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| What you need to know today in crypto and beyond July 19, 2021 Sponsored By: Welcome to The Node.
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–Daniel Kuhn
Today's must-reads Top Shelf WORKING GROUP: Treasury Secretary Janet Yellen is today convening a working group to examine stablecoin regulation and risks. Announced Friday, representatives from the top U.S. financial watchdogs will meet with industry representatives “in light of the rapid growth in digital assets.” Yale economist Gary Gorton and U.S. Federal Reserve attorney Jeffery Zhang recently drew a comparison between stablecoins and “wildcat banking” in a new paper.
THE BIG LEAGUE: Bank of America, the second-largest bank in the U.S. by total assets, last week approved trading of bitcoin futures for some clients, according to people familiar with the matter. Some clients are setting up to trade bitcoin futures, which are cash settled, and one or two may have already gone live, sources said. In May, Goldman Sachs started offering bitcoin derivatives to investors.
SIGNALING SUPPORT: ARK Invest has increased its holdings of Square following its announcement Friday the company would create a new bitcoin platform for financial services. The fund, led by maverick investor Cathie Wood, purchased over 225,000 shares, according to its daily holding files. Ark also purchased an additional 64,000 shares in Coinbase. DIFFICULTY DOWN: Bitcoin’s mining difficulty, a metric indicating the effort required to solve the complex cryptographic puzzle to mine blocks and validate transactions, recorded its fourth straight drop over the weekend. Difficulty fell by 4.8% on Sunday, now standing at an 18-month low of 13.67 trillion, 45% down from the mid-May peak of 25.05 trillion. EL SALVADOR: El Salvador’s government has plans to launch a native cryptocurrency that consumers will be able to use for services, Latin American newspaper El Faro reported Friday. The cryptocurrency, which is currently referred to as the colon dollar, is expected to be introduced by the end of 2021, according to President Nayib Bukele’s brothers.
–Helene Braun
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Overheard on CoinDesk TV Sound Bite “A lot of the times the parties to these meetings are old-school bankers who have the most to lose from any kind of innovation."
A message from CoinDesk The Investor’s Perspective on the Bitcoin Taproot Upgrade Taproot is a bundle of three upgrades to Bitcoin aimed at improving network security, privacy and scalability. At the same time, it poses some potential drawbacks to Bitcoin including risks of low adoption, unintended privacy shortcomings and Bitcoin community disappointment and fracturing.
CoinDesk Research's newest report dives into the economic impact and investment implications of the Taproot upgrade. Download the full report.
What others are writing... Off-Chain Signals
A Ripple reckoning at the SEC (Decrypt) Wall Street is in fear (Bloomberg) This is what a literal crypto crackdown looks like (CNBC)–D.K. & H.B.
A message from Exeno Spending cryptocurrencies without FIAT conversions
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Exeno is the first e-commerce platform that allows customers to make purchases using cryptocurrencies only (BTC, ETH, BTCV). The key Exeno’s features are no FIAT conversions and low commission: 1.8% per purchase.
Putting the news in perspective The Takeaway Everything Moves Fast in DeFi, Even Political Action In a few years' time, the crypto world is going to look back on the DeFi Education Fund as money well spent.
Last week, controversy broke out when the new advocacy group sold about $10 million in UNI tokens for USDC so it would have ready cash to get off the ground. The news was cast in a particularly bad light when one member of the organization's new governing committee made a sale of UNI right around the same time the trade was going through.
I have it on pretty good authority that, while it might be bad optically (it definitely was bad optically) it was a harmless trade. Time will tell, I suppose, but even if it was a malicious trade that doesn't mean the DeFi Education Fund (DEF) wasn't a good idea at its core.
The Defiant did a solid job reporting on why people felt weird about this vote. Uniswap governance, it should be noted, makes it particularly hard to get anything passed. This was only the fifth measure to rally enough tokens for a final vote and just the third successful measure since Uniswap introduced decentralized governance in September.
The proposal to create DEF passed largely with the support of very big UNI holders, deep-pocketed investors. It didn't feel grassroots.
But let's be honest about the core reason folks hated this grant: No one likes a big sale on a token they are holding. Investors in crypto have an especially short-term view of their favorite assets, probably because news and trades have a way of hitting their charts so fast and hard. Big sales are betrayals.
And the asset price was down 25% from the start of the week on Friday, but still up 100% from the start of the year. I know it hurt. No one likes a pinch in the smart wallet but the objections are, in my mind, a bit myopic.
Decentralized finance is an industry that threatens the massive money spigots that run the whole world. Its potential to shake up how value moves globally is too big; folks can only guess at how far it might go, even its builders.
This is becoming disconcerting to the powers that be. They aren't going to bother with learning how blockchains work to try to build competing technologies. No, the powers that be, both the state and the financial industry, will use the levers of power they know well: the law and regulations. And, of course, the law is built upon the state's martial power.
It surprised me to see there was a group in DeFi prescient enough to get a group like DEF funded now (nearly as surprised as I was to learn it was getting $20 million out of the gate, but that's a separate question). I wouldn't have expected folks in DeFi to get serious about politics nearly this soon. After all, Silicon Valley sat on its hands for years before finally going big making their case inside capitol buildings.
But everything in crypto really does move faster than you expect.
Founding a fund to defend DeFi was the right move. I know that big sale felt like a blow to the UNI hodlers, but your bags will be better off over time if someone is making the case for technology with lawmakers.
–Brady Dale
The CoinDesk Quarterly Review 2021 Q2
After two consecutive quarters of strong price gains for most of the top crypto assets, Q2 2021 finally brought an end to market euphoria with a resounding crash.
Most CoinDesk 20 assets, which constitute 99% of the crypto market by verifiable volume, ended the quarter with negative returns. Meanwhile, protocol development for the world's largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, reached new milestones.
CoinDesk Research's latest Quarterly Review dives into the trends, developments and technological progress that shaped the crypto markets from April to June 2021. The full report is now available from the CoinDesk Research Hub.
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