Crypto.com：加密貨幣支付成新趨勢 - 20210222 - 經濟
料未來更多法規出台
有傳支付服務巨頭PayPal、電動車大廠Tesla等擬接受加密貨幣支付，刺激比特幣價格持續破頂，於昨日升至5.7萬美元的歷史高位。劉偉經表示，加密貨幣支付行業的發展仍處於初步階段，不少國家正關注加密貨幣的發展走勢。隨着行業逐步發展，料未來會有更多政策法規出台，以及新機構投資加密貨幣支付平台。
金融科技發展方面，劉偉經指香港及大灣區內，不乏微信支付和支付寶等較普及的支付平台，甚至有來自其他國家的用戶，認為行業發展相對迅速。而市民普遍對於新興的金融科技態度保守，對金融科技產品的私隱及安全欠缺信心。
劉偉經坦言，目前沒有一個完美的解決方案，若公司要跟用戶建立信任，則要將私隱與安全的議題放於首位。
私隱安全放首位 增用戶信心
至於香港的虛擬銀行不時發生事故，劉偉經指出，由於虛擬銀行提供「全天候」服務，需要與雲端服務等第三方機構合作，或使銀行增添多一重危機。惟他認為，最重要的因素仍在於金融科技機構本身。公司需專注於內部培訓、程序控制等，且不能仍源用傳統的一套手法，才可以更快應對世界各國日新月異的法規。
Crypto conundrum: Digital Currency future seems vague in India
Even as the world’s largest and most popular cryptocurrency is making headway, the question of regulation looms large in India. At present, the meteoric rise of Bitcoins can be attributed to continued interest by major corporates. Now, more and more small and big investors around the world are attracted to cryptocurrency owing to its potential gains.Recently, the price of Bitcoin crossed the record high of $54,000. The historic feat was achieved after a leading electric carmaker announced that it bought $1.5 billion in Bitcoin and would accept the currency as the mode of payment. The steep rise in the value of the virtual currency has made it a hot topic among analysts and investors all over the world.While investors are riding the waves of this global phenomenon, India continues to be in a quagmire. There have been rumours of the government planning to ban all private virtual currencies and launching its official digital currency. These developments are raising many pertinent questions. However, legal experts and investorsunanimously agree that banning is not the solution.Many think that a sweeping step like imposing a ban would cost a huge loss of investment to India. Regardless of the standstill on regulations, many Indian crypto start-ups have collectively raised millions from foreign investors.Experts believe that the absence of regulation will spell catastrophe as it prompts the rise of black market. “It is very sad to see the lens with which Indian regulators are looking at a noble technology that can only bring transparency and align people to contribute positively at a scale. As I recommended to the finance ministry, we need to establish light-touch regulations to let the innovators grow, while at the same time, prevent the interests of the consumers. Education and awareness campaigns are already going a long way. We can treat all cryptocurrencies as foreign currencies and regulate it under existing foreign exchange management policy. Allow it to happen till a certain limit (250K $as remittance under FEMA) until we can figure how to weed out the bad actors and promote the good ones,” says Akshay Aggarwal, managing trustee, Blockchained India.Aggarwal rues the immature handling of innovation as it has led to the loss of global innovators from India. “We have to be open and learn from our past mistakes, the regulatory process has to evolve. Regulators need to give confidence to the local innovators. Instead of banning the industry, invest resources to understand the industry further, get new talent to suggest ways to deal with problems and introduce capacity-building measures before it gets too late. Support them with government funds and lay a cosy path for those working in the crypto trenches,” adds Aggarwal.In the absence of regulation and recognition by the Government of India, the future of cryptocurrencies seems to be in a disarray. The Central Government recently revealed that it will introduce a new bill on cryptocurrencies. There is no information so far on the contents of The Cryptocurrency and Regulation of Official Digital Currency Bill 2021.In 2018, the RBI had banned banks from conducting transactions related to cryptocurrency. However, in March 2020, the Supreme Court of India lifted the ban, and cryptocurrencies have been operational in India ever since.Speculations are rife that the new cryptocurrency bill might impact existing investors who are investing in private digital currencies like Bitcoin. This can be a possibility if the Centre explores and considers the recommendations made by the Inter-Ministerial Committee (IMC) on virtual currencies.Earlier, the IMC in its recommendations, had stated that private virtual coins lack attributes of a currency and cannot replace fiat currency.“A ban will be out-of-sync with most evolved economies that are choosing to regulate the cryptocurrencies to capture their potential and manage risks. Countries like Algeria, Bolivia, China, Venezuela, and Saudi Arabia, that have banned cryptocurrencies, do not share any constitutional values with India. Singapore with its progressive regulation has attracted several Indian cryptocurrency startups. India has about 350 startups in this space that will perish,” says Anirudh Rastogi, founding and managing partner, Ikigai Law.Cryptocurrencies are nothing but privately-built blockchain applications with use in health, governance, IP management and finance. Their use as a currency is only one of the many use cases. Experts believe that cryptocurrencies will not disappear from India, essentially because of the main characteristic that allows them to be transferred from person to person without a middleman.“Blockchain and digital assets are poised to disrupt the world as much as the internet did back in the 2000s. While the Indian Government’s concerns around capital flight, money laundering and lack of consumer awareness are understandable, a light-touch and measured approach to nurturing this global phenomenon is likely the best way forward. Regulators, world over, are introducing sandboxes as a means to let digital asset projects set-up, operate and improvise in an insulated environment, while the Government learns and creates a regulatory framework in tandem. An outright ban, albeit impractical to implement, will cost India a significant pool of talent, direct/indirect tax revenues, FDI inflow, and the chance to be recognised as a global leader in fintech innovation,” says Anoush Bhasin, a thought leader in the Indian cryptocurrency space.While the debate on the future of cryptocurrencies goes on, only time will tell which direction would the finale unfold.
Crypto Long & Short: Interest in DeFi Is Surging. You Can Thank GameStop
One of the most iconic moments of the past week was when Keith Gill, otherwise known as Reddit trader DeepF**kingValue, testified in front of the House Financial Services Committee: “I am not a cat.” All who enjoyed the video of the meeting in which a frustrated lawyer struggled with Zoom settings (who among us hasn’t experienced Zoom awkwardness?) immediately knew what he was referring to, and some of us may or may not have spluttered coffee all over our keyboard.
It wasn’t so much the power of memes that made his remark feel important, nor was it just the humor that made us sit up. It was more the deadpan delivery, staring at the screen, addressing some of the most powerful people in the world. To me, it synthesized a loud shift in attitudes toward authority. With that throwaway remark, Mr. Gill demonstrated loyalty to his tribe rather than to the establishment, a sentiment we see playing out not only across social media but also in classrooms, culture, startups and even in the intimidating world of finance.
You’re reading Crypto Long & Short, a newsletter that looks closely at the forces driving cryptocurrency markets. Authored by CoinDesk’s head of research, Noelle Acheson, it goes out every Sunday and offers a recap of the week – with insights and analysis – from a professional investor’s point of view. You can subscribe here.
Related: Australian Man Arrested for Trying to Launder $4.3M With Bitcoin
The surge in value of “anti-establishment” bitcoin, which broke $1 trillion this week, as well as of meme coins such as Dogecoin, are to a large extent an extension of this. The lack of trust in the establishment’s judgement, and the visible weakening of its influence, make alternatives more viable.
This goes beyond individual crypto assets. The congressional hearings highlighted a growing awareness of structural risks in our capital markets. This, combined with recent industry trends, points to strong potential growth in an area of digital assets we have not yet talked much about in this column: decentralized finance, or “DeFi.”
Story continues
The concept is about so much more than high investment returns, although there are potentially plenty of those to be had for those willing to take on high risk. It’s about the emergence of a new type of financial market, not created with professional investors in mind, but which will end up benefiting from their interest. This week, that got a strong boost.
Under the hood
The GameStop drama awakened a greater interest in financial market plumbing, something that very few had bothered to care about before. When we see what looks like institutions trampling on the retail investor, we have questions. Few congressional hearings have been as eagerly followed as this one, in the hopes of getting answers and of seeing the beginning of change.
Related: Bitcoin Faces Price Turbulence as Market Liquidity Falls, Says JPMorgan
This is happening at the same time as an explosion of interest and development in DeFi applications.
The term “DeFi” refers to self-executing programs that fulfill the functions of centralized financial services such as borrowing, lending and trading, but in a decentralized, peer-to-peer manner (here’s a more detailed primer if you need it). This week, Bloomberg reported that approximately $359 million worth of GameStop shares failed to deliver on Jan. 28. In the world of automated crypto asset trading, that couldn’t happen. Also, trades can’t be frozen, all traders have equal priority, and there is no authority who can change the rules or middleman who can prioritize some orders over others.
The concept started a few years ago in an experimental corner of the Ethereum ecosystem, with open-source “smart contracts” deployed to execute trades, interest payments and collateral swaps. Last year saw the rise of “yield farming,” which refers to hopping from platform to platform in search of the highest yields. These sometimes reached triple digits, at a time when official interest rates were near zero.
The returns were significant, but so were the opportunities for things to go wrong. Many platforms were constructed on hastily written code, and last year we reported on numerous bugs and losses that had no recourse. Mistakes are not unexpected at the start of an innovation spurt, however, and the creativity and output were (and still are) astonishing.
Given the high yields, it was only a matter of time before institutions started to take notice. In its Q3 2020 report, Genesis Trading (a subsidiary of DCG, also the parent of CoinDesk) reported that much of its lending growth was to institutions looking to finance yield opportunities.
Fast forward a few months, and the ecosystem feels different.
The economic value riding on DeFi platforms has almost tripled since the beginning of the year, to $41.9bn at time of writing. These platforms are usually powered by tokens which confer access and governance rights – the aggregate value of the 100 largest tokens by market cap currently stands at $83 trillion (yes, with a “t”), with over $16 trillion in 24-hour trading volume. The DeFi Pulse Index, which tracks 10 of the largest tokens by market cap, has risen over 260% year-to-date.
What’s more, Ethereum, the base blockchain for most DeFi applications, has entered a new phase of development with the launch of the first step in the migration to a more scalable and less energy-intensive consensus system. This will solve for the soaring fees on Ethereum which threaten to choke off some of the transaction volume. It will also give DeFi applications a viable platform from which to one day integrate with traditional finance.
Institutional onramps are spreading. Coinbase Custody has offered institutional clients trading and custody services for DeFi tokens for some time now, and has listed four new DeFi tokens so far this year. BitGo facilitates the conversion of bitcoin into a DeFi-friendly token. Digital asset custodian Trustology helps its institutional clients vet DeFi projects. But so far access to the potential returns has been largely limited to buying individual tokens. This is changing.
This week, crypto fund manager Bitwise launched a DeFi fund, which tracks the weighted value of a basket of tokens. And some U.S.-listed trusts may be on the way: over the past few weeks, Grayscale Investments, the largest fund manager in the industry (owned by DCG, also parent of CoinDesk), has filed for authorization of investment trusts based on tokens for DeFi protocols such as yield optimizer Yearn Finance, money market Aave and data oracle Chainlink. (Note that filing for authorization does not indicate intent to launch, but the possibility is there.)
New territory
The returns on DeFi assets may be high so far this year, but so are the risks. There’s the possibility of a technological glitch, or a hack – we’ve reported on a few just this month. There’s regulatory risk: the controversial FinCEN proposal presented in December of last year, which suggests that exchanges require identifying information for receiving addresses, would dampen DeFi innovation and make some functions unviable. There is also liquidity risk: even a small institutional order could distort the market, and it may be difficult to exit when necessary. What’s more, the high volatility of DeFi assets means the downside could be brutal.
Nevertheless, given the public support for examining structural inefficiency and fragility in traditional capital markets, and the increase in DeFi activity and innovation, the growth in mainstream interest is likely to accelerate.
This will be positive for those building the capital markets of tomorrow, and for those that invest in these projects. So far this month, we’ve reported on three new venture funds targeting DeFi startups.
More institutional money flowing into the DeFi ecosystem, either in the form of token investment or venture capital, will boost liquidity and legitimacy. Institutional support will also guide the ecosystem through the shoals of regulatory acceptability and the gradual adaptation of current market infrastructure.
Smart money will hopefully understand the risks involved. But getting in early on a transformational innovation rewards the brave. And current market infrastructure is getting ready to help this along.
CHAIN LINKS
Investors talking:
Bank of America’s February survey of fund managers revealed that “long bitcoin” has slipped from the most crowded trade in January to the number two position, behind “long tech” and just in front of “short dollar.”
“We believe the trend of transactions, bitcoin investments, and blockchain-driven initiatives could surge over the coming years as this bitcoin mania is not a fad in our opinion, but rather the start of a new age on the digital currency front.” – Wedbush Securities, in a research note.
“Bitcoin may be The Stimulus Asset. Doesn’t look like gold is.” – Jeffrey Gundlach, CEO of DoubleLine Capital
“Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P500 company … Bitcoin is almost as bs as fiat money. The key word is “almost”.” – Elon Musk
“For now, the bitcoin boom may best be viewed as a canary in the coal mine.” – An interesting take on bitcoin’s boom by the FT’s Rana Foroohar
Takeaways:
The Ontario Securities Commission (OSC) has approved the Evolve Bitcoin ETF, making it the second to list on the Toronto Stock Exchange. TAKEAWAY: U.S. regulators, the pressure is on …
Elsewhere in ETFs, the Purpose Bitcoin ETF (BTCC) started trading on the Toronto Stock Exchange on Thursday, and accumulated almost $422 million of AUM in two days. TAKEAWAY: This is a strong signal that there is demand for this type of product.
Speaking of which, NYDIG, Stone Ridge Asset Management’s bitcoin spin-off firm, has filed with the U.S. Securities and Exchange Commission (SEC) for a bitcoin ETF. TAKEAWAY: This follows bitcoin ETF applications from VanEck and Valkyrie, and signals that fund managers are feeling more optimistic about the prospects for approval. Notably, the filing lists Morgan Stanley as the initial authorized participant, which adds a blue-chip name to the process – as far as I know, the other two ETF filings have not specified who their initial authorized participant will be.
Cryptocurrency exchange Coinbase, which is preparing to trade publicly in the next few months, is being valued at $77 billion, based on trading of the company’s privately held shares on a secondary market. TAKEAWAY: This is higher than the CME Group, ICE (parent of the NYSE), the London Stock Exchange … the list goes on, but you get my drift.
MicroStrategy, the business intelligence firm now better known for the 70,784 BTC on its balance sheet, intends to raise $1.05 billion via the issuance of convertible senior notes due in 2027. The bulk of the proceeds will, you guessed it, be used to buy more bitcoin. TAKEAWAY: This makes MSTR the closest thing to a bitcoin ETF in the U.S. market, while layering a level of corporate risk on top of bitcoin market risk. This is yet another nudge to the SEC to approve a bitcoin ETF soon. A reasonable question is: what will happen to the MSTR share price when that happens?
A survey released by Gartner this week showed that only 5% of business executives intend to invest in bitcoin as a corporate asset this year. TAKEAWAY: “Only” 5%?? That seems like a lot to me. In mid-June non-financial corporate cash was at $2.12 trillion, according to Moody’s. And the non-financial companies with the largest amount of cash on their balance sheets are Apple, Microsoft, Alphabet, Amazon and Facebook – tech companies that are more likely to be interested in BTC holdings than your “average” corporate.
A look at why the CME ETH futures matter for the market. TAKEAWAY: It’s a way for a broader range of investors to take a broader range of positions. It’s also a necessary prerequisite for the development of a lively ETH options market, which will offer even more hedging and directional bet opportunities for investors of all types.
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