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.
Bitcoin reached a new all-time high this week just shy above USD 24,200. The recently published news about concrete institutional investments are likely to have made their contribution to the price appreciation. Besides individual tech companies like MicroStrategy and Square, for the first time an insurance company announced a Bitcoin allocation. This prompted major U.S. bank JPMorgan to take another look at the cryptocurrency. Analysts at the investment bank identified the investment by life insurer MassMutual as an important milestone. In a scenario in which pension funds and insurance companies of the US, Eurozone, UK and Japan allocate 1% of their assets to Bitcoin, the specialists projected a potential Bitcoin demand of $600 billion. A considerable amount given the current market capitalization of $425 billion.
Regulatory certainty remains an important foundation for the institutional adoption of blockchain technology as well as digital assets. While the finance ministers of the G7 countries are discussing possible actions, the implementation of the Swiss DLT regulatory framework will enter its final phase shortly. The heart of Crypto Valley has been working on a framework for distributed ledger technology (DLT) since 2014. With the Federal Council's new amendments, Switzerland will now have the most comprehensive and well-articulated blockchain legal framework worldwide. Yves Longchamp provides an overview on the development and future of the project, which is expected to be completed by mid-2021.
A significant use case of blockchain technology involves tokenization. The term is generally used to refer to the representation of an asset on the blockchain. UBS Group's new CEO, Ralph Hamers, recently referred to the technology's "almost unlimited potential." After Swiss "crypto bank" Sygnum announced the first regulated tokenization platform a few weeks ago, the digital asset specialist is consequently tokenizing its own shares. This is intended to lay the foundation for a planned IPO which will include a possible dual listing with the SIX Digital Exchange (SDX).
Tokenization is not just beneficial for traditional financial products. Illiquid assets such as art can profit from it as well. Through so-called "non-fungible tokens" (NFTs), artwork can be represented uniquely on the blockchain. NFTs differ from exchangeable tokens such as Bitcoin and Ethereum with their singularity. NFTs thus function as a singular, unique asset. This makes it suitable for collectibles and offers a wide range of potential use cases. The artist "Beeple" recently took advantage of these characteristics and launched his entire collection as NFTs. The collection sold for nearly $800,000 - the most expensive NFT auction so far.
In addition: Since December 2017, the US-based CME Group, the world's largest derivatives marketplace, has been offering futures on Bitcoin (BTC). In January of this year, Bitcoin options were included. Due to the increasing demand for derivative instruments on cryptocurrencies, the CME is going to launch Ether (ETH) futures in February 2021. This will make the second largest cryptocurrency considerably more accessible for institutional marketparticipants.
Selected articles in the weekly review:
The leading U.S. bank JPMorgan sees potential in Bitcoin due to increasing institutional interest. Their analysts project $600 billion in potential demand.
With the new legal framework for distributed ledger technology (DLT), Switzerland will be equipped with the most comprehensive regulatory framework for the blockchain technology sector.
Consistent: After launching a tokenization platform, Sygnum tokenized its own shares. This will lay the foundation for a forthcoming public offering, which includes a potential dual listing in partnership with SIX Digital Exchange (SDX).
Blockchain technology offers diverse use cases. So-called non-fungible tokens (NFTs) are becoming increasingly attractive for art objects. A collection of NFT art has now been sold for almost USD 800,000.
The world's largest derivatives exchange, CME Group, is planning to launch Ether futures in February 2021. The decision was followed due to increasing demand for the second largest cryptocurrency.
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