As we observed last week, crypto markets fluctuated, yet they failed to fully recover from the dip earlier in the week, which sent the price of bitcoin below USD 30,000. Bitcoin’s price BTC closed down about 3% for the week and is trading around $34,500. As for the altcoins, with the second and third largest assets in the market cap chart, Ethereum ETH and Binance coin BNB, ending the week around 13% and 15% respectively. 

News

Singapore Central Bank Launch Global CBDC Challenge

One global challenge for retail central bank digital currencies (CBDCs) has been set by the Monetary Authority of Singapore (MAS). In the hope of attracting financial technology (FinTech) companies, and financial institutions from around the world. With the aim of inviting them to submit innovative solutions for a CBDC instrument, its distribution and infrastructure.

The Monetary Authority of Singapore (MAS) has teamed up with several global economic organizations such as the International Monetary Fund (IMF), World Bank, the Organization for Economic Co-operation and Development (OECD) and other UN agencies.  

To launch a competition where entrants must tackle 12 unresolved challenges posed by central bank digital currencies (CBDCs).  for example:

“Can a retail CBDC system be embedded with additional functionalities beyond a basic transfer of value without requiring users to use smartphones?” the first challenge asks.

The Monetary Authority of Singapore’s “Global CBDC Challenge ” will be supported by Amazon Web Services, Mastercard, payments platform Partior, blockchain software developer R3 and blockchain project Hyperledger.

Retail CBDCs

Even though monetary authorities around the world are developing CBDCs. Most of these developments, however, concern wholesale CBDCs, which will facilitate payments at the central bank level. But some are also considering retail CBDCs, which consumers and businesses will be able to use like cash.

Now, this news points to some of the potential benefits that retail CBDCs could offer. For example, increasing the efficiency of payments and supporting the digitalisation of the economy. Nevertheless, it emphasises that retail CBDC solutions must meet a number of public policy objectives.

The solution must be cost-effective to implement and meet the current and anticipated payment needs of the consumer. At the same time, it must be accessible to a wide range of users, including low-income households and the technologically illiterate. 

Finalist selection

Those interested in participating should submit their application here by July 23. Up to 15 finalists will be selected to receive mentoring from industry experts. They will also have access to APIX Digital Currency Sandbox, which provides a comprehensive testing and development platform, including a large number of different application programming interfaces (APIs), allowing them to rapidly prototype digital currency solutions. 

The chosen finalists will present their solutions to an international audience at the Demo Day, taking place this year at the Singapore FinTech Festival. MAS indicates that up to three winners from the 15 finalists will be selected and awarded a prize of S$50,000 (US $37,193). 

Crypto Exchange Binance Banned from: UK, Canada and Japan

Binance, the crypto-currency exchange, is under global surveillance by the financial regulator. As mentioned last week, Japan’s Financial Services Agency (FSA) warned Binance for offering crypto services without registration. 

For Canada, specifically Ontario, Binance has withdrawn from the province, due to increasing regulation. Over the last weeks, the Ontario Securities Commission (OSC) has started pursuing legal action against unregistered cryptocurrency exchanges, such as Bybit and Kucoin ect. So to comply with the legislation put in place there, Binance stated that all users registered in the province should close their positions by Decembre 31 2021. 

AS for the UK, Britain’s Financial Conduct Authority (FCA) bans Binance’s regulated activities on UK soil. The Regulator asserts that the Group and its entities have no license to operate in the kingdom. So The FCA instructed Binance Markets to remove, or give instructions for removal of , any advertising and financial promotions it currently has live.It also required the company to secure and retain all documents relating to the UK cosumers, so they “can be provided to the FCA, or to a person named by the FCA, promptly on its request”, according to the statement.

Other News

  • Andy Warhol ‘three Self-Portraits” art pieces were sold as NFTs for $2.8 million on the Binance NFT marketplace. Which started last week with tokenized artwork of Andy Warhol and Sakvador Dali.
  • Hong Kong’s Financial Secretary insisted on the need for digital transformation and reaffirmed that it will conduct technical tests using the central bank’s renminbi digital currency (CBDC) in 2022.
  • Apparently taking a cue from El Salvador, Indian authorities may decide to classify bitcoin as a regulated asset class: “Top sources who follow the industry told this publication that the government has moved away from its earlier hostile stance towards virtual currencies,” reports the New India Express, “and is now considering classifying crypto as an asset class.” 
  • Bitcoin’s Hashrate declined to the lowest levels since summer 2019. It has dropped by 66% within the past month. Currently the rate is 58 tera hashes per second (TH/s). Due to China’s crackdown on Bitcoin mining.
  • Despite Regulatory Uncertainty, Crypto Investments in India Surged by Almost 20,000%, passing from $200 million to $40 billion last year India.

Insula Fund Highlights

This week we are focusing on our principal fund, Insula Pala. It allows indirect exposure to the decentralised exchanges DEX and provides a hedge against bitcoin dominance. One of the ways Insula provides exposure synthetically is via an Ethereum project called: DeFi Pulse Index (DPI):

DeFi Pulse Index, an index of decentralized finance that is not a synthetic or a derivative – users own the tokens that constitute the capitalization-weighted index.

Initial Index Conditions:

  • Index includes 10 tokens: YFI, LEND, COMP, SNX, MKR, REN, KNC, LRC, BAL, REPv2
  • The price per token and circulating supply were taken on September 8th, 2020 from CoinGecko.
  • The price per token multiplied by the circulating supply determines the circulating market cap. Each position is weighted by its relative circulating market cap to other positions in the index.

The DeFI Pulse Index plans to expand the index to include more DeFi Projects when subsequent rebalances occur.

Wrapped Bitcoin WBTC:

Wrapped bitcoin is a tokenized version of Bitcoin(BTC) that runs on the Ethereum Protocol. Which makes it compliant with ERC-20, allowing it to be fully integrated into the latter’s ecosystem of DEX and other DeFi applications.

WBTC is also backed by BTC at 1:1 ratio via a network of automatically monitored merchants and custodians, ensuring that its price is pegged to Bitcoin at all times and allows users to transfer liquidity between the BTC and the ETH networks in a decentralized and autonomous manner. Moreover Ethereum protocol’s faster average blocktime — about 15 seconds vs 10 minutes respectively — increases the speed with which WBTC can be transacted, compared to actual bitcoins.

We hope you have enjoyed our weekly email and that it has been effective in informing you about Insula and the crypto market as a whole. If you would like to invest in Insula’s diversified crypto fund you can view more information at https://insulainvestments.com/fund.

By Ayoub Khirane

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