Blockchain Bites: $187M Blockchain Bond, $522M BTC Mining Revenue and ‘Ethereum-First’ Institutional Investors

Singapore is funding blockchain R&D. Germany’s second-largest stock exchange’s crypto app saw $1.21 billion in trading volumes this year. Grayscale is seeing a growing number of “Ethereum-first” institutional buyers. 

Top shelf

Ethereum investors

There’s a growing class of institutional buyers interested in gaining exposure to ether, Ethereum’s native currency, at Grayscale, said the firm’s managing director, Michael Sonnenshein. “Over the course of 2020 we are seeing a new group of investors who are Ethereum-first and in some cases Ethereum-only,” Sonnenshein told Bloomberg. “Ethereum has along the same lines of the staying power Bitcoin has.” (Grayscale is owned by CoinDesk’s parent company, Digital Currency Group.)

Bond concept

Standard Chartered Bank and UnionBank of the Philippines said they have completed another proof-of-concept blockchain bond issuance, meant to reduce the barrier of entry to the bond market for retail investors. In total, the banks tokenized some $187 million worth of bonds. “Bond infrastructure around the world has been designed primarily for institutional investors and involves a number of intermediaries to buy and subsequently trade bonds, making it less accessible to retail investors,” a Standard representative said.

Blockchain R&D

The Singapore government has launched a S$12 million (US$8.99 million) program to advance commercial applications of blockchain within the city-state. Under the nation’s National Research Foundation (NRF), the Singapore Blockchain Innovation Programme will work with multinational corporations, large enterprises and IT firms to research and develop with 17 blockchain-based projects, to help the city-state become “more globally connected,” especially in the time of coronavirus.

Borse bulls

Borse Stuttgart’s crypto trading app has seen €1 billion (US$1.21 billion) in trading volumes this year. German’s second-largest stock exchange also reported that in November there were several days where the app saw record daily trading volumes exceeding €35 million ($42.3 million) on its crypto-first Bison trading app, with bitcoin, ether, XRP, litecoin and bitcoin cash functionality far exceeding expectations.

Cross-border CBDC

Hong Kong’s central bank is reportedly working with the People’s Bank of China (PBOC) to test digital yuan use cases. PBOC’s Digital Currency Institute and the Hong Kong Monetary Authority are discussing the technical pilot testing of using a digital currency for making cross-border payments. “As the renminbi is already in use in Hong Kong and the status of e-CNY is the same as cash in circulation,” an HKMA executive said. “It will certainly offer an additional payment option to those in Hong Kong and the mainland who need to make cross-border consumption.”

Mining revenue

Bitcoin miners generated an estimated $522 million in revenue in November, up 48% from October and the highest since late 2019, according to data from Coin Metrics. The sharp revenue increase came as bitcoin rallied 40% in November. Despite significant intra-year volatility, mining revenue measured by terahash per second (TH/s) is roughly flat year to date from roughly $0.138 per TH/s on Jan 1 to $0.135 per TH/s at last check. Additionally, network fees slightly decreased from October to November – from a $13 average transaction fee at the start of November to below $3 near month’s end.

Cardano fork

IOHK, the development team behind public blockchain project Cardano, said it is set to launch a hard fork in December as part of the transition to the third protocol development phase, focused on smart contract functionality. The hard fork will introduce the token-locking mechanism, thereby supporting certain smart contract use cases.

Quick bites

Market intel

Shorts on

Bitcoin traders on the Chicago Mercantile Exchange are taking on short positions as the leading cryptocurrency floats around $19,000. Net short open interest for CME leveraged funds, or the total amount of outstanding contracts, hit record highs of $1.3 billion at the end of last month. The market’s total open interest in bearish positions decreased slightly in early November, though is still up from September levels. Short positions are a bet that bitcoin’s price will drop.

At stake

Push & pull

In just under a year in office as Acting Comptroller of the Currency, Brian Brooks has pushed forward several pieces of guidance favorable to the cryptocurrency industry. In letters and statements, Brooks, former counsel for Coinbase, gave permission for nationally chartered banks to custody crypto, hold dollar reserves for stablecoin issuers and generally created a positive sentiment around the industry. But none of this guidance is binding.

On Friday, U.S. Representative, and chair of the House Financial Services Committee, Maxine Waters published her own letter, calling for President-elect Joe Biden to undo, or monitor, much of Brook’s work.

“As you begin to carry out the mandate given to you by the American people to restore trust in the federal government, I would like to highlight several areas where you and your team should immediately reverse the actions of your predecessors,” she wrote. This would include rescinding crypto and stablecoin services from the banking mandate.

This push and pull seen in government – between the executive and legislative branches, between Democrats and Republicans, and between public guidance and actual law – brings into relief the need for crypto-first industry standards. Whether favorable or skeptical, if a decision comes on from down high it will often lead to complications.

There are several self-regulatory focused groups in crypto, like the Gemini-led Virtual Commodities Association (VCA), as well as industry think tanks like Coin Center, that are doing meaningful work. The latest, a project between Bequant and Global Digital Finance, is looking to create “best practices” around decentralized finance (DeFi).

The companies announced last month they would form an industry group with law firm Hogan Lovells, aiming to bring industry participants together “with the goal of bringing credibility and integrity to DeFi projects around the globe,” according to a press release. Uniform standards can help the industry grow, without running into burdensome regulations.

The need for industry incubated standards is all the more relevant in light of Brooks’ proposals. Recently, the OCC chief proposed that banks be prevented from blacklisting certain politically charged, publicly vilified or legal but “at risk” businesses from banking services.

In a recent CoinDesk op-ed, J.P. Koning came out against the letter, saying that while it’s a noble attempt to stop “politically driven discrimination,” it would likely lead to a loss of diversity in services. “The underlying motivations are good ones,” Koning writes. Though it may not be for the best.

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