Kiffmeister’s #Fintech Daily Digest (03/02/2021)*

Goldman Sachs restarts cryptocurrency desk amid bitcoin boom

Goldman Sachs restarted its crypto-asset trading desk and will begin dealing bitcoin futures and non-deliverable forwards for clients from next week. The bank is also exploring the potential for a bitcoin exchange traded fund. The New York-based bank originally announced plans for a cryptocurrency trading desk in 2018 but then quietly shelved them because of Bitcoin’s price plunge witnessed that year.

Cardano Successfully Launches ‘Mary’ Hard Fork to Introduce Multi-Asset Features

Cardano (ADA) completed its “Mary hard fork” update via a managed hard fork combinator event. The upgrades will make Cardano a multi-asset chain, similar to Ethereum, allowing users to create and sell tokens that run natively on the blockchain. The new upgrades aim to enhance the development of tokens on its chain, bypassing the need to create a smart contract to govern ADA’s different tokens.  

February DEX volumes hit new high of nearly $73 billion

Decentralized exchanges (DEXs) ended the month of February with the highest monthly volume on record, according to data gathered by The Block. February’s monthly volume hit a new high of approximately $72.89 billion, increasing by $12 billion from January. Uniswap continued to lead in the DEX space, making up most of the monthly volume with $36.6 billion. SushiSwap and Curve came in second, hitting $14.93 billion and $4.42 billion respectively. 

State Street to look after bitcoin, just don’t call it custody

State Street will reportedly announce later this year that it is offering safekeeping for digital assets in the United States and Europe. However, because bitcoin is not a financial instrument, legally speaking it cannot be held in custody, so the bank will call their offering “record-keeping services” even though it will also offer to look after customers’ digital keys. Northern Trust is also close to offering safekeeping for clients’ crypto-assets through a joint venture with Standard Chartered. 

Coinbase holds more than 10% of the total crypto cap

According to Messari, Coinbase controls 11% of the combined crypto-asset market capital. The exchange held assets worth around $90 billion by the end of last year, versus the total crypto-asset market cap of $780 billion at the time. The bulk of this flew in during Q4 of last year. Coinbase provides its users with custodial services for more than 90 different assets, although only about half of these can be traded by users. Bitcoin represented 70% of the assets held in the exchange and Ethereum 13%. 

CBOE filed to list Van Eck’s proposed Bitcoin ETF

The Chicago Board Options Exchange filed with the US Securities and Exchange Commission (SEC) to list the Bitcoin exchange-traded fund (ETF) proposed by asset manager, Van Eck. In January, Van Eck filed for SEC approval of a Bitcoin ETF. Van Eck had previously unsuccessfully filed for a Bitcoin ETF in 2017. The firm also teamed up with SolidX — to file for a jointly issued ETF in 2018. The joint application was withdrawn in September 2019. the SEC is yet to approve any crypto ETF product. 

P2P insurance platform – the first innovation tested in the Bank of Lithuania’s regulatory sandbox

Peer-to-peer (P2P) insurance platform Ooniq has completed a year-long of testing within the Bank of Lithuania’s regulatory sandbox. The platform allows its members to form groups of peers with similar interests and protect themselves against losses by pooling funds for this purpose. Group members make their own decisions on loss compensation. If funds are still available thereafter, they are returned to group members. A sense of community could encourage its members to jointly reduce risks and losses and thus protect themselves against risks in a cheaper way.  

Thailand Regulator Withdraws Proposal of Harsh Crypto Investment Rules

Thailand’s Securities and Exchange Commission (SEC) has reportedly scrapped its new crypto regulations draft after it received backlash from the local community for setting a high bar for investors. The proposal’s 1 million baht ($33,000) minimum annual income requirement received quick public backlash.  

Technological innovation is fueling the resurgence of community currencies

Just as community currencies boomed during the Great Depression, their digital versions are expanding amid the COVID-19 recession. Complex experiments are combining mobile payments with blockchain. In Turkey, Good4Trust, a virtual bazaar for socially and environmentally conscious producers and consumers, is preparing to launch a community currency using blockchain powered by Celo. Brixton, a London neighborhood, has announced the release of a digital version of its Brixton Pound community currency using blockchain from Algorand. According to Celo’s Ezechiel Copic, “there’s a lot of focus on central bank digital currency [but] local currencies can provide a testing ground for these initiatives.” 

* The views expressed herein are those of the author and should not be attributed to the International Monetary Fund, its Executive Board or its management.