[co-author: Lauren Bass]
Crypto Market Develops in DeFi, Payments, Compliance and Consumer Adoption
A large institutional financial and media conglomerate recently announced a partnership with a major financial services and investment management company that specializes in digital assets, with the two companies offering the public the opportunity to invest in a decentralized finance (DeFi) index. Uniswap, Aave, Maker and Compound are a few of the DeFi protocols included in the index. The financial services and investment management company also announced its new DeFi Index Fund – its own separate “passively managed fund tracking the performance of DeFi.”
This week, Chainalysis introduced the Chainalysis Global DeFi Adoption Index, “a new geographic index ranking countries by DeFi adoption” that focuses on “grassroots adoption by individuals, rather than those sending the largest raw values of funds.” The index ranks 154 countries according to three criteria: (1) on-chain cryptocurrency value received by DeFi platforms, weighted by purchasing power parity per capita; (2) total retail value received by DeFi platforms; and (3) individual deposits to DeFi platforms. The top five ranked countries, in order, are the United States, Vietnam, Thailand, China and the United Kingdom.
According to recent reports, a major U.S. technology firm has been awarded a patent for software designed to “help users develop blockchain applications by making it easier and more efficient to create crypto tokens for different distributed ledgers.” And in a development from the Bitcoin ATM industry, this week, a group of Bitcoin ATM operators announced the formation of the Cryptocurrency Compliance Cooperative, with a mission to “legitimize the cash-to-cryptocurrency industry by bolstering compliance standards.”
In a final item of note, growing consumer interest in cryptocurrency was highlighted in three recent surveys. Findings from the surveys include the following:
- In one survey, respondents on average planned to invest $1,645 in cryptocurrency in the coming year and to hold on to their crypto for an average of five years.
- In another survey, 60 percent of respondents viewed cryptocurrency as a long-term investment, and 11 percent of U.S. respondents purchased cryptocurrency with their COVID-19 stimulus checks.
- A third survey found that Africa’s peer-to-peer bitcoin trading volume is close to $17 million and is now the largest in the world, exceeding that of North America.
For more information, please refer to the following links:
Market Navigation, Fashion Metaverse, Online Tutorials: NFT Adoption Continues
By Lauren Bass
Last week, an international digital payments corporation partnered with the first federally chartered digital asset bank to purchase the non-fungible token (NFT) CryptoPunk 7610. According to reports, the $150,000 transaction, which marked the corporation’s first foray into digital collectibles, was designed to help the company navigate this emerging marketplace and understand “what it takes to acquire, custody and interact with an NFT.”
Earlier this week, a U.S. beer company reportedly purchased NFT artwork featuring its own branded content. According to reports, the company then used the digital image as its profile picture on social media. The recent NFT sale follows the beer magnate’s earlier purchase of the Beer.eth domain name through OpenSea’s Ethereum Name Service.
In other NFT news, a major luxury fashion publication will reportedly launch an interactive fashion metaverse via a scannable QR code embedded in the magazine’s September print cover. According to reports, this digital world will feature two magazine covers, each to be released as a limited-edition NFT, as well as unique interactive online experiences. The publication will also reportedly release 15 NFTs featuring digital-only fashion wear, beauty and design products. The NFTs will be available for purchase on Brytehall, a newly launched NFT platform on the Binance Smart Chain.
To encourage the creation of NFTs on the Ethereum blockchain, Ethereum.org has published a tutorial that describes the step-by-step process necessary to generate and release an NFT. The three-part series teaches readers how to (i) write and deploy an ERC-721 smart contract, (ii) mint an NFT, and (iii) view the finished NFT on the Ethereum network.
For more information, please refer to the following links:
Crypto Compliance Addressed by CFTC, Thai SEC, South Korea and UK FCA
Commissioner Dawn Stump of the U.S. Commodity Futures Trading Commission (CFTC) issued a statement this week addressing the CFTC’s regulatory and enforcement authority over digital assets. Among other things, the commissioner stated that the CFTC does not regulate commodities, but rather, it regulates derivatives. The statement outlined 10 points clarifying how and what the CFTC regulates and distinguished its regulatory versus enforcement authority.
This week, the Securities and Exchange Commission of Thailand (Thai SEC) proposed additional regulations related to the custody of investors’ cryptocurrency holdings held by digital asset business operators, citing investor protection concerns. The regulations address custody of fiat money, fiat money and digital assets, and seeking benefits from clients’ assets. Among other things, the Thai SEC is specifically proposing to prohibit crypto companies from using investor assets for the “benefit of another client or other persons,” and it proposes a new framework for the withdrawal and transfer of fiat money from digital asset accounts, requiring compliance with the principles of “decentralized approval authority, multi-sign approval authority, and check and balance.” The Thai SEC is accepting public comments on the newly proposed regulations until Sept. 22.
All South Korean crypto exchanges have reportedly failed their regulatory “consulting” audits. In June, the regulatory Financial Services Commission (FSC) collaborated with government ministries and state-owned IT firms to conduct a “complete investigation of corporate accounts” and crypto exchanges’ “coin management and investor protection” protocols. The FSC reportedly found that out of 33 exchanges, 25 had gained information security management system accreditation, anti-money laundering protocols were still “lacking” at most exchanges, and none of the trading platforms had obtained the required real name-authenticated banking contracts they will need to continue doing business after Sept. 24. Finally, in news from the U.K., a June notice from the Blockchain Blog Image Request Financial Conduct Authority to the cryptocurrency exchange Binance was made public this week. Among other things, the notice found that the exchange was “not capable of being effectively supervised.”