the 7th largest cryptocurrency by market capitalization with a market capitalization standing at $10B. This is significant as many traders view Chainlink’s success as a major part of DeFi’s success as Chainlink is the largest protocol that connects off-chain data with on-chain data. In other words, Chainlink’s role as a “middle man is an integral part of the DeFi space. Additionally, Chainlink’s market capitalization is expected to rise even further as Grayscale has just unveiled a Chainlink investment trust (Cointelegraph). Enjin Coin becomes the first cryptocurrency gaming company to gain regulatory approval by the Japanese Virtual Currency Exchange Association (JVCEA), a self-regulatory authority recognized by Japan’s Financial Services Agency (FSA). Realizing Enjin’s blockchain technology will revolutionize the Japanese gaming industry, which is home to the most iconic games such as Pokemon and Super Mario, investors bid up Enjin Coin +75% on the day of the announcement (Finance Magnates). The Stellar Foundation, the team behind the cryptocurrency Stellar, is aiding the Ukraine’s Ministry of Digital Transformation in developing Ukraine’s Central Bank digital currency asset. Oleksandr Bornyakov, Deputy Minister of Digital Transformation for IT Development, states that this partnership will put Ukraine at the forefront of digital asset innovation as he makes sure Ukraine remains technologically competitive within Eastern Europe (Decrypt).
Finally, in other important developments, Valkyrie Digital Assets has filed for a bitcoin ETF. The Valkyrie Bitcoin Fund would be listed on the New York Stock Exchange and Coinbase Custody Trust Company would serve as the custodian for the proposed ETF. Although bitcoin ETFs were met with criticism by regulators in the past, the Biden Administrations new SEC head, Gary Gensler, a fervent bitcoin advocate, could be the key that opens up the door for a bitcoin ETF (Coindesk). Coinbase, the largest US cryptocurrency exchange, has announced that it is going public via a direct listing on the Nasdaq. The exchange now has over 35M customers and does $1B in daily volumes. Messari, a cryptocurrency analytics firm, has valued the company at $28B. Finally, in what was the most important regulatory news of the month, the US Treasury has stated that banks may use stablecoins and public blockchains for payments. This means that the $17T banking industry will now be able to transact “cheaper, faster and more efficiently” utilizing both public and private digital currency and blockchain technology. In other words, this announcement marks the beginning of the intersection of traditional finance (TradFi) with decentralized finance (DeFi) (Genesis Block).
2020 CRYPTOCURRENCY MARKET RECAP
2020 could certainly be considered an “outlier” year as the world encountered a global pandemic, heightened geopolitical tensions, social unrest and a financial crisis. Despite the fear, uncertainty and doubt (FUD) that enwrapped 2020, cryptocurrency markets had their best year since 2017 gaining $538B in market capitalization, a +289% YTD increase. Meanwhile, bitcoin ended the year gaining 279%, finally eclipsing its previous all time high of ~$19,800 set in December 2017. However, it was not all “smooth sailing” for cryptocurrency markets in 2020 as the market saw its early gains evaporate in just several days during the climax of the Covid-19 pandemic. Yet this was only one of many instances that tested the durability of the cryptocurrency market in 2020. Here is an end of the year recap remembering the highs and lows of the 2020 cryptocurrency bull market.
Cryptocurrency markets were off to a strong start to begin the year. On January 3rd, the assassination of Iranian major general, Qasem Solemani, threw markets into a tailspin as global political tensions heated up between Iran and the United States. As a result, market participants fled to safe haven assets causing bitcoin and gold to gain 5.44% and 1.59%, respectively, on the day of the assassination (Forbes). Bitcoin, now supplanting itself as “digital gold” by investors, was also finding its way into the institutional world. Grayscale recorded a record breaking $600 million in inflows with ~70% of the inflows coming from institutions (Decrypt). Meanwhile, CME’s release of bitcoin options, geared toward institutional investors, was doing a respectable $5.3 million in daily volume a week after its launch (Cryptoslate). Bitcoin was up as much as 42.76% to start off Q1, with the alt-market leading the charge gaining as much as 120.48% (Chart 1.0).Chart 1.0:
Bitcoin (Cyan) and alt-market (Orange) off to a strong 2020 start.As the Covid pandemic started to materialize in late February, cryptocurrency markets along with global markets would give back all the gains they had previously made at the start of the year. Bitcoin and the alt-market would eventually lose as much as -53.52% and -64.12%, respectively, from its Q1 highs made on February 14th (Chart 2.0).Chart 2.0: Bitcoin (Cyan) and alt-market (Orange) off to a strong 2020 start.
To start off the second quarter, bitcoin along with the alt-market rebounded +30% in April as the Federal Reserve unprecedentedly increased its balance sheet by nearly $2 trillion, a +57% increase, from the start of March into the end of April (FRED). However, the market remained relatively flat for the rest of the quarter as bitcoin’s 3rd halving, which took place at the start of May, turned out to be a “buy the rumor and sell the news” event. Nevertheless, institutional interest continued to steadily increase as Renaissance Technologies’ most famous investment fund, the Medallion Fund, got approved by the SEC to trade CME bitcoin futures (Crowd Fund Insider). Likewise, Paul Tudor Jones, one of the most famous traditional hedge fund managers, revealed that he had a bet on bitcoin, dubbing the digital asset the “fastest horse” in the investment universe (CNBC).
Lastly, and the most notable development in the digital asset market in Q2, came at the end of the quarter when Compound Finance’s release of its governance token paved the way for the crypto investment fad of the year… “yield farming” (Forbes).
Seeing Compound’s token gain over 330% with the introduction of a new “tokenomics” model, dubbed liquidity mining, the floodgates for DeFi markets were now opened. Akin to the ICO boom, DeFi projects, good and bad, were now popping up by the day all utilizing this new “tokenomics” model. In Q3, the total value locked (TVL) in DeFi would swell from $2.07B to $10.6B, a quarter over quarter (QoQ) increase of ~400%, as investors flocked to DeFi protocols to earn annual percentage returns (APRs) on their crypto holdings in excess of triple digits (Chart 3.0). Likewise, the DeFI mania would also be a boon to Ethereum miners as Ethereum would see over $350M in fees paid out to its miners rendering this the first time Ethereum’s cumulative network fees would outpace bitcoin’s since the start of a year (News.Bitcoin).
Although DeFi markets stole the spotlight in the cryptocurrency space in Q3, the institutional activity occurring in the quarter would set the stage for the deluge of institutional adoption of crypto in Q4. Microstrategy, a publicly traded business intelligence firm, converted $425M of its cash into bitcoin to hold as a reserve asset on its balance sheets (Decrypt). Meanwhile, Grayscale Investments would amass ~2.4% of the total supply of bitcoin to end the quarter (TokenPost).
To begin Q4, Paypal (Paypal) and Square (Cointelegraph) both announced they were integrating cryptocurrency into their platforms causing the price of bitcoin and the price of several other tokens to “moon.” Meanwhile, JP Morgan Chase, would soon announce the official release of its own stablecoin solidifying the entrance of the traditional investment banking world into the digital currency space (Cryptopotato). In October alone, bitcoin would increase nearly 30% MoM. However, the price of bitcoin would more than triple those gains in the following two months as institutional and retail “FOMO” would cause a demand shock for bitcoin (Chart 4.0).To end the year, strong retail demand for bitcoin via Paypal’s and Square’s recent digital currency integration would force both firm’s to buy more than 100% of all newly issued bitcoins. This alone was causing a supply scarcity of bitcoin (Business Insider). Meanwhile, on the institutional front, investment magnate, Stanley Druckenmiller, admitted he was betting on bitcoin causing even more institutional investors to ponder why they were not investing in the digital currency space (The Block). Several well-known multi-billionaire dollar investment management funds would also enter into the cryptocurrency space. Guggenheim Partners, the $200B asset manager, is now seeking to allocate up to 10% of the fund’s net asset value (NAV) to cryptocurrency (The Block) in 2021, while Skybridge Capital, a $7.7B hedge fund, has launched a bitcoin fund expecting an “Avalanche of Institutional Investors” to come in the new year (News.Bitcoin).
Despite the cryptocurrency market starting off 2020 with triple digit gains and bitcoin being dubbed as “digital gold”, a safe haven alternative to gold, the Covid pandemic caused the cryptocurrency market to erase all of its gains going into Q2. However, the cryptocurrency market rebounded strongly in Q2 with traders bidding up bitcoin ahead of its May halving. Paul Tudor Jones also gave credibility to the space stating that bitcoin could be the “fastest horse” of 2020. Then, as we entered into the second half of the year, DeFi markets experienced a mania as yield farmers flocked to Ethereum based DeFi protocols to earn astonishingly high yields on their crypto assets. This gave birth to the now almost $15B DeFi market. Lastly, to end the year institutional and retail investors would “FOMO” into bitcoin causing the price of bitcoin to rise +150% in Q4.
Now, with institutional interest in the space at an all-time high, decentralized finance continuing to innovate their product offerings and tech companies integrating cryptocurrency onto their platforms, it appears that the “Roaring 20’s” has just begun for the digital asset space as we head into 2021.
The bulls in cryptocurrency markets stampede onwards causing traditional financial institutions and billionaires to experience “Fear of Missing Out” or “FOMO” an acronym popularized by Generation Z. In bitcoin news, the poster child of the digital asset space is coming to qualified retirement plans popularly known as “401(k) plans”, while the US government may be bitcoin’s newest “hodler”. Interestingly, the recent entrance of PayPal and Square into the crypto markets has now caused bitcoin to face a supply shortage. In global markets, financially stricken countries adopt digital assets as fiat becomes futile.
Two notable high-net-worth individuals have finally made their way into the crypto-sphere. Ricardo Salinas Pliego, the Mexican billionaire and founder of Grupo Salinas, has announced that 10% of his net-worth is being held in bitcoin. Mr. Salinas Pliego stated that “Bitcoin protects the citizen from government expropriation” (Coindesk), while Stanley Drukenmiler, the investment magnate and billionaire, also revealed that he is betting on bitcoin. Although the renowned macro investor stated that he has a larger gold bet, he simultaneously expressed that his bet on bitcoin “will probably work better” (The Block). This month, institutions continue to showcase “FOMO” into the digital asset space. Guggenheim Partners, the $200B asset manager, is seeking to allocate to the cryptocurrency market. In a recent filing, Guggenheim stated that it wanted indirect exposure to bitcoin via the Grayscale Bitcoin Investment Trust (GBTC), while also stating that up to 10% of the net asset value of its Macro Opportunities Fund could be allocated to the trust (The Block). The nearly $3T asset manager, JPMorgan Chase, released an analysis which made the case that family offices may be seeing bitcoin as an alternative to gold. The analysis states that “the potential longer term upside for bitcoin” makes it a strong contender to gold as an alternative currency to fiat (Coindesk).
In bitcoin news, the US-based asset manager, Digital Asset Investment Management (DAiM), has launched the first employer 401(k) plans supporting bitcoin. DAiM will serve as an advisor and a fiduciary in helping companies craft the 401(k) plans which will mix traditional assets and up to 10% of digital assets in its clients portfolios (Cointelegraph).
After seizing $1B worth of bitcoin and bitcoin forks from individual ‘X’, a hacker affiliated with the Silk Road, several notable individuals within the cryptosphere are urging the US Government not to sell the seized bitcoins. Although the DoJ has an obligation to sell seized assets when the assets were initially acquired illegally, Crypto-focused lawyer Preston Byrne has stated that the government should not sell its bitcoins, rather the government should start “stockpiling a national reserve of BTC” in preparation for the end of the fiat monetary system. Although Byrne’s statement was met with criticism, it reinforces the idea that the US government could be a “hodler” of bitcoin in the near future (Cryptoslate).
There appears to be a shortage of bitcoin as PayPal and Square’s Cash App, is buying up more than 100% of all new issued bitcoins. The largest bitcoin hedge fund, Pantera Capital, commented on the development stating that “When other, larger financial institutions follow their lead, the supply scarcity will become even more imbalanced”. Interestingly, if PayPal’s growth persists, the payments platform alone will be buying up more than all newly issued bitcoin’s (Businessinsider).Lastly, digital currencies are being used around the world to provide economic relief to financially stricken countries. The stablecoin provider, Circle, has partnered up with Juan Guaido, the interim-President of the Bolivarian Republic of Venezuela and Airtm to deliver aid to front line medical workers which are combating not only the global pandemic, but capital controls and hyperinflation produced by the dictator and usurper of power, Nicolas Maduro. More specifically, “Circle created an aid disbursement pipeline that leveraged its US dollar backed stablecoin, USDC, to bypass the capital controls set by the dictator, Nicolas Maduro resulting in millions of dollars of funds being put in the hands of frontline medical workers” (Circle). Meanwhile, Lebanon’s Central Bank plans to launch a digital currency in 2021 in an attempt to combat the economic crisis facing its country. Lebanon, faced with a dollar crisis, tightened up capital controls while its native currency, the Lira, plunged rendering it a near impossibility for Lebanese citizens to transact in their local currency. The governor of the central bank is hopeful that the release of its digital currency will reinstate confidence in Lebanon’s banking system (Cointelegraph).
The price of bitcoin smashed through $13K to start off the month of October as Central Banks around the world finally cave and give into the digital asset evolution. Meanwhile, digital currency continues to seep into traditional business models as one of the largest online payment systems in the world integrates bitcoin into its platform, the tokenization of traditional financial assets reaches an inflection point and one of the largest asset managers in the world finally releases its own cryptocurrency. Lastly, several public companies abandon cash for cryptocurrency as they begin “stacking sats” on their balance sheets.
In the Central Banking world, South Korea’s Central Bank has announced that it will begin its distribution phase of its central bank digital currency (CBDC) next year. The distribution phase is the last phase in its CBDC’s implementation and will finalize in December of next year. Currently, the Bank of Korea is consulting third parties on how to implement their CBDC (Currency.com). On the other hand, the Central Bank of the Bahamas, or CBOB, is working on a solution to make their CBDC, the Sand Dollar, interoperable with other global currencies. Cleopatra Davis, Head of Banking at CBOB, stated that digital currencies have become “extremely important during the time of COVID-19” because digital currency is accessible anywhere without physical interaction (Cointelegraph). The current President of the European Central Bank (ECB), Christine Lagarde, has stated that the ECB should be “prepared” to release a digital currency as the way humans interact with money is becoming increasingly digitized. According to Lagarde, the ECB is looking at the technology “very seriously” (Cryptoslate). Lastly in CBDC news, the Central Bank of China PBOC, has already processed $162M or 1.1B Yuan worth of pilot digital currency transactions. China’s Digital Yuan looks promising as there are already 113,300 personal digital currency wallets and 8,800 corporate digital currency wallets that have been utilizing the Digital Yuan. It is interesting to note, that the PBOC has been researching digital currency electronic payments since 2014, far ahead of any other major developed nation (The Block).
Digital currencies and blockchain technologies continue to enhance traditional business models. PayPal has launched a service that will allow users to buy, sell and hold cryptocurrency in their PayPal account. The payment platform also plans to make cryptocurrency available to its 26 million merchants worldwide. Users will be able to exchange Bitcoin, Ethereum, Bitcoin Cash and Litecoin within their PayPal digital wallets. This development is paramount for the growth of the digital currency industry as cryptocurrencies will now be able to be used by over 300 million of PayPal’s users worldwide (PayPal). Yield, a Paradigm backed startup, is planning to offer what would be the first T-Bill like product in the cryptocurrency space. Unlike current interest rate products, which are mostly variable or fixed with a premium due to the extreme volatility of the crypto market, Yield will be the only one that provides stable long term borrowing and lending options. Like a T-Bill, the protocol’s token, fyDai (Fixed Dai), will offer a set return upon contract expiry (Coindesk). FTX, one of the fastest growing crypto exchanges, has launched tokenized equities. The exchange supports the trading of Facebook, Amazon, Netflix, Google, Apple, SPY and Tesla. If the product becomes popular among traders, it could pave the way for the tokenization of the +$70 trillion equity market and enhance the way we invest in stocks (Decrypt). JPMorgan Chase has finally released its stablecoin, JPM Coin, along with a new business arm dubbed Onyx, which will house its blockchain and digital assets enterprise. Takis Georgakopoulos, the bank’s Global Head of Wholesale Payments, stated the launch of Onyx and JPM Coin is in response to the commercialization of blockchain technology and digital assets (Cryptopotato).
Finally, several companies ditch cash for bitcoin on their balance sheets. MicroStrategy, a publicly traded business analytics firm, is the first publicly traded company to buy and hold bitcoin as a reserve asset. The company had purchased 38,250 bitcoin in August and September, which is now worth more than $500 million. CEO of MicroStrategy, Michael Saylor, stated that bitcoin is the “solution” to the hyper monetary inflation problem (Decrypt). Following in the footsteps of MicroStrategy, Stone Ridge Holdings Group, a $10 billion asset management company, has stashed 10,000 bitcoin or around $114 million with its subsidiary NYDIG (Coindesk). Square Inc., a publicly traded digital payment company, has also made an investment in bitcoin. For a public company larger than Goldman Sachs, their $50 million investment in bitcoin may seem like a pittance, however, it is another firm embracing the trend of hoarding the “inflation proof” asset on their balance sheet (Cointelegraph).
In the month of September, despite DeFi markets cooling down, capital continues to flow into the space. Meanwhile, non-fungible tokens (NFTs) briefly take the spotlight away from DeFi tokens as the market hints at NFT’s possibly being the catalyst for the next cryptocurrency investment mania. Lastly, bitcoin maximalists rejoice as institutions continue to accumulate “digital gold.”
Top DeFi tokens crashed by over 50% to start off the first week of September, while the aggregate DeFi market also ends the month in a “bloodbath.” As a result this caused some traders to coin the market a “scam” (Cointelegraph). Nevertheless, DeFi adoption remains unhindered. Binance, after just releasing its DeFi focused blockchain, Binance Smart Chain, has introduced a $100 million support fund for DeFi projects seeking to build on the Binance Smart Chain. Binance will aid the following projects by adding liquidity to their platform, providing them with media coverage and giving them access to incubation financing (Binance Blog). Yearn Finance, the first “yield farming” robo-advisor, has locked up over $140 million worth of Ethereum in its collateralized Ethereum (yETH) vault. The vault, which locked up $100 million in its first day of launch, is providing an astonishing annual percentage return (APR) of over 90% (News.Bitcoin). However, it is vital to remember Yearn Finance’s platform is still in its infancy and not invincible to the occasional DeFi hack. Piggybacking off of the DeFi boom, Ethereum has seen over $350 million worth of transaction fees paid to Ethereum miners. This is the first time Ethereum’s cumulative network fees have outpaced bitcoin’s since the start of a year (News.Bitcoin).
In an ephemeral narrative shift lasting no longer than two weeks, NFT’s took the spotlight away from DeFi as the $10 million market cap space saw an average price increase among its components of +350% (Cryptonews). Iconic crypto artist, Pak, released a collection of digital art dubbed “Terminus”. Since selling his first digital artwork back in February, Pak has sold over $300,000 worth of his works to date (Decrypt). Crypto research firm Delphi Digital, has purchased Five Ethereum NFT’s, which represent digital pets that can be collected and or utilized to battle against other pets in the online game Axie Infinity, for a total of $162,000. Although the price tag may seem absurd, Delphi Digital claims, as the game’s popularity increases it will give rise to the NFT’s “rarity and utility” (Decrypt). Dapper Lab’s, the team behind the most lucrative NFT boon, CryptoKitties, has just released NBA Top Shot. The platform allows users to own memorable in-game highlights of NBA players. The platform achieved over $1 million in revenue during testing (Ledger Insights). However, the most notable development of the month, arising from NFT space, is that the team behind Minecraft has announced that it will release NFTs for the game by year’s end. (Cointelegraph). Minecraft is the ideal platform suited for NFTs as its 126 million player community along with its 11 year old track record boasts a perfect sandboxed environment to exchange and utilize rare items. Not to mention, the game reached $200 million in revenue in 2020 (The Verge).
Lastly, institutions continue to bet on bitcoin. Grayscale Investments now owns 2.4% of the total supply of bitcoin. This comes after the largest digital asset manager purchased $180 million worth of bitcoin during the month (TokenPost). The world’s largest sovereign fund, the Norwegian Government Pension Fund, now owns almost 600 bitcoin, which is currently valued at just over $6 million dollars. Although the allocation is trivial to its total assets under management of $1 trillion, it is more impressive to see sovereign wealth funds “dipping their toes” into the digital asset space (Nairametrics). MicroStrategy, a publicly traded business intelligence firm, converted $425 million of its firm’s cash to bitcoin. The CEO of MicroStrategy, Michael Saylor, who in 2013 stated that bitcoin was doomed to fail, recently stated that bitcoin was a much better inflation hedge than gold (Decrypt).
This month in digital asset markets DeFi continues its hot streak as it, once again, surpasses all time highs and attracts even more crypto projects into the space. In the traditional financial sector, financial service firms continue to roll out more crypto products for the retail investor, while South Korean Banks make a pivotal entrance into crypto markets. Lastly, blockchain technology continues to enhance inefficient databases, while also being a possible remedy for a widely debatable topic regarding the upcoming US election.
DeFi markets surpass $4 billion in total value locked (“TVL”) (Cointelegraph) and its market capitalization surpasses $15 billion (Decrypt). The explosion in DeFi adoption has led popular DeFi exchange, Uniswap, to surpass Coinbase Pro in daily trading volume. According to Uniswap’s trading records, on the day it surpassed Coinbase Pro in trading volume, it did $426 million in volume as opposed to Coinbase Pro’s $349 million (Cointelegraph). What many refer to as the “meme mania,” the speculative frenzy among cryptocurrencies based off of popular internet memes, could be attributed as the primary driver of the increase in trading volume on Uniswap. Several meme tokens, in which the majority are dubbed worthless by “crypto” investors, amassed gains over thousands of percent in just several days, while one meme token rose over an astonishing 1 million percent in just several weeks of trading. However, risks are prevalent in the meme mania as many investors lost everything to meme token scams (see: BKCC Medium). It is important to note that most DeFi speculation is taking place on the Ethereum blockchain, which is now leading many other layer 1 networks to make their way into the DeFi space. In fact, Tron recently launched “Just Swap” to compete with Etherum’s DeFi sector. Additionally, Brendan Blumer, CEO of EOS, tweeted that EOS will “unleash DeFi” stating further that EOS is a better alternative to Ethereum’s slow and costly DeFi network (Daily Hodl).
In the traditional financial service sector, Fidelity Investments, the 5th largest asset manager in the world with $2.7 trillion in assets under management (“AUM”), is launching its first Bitcoin-only fund. This product will be geared towards institutional investors with a minimum investment set at $100,000. Fidelity is most likely trying to anticipate a surge of institutional capital entering into the digital asset space (CryptoPotato). 21Shares, formerly Anum, a crypto exchange products provider (ETP), has crossed over $100 million in AUM. 21Shares is one of few financial services providers at the intersection of crypto and traditional finance that is gaining market share in the European market. 21Shares’ ETPs are listed across both Switzerland’s and Germany’s stock exchanges (The Block). In Asia, four of the five largest South Korean Banks have announced their plan to provide cryptocurrency services next year after the government enforces a key piece of regulation regarding cryptocurrency. This comes after the US Office of the Comptroller of the Currency (OCC), had announced recently that US banks are authorized to provide cryptocurrency services. Clearly, the banking industry is getting ready to take on a wave of crypto assets in the coming months (Bitcoin.com).Blockchain technology continues to replace inefficient databases worldwide. In fact, one million citizens of South Korea have abandoned their physical driver’s license for a digital blockchain based driver’s license. Through the PASS smartphone app, South Koreans are able to verify their proof of age for buying things like cigarettes and alcohol (Blockchain News). On the other hand, VeChain’s newly released blockchain application, ToolChain, intends to immensely improve the tracking of the global food supply chain (Cointelegraph). The release of ToolChain is most likely in response to the current COVID-19 pandemic, effectively, trying to verify the quality and safety of the sourcing, storing and delivery of food. Lastly, as the United States Presidential Election heats up, one of the most debatable topics that has surfaced is the use of mail-in ballots. Although the country is divided by this issue, the United States Postal Service (USPS) may have a solution. The USPS has just patented a blockchain backed mail-in voting technology that would make voting by mail both secure and convenient. It is unclear whether the USPS will actually implement the technology, it could provide not just the US election, but global elections with a transparent and convenient voting solution (Coindesk).
DeFi continues to surpass more milestones as the space continues to attract risk savvy investors. In the altcoin market, a once forgotten payments platform locks in a key partnership with Samsung, Binance seeks to expand its product offering, Travala token (AVA) soars as its partnership with Expedia brings crypto into the bookings industry and a popular meme coin surges over 100% in the matter of days. In other industry news, “Gen x” and “Boomers” take a play from millennials, while crypto makes headwinds in the traditional finance world.
DeFi goes parabolic as the total value locked in DeFi surges from $3 billion to over $4 billion in less than a week (Decrypt). Compound, the leading lending protocol on Ethereum, topped over $1 billion in assets borrowed (Coindesk). Although impressive, Maker Dao beat Compound to the punch as it became the first DeFi platform this month to surpass $1 billion in total value locked (Coindesk). Seeing the massive growth in DeFi, new players are making their way into the space. FTX, a popular retail geared crypto exchange, has partnered up with Solana, a blockchain platform, to launch their own decentralized exchange (DEX) (The Block). If FTX’s DEX is anywhere near as successful as their current platform, expect FTX to become a major player in the DeFi space. Lastly, Aave, another lending protocol, has just launched unsecured flash loans. In other words, users can borrow without any collateral as long as the loan is returned to the pool before the transaction ends. The technology will most likely be used by sophisticated arbitrageurs giving birth to a new breed of “Flash Boys” (The Defiant).
Expedia now allows over 700,000 accommodations to be booked with cryptocurrency after partnering up with popular hotel aggregator Travala. As a result, Travala token (AVA) rose over 300% on the month as investors believe this partnership will open up the doors for cryptocurrency in the bookings industry (Cointelegraph). Stellar foundation, the non-profit organization that supports the Stellar blockchain, has partnered with Samsung, which means Stellar’s blockchain services will be now available on the Samsung Blockchain Keystore. This partnership should further boost Stellar Network’s already 4 million clientele (Prnewswire). Binance is looking to expand its offerings after acquiring a London based provider of crypto Visa debit cards, Swipe. Binance also agreed to list Swipe’s token (SXP) on its exchange causing SXP to rise over 50% on the week (The Block). Lastly, just when you thought you have seen it all in the cryptocurrency markets the popular meme coin, Dogecoin (DOGE), rose over 100% in under a week after a “TikToker” posed a challenge to pump the token up to $1. The “pump n’ dump” came nowhere near its goal as the token would have to rise by almost 500x, but the effort was certainly audacious (Fortune).
In other industry news, Mode Banking, a U.K. trading app, has reported that Baby Boomers and Generation-X are increasing their investment into digital assets. In fact, the two groups have increased their bitcoin holdings by a factor of nine since the pandemic first hit in March. In fact, Morgan Creek Digital commented on this trend stating that the older generation will soon own more digital assets than millennials (Cointelegraph). On the other hand, in Grayscale’s most recent quarterly report, Q2 2020, the largest asset manager in crypto had once again revealed that it had another record breaking quarter. An impressive $1 billion worth of digital assets flowed into the asset manager in Q2 (Grayscale). Meanwhile, as the “Fed’s money printer goes brrr..”, the Federal Reserve announced that it had no plans to issue a digital currency in the future, but it will be ready to implement one if the need arises (The Block). Finally, in what was probably the most talked about headline in the institutional crypto space, Coinbase, the largest US crypto exchange, is looking to go public via a direct listing. With over 35 million users and a valuation of $8 billion, the platform would certainly make headwinds as the first publicly traded US cryptocurrency exchange (Reuters).
This month in altcoin news Vitalik Buterin updates the cryptocurrency community on Ethereum’s 2.0 launch, meanwhile, Ethereum Classic “follows in its sibling’s footsteps” with its Phoenix Hard Fork launch, Cardano’s Shelly Mainnet launches a Proof of Stake upgrade and Basic Attention Token becomes a magnet for adopters. In stablecoin news, Tether drowns the competition as its market capitalization continues to swell, however, the rest of the stablecoin market also experiences growth. Lastly, the DeFi market experiences parabolic growth as it carves out a new investment niche in the cryptocurrency space, which retail traders have coined “Yield Farming”.
Vitalik Buterin confirms that Ethereum’s 2.0 launch is on track to launch in July 2020 after tweeting that the initial deployment of its blockchain layer 2 scaling solution has succeeded. He adds what is left is sole “refinement and deployment” (Brave New Coin). Ethereum Classic has completed its Phoenix Hard-fork, which now means Ethereum Classic’s blockchain is fully compatible with Ethereum’s blockchain. Hopefully, for Ethereum Classic, it sees a surge in adoption following the hard-fork as it continues to follow in the footsteps of its sister chain, Ethereum (Cointelegraph). Cardano (ADA) has rolled out public testing of its Shelly Main-net, which will eventually morph the blockchain into a decentralized proof of stake network. In other words, ADA holders will be compensated to contribute their cryptocurrency to power Cardano’s network (DailyHodl). Meanwhile, Brave Browser’s monthly active users has surpassed 15 million. Although the browser has experienced a plethora of user adoption, it is still finding ways to make the browser more compatible for mobile users as it struggles to penetrate the mobile browser market (Cointelegraph). Luckily for Brave, the browser received “free press” this month from the world’s most popular podcaster, Joe Rogan, as he stated that he prefers privacy browsers like Brave over traditional browsers like Chrome (PC Mag).
The stablecoin market sees 100% growth in just 4 months as total stablecoin market capitalization surpasses $11 billion (Cryptopotato). Although both stablecoins PAX and TrueUSD have seen their growth stagnate, Binance’s stablecoin has grown more than $875 million since the start of the year, while USDC, the second-largest stablecoin by market capitalization, has also seen triple-digit growth on the year. However, Tether continues to decimate the stablecoin market as its market capitalization is now over $10 billion representing 87% of the total stablecoin market (Cointelegraph). However, not all growth is good growth for the digital asset industry, as Tether continues to overtake the rest of the stablecoin market potential risks become ever more centralized and systemic.
The DeFi space has seen unprecedented growth in the month of June 2020 as total value locked in DeFi surged from just under $979 million to $1.57 billion (DeFiPulse). This parabolic growth in DeFi can largely be attributed to the popular DeFi lending and borrowing platform, Compound, launching COMP token; a governance token where borrowers and lenders are rewarded for participating on the Compound platform (Crypto News). By lending across DeFi protocols and earning COMP rewards, users are able to earn a “double yield” on their investment. In some instances, users were able to realize an APR of over 100% on their lends. Retail crypto users coined this new investment niche “yield farming” (Forbes).
Consequently, the retail investor’s affinity for high yielding products within the DeFi space has caused the Compound platform to become the largest DeFi protocol by market capitalization, exceeding $2 billion, just a few days after its token’s release (DeFiMarketcap). Seeing Compound’s rapid growth, several DeFi protocols followed suit. Balancer, a DeFi token swap platform, adopted a similar token model, and consequently, saw its token price spike 235% on its first day of trading (Cointelegraph). BZx is also looking to hop on the “yield farming bandwagon” as it plans to revamp its token to allow BZx platform users to receive token rewards (Decrypt). Unequivocally, we are at the start of what could be another bubble in digital asset markets, but with the total DeFi market capitalization making up less than 3% of the total crypto market’s capitalization, this begs the question, how big can this bubble get?
In the month of May 2020, bitcoin surpasses several key milestones as its third halving materializes, digital asset markets continue to attract notable institutional interest, and “several altcoins fly while bitcoin sighs”.
Although bitcoin’s long-anticipated halving turned out to be a “non-event” for its price on May 11th, 2020 bitcoin broke several notable records this month. Bitcoin options trading on the CME reached all-time highs eclipsing $60 million (Decrypt). Open interest in bitcoin futures hit an all-time high of $399 million surpassing the previous record set in June 2019 of $392 million (Cointelegraph). It is important to note that CME products are tailored for institutions and an increase in CME activity means that institutional interest in bitcoin continues to grow. In global bitcoin markets, bitcoin volumes in Africa hit an all-time high with nearly $14 million worth of trades taking place across popular P2P bitcoin exchanges Paxful and Local Bitcoins. Interestingly, bitcoin volumes in Africa are currently outpacing local trading in Latin America which only did $11 million worth of bitcoin volumes in the past seven days (Decrypt).
Institutions continue to flock to digital asset markets. The latest popular cryptocurrency IPO, Silvergate Bank, has seen a 75% increase in bitcoin trading volume for its 850 digital currency-related clients which include crypto exchanges, miners, custodians, and global investors. Most notably, Silvergate saw an inflow of $447 million bitcoin following the March 12th selloff (Cointelegraph). Meanwhile, the banking behemoth, JPMorgan, America’s largest investment firm, which manages over $2.6 trillion in assets and initial detractor of cryptocurrency markets, will begin to provide bank accounts, which include deposit, withdrawal and transfer services for crypto exchanges Coinbase and Gemini (Forbes). This partnership is paramount for the digital asset space as it may be the beginning of better banking relationships between traditional financial companies and digital asset firms. Kingdom Trust, a financial custodian that manages over $13 billion in assets has launched a retirement account supporting both altcoins and bitcoin. To incentivize signups Kingdom Trust is giving $62.50 worth of bitcoin to the first 1,000 “Choice” signups (Skugal). Finally, in the institutional digital assets world, famed macro investor Paul Tudor Jones reveals that he has allocated 1-2% of his investment portfolio to bitcoin dubbing the asset “great speculation” (CNBC). This manifestation will undoubtedly cause a wave of institutional investors to think and further participate in bitcoin’s role in the global economy.
In crypto markets, several altcoins “pump” on groundbreaking developments. Enjin has teamed up with Minecraft, the 126 million monthly user sandbox video game, to allow players to tokenize blockchain assets within the game. Dubbed EnjinCraft, players can now trade blockchain assets with each other within Minecraft’s in-game interface as well as allow players to view their Enjin and Ethereum balances in real-time (Decrypt). Blockchain-based delivery network Theta Labs has partnered up with Google Cloud. Google will be a part of Theta’s enterprise validator program, which means Theta will be utilizing the stability, reliability, and security offered by Google Cloud (BlockTribune). Cardano’s founder, Charles Hoskinson, reveals that Shelly Mainnent’s launch, which Hoskinson believes will render Cardano the “world’s next operating system” is on track to launch on June 30th (CryptoPotato). Lastly, the next major event all crypto enthusiasts and traders are eyeing, Ethereum’s 2.0 launch, has been confirmed by decentralized distributing system pioneer, Vitalik Buterin, and it is on track to launch in July. After its release, Ethereum is poised to be able to scale to over 1,000 transactions per second with a new layer 2 scaling solution and other innovative scaling techniques like sharding (Coindesk).
Several altcoins “rip” on significant developments in the month of May while bitcoin underperforms. As previously mentioned, bulls bid up ADA (+45%) into its main-net Shelly Launch. Meanwhile, bulls start to unwind on Theta token (+93%) as they sell the press release announcing Theta’s partnership with Google Cloud. Likewise, Enjin token also made some notable gains (+46%) after it was revealed Enjin would be launching a blockchain platform for one of the largest video game communities in the world. Other notable altcoin mentions include OmiseGO (+100%) and Maker (31.69%), which pumped on Coinbase listing announcements.
In digital asset news, several of the top altcoins by market cap spark important partnerships in an attempt to expand their user base and enhance their platform. Bitcoin forks (ABC and BSV) disappoint as traders “pump n’ dump” into their halvings. In global markets, emerging markets continue to adopt bitcoin as hyperinflation decimates their local currency, meanwhile, China begins testing its own digital currency in four cities. In the digital asset fund management space, several funds look to expand their capital base, while a well-known traditional hedge fund manager looks to make a play in bitcoin futures.
This month in the digital asset and blockchain industry we see continued partnerships between digital asset businesses and traditional business, altcoins continue on the path of improving blockchain interoperability and privacy, the first hostile takeover in altcoin markets commences and lastly, blockchain continues its trend of being intertwined in our everyday lives.
The popular bookings and traveling site, Travala.com, has just recently partnered with Crypto.com to accept payment in several cryptocurrencies. While Travala.com hopes to gain more users from the partnership, this is only one of many partnerships Crypto.com has formed with traditional companies. In fact, Crypto.com Pay’s 1 million users can now access 2 million accommodations in 230 countries (Cointelegraph). In the traditional banking industry, Wells Fargo has invested $5 million in blockchain forensics firm Elliptic, which helps connect cryptocurrency exchanges to traditional banks (Coindesk). Meanwhile, Bank Asia, a $4 billion Bangladesh based bank, has joined Ripple’s RippleNet blockchain-based financial services network to help facilitate real-time remittance transfers (Flipboard).
In altcoin developments, Tether is making their infamous US dollar stablecoin (USDT) interoperable with the Algorand blockchain. Along with Algorand blockchain, USDT is supported by Ethereum, EOS, the Liquid Network, Omni and Tron. Although USDT is a centralized digital currency, it goes to show that both centralized and decentralized forms of digital currency can co-exist not only in the same industry but across several blockchains (Cointelegraph). Aztec, a financial privacy protocol, has launched its privacy network on the Ethereum blockchain. The protocol uses zero-knowledge proofs, like Zcash, to allow Ethereum blockchain users to send transactions privately (Coindesk). Tron, in what may be the first hostile takeover deal in digital asset markets, has acquired the social networking platform Steemit Inc. Although Justin Sun, CEO of Tron, believes much synergies can be realized, he has his work cut out for him as Steemit developers soft forked the steem blockchain in fear of Sun consolidating power on the decentralized blockchain. In other words, Sun and Steemit developers both have two different, and what seems to be unwavering, visions for the future of the steem blockchain (Crypto briefing).
In blockchain developments. Union of European Football Association (UEFA) is distributing one million tickets on a blockchain-based mobile application. UEFA believes this blockchain ticketing system will both enhance and smoothen stadium security (UEFA). On the other hand, South Korea’s capital city, Seoul, which is currently embracing a $109 million blockchain plan, has just released a blockchain-based voting system which will help eliminate voter fraud and allow citizens to better express their ideas and concerns (Decrypt). Lastly, the Department of Defense (DoD), has just contracted a $9.5 million deal with SIMBA Chain to deploy a secure blockchain-based messaging and transaction platform for the US Navy. The DoD will now be able to efficiently “conduct sensitive, mission-critical operations in a manner that is immutable and non-refutable” (Decrypt).
The digital asset industry is off to a strong start in 2020. We are beginning to see the most talked-about narrative of 2019, Central Banks (CB) issuance of digital currencies unravel, the startup behind the most popular stablecoin, Tether, seeks further widespread adoption, the digital asset industry continues its successful push to attract institutional capital and altcoins continue to “shock and awe” digital asset investors.
As Japan’s government begins to develop its own digital currency (Cointelegraph) and the People’s Bank of China completes the top layer design of the digital Yuan (AMBCrypto), “the central banks of Canada, the United Kingdom, Japan, European Union, Sweden, and Switzerland have created a group with the Bank for International Settlements (BIS) to jointly research central bank digital currencies (CBDC)” (Cointelegraph). In addition, at the 2020 World Economic Forum (WEF), WEF along with several central banks, have released a central bank digital currency (CBDC) toolkit, which will act as a “decision guide” to help policymakers navigate the digital currency landscape (World Economic Forum).
Tether has just released a new digital asset, Tether Gold (XAUt), which is pegged to one troy ounce of physical gold on a London Good Delivery gold bar. Tether Gold is primarily geared towards institutional investors as the minimum purchase price allowed is 50XAUt (50 troy ounces) or $75,000. The tokens can be redeemed for the physical gold, which will be stored in a vault in Switzerland (Cryptoslate). As Tether seeks to be one of the first movers in the metals tokenization market, the startup is also venturing into the adult entertainment industry. Tether has just recently partnered up with the firm behind the 34th most popular website in the world, Pornhub. The adult entrainment website will now accept Tether’s US dollar-pegged stablecoin, USDT, and “will allow instant and zero-fee payments via the crypto wallet and browser extension “TronLink.” Pornhub adding support for the stablecoin, is in response to PayPal discontinuing its payment support for the adult entertainment website (Cointelegraph). Although subtle, this is a groundbreaking advancement in digital asset markets as we are beginning to see digital asset technology replace traditional payment systems
Institutional capital has finally made its way into crypto. Grayscale has just recently reported a record-breaking $600 million of inflows into its investment products, with 70% of the capital coming from institutions (Decrypt). However, Grayscale is not the only firm capitalizing on the trend. CME’s recent release of its regulated bitcoin options contracts is already doing $5.3 million in daily volumes after only a week after its launch (Cryptoslate). Meanwhile, one of the world’s largest asset managers ($63.8 billion AUM), Wisdom Tree, is planning to launch a regulated stablecoin. If Wisdom Tree successfully convinces the SEC that its stablecoin is regulatory compliant, unequivocally, Wisdom Tree’s brand equity in the traditional financial space will attract much institutional capital into its digital asset product (Coindesk).
Lastly, in altcoin news, the SEC continues its crackdown on Telegram. The SEC’s ongoing lawsuit against Telegram for its initial coin offering (ICO) of its cryptocurrency, GRAM, began in 2019 claiming the token did not register its ICO with the SEC. Now, the SEC is stating that Telegram’s cryptocurrency has no actual utility. Although the SEC has launched lawsuits against several ICO’s, the SEC’s lawsuit against Telegram is of such importance because Telegram raised a colossal $1.7 billion, making it the second-largest ICO in history (Cointelegraph). On a different note, California VC firm, Andra Capital has partnered up with the Tezos Foundation to issue Silicon Valley Coin (SVC) in a Security Token Offering (STO). SVC will be used by Andra Capital to invest in late-stage private technology companies. It is worth noting that Tezos is at the forefront of the STO space (Crypto Potato). With over “$2.643 billion worth of STO’s to be deployed on the Tezos blockchain”, Tezos is helping to merge regulatory transparency with digital assets (Medium).
Although many digital asset investors were hoping for a “Christmas rally” in December, they were left disappointed as altcoins continued their downtrend, while the price of bitcoin remained fairly constant losing a trivial 2.65%. Although it was more of a “Blue Christmas” for crypto asset investors, digital assets continue to remain uncorrelated to traditional assets. In other words, a great source of diversification for a traditional investment portfolio.
In industry news, we continue to see the rise of crypto derivatives, mainstream multi-billion dollar corporations find opportunities in non-fungible tokens (NFT’s), the largest digital asset exchanges strategically position themselves for the new year and once again, central banks are continuing the push to issue their own digital currency.
OKEx, the second-largest crypto derivatives exchange (FTX), has launched options trading, which will initially allow only selected users to try the service (Crypto Globe). Likewise, Bakkt has also launched its own options trading product, which will be the first Bitcoin Options contract regulated by the Commodities Futures Trading Commission (CFTC) (Cointelegraph). Although the options market is considered an esoteric market for most retail investors, the trillion-dollar market is adored by institutions because it gives them the ability to generate consistent low volatility returns.
Nike has finally unveiled more details about its patented cryptocurrency project, CryptoKicks. One of the ways the technology will be used is by authenticating and transacting a physical shoe using Ethereum non-fungible tokens. Basically, the system provides a way to ensure the authenticity of its sneakers (Cointelegraph). Additionally, CryptoKicks’ technology has immense utility outside of the primary retail sneaker market. In fact, the sneaker resale market is expected to have a market size of over $6 billion in 2025, while its current market size is estimated to be about $2 billion (Business Insider). CryptoKicks could play a large role in helping authenticate resold sneakers, which is one of the largest retail markets flooded by counterfeits (Las Angeles Times). Meanwhile, Microsoft is also “dipping its toes” into the non-fungible token space. It is rewarding its developer community with a program called “Azure Heroes”. Developers who are nominated by the Microsoft community as social leaders will be rewarded an Ethereum “Badger” collectible token. This token will be able to be exchanged on a secondary market (Microsoft). Although this project seems trivial, most likely it is being used as a proof of concept for more practical applications of NFT technologies.
Several of the most well-known cryptocurrency exchanges have been making strategic moves leading up to the new year hoping to gain a competitive advantage in 2020. Gemini is collaborating with State Street to launch a digital asset pilot. State Street, a well-respected investment bank in the traditional financial services industry, is using Gemini’s cryptocurrency expertise to help them implement digital asset technology into their product offerings (Business Wire). Additionally, Kraken has just acquired Circle’s OTC trading desk in an attempt to offer more liquidity and tighter spreads to its users. Circle, on the other hand, is doubling down on its most notable product, its stablecoin, USDC, and believes stablecoins will reach widespread adoption in 2020 (Cointelegraph). Lastly, Binance the largest spot cryptocurrency exchange has made a multi-million-dollar investment in its rival exchange FTX. CFO of Binance Wei Zhou, says this move encourages “positive competition as well as partnerships” in the space (Cointelegraph).
Finally, and as stated in the previous newsletter, Peoples Bank of China’s entrance into the stablecoin industry has sparked a wave of interest across the globe, inciting central banks to develop their own stablecoin technologies. This month Russia’s Central Bank is testing a real asset-backed stablecoin (Cointelegraph), South Korea is forming a task force for central bank digital currency research (Bitcoinist), Sweden’s Central Bank is planning to launch the “e-krona”(Bitcoinist), British Virgin Islands is launching a dollar-backed stablecoin (FX Street), the Bahama’s already began testing their own digital currency (Coindesk) and Iran is planning to create a cryptocurrency to confront “U.S. economic hegemony” (Coindesk).
Bitcoin rolls-over in the month of November as investors abandon “buying dips” to “sell rallies”. Although bitcoin joins altcoin markets in succumbing to the bears, we continue to see exponential growth in digital asset markets. In the cryptocurrency mining space, we see that the growth of mining farms not only proves the sustainability of the digital asset space, but it could also be an alternative source of revenue for energy producers. Furthermore, we see several digital asset investment firms continue to make a significant push to educate the masses and make investing in digital assets for retail and institutional investors more seamless while focusing on meeting all the prerequisites of existing regulations.
The popular lending and borrowing platform Celsius has surpassed an astonishing $4 billion in crypto loans. This is a 93% increase from the $2.2 billion in crypto loans recorded at the start of 2019 (Cryptoslate). Meanwhile, the DeFi crypto credit protocol, Compound, has raised a $25 million Series A led by the popular crypto Venture Capital firm A16z. Compound has $103 million worth of crypto locked up in its platform. Although this is only a fraction of capital utilized on Celsius’ platform, it is still very impressive as it shows people’s trust in peer-to-peer DeFi lending (Coindesk). On the other hand, popular DeFi smart contract platform Tron (TRX), has announced that it has officially partnered up with tech giant Samsung. There are now over 4 million accounts registered on Tron’s platform, however, it is unsure how many are actually active (Cointelegraph). Nevertheless, this partnership exposes Tron to Samsung’s near one billion user base (Cointelegraph).
In other crypto-mining news, it was unveiled that data center developer Whinstone US is currently in the process of building a 1 Gigawatt Bitcoin Mine in Texas. This mining farm is planned to dwarf Bitmain’s mining farm, also located in Texas, which has the capacity to only ramp up to 300 Megawatts. The datacenter costs $150 million to build and furnish (Coindesk). Realizing the opportunity cost of not having a bitcoin mining industry, China, has finally ruled to not ban crypto mining. This comes as no surprise, as in recent months, China made a complete U-turn regarding the regulation of digital asset and blockchain technology (Decrypt).
On the contrary, mobile data centers in the US and Canada have found a way to help oil and gas producers to help save on the costs of producing energy commodities. Upstream Data, for example, allows oil and gas companies to buy or rent data centers so, they can utilize their energy to also mine digital currencies. As a result, energy companies are able to produce a higher income for gas then any market price could return (Bitcoin.com).
Digital asset investment firms continue the push to make digital assets a ubiquitous asset class for both retail and institutional investors. In fact, Grayscale Investments has filed its most popular investment vehicle, the Grayscale Bitcoin Investment Trust (GBTC), with Form 10 of the SEC. If approved by the SEC, GBTC will become the first publicly traded digital asset trust to be an SEC reporting company and be compliant of section 12(g) of the Securities and Exchange Act of 1934 (Medium). Meanwhile, Canadian based firm 3iQ is convinced that the Ontario Securities Commission (OSC) will approve their Bitcoin ETF claiming that they have solved the “pricing, custody, audit, and public interest issues”. If 3iQ gets approval for its ETF, it will have successfully become the first company to release a digital asset ETF (Cryptoslate).
Finally, last month’s unveiling of China’s digital asset currency has opened up the floodgates for the global digitization of fiat currency. Ghana is exploring a digital currency (Cointelegraph), Saudi Arabia and UAE are jointly issuing a digital currency (Cointelegraph), the Association of German Banks, a lobby group of over 200 private German Banks, are vouching for a digital Euro (The Block Crypto), the Federal Reserve is evaluating a digital dollar (Coindesk), Tunisia is launching their own digital currency, dubbed E-Dinar (Cointelegraph), the French Central Bank is developing a digital currency (Coindesk) and Turkey is planning on launching their own digital currency next year (The Block Crypto). The race to digitize fiat currency in 2020 has officially begun.
Bitcoin and altcoins got squeezed in October causing cryptocurrency markets to finish the month with a positive performance. Meanwhile, in digital asset news, altcoins finally reclaim headlines after several languid months of inactivity, Grayscale capitalizes on a reluctant SEC, Bakkt futures make a “come Bakkt” and China leads the way in digital asset and blockchain innovation.
Brave, the firm that rewards their web browser users in Basic Attention Tokens (BAT) for their data, released the world’s first whitepaper outlining a distributed virtual private network (VPN), dubbed VPN-0. VPN-0 will allow users to connect with each other over a peer-to-peer network while preserving their online identities (Cryptoslate). If successfully implemented, this would be a major, but also controversial innovation in the tech-privacy space as it will allow users to search dodgy things without their identity being revealed (Decrypt).
Justin Sun, the founder of Tron (TRX), is once again teasing a major announcement for his cryptocurrency. Sun tweeted that Tron is partnering up with a billion-dollar tech mega-corporation that will distribute Tron dapps and tokens to billions of customers (CCN). If Tron makes the right partnership, the potential synergy could render Tron to be the first mainstream adopted cryptocurrency.
Lastly, in altcoin news, DeFi is making new headwinds, as there is now $420 million worth of Ethereum being utilized throughout DeFi platforms. Although MakerDao is the most popular DeFi platform to lockup Ethereum for lending and borrowing, dydx, the Andreessen Horowitz backed derivatives platform, has grown its share of locked up Ethereum from $14.2 million worth to $25 million worth in just two months. Likewise, InstaDApp, another less popular DeFi platform, now has $32 million worth of Ethereum locked up for lending and borrowing (Decrypt). We continue to monitor the DeFi space closely as it is one of the fastest-growing and most promising niches within the digital asset space.
Not everyone is complaining about the SEC’s decision to delay a bitcoin ETF until 2020, in fact, Grayscale, the firm behind the successful Grayscale Bitcoin Trust (GBTC) and several altcoin trusts, has seen $85 million in capital inflows in Q2 or twice as much capital inflow as in Q1. More interestingly, 25% of capital inflow in Q2 targeted altcoins (Cointelegraph). In addition, while the SEC stalls, Grayscale continues to gain market share in the digital asset management space. In fact, Grayscale has just released a new FINRA approved product for OTC retail trading, the Digital Large Cap Fund (DLC). DLC is an index fund that tracks a basket of nine of the most popular cryptocurrencies. At the beginning of October, there were around 3.2 million shares of DLC outstanding (Coindesk).
After a disappointing launch, Bakkt futures are gaining traction. Only a month after its release, Bakkt futures volume exploded to 10x its first-day trading volume, hitting an all-time high daily trading volume of $10.3 million on October 25th (Cointelegraph). “Piggy-Bakkting” off of their most recent success, the custody and futures platform has also announced that they will be entering into the mobile payment industry. Although Bakkt has released minimal details about the new endeavor, we know Bakkt is releasing a consumer app, which will allow users to transact and track digital assets. Starbucks has already announced that they will be partnering up with Bakkt on the project (Cointelegraph).
Finally, China has officially confirmed that it will release its own digital currency electronic payment system (DCEP). The Peoples Bank of China (PBoC) revealed that they have been studying digital currencies for the last five to six years. The PBoC boasts that “DCEP can achieve the real-time collection of data related to money creation, bookkeeping, etc., providing a useful reference for the provision of money and the implementation of monetary policies”. The launch of DCEP will mark the first digital currency issued by a central bank (u.today). While China leads on the digital currency innovation front, China is also leading the way in blockchain development. According to the China Electronic Information Industry Development (CCID), there are over 700 blockchain firms in China. Although China lacks large scale implementation of blockchain technology and has not released any “killer blockchain applications”, it is only a matter of time before China gains significant market share in the digital asset space. (Cointelegraph).
Cryptocurrency markets dipped in September as it appears that regulators will not approve the VanEck/SolidX Bitcoin ETF until 2020 (Cointelegraph). The approval of a bitcoin ETF in 2019 was anticipated to be a major catalyst that would propel cryptocurrency markets higher as it would render investing in bitcoin easier for both retail investors and institutional investors. Meanwhile, Bakkt’s disappointing release of its bitcoin futures contract exchange added to the negative sentiment among investors in the digital asset space. Compared to the initial release of the CME bitcoin futures, which processed 420 million dollars in its first week of trading, the highly anticipated Bakkt product only processed a measly 6.8 million dollars in its first week of trading (Decrypt). The lack of liquidity in Bakkt futures along with the VanEck/SolidX Bitcoin ETF flop can greatly be attributed to investor’s uncertain expectations about US crypto regulation, a reoccurring theme we continue to see plague crypto markets. US regulators continue to hesitate on regulating digital assets, yet global innovation within the digital asset space continues to prosper.
We are seeing an increase in US regulated exchanges adapting to the growth of digital assets. Nasdaq is making its first step into the decentralized finance (DEFI) space by issuing an index for digital assets. The index, Defix (DEFX), will track projects belonging to “Proof-of-Work blockchain Amoveo (VEO), decentralized exchange protocol 0x (ZRX) and prediction market Augur (REP), as well as the governance token of the decentralized autonomous organization behind the DAI stablecoin and MakerDAO (MKR)” (Cointelegraph). This an interesting move by Nasdaq as most institutions tend to stay away from DEFI as it is direct competition to their centralized business models and lacks government regulation. Furthermore, the Chicago Mercantile Exchange Group (CME), well known in the digital asset space for their successful bitcoin futures contracts, is planning to release bitcoin options contracts in early 2020 (Cryptoslate). This product will likely drive an increase in demand by institutions focused on the bitcoin derivatives space.
The tokenization of real estate, where ownership of real estate can be portioned into cryptocurrency, has finally come to fruition. Blockchain real estate firm, Asset Block, is tokenizing 60-million-dollars worth of luxury real estate on Algorand’s blockchain platform (Cointelegraph). On the other hand, Harbor, a startup with the goal of transforming the alternative asset experience, has tokenized 100 million dollar’s worth of real estate on Ethereum’s blockchain (The Tokenist). In other words, on both platforms, investors now have access to invest in what was previously a very illiquid and high barrier to entry marketplace.
In government digital currency news, North Korea, the Democratic People’s Republic of Korea (DPRK), is joining Iran and Venezuela in issuing its own national digital currency to avoid international sanctions. This is not DPRK’s first interaction with digital currencies. DPRK hackers have been responsible for stealing $2 billion from foreign banks and digital exchanges to fund its weapons of mass destruction program (Cointelegraph). Meanwhile, across the border, the People’s Bank of China (PBOC) has denied rumors of launching its cryptocurrency in November and confirmed that it does not have an official launch for its digital currency (Coindesk). Lastly and unsurprisingly, Binance continues to make headlines as it is now marketing its Venus stablecoin as a government-friendly digital currency as an alternative to Libra. Once again, Binance continues to push the boundaries of digital asset innovation (Cointelegraph).
It was an interesting month for digital asset markets as we saw an unprecedented amount of cryptocurrency and blockchain developments within the sports entertainment sector. On one hand, several English Premier League football clubs have partnered with blockchain and cryptocurrency firms. Newcastle United (CCN) has partnered with cryptocurrency StormGain to give out unique promotions to fans, Manchester City (Token Post) has partnered with the blockchain gaming firm Superbloke so users can now build a digital football team by training and trading Manchester City digital player cards, and Leicester (Cointelegraph) and Everton (Everton FC) have partnered with the trading platform, Etoro, to promote cryptocurrency markets to football fans. On the other hand, the NBA has also made its way into the cryptocurrency space. The NBA has partnered with Dapper Labs, the creators behind CryptoKitties, to release a new cryptocurrency collectibles game where users can collect, trade and own “some of the greatest moments in league history on the blockchain” (NBA). If the NBA’s platform is successful, it could pave the way for a new alternative asset industry where we could see the tokenization of professional athletes, teams, and franchises.
In places encountering social, political and/or economic turmoil, bitcoin continues to act as a safe-haven asset. Although this has become such a trite reoccurring theme in cryptocurrency markets, the importance of bitcoin acting as a safe haven asset cannot be overlooked. Once again, in Venezuela, bitcoin trading has hit another all-time high as “the number of Venezuelan Bolivars that were exchanged for Bitcoin rose to nearly 67 billion” (CCN). Meanwhile, in Hong Kong, bitcoin was trading at a premium of as much as $5,000 revealing that there was an enormous amount of demand to exchange the Hong Kong dollar for the cryptocurrency in the midst of the Hong Kong anti-extradition protests (CCN). Seeing this type of price action in a developed country like Hong Kong reinforces the legitimacy of bitcoin as an alternative asset.
Walmart, following in the footsteps of Facebook, is now planning to release their own cryptocurrency (Forbes). Although we are still unsure of the utility of Walmart’s cryptocurrency, several expect it to be more successful than Libra as Walmart’s cryptocurrency seems to be flying under the radar of regulators, while Libra continues to encounter regulatory scrutiny. In fact, several of Libra’s backers are now considering withdrawing from the project (Cointelegraph).
Lastly, we are witnessing the final days of fiat as a means of exchange as the PBOC has stated that it is ready to release their own cryptocurrency (Futurism). Alibaba and Tencent are two of seven entities that will first receive the cryptocurrency (Forbes). Several analysts believe that China’s cryptocurrency will make the private banking technologies Alipay and WeChat obsolete, which currently processes every 9 out of every 10 transactions in China. Additionally, China’s cryptocurrency will, unsurprisingly, not be anonymous or decentralized as the government will have full control over the centralized ledger (Block Publisher). Likewise, the capital city of South Korea, Seoul, is also releasing their own cryptocurrency, which is planning to launch this November. The cryptocurrency, dubbed S-Coin, will be used to encourage citizens to participate in governance, facilitate cooperation between citizens and collect information. The cryptocurrency will be programmed so that authorities can decide exactly how the cryptocurrency can be spent (Cointelegraph). As global powerhouses continue to adopt cryptocurrency, this begs the question, will the US fall behind in the cryptocurrency revolution? While foreign governments are integrating cryptocurrency into its citizens’ everyday lives our regulators continue to stall on releasing a bitcoin ETF (Cointelegraph).
Cryptocurrency markets sold off in July as President Trump manifested his dislike for cryptocurrencies (Coindesk) and US regulators expressed their concerns over Facebook’s Libra cryptocurrency during Libra’s congressional hearing (Mashable). In fact, Libra has come under so much regulatory scrutiny that it is possible it may never see the “light of day” (CNBC). Although Congress has an unfavorable outlook on Libra, in the most recent cryptocurrency and blockchain congressional hearing, congress appears to be taking a more open-minded and pro-innovation stance on cryptocurrency and blockchain technology. Today, Congress is not fully sold on the digital asset revolution, but the trend remains positive (CCN).
Meanwhile, in the Asian regulatory front, China’s Hangzhou Internet Court has ruled that bitcoin is virtual property and is legally protected in China. This came as a surprise to most cryptocurrency enthusiasts being that China historically has had a severe opposition to digital assets, which includes banning ICO’s in September of 2017 (BBC).
In emerging markets, cryptocurrencies continue to be a boon. Venezuelan’s continue to flee from the hyperinflationary Bolivar as more than 47 billion Bolivars were traded against bitcoin in the first week of July reaching an all-time high, which was previously set in June (CCN). However, Venezuelan’s are no longer the only emerging market participants using bitcoin to avoid hyperinflation. Zimbabweans are also fleeing to bitcoin to avoid hyperinflation in their country. Albeit, bitcoin is technically illegal in Zimbabwe, citizens like to use bitcoin as a means of exchange rather than its native currency, the Zimbabwean dollar, to avoid losing purchasing power (CCN). Lastly, Cuba is now debating whether it should issue its own national cryptocurrency to help avoid US sanctions. As a reminder, Venezuela is the only country that has issued a national cryptocurrency, the “Petro”, to help avoid US sanctions but turned out to be a failure because of its lack of transparency (CCN).
In fin-tech news, Binance has finally unveiled its long-awaited margin trading platform, Binance 2.0, which will allow eligible users to use up to 3x leverage to trade across 9 asset pairs (CCN). Binance’s recent release could not come at a better time as Bitmex is now being investigated by the US Commodity Futures and Trading Commission for allowing US residents to use its platform. Bitmex’s bitcoin volume has fallen 33% since the investigation (NEWSBTC). However, Bitmex has no reason to worry as it has just recently hit an astonishing $1 trillion in annual trading volume (CCN). On the other hand, Latin America’s largest investment bank Banco BTG Pactual S.A., has announced plans to launch Security Token Offerings (STO’s) on the Tezos blockchain. Furthermore, BTG Pactual and Dalma Capital will work together to host a deal pipeline of $1 Billion for token issuances on the Tezos blockchain (CCN).
In conclusion, we are seeing the global macro environment fostering a bullish outlook for cryptocurrencies. While digital asset technology was initially met with scrutiny by regulators, we believe Congress will acquiesce to promoting blockchain and cryptocurrency technology from fear of missing out and continuing to lag pro-regulatory digital asset countries. Meanwhile, as blockchain technology becomes more seamless, we will continue to see emerging market countries afflicted by dictatorships and hyperinflation follow in the footsteps of Venezuela and Zimbabwe and flee to bitcoin as a safe haven. More importantly, like the Winklevoss twins, we believe this is only the “bottom of the first inning” in the digital asset revolution (Yahoo Finance).
Bitcoin dominated the cryptocurrency markets in June going on a parabolic run, which has been rumored to be caused by institutional buying of the digital asset. Meanwhile, Binance is launching bitcoin futures trading on their platform, which will allow speculators to use up to 20x leverage to trade bitcoin (Coindesk). Binance hopes to overtake some of Bitmex’s liquidity as Bitmex had just recently hit an astonishing $11 billion in daily bitcoin volume (Forbes). Additionally, Google partnered with Chainlink, a blockchain company that acts as a secure “middleman” and will allow Google to use its technology to transfer data between Google and Ethereum smart contracts safely (CryptoSlate). Chainlink is now the best performing altcoin this year gaining 1,195% since the start of 2019 (Swingtradebot). Moreover, LedgerX has won approval of the Commodities Futures and Trading Commision (CFTC) to settle bitcoin futures in spot bitcoin, which will allow LedgerX to offer bitcoin derivatives to retail and institutional investors in the United States and Singapore (Financial Times). All eyes were on Facebook in June as they released the Libra cryptocurrency whitepaper (Libra Whitepaper) and captivated the cryptocurrency community making this release one of the biggest cryptocurrency news of 2019.
Libra, which will be used as a method of payment and used for transactional purposes, has a mission to bring financial infrastructure to the 1.7 billion unbanked across the globe. Facebook’s inspiring and revolutionary mission has aroused cryptocurrency enthusiasts claiming that Libra will spur mass cryptocurrency adoption. However, Libra’s inspiring mission did not excite all cryptocurrency enthusiasts. Several claim that Libra is the “Trojan Horse” of the decentralized cryptocurrency movement (USSA News). So, what’s behind the Libra token that is stimulating such extraordinary narratives among crypto enthusiasts?
The Libra cryptocurrency operates on the Libra Blockchain which uses Byzantine Fault Tolerance (BFT) consensus mechanism to verify transactions. There are going to be 100 validators on the network, which Facebook’s claims are the “decentralized” part of the blockchain. However, on the Libra blockchain, you must be a globally renowned “entity” to become a validator on the network. In other words, a firm/entity must reach two of the three following requirements: more than a billion dollars in market value, reach more than 20 billion people across the globe annually and/or be recognized as an industry leader by a third party association. Clearly, those worried about the decentralization of Libra’s blockchain is justifiable as it appears that Libra’s blockchain is quasi-oligopolistic. In addition, those also worried about the decentralization of Libra’s blockchain will only be instilled with more anxiety when discovering that the Libra blockchain is, ironically, not actually a blockchain, rather, a permissioned ledger with no concept of a block of transactions in the ledger history. Fortunately, the Libra blockchain is pseudonymous, which means users can have one or more addresses that are not linked to their real-world identity (Libra Whitepaper).
Nevertheless, on the surface, the Libra cryptocurrency has all the characteristics of a stablecoin. The cryptocurrency is backed by a basket of the most “stable” global fiat currencies, which include the US Dollar, the British Pound, the Euro, and the Yen. However, unlike most stablecoins, Libra will not be pegged to a basket of fiat currencies. As a result, the Libra Association, the entity responsible for making decisions about Libra, will not actively manage its reserves, rather, they will only intervene if there is a currency crisis that could greatly affect the value of the basket of currencies. Lastly, the supply of Libra’s is uncapped and coins will be minted and burned in accordance with the flow of fiat when buying and selling into Libras (Libra Whitepaper).
In accordance with the invention of Libra, Facebook is also releasing a digital custodial wallet, dubbed Calibra, which specifically, enables the storage and usage of the Libra cryptocurrency. It will be available on Facebook platforms, but initially, it will be integrated with WhatsApp and Messenger. Although several have stated that Calibra will not share your personal data, that is actually not true. Rather, Calibra will not share account information or financial data with Facebook, Inc. or any third party without customer consent. In other words, it is likely that Facebook will have access to your personal transaction history when using the Calibra wallet (Calibra: Customer Commitment).
Being that the Libra blockchain is private, oligopolistic and not actually a blockchain, it is clear why crypto enthusiasts are skeptical about the project. Moreover, given Facebook’s questionable history regarding user’s privacy, it is justifiable to believe that this project is just another medium for Facebook to further capitalize on its user’s private data (New York Times). However, what is more worrisome is not so much the underlying technology of Libra, but the Calibra wallet. When transacting on the Libra blockchain, a person’s identity will be hidden, hence, it would be difficult for Facebook or any of Libra’s validators to capitalize on your personal data. However, the Calibra wallet will be integrated on all of Facebook’s platforms and Facebook has already hinted at utilizing your personal transaction data as long as they have your “consent” to do so. Hence, Facebook will not only have access to all of your social media platform data, but they will be able to specifically analyze what your buying and selling on a daily basis (Calibra: Customer Commitment). In fact, this concern over privacy has already promoted regulators to take action. Maxine Waters, House Financial Services Committee Chairwoman, has already scheduled a July 17th hearing for the social network’s ambitious cryptocurrency plans (The Mercury News).
Although safeguarding its user’s private data is not a primary concern for Facebook, even the largest data scandal of the 21st century, Cambridge Analytica, could not deter the 2.38 billion monthly users who continue to use Facebook’s platform (New York Times). As a result, it is clear that Facebook’s users value simplicity over privacy, which renders Libra to be a major opportunity for both Facebook and the digital asset space.
Today, the most challenging issue afflicting cryptocurrencies is adoption. Although there are around 32 million bitcoin wallets, the estimated amount of active bitcoin users, those used to make payments with bitcoin, is around 2.3 million (Bitcoin Market Journal). Meanwhile, bitcoin’s Chinese payment rival, AliPay has 900 million active users (China Daily). Hence, if Facebook is only able integrate the Calibra Wallet with only 1% of active users on both Facebook Messenger and WhatsApp (Dustin Stout), Libra will have around 8x-10x more active users than bitcoin (Zephoria). Likewise, if Facebook is able to integrate the Calibra Wallet with just a fraction of its users, it will likely render most ecommerce cryptocurrencies obsolete and will cause cryptocurrency enthusiasts to question if this digital asset movement is really meant to thrive on decentralization. However, let’s not forget that Facebook’s path to success is not as cushy as it appears as its permissioned ledger will have it competing with other centralized payment behemoths such as Apple Pay, which has over 300 million active users (Apple Insider) and PayPal, which has a user base of over 200 million accounts (Statista).
If regulators fail to intervene in Facebook’s cryptocurrency plans, Libra will inevitably impact the cryptocurrency space. However, Libra’s success will greatly depend on the logistical integration of Calibra across Facebook’s social media and messaging applications. Seamlessness integration of Libra will most likely lead to the cryptocurrency’s success, but consequently, will further exacerbate the lack of control over user data, which is one of the major issues the decentralized cryptocurrency movement is attempting to remedy.
List of all Libra “Founding Members” listed below by industry:Payments: Mastercard, Mercado Pago, PayPal, PayU (Naspers’ fintech arm), Stripe, VisaTechnology and marketplaces: Booking Holdings, eBay, Facebook/Calibra, Farfetch, Lyft, Spotify AB, Uber Technologies, Inc.Telecommunications: Iliad, Vodafone GroupBlockchain: Anchorage, Bison Trails, Coinbase, Inc., Xapo Holdings LimitedVenture Capital: Andreessen Horowitz, Breakthrough Initiatives, Ribbit Capital, Thrive Capital, Union Square VenturesNonprofit and multilateral organizations, and academic institutions: Creative Destruction Lab, Kiva, Mercy Corps, Women’s World Banking
Digital Assets ripped higher in May causing bitcoin to be up an astonishing +100% year to date (MarketWatch). We believe that this is the result of “crypto spring” as digital asset hedge funds went on a +2400% bitcoin buying spree in Q1 of 2019 (CCN). More importantly, we are starting to see popular thematic trends play out in the digital asset markets such as widespread stable-coin developments, global regulatory approval of digital assets and the monthly adoption of blockchain and digital asset technology by the largest retail firms, which is now becoming somewhat banal.
In the regulatory landscape, G20 countries will meet in Fukuoka, Japan next month with plans on creating a cryptocurrency exchange registry to help prevent money laundering with digital assets (CCN). On the other hand, the Central Bank of the Bahamas (CBOB) unveiled a plan to launch its own digital currency in 2020 via its initiative “Project Sand Dollar” (Cointelegraph). In the United States, Montana joins Wyoming in its attempt to provide a regulatory friendly environment for digital asset firms by passing a bill to exempt utility tokens from security laws (Coindesk).
In the retail space, LVMH and Christian Dior released a blockchain in collaboration with Microsoft dubbed “Aura” to verify the authenticity of luxury goods and to put an end to the counterfeit goods market (Cointelegraph). Meanwhile, payment network Flexa has launched an app that will allow you to spend cryptocurrencies at physical stores. It currently supports payment at several of the most popular firms in the United States such as GameStop, Nordstrom and Whole Foods (Cointelegraph). In addition, AT&T has teamed up with BitPay to allow its customers to pay for bills using cryptocurrencies (Coindesk).
The most notable development in the digital asset space is Amazon’s recent filing of its Proof of Work patent. Although we are still unsure of Amazon’s digital asset and blockchain plans, it is interesting to speculate on the potential impacts of Amazon releasing a cryptocurrency of their own (Coindesk). Amazon’s cryptocurrency could integrate its +100 million prime users (Fortune), in other words, creating 100 million more cryptocurrency wallets, or greater than three times the amount of bitcoin wallets in existence (Bitcoin Market Journal). Interestingly, if Amazon releases a stable-coin, it could be a perfect opportunity for citizens in countries with precarious economic situations to hedge their currency exposure, while having an all in one place to shop for everyday necessities.
Lastly, in other digital asset and blockchain news, Microsoft is now in the midst of launching a decentralized identity system, “ION”. ION is built on top of the Bitcoin network and its goal is to create an ecosystem where each individual can have more control of both their identity and their data (Cointelegraph). On the other hand, Facebook has finally unveiled its plans for its long-anticipated stable-coin, which was recently dubbed “GlobalCoin”. GlobalCoin will act as a payment network where Facebook’s billions of users can transfer money to and from each other, while also being able to make online purchases (Coindesk). Spencer Bogart, Partner at Blockchain Capital, claims that Facebook’s entrance into the digital asset industry is a “…dramatic catalyst”, which can double or even triple the number of crypto users (To The Moon News). Facebook is hoping to launch GlobalCoin in a dozen countries by the first quarter of 2020 (Coindesk). In addition to Facebook’s stable-coin plans, Coinbase is expanding their stable-coin, USD Coin (USDC), into 85 countries seeking to act as a less volatile form of payment for citizens living in high inflationary environments (Coindesk). Finally, Russia is rumoring to release a gold backed cryptocurrency of its own. If true, they will join Iran in being the only two countries to have its own national cryptocurrency backed by gold (Coindesk).