The US’ Stance Towards Crypto Is The Not The Be-All & End-All For The Asset Class
The Daily Crypto Update for Institutional Investors
Throughout May The Crypto Space’s Attention Has Been Fixated On US Politics & Legislation - However, The US’ Stance Towards Crypto Is The Not The Be-All & End-All For The Asset Class Given The Strength Of Adoption Outside Of The Country
In May, crypto emerged as a notable US political topic. Candidate Donald Trump’s embrace of the asset class, and the subsequent pivot by the Biden Administration, placed the US’ approach to crypto as the center of attention of the crypto world. However, despite the fixation on US adoption of crypto, significant adoption is occurring outside the country. In these regions, crypto-friendly rules and regulations have been much less controversial. Data also suggests that the practical uptake in these countries is significant.
Chainalysis’ 2023 Global Crypto Adoption Index ranks the US as 4th in overall digital asset adoption, behind India, Nigeria, and Vietnam. The index’s accompanying report points to central and south Asia as ‘leading the way in grassroots crypto adoption.’ The report also emphasizes that lower middle income countries have seen a stronger recovery than elsewhere in grassroots crypto adoption following ‘the doldrums of late 2022…’ The top 20 according to the index also include Brazil, ranked 9th, and China, ranked 11th.
Crypto proponents interpret the asset class’ accelerated adoption in emerging markets as a result of often acute economic conditions in those countries. For instance, in Turkey where the local currency has lost ~80% of its value against USD, Binance and stablecoin USDt have become an increasingly popular means for gaining USD exposure. In Argentina, which has been plagued by inflation for decades, BTC proponent president Javier Milei’s economic liberalization efforts have allowed contracts in the country to be denominated in cryptocurrency. Crypto media has pointed to anecdotal examples of rental agreements relying on BTC being used in Argentina since Milei’s reforms.
Over the weekend, El Salvador inaugurated President Nayib Bukele for his second term. Bukele led the country’s adoption of BTC as legal tender in 2021. El Salvador has emerged as a pioneer in the nation state adoption of BTC. We have previously written that Bukele’s adoption of BTC, which has coincided with other highly successful national reforms, is likely normalizing the move among other leaders, especially in Latin America.
Takeaway: In January, to mark the 15-year anniversary of the ‘bitcoin genesis block,’ we described nation state adoption of BTC as a ‘key bullish narrative.’ This dynamic is largely independent of the day-to-day dynamics of crypto’s role in US politics. Emerging markets have brought to light some of BTC and crypto’s most fundamental and practical use-cases.
CRYPTO HEADLINES
President Joe Biden vetoed a resolution aimed at overturning SEC's anti-crypto rule, SAB 121. The regulation requires financial entities that custody crypto assets for clients to include these assets in their balance sheets as liabilities. Biden cited the necessity of maintaining suitable protections for both consumers and investors, suggesting that negating the resolution may weaken the SEC's overarching control over accounting practices. - link - @CoinDesk
Donald Trump's 2024 presidential campaign now accepts BTC Lightning Network donations. In a move geared toward crypto-friendly voters, Trump has partnered with OpenNode to facilitate campaign contributions through the BTC Lightning Network. - link - @BitcoinMagazine
Hong Kong's securities regulator has listed 11 crypto exchanges as ‘deemed to be licensed,’ following the introduction of a digital-asset rulebook last year. Crypto.com and Bullish are among the applicants listed, while exchanges such as OKX and Bybit have withdrawn their applications. - link - @Bloomberg
Japanese crypto exchange DMM Bitcoin suffered a USD 301M hack. The equivalent amount in BTC, 4,503, was dispersed to 10 different crypto addresses following the significant security breach. DMM Bitcoin has temporarily halted a number of services such as withdrawals but has guaranteed full compensation for affected BTC deposits through its group companies. - link - @Bloomberg
Australia's first spot BTC ETF, IBTC, will debut on Cboe Australia. Scheduled for launch tomorrow, the fund is overseen by Monochrome Asset Management and carries a management fee of 0.98%. - link - @BitcoinMagazine
Franklin Templeton will charge a management fee of 0.19% annually for its planned spot ETH ETF. The fee is the first to be revealed by ETH ETF issuers, and the fund has pledged to waive all fees for the first USD 10B in assets for six months after its debut. - link - @Decrypt
US Senator Ted Cruz said he has invested in three BTC miners that have established operations in Texas. Cruz has been an advocate of BTC adoption in Texas and the broader US, including promoting BTC mining in the state and accepting BTC for campaign donations. - link - @BitcoinMagazine
MicroStrategy (NASDAQ: MSTR) and Michael Saylor agreed to pay USD 40M to settle a tax fraud lawsuit. The lawsuit, filed by the Washington, DC attorney general, accused Saylor of evading over USD 25M in taxes. This settlement marks the largest income tax recovery in DC's history. - link - @Bloomberg
TOP ARTICLES
OPEN-SOURCE RESEARCH / LONG-READ OF THE DAY
How Crypto Can Help Restore Hong Kong’s Financial Glory, Danny Chong for South China Morning Post, June 2, 2024
Danny Chong, co-founder of Tranchess, a DeFi protocol offering structured and liquid staking solutions, discusses the broader positive aspects of Hong Kong's crypto regulations.
CRYPTO MULTIMEDIA
Jobanputra: More Crypto ETF Approvals To Come, Bloomberg, May 29, 2024
Jalak Jobanputra, founder and managing partner of Future Perfect Ventures, discusses crypto ETFs.
CHART OF THE DAY
BTC is ~5.5% below its record high price of USD ~73,800 from March, while trading activity is magnitudes times lower compared to prior bull markets...
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