What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
In mid-June, BlackRock surprised the investment world by submitting an application for an exchange-traded Bitcoin fund (ETF) on a spot basis. The US Securities and Exchange Commission (SEC) had previously rejected the applications of various issuers. However, the entry of the world’s largest asset manager has significantly increased the chances of approval. Analysts expect approval by January 2024, but even before the SEC’s green light, BlackRock submitted its next crypto fund this week. Using the second-largest cryptocurrency, ether (ETH), as the basis, the financial giant wants to launch another product. This, too, would be a premiere.
A year ago, the cryptocurrency industry was shaken by the collapse of FTX, formerly the second-largest crypto exchange. What was initially advertised as a secure, regulated trading platform turned out to be a fraudulent scam. Billions of customer deposits were irretrievably lost, as the subsequent insolvency filing showed. As a result, the founder and former CEO Sam Bankman-Fried spent the past month in court. The prosecution accused him of various cases of fraud. A week ago, after considering the arguments of both sides, the jury found Bankman-Fried guilty on all seven counts. The ex-FTX CEO now faces up to 115 years in prison.
Despite the high-profile fraud case, some former FTX users are hoping for a restart of the exchange. Two initiatives are currently underway to restart operations. Firstly, the FTX insolvency administrator wants to formulate a possible restart plan by mid-December. The cryptocurrency exchange “Bullish”, the financial services provider “Figure Technologies” and the investment group “Proof Group” are involved in the talks. On the other front, a coalition of former traders has joined forces. The group’s plan envisages a new start as FTX 2.0, which is to be supported by issuing company shares to creditors. The members hope that this will lead to a full recovery of all customer funds instead of the immediate liquidation of the remaining assets.
Decentralized Finance (DeFi) refers to a range of blockchain-based financial applications and protocols that replicate traditional financial services. These include lending, borrowing, trading and yield generation in a decentralized manner. These platforms operate on public blockchain networks such as Ethereum and use smart contracts to automate financial transactions without intermediaries. This area offers numerous opportunities for both users and traditional banking institutions. Dr. Benjamin Schellinger, a postdoctoral researcher at the Blockchain Research Lab, introduces his six-part article series on the topic.
In addition: Bitcoin has risen to new highs for the year with an impressive rally of +30% since mid-October. This price rise has been fueled in part by expectations of a Bitcoin ETF and the potential influx of capital from financial giants such as BlackRock. Over the past few weeks, altcoins have also followed suit. Four of the top 20 cryptocurrencies by market capitalization recorded multiple weekly price increases in the double-digit percentage range. The current “darlings” of the market are Solana (SOL), Ripple (XRP), Chainlink (LINK) and Cardano (ADA).