Hyperledger Announces Financial Group, Exchange Adds Custody Service
By Christopher Lamb
According to a recent press release, Hyperledger Foundation, a global ecosystem for enterprise-grade blockchain technologies, has announced that two major financial institutions have become new members of the organization. In addition, Hyperledger announced a new Hyperledger Besu Financial Services Working Group “that will support operationalizing the open source Ethereum client for enterprise end user applications.” The Working Group is “an industry-wide collaboration where enterprise users and code contributors … can actively define new features and enhancements” that are used to improve adoption among organizations.
According to recent reports, a major U.S. cryptocurrency exchange has launched a custodial service for its institutional platform. The service reportedly provides digital asset custodial services and deposit accounts for institutional clients, which also enables the clients to store, manage and transfer funds all within a single interface.
According to a recent report released by CoinGecko, “RWA Report 2024: Rise of Real-World Assets in Crypto,” crypto assets tied to real-world assets (RWAs) have continued to become more diverse with the emergence of tokenized treasuries and stocks, private credit markets through uncollateralized lending platforms, and assets such as real estate, art, and commodities. The report notes that USDT still dominates the fiat-backed stablecoin market cap with roughly 71 percent share, followed by USDC and DAI. According to the report, “[t]okenized US treasuries saw a surge in popularity during the bear market, with its market cap increasing 641% in 2023, from $114.0 million to $845.0 million.”
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Reports Address Bitcoin Mining and Price Data in Advance of ‘Bitcoin Halving’
By Keith R. Murphy
A recent report addressing current market values of multiple coins notes that while the price of bitcoin continues moving upward, even breaking a record after reaching more than $72,000, bitcoin miners are slowly shrinking their treasuries of the asset. The report suggests that miners appear to be offloading bitcoin to institutions to satisfy demand from exchange-traded fund shareholders, and that the amount of bitcoin kept on cryptocurrency exchanges has been trending downward this year. Most days this month have experienced net outflows from bitcoin miners, according to the report.
According to another recent report, miners are adding more machines and utilizing record amounts of energy in the lead-up to the Bitcoin halving that is anticipated to occur this April. The halving, which happens every four years, will result in the bitcoin award for validating records of blockchain transactions shrinking from 6.25 bitcoins to 3.125 bitcoins for each new block created. The report indicates that miners are rushing to increase their computing power and efficiency in advance of the halving. The report notes that this past February, miners used 19.6 gigawatts of electricity, up from 12.1 gigawatts in February of the prior year, a more than 60 percent increase. In related news, a major U.S. bitcoin mining company recently announced its intention to purchase the Texas-based bitcoin mining center of another major U.S. mining company, according to a report.
In more news related to the Bitcoin halving, a major U.S. cryptocurrency exchange recently published a report addressing “how bitcoin has performed in prior halvings and what investors need to know.” Among other things, the report notes that “[b]ecause halvings reduce the supply of new bitcoins, they are often viewed as bullish for the price of BTC” and that price data supports this view, as “bitcoin gained an average of 61% in the six months leading up to prior halvings, and rose an average of 348% in the six months after halving.” However, the report cautions that there is limited historical data on the relationship between the halving and the bitcoin price, and that bitcoin “doesn’t operate in a vacuum” with “its price is affected by factors far removed from crypto-specific influences.”
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BIS Paper Examines Role of Collateral and Leverage on DeFi Protocols
By Joanna F. Wasick
This month, the Monetary and Economic Department of the Bank for International Settlements published BIS Working Papers No 1171, “DeFi Leverage,” examining the role of collateral and leverage on DeFi protocols – protocols on which a user can deposit crypto assets into a lending pool and receive a claim on their share of the pool. First, using data from the Ethereum blockchain, the paper documents individual DeFi wallets’ leverage, focusing on overall trends, group disparities and driving factors. Second, the paper presents evidence on the systemic risk impact of high leverage on DeFi lending platforms, particularly lending resilience and strategic substitution behaviors. Last, the paper addresses how understanding DeFi lending can improve understanding of greater financial stability concerns, such as repo and securities lending markets.
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Ethereum Foundation Faces ‘State Authority’ Enquiry; SEC Actions Continue
By Robert A. Musiala Jr.
According to recent reports, the Ethereum Foundation, a Swiss nonprofit organization, is facing an inquiry from a state authority. A comment on the Ethereum Foundation’s GitHub page states, “We have received a voluntary enquiry from a state authority that included a requirement for confidentiality.”
In other news, a recent press release by the U.S. Securities and Exchange Commission (SEC) announced that a major cryptocurrency lending firm has “agreed to a final judgment ordering it to pay a $21 million civil penalty and imposing a permanent injunction to settle charges that it engaged in the unregistered offer and sale of securities through a crypto asset lending program.” The company is currently involved in bankruptcy proceedings, and the press notes that “[u]nder the terms of the settlement, the SEC will not receive any portion of the penalty until after payment of all other allowed claims by the bankruptcy court, including claims by retail investors in the … program.”
In another recent press release, the SEC announced charges against 17 individuals “for their roles in a $300 million Ponzi scheme that involved Houston, Texas-based CryptoFX LLC and targeted more than 40,000 predominantly Latino investors in the U.S. and two other countries.” According to the press release, the action “follows the SEC’s successful emergency action in September 2022 that halted the CryptoFX scheme and charged its two main principals.” In a quote from the press release, an SEC official noted that the SEC “continued our investigation to identify additional individuals who allegedly played roles in this massive Ponzi scheme.”
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