Institutions Love Bitcoin, but They Fear DeFi
Welcome to the fourth edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the cryptocurrency industry.
Digital assets evolve and move faster compared to any other market. For those who do not have time to constantly scroll Crypto Twitter, we wrote a special weekly update that covers everything major that happened this week.
Summary
Morgan Stanley plans to offer Bitcoin exposure to its wealthy clients
Powell stated that digital currencies will have to coexist with cash
Robinhood will expand its crypto team this year
Tony Hawk created an NFT out of his skating move
Deutsche Bank revealed that Bitcoin is too big to ignore
NFT marketplace OpenSea raised $23 in a funding round
Bank of America claimed that DeFi is potentially more disruptive than Bitcoin
HK-firm Meitu bought more BTC and ETH
Several DeFi platforms on BSC were hit by a DNS attack
Morgan Stanley offers Bitcoin exposure to investors
Morgan Stanley became the first big U.S. bank to offer its clients exposure to Bitcoin, which will be available through three funds. Two of the funds are from Galaxy Digital, while the third one is a joint effort from asset manager FS Investments and Bitcoin company NYDIG.
According to the bank, Bitcoin is suitable for investors who have an aggressive risk tolerance. To participate in the new funds, they will need at least $5 million and have an account older than 6 months.
Experts believe that Morgan Stanley’s recent decision is a big step for Bitcoin’s acceptance as an asset class.
Powell: CBDCs will need to coexist with cash
The Federal Reserve Chairman Jerome Powell stated during a virtual payments conference on Thursday that central bank digital currencies (CBDCs) need to coexist with cash. Powell believes that improvements to the global payments system must come from the private sector as well, and not just the public sector.
As a reminder, the chairman recently disclosed that the central bank seeks to revitalize the digital dollar project this year. With that in mind, Powell’s newest statement seems to cement the Fed’s position on digital currencies.
Robinhood to expand its crypto team in 2021
The largest retail brokerage platform announced that it plans to grow its crypto team ‘hugely’ in 2021. During a video Q&A with customers, Robinhood CEO Vlad Tenev revealed that he wishes to make a huge investment and hire a ton of people for its crypto business.
Tenev noted that the platform saw a spike in new crypto users, which is why he wants to create a new focus on digital assets and potentially “take a bite out of Coinbase.”
Tony Hawk joins the NFT craze
Famous skater Tony Hawk has joined the NFT market by tokenizing his last ‘540 ollie.’ Mr. Hawk plans to sell the non-fungible token on the open market via the Ethernity Chain marketplace.
On his Instagram page, Tony Hawk explained that he has done the skating trick one more time and that he will never do it again. Immortalizing the move by transferring it into the NFT world, the skater will likely have a positive impact on the segment’s growth.
Deutsche Bank: Bitcoin is ‘Too Important to Ignore’
In a new report released by the Deutsche Bank this week, the financial giant revealed that Bitcoin is now too important to ignore given its $1 trillion market cap.
Like the Morgan Stanley event, Deutsche Bank’s report could motivate asset managers, institutional investors, and companies to join the cryptocurrency market.
Apart from noting the importance of Bitcoin, the bank also pointed out in its report that 30% of the cryptocurrency’s transactional activity is related to payments and that 28 million coins exchanged hands in 2020.
NFT marketplace OpenSea Raises $23M
In a funding round led by Silicon Valley venture capital firm Andreessen Horowitz, non-fungible token marketplace OpenSea raised an astounding $23 million. According to an announcement released on Thursday, OpenSea grew by more than 100 times during the last six months.
Horowitz has also led a $25 million funding round for Optimism, a leading Ethereum scaling solution. Both events imply that institutional investors might be done with Bitcoin and that they wish to gain exposure to altcoins like Ether as well.
This week’s crypto adversaries
1. EU regulators warn against crypto risk. The European Supervisory Authorities said in a new report that cryptocurrencies are highly risky and speculative, warning investors against using them for speculative purposes.
The report also stated that investors could lose “all their money” in this so-called largely unregulated market.
ESA believes that there are more risks involved in digital assets than usual as cryptocurrencies like Bitcoin reach new all-time highs.
2. UK regulator decides to ban ‘socially irresponsible’ Bitcoin ad. This week, the UK Advertising Standards Authority (ASA) has banned a Bitcoin advertisement from crypto exchange Coinfloor.
ASA believes that the ad is socially irresponsible because it suggests that buying Bitcoin is a good way of investing one’s savings.
The regulator also claimed that Coinfloor did not highlight the possible risks involved with investing in cryptocurrencies.
3. Russia’s Putin plans to stop illegal cross-border crypto transfers. During his meeting with the attorney general’s office, Russian President Vladimir Putin called for closer attention to illegal cross-border transfers.
A new regulatory framework for digital assets was signed last July and took effect in January 2021.
At the same time, Russia’s central bank became more involved with the prospect of launching a digital ruble.
Bank of America believes that DeFi is more disruptive than Bitcoin
In its report titled “Bitcoin’s Dirty Little Secrets,” the second-biggest U.S. lender discussed the future of cryptocurrencies and their current influence on markets. In one section, The Bank of America pointed out that while Bitcoin is the most talked-about cryptocurrency, Ethereum has more features such as flexibility.
Into this flexibility falls the decentralized finance market, which is potentially more disruptive than Bitcoin, according to the bank. It could bring a radical change to mainstream capital markets, but at only $35 billion, DeFi has a long way to go.
Another interesting statement is the bank’s belief that central bank digital currencies are “kryptonite for crypto.”
Software firm Meitu buys more BTC and ETH
Hong Kong-listed company Meitu announced this week that it made new investments in cryptocurrencies. Through its subsidiary Miracle Vision, the company bought 16,000 ETH and 386 BTC. This is Meitu’s second crypto investment this year, which now totals almost $90 million.
Binance Smart Chain DeFi platforms hit with DNS attacks
Several DeFi projects based on the Binance Smart Chain were hit with DNS attacks that created an entirely new attack vector for its users. For several hours, the main websites of these projects were asking investors to input seed phrases.
The issue was first reported by Pancakeswap. Later that day, Cream Finance announced that it was hit by the attack as well. Both teams have requested that the DeFi community does not access their platforms until the exploit is fixed.
Quote of the week
The Good News
Bitcoin recovered this week after the Fed announced that it will support the economy as long as it takes and that it won’t increase interest rates.
Kraken’s CEO is considering a debut on the stock market next year, either through the traditional IPO route or through a SPAC listing.
Coinbase unexpectedly listed Cardano (ADA) after major user interest.
The Bad News
CryptoQuant decided to remove labels for its whale alerts following community outrage over FUD.
Filecoin suffered a double-spend exploit on Binance and several other crypto exchanges.
A survey by Investopedia showed that 60% of investors are concerned about Bitcoin being in bubble territory.
Crypto Twitter Highlights
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