Crypto’s Last Week
This edition of “Crypto’s Last Week” accounts for the most notable, and crypto-related — institutional, investment, and regulatory — news published between Saturday, August 28, and Friday, September 4.
As of August 30, according to Bloomberg, the United States Federal Reserve owned a variety of securities with a total amount of 22,913, which positions said institution as the world’s “biggest investor.” The strategy to substantially increase the number of owned securities on the Fed’s balance sheet has been part of the Covid-19 recovery strategy to secure the US economy’s gears keep moving and as smooth as possible under the current circumstances. For reference, the purchase of these securities has been commonly been referred to as “printing or injecting money” due to the increasing liquidity entering the market by an actor that technically has limitless power to acquire securities by simply adding zeros to the circulating supply of money in the US economy, adding the important facts that the US gross debt to GDP ratio — estimated to reach 125% by 2021 — and government spending continues to set record highs with no minimal austerity in sight, sets this house of cards that is the economy and the world’s reserve currency (USD) to potentially come tumbling down any time in the future.
These actions have made important financial personalities such as Jim Rodgers and Ray Dalio promote hedging against inflation — a direct result of the increased amount of liquidity entering the markets — and the effects derived from the application of modern monetary theory by investing in “hard assets” such as gold, silver or bitcoin. Historically, the effects of a central bank injecting liquidity into the market to maintain the economy active have had positive short-term effects but dangerously negative long-term effects — see Zimbabwe, Argentina, & Venezuela — that could be a bleak premonition for both the US dollar and economy, unless drastic measures are taken to avoid such results.
The Commodity Futures Trading Commission (CFTC) has recently announced the approval for LedgerX to provide clearing services for fully collateralized futures and options in addition to previously authorized swaps. This order amendment opens the door for LedgerX to expand its service offerings and not be limited exclusively to clearing digital currency products.
The amendment has been in the work since 2018 and has transcended difficult internal and external situations that had hampered the company’s first-mover intentions as a compliant platform offering crypto and traditional derivative products to a wide array of institutional and retail investors in the USA.
It is important to note that LedgerX has now become part of the select few that not only offers derivative products for crypto but has increased its sophistication as a financial service provider and achieved the approval for the aforementioned products. This also makes LedgerX part of the uncommon group that has risen from exclusive crypto-related products to traditional-related products, a feat that is in itself commendable.
The United States Department of Justice (DoJ) has been the most recent governmental institution to announce the active instruction of attorneys and economists, through the Massachusetts Institute of Technology (MIT) Sloan School of Management, on blockchain, machine learning, and AI. The DoJ’s announcement comes days after the Boston Federal Reserve has announced their collaboration with MIT to analyze 30–40 protocols for a potential “digital dollar.” These recent and very close statements indicate a clear understanding by regulators and government organizations on the benefits derived from blockchain, digital assets, artificial intelligence, and machine learning to the future of the technological advancements in what is considered the most advanced country in science and technology development with a serious contender as China driving blockchain development and application through their DC/EP system as well as machine learning and AI in the financial and law enforcement areas. This race seems to bring major technological progress like the one seen during the Cold War’s “Space Race” — telecommunications, micro-technology, computer science and, solar power, among others — but to an era with a surprising parabolic rise in technological advancements on a year-to-year basis.
This brings forward the question. Will the country that dominates what is considered to be the WEB 3.0, and its ramifications, lead the next technological revolution and bring paradigm shifts to other branches of the global economy?
This past week it was announced that a bitcoin exchange-traded product (ETP) created by 21Shares AG, has been successfully included in leading stock exchanges in all three DACH countries — Germany, Austria, Switzerland. Wiener Börse and the Vienna Stock Exchange join the Deutsche Boerse Xetra, Boerse Stuttgart, and BX Swiss as the new members of an important group offering a bitcoin ETP (ABTC) to users within what accounts as 5.92% of global GDP. This significant achievement is a direct result of virtual asset service providers (VASP) relentlessly driving forward an agenda to create clear and progressive regulatory frameworks within their respective countries or regions.
The acceptance of these digital asset products also comes as a consequence of incremental demand by investors to have exposure to the next generation of assets, as a means of protecting their investments and savings from inflation or other monetary issues.
In addition, Deutsche Boerse has also added the, 21 Shares AG created, short bitcoin ETP (SBTC) as a way to offer exposure to the negative priced movement of what has been a volatile asset in past years and could benefit investors with experience in complex trading products.
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