Dispatch #65: Nexo & Fidelity to Onboard Institutions Into Crypto

In this patch of your weekly Dispatch:

• Nexo, Fidelity to revolutionize institutional access to crypto
• Arguably, the most productive crypto hearing in US history
• A DAO to buy the #FreeRoss NFT collection

The Big Idea

Nexo, Fidelity, and the Institutional Crypto Revolution

We seldom do this – hijack Dispatch with Nexo stuff. But this one’s for the history books and we are happy to oblige.

Nexo was excited to announce this week that we’re collaborating to develop a product line that can bring together Nexo's credit lines and Fidelity Digital Assets’ best-in-class custodial solutions to institutional clients. For us, this is an exciting chance not only to work with one of the great stalwarts of both traditional finance and digital assets but to continue on our quest to onboard the whole institutional world to the digital asset ecosystem.

The news got picked by, well, everyone… from top-tier crypto media to mainstream financial outlets. Let’s break down the importance of the alliance which will:

• establish an institutional-grade platform for the storage of digital assets
• further enhance Nexo’s military-grade security infrastructure
• deliver innovative products and tri-party lending agreements to institutional investors

Ultimately, we have tied up with one of the most renowned financial institutions to solve institutions’ age-old (certainly feels like it) challenge of safely storing digital assets which has limited large investors from entering the space. The tri-party structures in turn will allow Fidelity Digital Assets’ clients to enjoy the asset protection of their top-tier custody while borrowing tax-efficiently from Nexo. In the coming steps of the partnership, we are planning to release a series of innovative institutional-focused products.

In the words (newsletter) of the Wolf of All Streets, such alliances “are a tell-tale sign of a healthy market” as well as “growing institutional and mainstream interest” in crypto.

“We saw the once-in-a-lifetime opportunity to introduce services that simply do not exist to this day and this is precisely what we plan on doing through our collaboration,” said Kalin Metodiev, CFA, Co-founder and Managing Partner at Nexo.

The tides really are shifting and novel financial products and services will emerge from the combination of such mind-blowing figures: Fidelity’s 83.4 million accounts and Nexo’s close to three million clients. Innovation is no longer reserved for the degens, folks.

The Latest In…

Congress

Usually, when we hear about a Congress holding a hearing on crypto, we cringe a little. Too often, hearings have been a chance for politicians to grandstand and repeat their acrimony. But this week’s House Financial Services Committee meeting with six crypto CEOs was respectful, engaged, and dare we say…productive? Some of the big themes included:

• US dollar hegemony and the future of the USD as the world’s reserve currency
• What’s working and what’s not with the US regulatory regime
• How Web 3.0 differs from big tech, especially for marginalized groups

It wasn’t all sunshine and rainbows. But still, the tone was different. Could it be that lobbying efforts have picked or is it mere opportunism as crypto grows in popularity? Either way, it’s a nice change and we’d love to see more of it.

The Latest In…

Institutions

You have to think the big institutions were watching this week’s hearing with interest, huh? Well if they were, they also would have found these stories to be of interest. Visa announced a new advisory and consulting division to help companies figure out their blockchain and crypto strategies. In the UK, Fidelity Digital Assets got approval to operate by the country’s Financial Conduct Authority. Finally, FTX announced that they had joined the Futures Industry Association (FIA), giving them a stronger foot from a regulatory standpoint.

The Latest In…

The Nexoverse

This week:

• The latest Nexonomics upgrade: the Exchange Rewards are now a permanent part of our Loyalty Program. That’s right – you get up to 0.5% back on every swap and purchase on the Nexo Exchange. Details on our blog.
• #Buyback Update! Since the launch of our $100M buyback on Nov 15, we have repurchased 4,792,621 $NEXO Tokens at a weighted average price of $2.7395 for a total amount spent of more than $13 million.
• We added two more companies to our growing investment portfolio this week: Arker, which brings the metaverse, NFTs, and P2E all into one through its play-to-earn game, and Paradigm – the zero-fee, institutional liquidity network for derivative traders. #MetaFi here we come!

The Latest In…

NFTs and DAOs

It continues to be something of a bear market in NFT land. At least in most places. The highlight of the week must be imprisoned Silk Road founder Ross Ulbricht who auctioned their first NFT collection, with the ultimate winner being a group called FreeRossDAO. The latter said they had raised over 2800 ETH from 1300 individuals, spearheaded by the PleasrDAO community. DAO fundraising is officially here, folks.

The Week’s Most Interesting Data Story

The Dueling Charts of Bitcoin

Last weekend saw one of those ugly cascading liquidation-driven blowoffs that we’ve gotten so used to in Bitcoin. From Friday evening into Saturday morning US time, Bitcoin dropped about $10,000 peak-to-trough. As part of that we saw a major decrease in open interest:

Now, in many of these previous circumstances, we’ve also seen Bitcoin flee from cold storage onto exchanges as people get fearful of further pain. Not this time. BTC balances held on exchanges remain near multi-year lows. In short, Bitcoin holders today have a better understanding than ever before of the difference between market structure-driven volatility and larger and more problematic shifts in market sentiment. This will likely lead to a decrease in volatility over time.

Hot Topics

What the Community Is Discussing

The mainstream – including those from different political backgrounds than the traditional libertarian set – is slowly but surely on its way.

When Ubisoft announced NFTs in games, the response was so negative they backed off.

Should DeFi have a different name? MetaFi?

What to Watch for Next Week:

• Will the Senate Banking Committee hearing on stablecoins be just as friendly?
• Can Bitcoin recover any momentum?
• What fundraising DAO will spin up next?