Weekly review calendar week 26 - 2021

What has been happening around Blockchain Technology and Cryptocurrencies this week? The most relevant local and international developments as well as appealing background reports in a pointed and compact way in retrospect in our weekly review.

The advance of digital assets into the traditional financial sector is in full swing. This week, crypto custodian and Stone Ridge subsidiary NYDIG announced it would open its doors to the sector for a total of 24 million U.S. bank customers. A full-page ad with a large Bitcoin logo in the Wall Street Journal celebrated the milestone. Users will henceforth be able to buy, sell and hold Bitcoin directly through their bank's gateway. After all, according to NYDIG President Yan Zhao, established banks don't want to lose their customers to dedicated crypto exchanges like Coinbase or Binance. Thanks to a partnership with the established payment solutions provider NCR, the service will be extended to thousands of restaurants, hotels and grocery stores going forward.

In the DACH region, traditional financial service providers are also increasingly positioning themselves in the area of the emerging asset class. With an investment in the triple-digit CHF million range, Deutsche Börse, the operator of Germany's largest securities exchange, is acquiring a two-thirds majority stake in Crypto Finance AG. The acquisition of the Swiss startup represents the next step in building a comprehensive ecosystem for digital assets. Deutsche Börse says it firmly believes that crypto assets will significantly change the financial industry. Many institutional clients have already recognized this, which is reflected in growing demand.

Meanwhile, it is obvious that China is not comfortable with Bitcoin. The People's Republic prefers to focus on its own state alternative for digital currencies - the yuan in the form of a CBDC. The decentralized and censorship-resistant nature of the Bitcoin network contradicts the regime's premise of all-encompassing control. When it comes to money flow monitoring, as well as fiscal policy, digital central bank currencies (CBDCs) open up new options. China is leading the world in adopting its own digital currency. While the digital yuan has already been tested in various provinces and in public transport, CBDC projects by other central banks are merely in the planning phase. By next year, China plans to process cross-border payments with Hong Kong. The international expansion of the digital yuan is likely to increase pressure on other central banks to introduce their own digital currency.

Around the globe, interest rates are close to zero, and some central banks are even setting their key rates in negative territory. This intervention in the markets leads to the absurd situation that investors sometimes have to pay money to lend money. How a free market is pricing interest rates can be well observed in the emerging field of decentralized finance. Amounts in the billions are now being transacted via decentralized lending protocols on the Ethereum blockchain. Deposits on the platforms have at times been rewarded at double-digit percentages, dimensions higher than in the traditional financial world. This week, Compound Finance, one of the leaders in the DeFi lending market, launched a fixed-rate pool for institutional clients. With interest rates of 4% p.a. on dollar deposits, the protocol aims to attract traditional financial institutions. Early FinTech companies, such as provider Banking-App Current, are already working on an implementation.

In addition: The world's largest interdealer broker TP ICAP is expanding its crypto offering as well. Two years ago, the financial specialist was responsible for launching crypto futures on the Chicago Mercantile Exchange (CME). Now, the British corporation is launching its own crypto trading platform. Through secure custody and handling of transactions, investors should have easier access to digital assets. For now, the platform only supports bitcoin, but other crypto assets are to follow soon.