Blockchain Confidential - 14 January 2022

TradFi digital asset engagement expands, a great NFT trading data analysis, and the Chinese government will ape in to NFT's despite crypto ban

The Week

Blockchain Confidential has a soft spot for zero-knowledge proofs (ZKP) and so we’re excited to report that ultra-fast ZK Rollups are coming to Polygon. In news sure to delight market microstructure geeks, QCP Capital thinks the digital asset option market tail may be starting to wag the dog of the spot market. On the subject of derivatives, all the cool kids want their own DAO nowadays, and dYdX is no different as it presses for full decentralization in 2022. And Jack Dorsey wants to help Bitcoin developers lawyer up.

In NFT and the metaverse, the Associated Press is launching an NFT marketplace with its iconic images via “Pulitzer Drops” to help fund AP journalism, while Gap launched a collection on Tezos. OpenSea continues to dominate NFT trading and is heading on a new all-time-high in January of $6B on current trends. After announcing plans for NFT’s from the state-owned Xinhua News Agency, the Chinese government doubled down and announced plans for an entire state-backed NFT platform. We are guessing the AP’s famous Tank Man photo need not apply.

Traditional finance companies were active this week. Following on research that suggests beneficial diversification effects from blending equity and crypto exposure, Fidelity added Bitcoin spot exposure to its All-in-One ETF series. PayPal is exploring its own stablecoin, along with a group of FDIC-backed banks. Credit reporting giant TransUnion wants to start covering crypto lending in partnership with Spring Labs, which is bringing its decentralized identity and on-chain KYC/AML technology. Finally, Visa is partnering up with ConsenSys on CBDC payment rails.

The Good Read

We love a good data science piece, especially when the dataset is a hot topic like NFT trading. Read Yifei Huang’s The data behind the NFT hype.

Regulator Radar

On CNBC SEC Chair Gensler side-stepped the question of whether Ethereum could be considered a security, just pointing once again to the Howey Test guidelines for U.S. securities as he has done before. Separately, Fed Chair Powell told Congress that the delayed Fed report on digital currencies is due within weeks, which may reveal their thinking on adopting a digital dollar CBDC; he also sparred with Senator Loomis regarding the Fed’s blocking of crypto banks chartered in Wyoming. The famous venture capital firm a16z released a whitepaper calling for targeted DeFi regulation to support Web 3.0 growth, including regulation of stablecoins, a call echoed by FTX founder Sam Bankman-Fried.

Thailand is going to clarify crypto tax treatment, while the Hong Kong Monetary Authority released its latest whitepaper on digital assets, with a focus on stablecoin regulation. Bottlepay obtained U.K. FCA registration for its Lightning Network-based payment rails. Kling Trading and Cosmea teamed up to apply for the first Bitcoin and Ether futures-linked ETF’s in India, while Pakistan’s central bank appears to be heading toward a crypto ban. In CBDC pilot news, the Swiss National Bank partnered with the BIS and five commercial banks to test out a wholesale digital CNF.

At the Office

Employee #1 joined Cloudwall Capital in NYC, Barry May. Barry is a seasoned Web architect and Wall Street IT veteran and will be taking charge of the development of Serenity’s Web front-end. We got a leading-edge Docker-based development environment running for everybody; we’ll be writing about our VS Code set up in a future Geek Out after we iron out a few remaining issues. To support the Research team, we also got a cloud-based JupyterLab environment running this week, and some prototype data pipelines loading digital asset data. With the NYC operation fully live, Jia Yng is putting the finishing touches on the operational infrastructure so we can bring on our first Singapore employee by March 1st. And we continued our customer outreach speaking with digital asset operations at hedge funds, banks and OTC/prop traders. Want to talk about your data and analytics needs and pain points for digital assets trading? Reach out!