🏦 Is Digital Currency the Death of Private Banks?

Good Morning!

As we continue to wait for Bitcoins first Spot ETF to be accepted, Grayscale has taken shots at the SEC, stating that it has no grounds to reject their proposal. We also take a dive into Ethereum staking, and explore whether there really is a “Risk Free” rate of return.

There’s also notable news from Russia and China. In Russia, the head of parliamentary finance has stated he expects digital currencies to displace most private banks. In China, Shandong province is aiming to have a metaverse economy of over $20bn by 2025!

Let’s dive into the news! 👇

Markets

SEC Has 'No Grounds' to Reject Bitcoin ETF Conversion, Grayscale Says (1 minute read)
Grayscale Investments has informed the U.S SEC that it believes there are no valid reasons to oppose the transformation of its Grayscale Bitcoin Trust into an exchange-traded fund (ETF). This comes after a recent court order instructed the SEC to reevaluate its previous rejection of the conversion. Circuit Judge Neomi Rao sided with Grayscale's argument that their proposed product is essentially on par with existing bitcoin futures exchange-traded products in the U.S. Grayscale also pointed out the SEC's track record of turning down spot bitcoin ETF applications, suggesting that any substantial distinctions between the two would have been identified in the numerous rejections, even as bitcoin futures ETPs have been trading.

Explaining Ethereum's 'Risk Free' Rate of Return (4 minute read)
There's a glimmer of hope on the horizon: staking. Despite the challenges faced by the blockchain industry in the tumultuous year that was 2022, along with the economic uncertainties highlighted by Federal Reserve Chair Jerome Powell at Jackson Hole, there's been a remarkable resurgence in proof-of-stake (PoS) revenue generation, almost reaching record levels. As Bloomberg's Sidhartha Shukla recently pointed out, the total value locked (TVL) in liquid staking protocols has skyrocketed by 292% to reach an impressive $20 billion over the past year. This is just a stone's throw away from the $21 billion locked in the prominent decentralized staking protocols, Lido and Rocket Pool, back in April 2022, just before the TerraUSD stablecoin hiccup. The resurgence in Ethereum staking valuations might seem counterintuitive in a time when decentralized finance (DeFi) is experiencing a lull, but it makes sense when you look at the risks and rate of return.

CBDCs will gradually displace private banks, says Russian lawmaker (2 minute read)
According to Anatoly Aksakov, the head of Russia's parliamentary financial committee and a notable Bitcoin skeptic, the rise of central bank digital currencies (CBDCs) and blockchain technology is poised to shake up the traditional banking landscape. Aksakov suggests that the conventional banking system could gradually "fade away" as the digital ruble gains prominence, as reported by local news agency RIA. Speaking at the AIF Media forum, he remarked, "As for the role of banks, I think that their role will decrease in the future with the development of blockchain." In this evolving landscape, private banks will need to redefine their purpose, possibly by participating in the infrastructure of digital financial assets and the digital ruble.

Tech

China’s Shandong province aims for metaverse market worth $20.5 billion by 2025 (3 minute read)
China's Shandong province is diving headfirst into the metaverse industry as part of its ongoing blockchain initiatives, unveiling draft guidelines aimed at boosting development in this space. The provincial government, in a document released on Monday, outlined its ambitious plans to nurture the metaverse sector, with the goal of achieving a market size of 150 billion yuan (approximately US$20.5 billion) by 2025. To accomplish this, Shandong plans to establish multiple metaverse-related industrial parks and foster the growth of at least 100 metaverse companies over the next few years. As part of this endeavor, the local government is also committed to assisting companies in securing at least 3,000 international and domestic patents by 2025.

Visa’s crypto stablecoin settlement expands to Solana (2 minute read)
Visa has opened up a new avenue for its partners to engage with the world of cryptocurrencies by allowing them to send or receive USDC settlement payments using the Solana blockchain. The move comes as Visa collaborates with fresh merchant banks, marking a significant step in the company's journey into the crypto realm. With this expansion of stablecoin settlement capabilities, Visa can now seamlessly transmit USDC-denominated payouts to Worldpay and Nuvei through its Circle Account, enabling these payment processors to smoothly direct these USDC payments to their respective end merchants. Visa's Crypto Head, Cuy Sheffield, emphasized the company's pivotal role in facilitating the daily clearing, settlement, and movement of enormous sums of money, involving roughly 15,000 financial institutions and spanning approximately 25 currencies.

Misc

Tether becomes one of US Treasury bills’ major holders (2 minute read)
Tether's Chief Technology Officer, Paolo Ardoino, has dropped an interesting tidbit: Tether has invested more in US Treasury bills than some entire countries, including the United Arab Emirates, Australia, Japan, and Mexico. In his post on X, Ardoino disclosed that Tether's current stash of US Treasury bills stands at a whopping $72.5 billion. He also underscored the significance of USDT, Tether's stablecoin, in emerging markets, where it can serve as a financial lifeline, shielding communities from the challenges of soaring inflation in their local currencies.

Sam Bankman-Fried’s lawyers reiterate jail release request, DOJ says laptop access sufficient (3 minute read)
Sam Bankman-Fried, the founder of the now-defunct FTX crypto exchange, currently residing at the Metropolitan Detention Center, has been granted a laptop as he awaits his trial slated for early October. Prosecutors revealed in a letter addressed to Judge ​​Lewis A. Kaplan that Bankman-Fried has been provided with access to an air-gapped laptop in a visiting room. This access is available to him from 8:00 a.m. to 7:00 p.m. on weekdays and from 8:00 a.m. to 3:30 p.m. on weekends and holidays. Interestingly, there have been no reported issues with the laptop's functionality, including the USB ports and software applications utilized thus far. In fact, Bankman-Fried now possesses three hard drives, and the detention center has even greenlit a second air-gapped laptop, conveniently stored in an area near his housing unit.

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