Blockchain and Cryptocurrency News Roundup

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  • February 22, 2021
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22 February 2021.

Here’s a short summary of some of the biggest headlines in Crypto this week. CoinShares releases DeFi index token for institutional investors, Bitcoin’s parabolic price run pushes the cryptocurrency’s market cap above $1 trillion, Ripple now registered as a Wyoming business & India’s regulator tells companies to sell Bitcoin prior to IPOs.

CoinShares releases DeFi index token for institutional investors

Asset manager CoinShares is coming to market with a decentralized finance (DeFi) token – one meant for institutional investors. The London-based firm best known for its bitcoin exchange-traded product XBT has released its CoinShares Gold and Cryptoassets Index Lite (CGI) token on the Ethereum blockchain. The CGI token was built in cooperation with Index Coop, the team behind the DeFi Pulse Index, and the Imperial College of London, according to documents shared with CoinDesk. The CGI token consists of two equally weighted “wrapped” crypto assets – wrapped bitcoin (WBTC) and wrapped ether (WETH) – and the firm’s wrapped gold token, wDGLD. The index itself, the CGCI, was first released in May 2020. Indexes bring legitimacy and ease of access to novel asset classes, CoinShares chairman Danny Masters told CoinDesk in an interview. For example, the Goldman Sachs Commodity Index of the mid-2000s introduced institutional investors to the commodities market previously not considered an asset class at all, Masters said. “When [institutional investors] came to the commodity space, they wanted an index,” Masters said. History is likely to repeat with digital assets, he said. The index token itself is structured so as to take advantage of the infamous volatility of crypto markets. The CGI itself uses the Shannon’s Demon portfolio methodology which breaks asset holdings into two classes: volatile and non-volatile assets – in this case, crypto and gold. The portfolio rebalances to the original weights on a set schedule regardless of ups or downs. The methodology has proven to beat passive investment products offered by traditional indexes. The CGI token follows the release of the DeFi Pulse Index (DPI) in September and Bitwise’s DeFi Index Fund on Feb. 17. That index, unlike CoinShares’, tracks a basket of differently weighted DeFi tokens such as AAVE or UNI.


Bitcoin’s parabolic price run pushes the cryptocurrency’s market cap above $1 trillion

Bitcoin’s current bull run has served to push the world’s first and biggest cryptocurrency to a market capitalization of $1 trillion. According to data from CoinMarketCap, the price of the digital currency has surged by over 8.8% in the past 24 hours, crossing a new all-time high (ATH) of $56,000.00 within that time frame. Currently, the combined market capitalization of the global cryptocurrency market stands at $1.71 trillion. Bitcoin has proven to be a star digital asset in the crypto space, establishing itself as a unicorn responsible for more than 61% of the value of the entire cryptocurrencies. There are over 8,520 in all. The embrace of Bitcoin by institutional investors is paying off with a corresponding increase in price. A Bitcoin adoption cycle was notably kickstarted with a move from Jack Dorsey’s backed payment firm, Square Inc, and Michael Saylor’s business intelligence firm, MicroStrategy Inc. back in the second half of 2020. Since these publicly-listed firms dabbled into the world of Bitcoin, it has led to other firms promptly following their lead. Today, many Wall Street firms are shoring up their balance sheets with Bitcoin, bemoaning the unattractiveness of the US dollar amid unrelenting money printing used for covid-19 stimulus packages. Bitcoin, with a $1 trillion market cap milestone attained today, has further strengthened the appeal of the cryptocurrency industry as the inflow of funds may serve to make regulators rethink their position in the industry. Another step to gain more exposure to Bitcoin for corporate investors is through Exchange-Traded Fund products, and while other nations such as Canada have approved their first Bitcoin ETFs, the US has yet to approve any Bitcoin ETF application. When this hurdle is crossed, Bitcoin is bound to see a wave of money inflow and the cryptocurrency will gain an even bigger market capitalization in the near future.

Ripple now registered as a Wyoming business

“More crypto companies are realizing Wyoming is a better domicile than Delaware due to our crypto-friendly laws,” said Caitlin Long. Blockchain-based payments firm Ripple Labs has now registered a business in Wyoming. According to records from the Wyoming Secretary of State, Ripple Markets WY LLC’s status as a local business is listed as “active” after an initial filing in February 2020. As a limited liability company in Wyoming, Ripple’s registered agent will be based in Cheyenne. “More crypto companies are realizing Wyoming is a better domicile than Delaware due to our crypto-friendly laws,” said Caitlin Long on Twitter. Long is the CEO of digital bank Avanti Bank & Trust and associated with the state legislature’s Select Committee on Blockchain, Financial Technology and Digital Innovation. She said crypto firms like Ripple should consider relocating to Wyoming due to the state not having any corporate or franchise taxes, and cryptocurrencies being exempt from property and sales tax. In addition, there is the presence of U.S. Senator Cynthia Lummis. The Wyoming lawmaker is one of the first to say digital assets will be a key part of her legislative agenda. Responding to the Ripple news, Lummis’ state policy director said many people were “maximalist on Wyoming.” It does not appear as if Ripple will move its headquarters to the crypto-friendly state as its principal office is still listed as San Francisco. However, both Ripple co-founder Chris Larsen and CEO Brad Garlinghouse have said that they are displeased with the seeming lack of regulatory clarity on crypto and blockchain in the United States. Wyoming is becoming one of the most attractive U.S. states for crypto and blockchain firms. Last year, the Wyoming State Banking Board granted crypto exchange Kraken a charter to operate as a crypto-friendly bank and gave Avanti the green light to receive and custody crypto in a similar fashion. In the wake of Tesla’s $1.5 billion Bitcoin (BTC) purchase earlier this month, Senator Lummis invited CEO Elon Musk to consider relocating to the state.


India’s regulator tells companies to sell Bitcoin prior to IPOs

The Securities and Exchange Board of India (SEBI), the country’s top financial regulatory authority, is cracking down on high-level executives who hold Bitcoin and intend to take their companies public in the coming months, as per a report today on local news outlet Economic Times. SEBI has asked promoters of such companies to sell off any cryptocurrencies they hold before raising funds from the public, the report said, adding that investment bankers and securities lawyers involved with any ongoing Initial Public Offering (IPO) process were already informed of the new regulation. Among factors like cryptocurrencies remaining a legal gray area in India, a major concern for SEBI is that promoters could use the funds they raised through IPOs to buy more cryptocurrencies. But not everyone is convinced of that argument. “If a promoter holds any cryptocurrency, it may not necessarily expose the company to any risk,” Vatsal Gaur, partner at legal firm Pier Counsel, told the outlet. He added that holding cryptocurrencies was similar to owning any other financial asset—which doesn’t directly risk the operations of a listed entity. The concerns come as the executives of some public companies in the US, most notably MicroStrategy CEO Michael Saylor, have championed a strategy of using company funds to buy Bitcoin. The firm has already picked up over $1.5 billion of Bitcoin as part of its treasury and intends to buy over $900 million more in the coming days. Some say its stock has become a pseudo-Bitcoin ETF as a result of these purchases; the stock price has soared over 400% from under $150 to as much as $1,300 since its first Bitcoin purchase (a narrative that Saylor does not agree with). Indian authorities, however, don’t want a repeat of that in any stock listed in the country. Meanwhile, the India’s central bank is already contemplating a ban on the ownership of Bitcoin or other cryptocurrencies, while simultaneously weighing the launch of its own digital currency.


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