When Titans Turn

When Titans Turn

The Fipto Research Team
July 11, 2023

Only fools never change their minds

In an unexpected pivot, BlackRock, the world's largest asset management firm, is embracing cryptocurrencies. Larry Fink, BlackRock's CEO, who was previously known as a crypto skeptic, is now endorsing digital assets as international gold. The driving force behind this shift is not a sudden epiphany, but a robust institutional demand. Analysts see this move as pivotal, potentially marking a significant change in how significant institutions perceive cryptocurrencies. Despite initial resistance, it appears that the world's financial giants are ready to explore the realm of digital assets, primarily guided by client demand rather than personal conviction. It's so funny. Is Warren Buffet next ?

Grayscale's Critique

Crypto asset manager Grayscale has criticized regulators for approving a leveraged bitcoin-based exchange-traded fund (ETF) while its own spot bitcoin ETF application was rejected by the U.S. Securities and Exchange Commission (SEC). In a letter to the U.S. Court of Appeals, Grayscale's lawyers argued that the approved leveraged ETF is even riskier than its traditional bitcoin-based futures products. They accused the SEC of discriminatory treatment and stated that the approval of a high-risk leveraged bitcoin futures ETF shows the commission has no intention of reversing its decision. Grayscale's application to convert its Grayscale Bitcoin Trust into an ETF was rejected last year, leading the company to file a lawsuit against the SEC. A ruling on the case is expected by the end of the year.

Yuan-Backed Stablecoins as a Globalization Tool

Circle CEO Jeremy Allaire believes that Yuan-backed stablecoins could be a more effective way to globalize China's fiat currency than a central bank digital currency (CBDC). He acknowledges that mainland China is unlikely to embrace crypto but remains optimistic about stablecoin regulation and web3 development in Hong Kong. Allaire suggests that a stablecoin pegged to the offshore Yuan could increase the currency's use in global trade. However, the team behind private CNH and Hong Kong dollar stablecoins was detained in May. Allaire also highlights the importance of Hong Kong embracing digital assets to remain relevant. He sees CBDCs and private stablecoins as complementary and believes that private stablecoins drive innovation. The Hong Kong government plans to introduce stablecoin regulations by 2024 and has established a web3 task force to reestablish itself as a global crypto hub. Circle's USDC stablecoin is the second-largest USD-pegged stablecoin behind Tether's USDT.

As a reminder, USDT holds a market capitalization three times that of its closest competitor which adds up to twice the combined market capitalization of all other competitors. Meanwhile, USDC has consistently been regarded as the exemplary participant.

The Fipto Research Team

Sources: The Block

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July 11, 2023

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