BitGo: Crypto Water Cooler — Nov 8
GM. It’s Wednesday, November 8.
New Report: Crypto Categories Unveiled — Bitstamp
Newsmakers
The UK Is on a Fast Track to Comprehensive Regulation
Regulators in the UK — the largest crypto hub in Western, Central, and Northern Europe — are quickly moving ahead on crypto legislation. In February 2023, the UK government provided recommendations for crypto regulations; they got royal assent to the Financial Services and Markets Act of 2023 in June. Last week, after receiving feedback on their recommendations from crypto and TradFi firms, industry associations, academia, and other stakeholders, the government says it will have legislation in Parliament in early 2024.
Specifics are still being worked out, but crypto assets and activities will fall under the same regulations as other financial firms. Regulation will be released in phases, starting with fiat-backed stablecoins. On Monday, the Bank of England and the Financial Conduct Authority (FCA) put forth some details of stablecoin regulation. NFTs similar to artwork or collectibles are not expected to be regulated although exchange tokens might be. Rules will be created for trading venues that are already regulated in other jurisdictions and desire a UK presence.
After implementing standards for crypto advertising in October, the FCA has released their “Finalised non-handbook guidance on Cryptoasset Financial Promotions.” These requirements include due diligence on assets being promoted, risk warnings in promotional communications, and factual support for claims made. Already, 221 firms have been flagged as non-compliant. To further protect consumers, the National Crime Agency is recruiting six people to investigate crypto-related crimes.
Broader access to crypto assets is also in the works; payment giant PayPal announced that the FCA approved their registration as a crypto business although services are currently paused as they work to ensure compliance. And, HSBC Holdings Plc, one of the world’s top bullion banks, launched a platform to tokenize gold in its London vault, which can then be traded through that bank’s single-dealer platform.
Banks in both the UK and the U.S., though, are less enthusiastic about jumping into DeFi when compared to other countries with the UK government recently saying that it’s too early to regulate this decentralized activity.
Read more →Gov.uk
Tron Jumps Out to Early Payments Lead In Emerging Markets
Banking the unbanked in developing markets is stated as one of the major aims of crypto, but neither BTC nor ETH has yet achieved that goal. But another chain, Tron, has been quietly making progress, finding a niche as the top blockchain for USDT and other fiat-backed stablecoin transfers. Its secret: fast, cheap, and reliable payments.
A new report ($) from hedge fund Brevan Howard shows that Tron has over 2.4MM weekly active addresses interacting with stablecoins, dwarfing activity on speed and cost-focused Ethereum layer-2s such as Arbitrum and Optimism — and even on Ethereum itself. Although it is roughly twenty-six times the size of Tron in terms of market capitalization, Ethereum has fluctuated between 300–500K weekly active addresses over the past few years.
Usage has largely been driven by customers in emerging markets. Google search volume for “USDT Tron” has surged in Nigeria, Côte d’Ivoire, and Pakistan while searches for “USDT Ethereum” have declined, leaving the two neck and neck for search volume in those markets. But that’s where the similarity ends. Data shows that the average payment using USDT on Tron has oscillated between $100 and $300 over the past three years. Meanwhile, stablecoin volume on Ethereum consisted primarily of large transfers of over $100,000. The average cost to send USDT on Ethereum is about $3.50; the cost of a similar transfer on Tron is roughly $1.30.
That’s still higher than Optimism and Arbitrum where transfers averaged $0.11, but Tron is more well-known in emerging markets where it enjoys a first mover advantage and network effects. Diego Diaz, who works at a bank in Argentina where Tron is popular, says that most fintech companies operating in Argentina offer USDT payments on Tron. Matias, a vendor who runs an e-commerce store in Buenos Aires, estimates that about 95 percent of his customers pay with it. Mattias says that he accepts Tron because everyone else does.
At some point, Tron may face more competition. Upgrades to the Ethereum network are slated to add speed and reduce gas fees. Optimism and Arbitrum could earn market share as awareness increases. But, for now, Tron is the blockchain of choice for emerging market users who want to transact quickly, cheaply, and simply — the same motivations that drive customer choice of payment providers everywhere.
Read more →The Defiant
Gaming Fuels Reversal of DApp Downtrend
According to the latest quarterly update from DappRadar — the largest DApp distribution platform — October saw a reversal of the downward DApp market trend with gaming leading the way. Gaming dominates the Web3 world, now accounting for 62 percent of activity, an increase of 10 percentage points since September. Plus, 1.6MM daily unique active wallets (dUAW) interacted with gaming DApps in October — an increase of 17 percent.
The growing popularity of NFT games contributed to this rise. These games use NFTs stored on the blockchain as assets with each player owning unique game elements, characters, or other items. Players may have the opportunity to trade and sell their NFTs to earn real-world income. Some can be traded across chains, games, and platforms, which can increase their appeal and value.
Sorare, Axie Infinity, and Gods Unchained NFTs are the most traded. Sorare is a fantasy sports game in which players set up lineups based on real world teams and earn prizes based on how their lineup performs in real life. Win or lose, players get to keep their sports cards. Axie Infinity players can equip their axies with charms and runes to give them unique strengths based on their “genes,” which they can use in their adventures. In Gods Unchained, to defeat opponents, players must develop strategies and unleash divine powers to master six domains and nearly two thousand cards.
Read more →DappRadar
News In Brief
Regulation and Security
Recommended by LinkedIn
Business of Crypto
DeFi and Web3
Midweek Market Pulse
Total Market Cap: $1.31T — 7 day change as of Tuesday 11/7/23 Noon EST: +3.2%
Source: Messari
“Uptober” has rolled into November, as the global crypto market cap climbed 3.2% to $1.31T, with alt coins outperforming Bitcoin (BTC, -0.0%) and Ethereum (ETH, +2.3%) for the week and NFTs and DeFi delivering strong October numbers.
With the trial of Sam Bankman-Fried fading in the rear view mirror, the crypto world keeps turning, looking forward to catalysts like Bitcoin’s halving in early 2024 and the prospect of approval of spot Bitcoin ETFs. BitMEX cofounder Arthur Hayes also sees BTC as a hedge against future increases in U.S. military spending.
Alt coins including XRP (XRP, +10.7%), Chainlink (LINK, +12.2%), and Cardano (ADA, +14.8%) all posted strong gains. XRP was approved by the Dubai Financial Services Authority (DFSA); licensed firms there can now offer XRP to clients. Parent company Ripple will also begin working with the Republic of Georgia’s central bank on its CBDC pilot. Chainlink continues to rally on adoption of its Cross-Chain Interoperability Protocol, which is now being used in Hong Kong’s CBDC trials.
Transaction volume on the Cardano network surged to a three-month high as the rollout of its privacy-focused Cardano Midnight protocol continued. Additionally, Cardano will adopt Polkadot’s (DOT, +7.1%) Substrate framework for its “partner chain” initiative, the aim of which is to build a worldwide network of interconnected blockchains.Data from Santiment shows that Cardano led developer activity in the last 30 days as measured by Github developer commits, followed by Polkadot, Kusama (KSM, +17.1%), Hedera (HBAR, +7.1%), and Aptos (APT, +0.1%).
NFTs enjoyed a resurgence in October. Forkast reports $300MM in sales for the month, halting a seven-month skid. The average sales price increased to $60.38, a four-month high. The DeFi market also made a strong comeback, with total value locked climbing to a three-month high of $42B, based on rising asset prices and fresh inflows from new participants.
The Last Word
Network Effects
Noun
: The idea that the value of a product or service increases the more that people use it
/ Network effects derive from the ability of a platform to connect people or entities in a frictionless manner around an enduring exchange of value.
About BitGo
BitGo provides the most secure and scalable solutions for the digital asset economy, offering regulated custody, borrowing and lending, and core infrastructure to investors and builders alike.
Founded in 2013 — the early days of crypto — BitGo pioneered the multi-signature wallet and later built TSS to improve upon other companies’ MPC offerings. Between multi-sig and TSS, BitGo offers the safest technology on the market and safeguards over 600 tokens across a wide variety of blockchains.
Over the years, BitGo has expanded from offering wallets into providing a full-suite solution that lets clients hold assets safely and then put them to work.
BitGo launched BitGo Trust Company in 2018, providing fully regulated, qualified cold storage to complement BitGo Inc’s original hot wallet solution. In 2020, BitGo launched BitGo Prime, which allows its clients to trade, borrow, and lend. Moreover, BitGo also provides access to DeFi, staking, NFT wallets, and beyond, and serves as the world’s sole custodian for WBTC, or wrapped Bitcoin.
Today, BitGo is the leader in digital asset security, custody, and liquidity, providing the operational backbone for more than 1500 institutional clients in over 50 countries — a list that includes many regulated entities and the world’s top cryptocurrency exchanges and platforms. BitGo also processes approximately 20% of all global Bitcoin transactions by value.
For more information, please visit www.bitgo.com.
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