Issue 121: Crypto is soaring!
November 5th, 2020
Market Weekly Update
Analysis: Crypto is absolutely soaring, simply put. Bitcoin touched $20,000 CAD for the first time since early 2018 and is up 10% on the week. Most major coins are up across the board, but the conversation and volume is always behind Bitcoin. Bitcoin dominance is over 65%, its the highest level in months. Its safe to say that Crypto is soaring!
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US Election: What Will It Mean?
We Provide An Overview Of Each Candidate’s Known Crypto Stance
- President Trump is alleged to have told Treasury Secretary Steven Mnuchin to ‘[g]o after Bitcoin [for fraud].’ The President tweeted in July 2019 that he is ‘not a fan of Bitcoin and other Cryptocurrencies…’ and added that ‘[w]e have only one real currency in the USA, and it is stronger than ever…’ Since then, the Trump Administration has made a number of concrete regulatory steps regarding crypto. Most notable is the Department of Justice’s (DoJ) cryptocurrency enforcement framework published in October. That report affirmed the DoJ’s broad assumptions of jurisdiction and readiness to prosecute offshore crypto businesses. The Office of the Comptroller of the Currency’s (OCC) issued two interpretive letters clarifying how banks can interact with crypto. The letters, which gave banks the green light to custody crypto and hold stablecoin reserves, were described as ‘trying to demystify crypto’ by the OCC’s head, Brian Brooks (Coinbase’s Chief Legal Officer from 2018 to 2020). On the other hand, candidate Joe Biden’s stance on cryptocurrency has not been articulated. Crypto did not emerge as a Democratic primary topic, except for candidate Mike Bloomberg’s financial reform plan which called for ‘a clear regulatory framework for cryptocurrencies’ and candidate Andrew Yang’s calls for ‘clear and transparent rules.’ However, Democratic politicians were some of the most ardent critics of Facebook’s Libra project with calls for Facebook to be ‘broken up’ at Congressional hearings with Mark Zuckerberg. What will the price do if Trump or Biden wins? One expert thinks he knows the answer: “Bitcoin will rise in value no matter who wins the US election”, said Jeff Dorman, chief investment officer at cryptocurrency hedge fund Arca. He went on to point to the “lowering fear factor” happening on Wall Street as more institutions move corporate treasury funds or investment dollars into Bitcoin. Trump or Biden, he expects this trend to continue.
Crypto and Politics
Takeaway: The Trump Administration has maintained an assertive approach towards crypto regulation and law enforcement over the past 4 years. This has translated into high-profile actions against BitMEX, Bitfinex/Tether, Telegram, Kik, and others. On the other hand, Biden’s approach to crypto is uncertain.
Beyond the distaste shown by Democrats during hearings on Libra, one might make estimates on approaches to crypto based on broader policy positions. Positions like Biden’s support for Dodd Frank. In either case, the election is just one factor in a mix of tectonic plates pushing crypto around but what matters is that crypto is soaring.
Other Weekly Headlines
- The Ethereum 2.0 deposit contract, considered a key technical milestone ahead of the network’s proof-of-stake launch, has gone live. The contract is where prospective stakers will deposit ETH. The contract must collect 16384 deposits of 32 ETH each to trigger the launch of the Beacon chain. The Beacon Chain will launch December 1. The Beacon Chain acts as a bridge between ETH staked on the current mainnet and the transactions that the coin is meant to process. – link – @EthereumFoundation
- The New York Department of Financial Services sent a letter to regulated entities in the state, including crypto firms, urging them to consider environmental externalities of their business. Linda Lacewell, the department’s Superintendent, tweeted ‘New York’s Financial Regulator Wants Firms, Including Crypto Miners, to Look Closer at Climate Change Risks.’ – link – @CoinDesk
- Fidelity Digital Assets has partnered with Singapore-based Stack Funds to offer custody solutions to the latter firm’s Asian clients. Stack Funds offers exposure to crypto via indexes. – link – @Bloomberg
- A proposal to airdrop 400 of decentralized exchange UniSwap’s UNI tokens to users who used the exchange via third party interfaces, proposed through the venue’s governance mechanism, was rejected due to a failure to reach adequate support. The distribution of UNI tokens to users began in September and is planned to last 4 years. The proposal was submitted by Dharma, which offers interfacing with DeFi venues. Dharma’s proposal would have seen 400 UNI tokens distributed to 12,619 Ethereum addresses that interacted with the exchange via third party interfaces, such as Dharma. – link – @CoinDesk
- The Reserve Bank of Australia has announced that it is exploring the ‘potential use and implications’ of a central bank digital currency using distributed ledger technology. The project will see collaboration between a number of banks and Ethereum development firm ConsenSys. – link – @RBA