Dispatch #38: Regulation Is Coming & Crypto Has Nothing to Worry About

Jun 04, 2021•4 min read

In this patch of your weekly Dispatch:

  • The latest signs that regulation is coming to crypto town
  • Everyone is in Miami now and so is our giveaway
  • Nexo’s industry-first collateral exchange feature

The Big Idea

Stop Worrying and Love the Right Regulation

There are numerous signs that deeper government engagement with crypto is coming.

  • SEC Chair Gary Gensler has made numerous statements before Congress suggesting that they should look into exchange regulation
  • The Biden Administration has included analysis of crypto as part of its response to the Colonial Pipeline and other ransomware attacks
  • The director of the Office of the Comptroller of the Currency (OCC) Michael Hsu has ordered a comprehensive review of all Brian Brooks-era changes

This last action has the crypto industry most concerned because much of this bull run was underpinned by big institutions coming into the space as a result of eased restrictions on how they interact with crypto.

In general, crypto has a free-market bent that recoils against restrictions. Being an asset class with a $2T market cap, there is simply no question crypto will see more attention from regulators.

What matters is how much regulators chose to engage with the crypto industry itself. It’s about finding the right path to promote and sustain innovation while also satisfying their mandates for investor protection. Regulation is coming, but it will be better if the crypto industry engages and has a seat at the table.

The Latest In…

Central Bank Digital Currencies

A new report from the European Central Bank has argued that not releasing a CBDC would create a threat to stability as foreign “artificial” currencies could take hold. On the flipside, "[i]ssuing a CBDC would help to maintain the autonomy of domestic payment systems and the international use of a currency in a digital world.” Meanwhile, the European Union is set to announce plans for an official digital wallet. Over in China, Beijing is prepping for the latest and largest live trial of their digital yuan – this time distributing $6.3M.

The Latest In…

Dogecoin

The Dog had another banger of a week and is up about 30% in June, even as the rest of the crypto market tries to find its feet. How did it happen? Well, on the one hand, it was the broad perception of institutional acceptance that came with a listing on Coinbase Pro. On the other, it was, of course, Elon Tweets.

The Latest In…

Altcoins

While all the Bitcoiners, Paris Hilton, some Ethereans, and our co-founder Kalin Metodiev descend upon Miami for what has become the largest Bitcoin Conference in history, altcoins are having themselves a time. Asian venture firm Master Ventures has created a $30M Polkadot fund. Solana has launched a $20M fund focused on their Korean ecosystem. Cardano launched its first cross-chain bridge. Don’t sleep on the competition, Bitcoin and Ethereum!

The Week’s Most Interesting Data Story

Who is HODLing and Who is Selling?

All too often, when we discuss price action, we do so in a way that makes it seem monolithic – as if everyone is trading in the same direction. The reality is that markets are a constant messy combination of buyers and sellers, but thanks to on-chain data, we can get an idea of who is taking what actions at any given time. Over the bloody last month, it was the whales who were selling while retail investors were acquiring. This may be part and parcel of the new institutional texture of this space, but it is heartening to know that the broad base of Bitcoin hodlers that set its price floor continues to grow their holdings!

Hot Topics

What the Community Is Discussing

While the “digital gold” meme is helpful to a point, it diminishes what Bitcoin is truly capable of.

As Ethereum’s EIP-1559 gets closer, not everyone is convinced that it’s the right move.

This is a heckuva list.

The Latest In…

Nexo

  • Thursday marked an important milestone for the #NexoTransperancy initiative. All of Nexo’s Licences & Registrations were diligently collected under the same roof and made publicly available on our website. In the coming months, we expect to add even more currently pending licenses and authorizations!
  • Earlier this week we also introduced Collateral Exchange – the feature that allows you to exchange assets in your Credit Line Wallet in order to maintain a healthy LTV ratio during a market downturn and match your investment goals. It’s the first time users of crypto-backed loans will be able to be in full control of their collateral and use it in whichever way they see fit.
  • If you’re in Miami now, we doubt you’re reading this. If you’re not, you can still get in on the action by entering our contest for $200 in NEXO Tokens – just share one of the special tweets. You also get a free Nexo wallpaper for tweeting! #NexoGoesMiami

What to Watch for Next Week:

  • Can Bitcoin break back above $40,000?
  • Will more skepticism of EIP-1559 emerge as it gets closer?
  • Will Ransomware continue to be a new Bitcoin FUD?