Kiffmeister’s FinTech Daily Digest (06/10/2020)

One Third of Institutions Have Invested in Crypto Says Fidelity
A Fidelity survey of 774 institutional investors found that more than one-third of firms worldwide have invested in digital assets or derivatives. While 36% of institutions own crypto globally, multinational financial services company  Fidelity found that only 27% of the 441 U.S. institutions surveyed are exposed to crypto — although that’s up from 22% last year. Close to half of European institutions are long on virtual assets.

Negative Interest Rates Are Destroying Europe’s Finances, Driving Demand For Cryptocurrency
According to the Fidelity survey of institutional investors, Europeans are much more likely to have a positive view and to own crypto-assets compared to Americans. 45% of the European institutional investors surveyed owned crypto-assets, while only 27% did in the United States. Also, 25% of European investors find crypto-assets being free of government intervention a very appealing factor, vs. 10% of American investors. About 82% of European institutional investors found something positive about crypto-assets, compared to 74% of American institutional investors. It’s a flip on the usual narrative of pro-market, pro-private sector Americans vs. government-loving Europeans. Europeans now see crypto-assets as a desirable asset class and for some it’s precisely because it avoids the intervention of the political or technocratic class that defines the European Union and the European Central Bank.

Less Than 6 Accounts Control 80% of Wealth on Top Stablecoins
CoinMetrics has found extreme wealth centralization among many top stablecoins, with at least 80% of the total capitalization for five top stable tokens being held in less than six accounts. And most at least 20% of transfers made using most stablecoins are valued at less than $100, showing significant stable token adoption as a means of payment. The report also found that more than 40% of transactions made using the Paxos Standard Token are directly linked to a single multi-level marketing, or MLM, Ponzi scheme.

MakerDAO Up by 30% After Vote for ‘Real-World’ Loan Collateral
MakerDAO’s latest spike comes amid a community vote showing strong support for supporting non-crypto-native assets as collateral for the creation of DAI. Currently, MakerDAO users can lock up Ether, Wrapped Bitcoin, Basic Attention Tokens, or the stablecoin USD Coin to fund DAI loans. The vote signaled support for a protocol developed by blockchain startup Centrifuge that would allow “real-world assets” to be tokenized as ERC-20-based securities that can be used as collateral for DAI minting.

Ball’s in Their Court: Crypto Custodians Waiting on Regulators to Act
The Capital Markets and Technology Association published a common industry standard for the management and custody of crypto assets. Dubbed “Digital Assets Custody Standard,” the document attempts to elucidate how the custody of digital assets differs from that of traditional assets. Having identified the differences, the CMTA then laid down foundational security and operational requirements for crypto custody providers.

Bitcoin Options Open Interest Rises 50% in a Month to Hit $1.5 Billion
According to the latest data from market analysis company Skew, total open interest in Bitcoin options passed $1.5 billion on June 9. This comes barely a month after open interest crossed $1 billion for the first time, marking a 50% increase in just 33 days. Deribit has open interest of $1.1 billion, and the Chicago Mercantile Exchange $368 million. LedgerX open interest remained roughly the same since May 7 at $52 million while OKEx saw a 15% fall to $65 million. Bakkt also saw a fall in open interest, from $80,000 to $68,000.

Reserve Bank of Australia gets ‘data bunker’ project underway
The Reserve Bank of Australia has reportedly gone to market for help with standing up a “data bunker”, which it said forms part of its ongoing efforts to improve the resilience of the country’s payment system. The successful vendor, as the systems integrator, will be charged with planning and designing the bunker; building and implementing it, along with supporting components; and running the bunker, including developing operational procedures, policies, and tools for the first year of its operation.

Addressing Cyber-Risk in Financial Institutions and in the Financial System
This paper organizes the latest research and views on cyber-risk management to enable insights into frequency and severity of cyber-risk events, the magnitude of cyber-risk losses, and the best practices methods and frameworks for organizing and implementing a cyber-risk management program. This paper also describes cryptographic best practices and the evolving research on protection of cyber-attacks in the coming Quantum computing era.

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