Blockstone Capital Weekly Digest: Friday 21 July 2023
In a broadly lacklustre week for crypto trading, Bitcoin dropped below the $30K level for the first time in two weeks. Meanwhile, Ethereum, after brushing the $2K mark just last Friday, is now lingering at around $1.8K.
XRP, however, has been following a different script. Directly after Ripple's partial courtroom success against the SEC, the price of XRP immediately doubled to become the most traded asset in the crypto market, with Kaiko data showing that XRP trading volumes increased at least tenfold. XRP is currently trading at $0.77.
Attention this week also turned to the stablecoin market, as newly-released research from CCData revealed that the market cap of the digital asset sub-sector has seen its value shed for the 16th month in a row, falling to $127bn in July – the lowest level since August 2021.
In the political arena, presidential candidates have been vocal about their crypto positions. Democratic contender Robert F. Kennedy Jr. proposed exempting Bitcoin from capital gains tax and backing the dollar with hard assets like gold, silver, platinum, and Bitcoin. On the other hand, Republican candidate and current Florida Governor Ron DeSantis pledged that, if he is elected, he would ban CBDCs. These developments, in our view, signal that digital assets will be a mainstream topic in the forthcoming US presidential election discourse.
Carl, Vegard and Yev
Societe Generale obtains France's first crypto licence
Following the debut of its euro CoinVertible stablecoin, SG Forge, Societe Generale’s digital asset subsidiary, continues to demonstrate its leadership in the digital asset front by becoming the first institution to secure a full, regulatory license from France’s financial regulator.
The license allows SG Forge to trade “digital assets against other digital assets,” as well as receive and transmit “third-party orders.” This builds on its already-approved activities of custody, and trading digital assets, and underscores Societe Generale's commitment to be at the forefront of crypto innovation, while gearing up for the incoming MiCA regulations.
In recent months, we have seen European banks increasingly take the lead in delivering crypto services to their customers, giving them an edge over the regulatory hurdles faced by US banks. BNP Paribas, another French titan, has been enjoying a collaborative relationship with crypto custody firm Fireblocks for over a year now. In June, Credit Agricole's CACEIS received crypto custody registration in France, further consolidating Europe's pole position in this sector.
Germany's Deutsche Bank, one of the biggest in Europe, threw its hat in the ring in June, applying for a license to host its own crypto asset custody. Meanwhile, DZ Bank, the second largest German bank, did the same in February and now offers services to institutional clients in collaboration with a couple of fintech firms.
With MiCA rules starting in January 2025, one question looms: which European banking institution will be the next to dive in the digital asset ecosystem?
Nasdaq halts plans for crypto custody solution
In response to the absence of a clear regulatory crypto framework in the US, Nasdaq said it is pausing the launch of its crypto custody solution that was planned for Q2.
This decision arrives at a time when the US crypto market has been cautiously optimistic, amid several institutions (most notably BlackRock) submitting their spot Bitcoin ETF applications to the SEC – with Nasdaq being the favoured exchange for these potential listings.
The extent to which Nasdaq halting this custody offering dampens US crypto market optimism remains to be seen. However, the move has led to widespread criticism of US regulators for sowing confusion and for standing in the way of trusted institutions to enter the space.
During an earnings call, Nasdaq CEO Adena Freidman explained that though the company has suspended the launch of its custody service, it remains committed to support the digital assets ecosystem and engage with regulators. While Friedman did not specifically mention whether Nasdaq would revisit the custody service in the future, the company’s steadfast dedication to the growth of the digital asset business implies a possibility for Nasdaq to reconsider this service's launch in a less muddy regulatory environment.
For now, with US regulatory roadblocks still up, the spotlight over the coming weeks and months will likely remain on the strides of European institutions in the digital asset domain.
Roundup of other key developments
UK government rejects call to regulate crypto as gambling.
FCA to introduce digital sandbox.
US instant payment network FedNow goes live.
Kuwait bans crypto and virtual asset transactions.
Binance completes integration of Bitcoin Lightning Network.
Aave Protocol launches stablecoin GHO on Ethereum mainnet.
SEC Chair Gensler cites 'Wild West' of crypto in case to increase agency's budget.
South Korea's Shinhan Bank tests stablecoin payments on Hedera network.
Binance Labs invests $10m in cross-chain DeFi lender Radiant Capital.
Ex-FTX COO Constance Wang joins crypto fund Sino Global.
Alan Howard-backed web3 incubator gets fresh funds from Nomura’s Laser
FCA warns crypto memes could breach financial promotion rules.
Cathie Wood's Ark Invest sells more Coinbase shares worth $26m.
Hayden Adams unveils UniswapX protocol to aggregate DEX liquidity.
From Blockstone Capital
Our CIO, Yevgeny Bebney, recently joined Henri Arslanian on the ‘Future of Money’ show to discuss some of the biggest trends in the global crypto hedge fund ecosystem, from obstacles for traditional funds entering the space and strategies for selecting successful fund managers, to the potential shift from centralised to decentralised systems.