Dispatch #22: Tesla Buys $1.5B in Bitcoin as the World’s Biggest Custody Firm Comes to Crypto

In this patch of your weekly Dispatch:

• Tesla and its inevitable move of allocating cash to BTC
• America’s oldest lender BNY Mellon venturing into digital services
• Our bigger & better security game with Ledger Vault

The Big Idea

Tesla Gets In The Bitcoin Treasury Game

A couple of weeks ago, Elon Musk changed his Twitter bio to a single word – Bitcoin – and tweeted “In retrospect, it was inevitable.”

On Monday, the whole world woke up to an explanation – the explanation the entire crypto world had been hoping for. Over the last month, Tesla purchased $1.5B worth of Bitcoin, representing 7.7% of their net cash reserves. In addition, they stated that people would soon be able to use the cryptocurrency to purchase Tesla vehicles.

The price of Bitcoin rocketed up and the race was on to predict what would happen next. A number of big-name banks published papers explaining why it was unlikely that Tesla’s move would inspire other companies to do the same. Then again others like Jim Cramer said it would be nearly irresponsible at this point for companies not to consider an allocation.

So who was right? While time will tell, we’re already starting to see evidence that the skeptics have it wrong once again. Take, for example, the CFO of Twitter who jumped on CNBC to say that the company was not only looking at a treasury allocation, but also exploring whether it could pay its employees in BTC and accept it for other payments as well.

When all is said and done, big companies this week are waking up to realize that they missed the chance to beat the world’s richest man to the century’s best trade.

The Latest In…

Payments

Оne of the surprise bonuses of the Tesla news had to do with the company opening the doors to accepting Bitcoin as payment. Reinforcing that was an announcement from Mastercard on Wednesday that it would be allowing merchants to accept payments with crypto this year.

While the payments narrative has been less relevant than the inflation hedge idea driving institutional BTC adoption, we’d be lying if we said we didn’t appreciate the payments skeptics having their hat handed to them just a bit.

As far as we Bitcoin HODLers are concerned, why spend your precious digital gold for a Tesla when you can keep it and get a tax-efficient crypto credit line?

Don't Miss…

It’s AMA Time

Charlie Shrem, one of our favorite Bitcoiners, is hosting our Co-founder Antoni for an exclusive Ask Me Anything on Tue, Feb 16, at 15:00 UTC. Charlie will post the link of the YouTube stream on his Twitter @CharlieShrem, so stay tuned!

The Latest In…

Nexo Security

With crypto’s market cap reaching $1T, Nexo’s assets under management surged to $4B+. With great funds comes great responsibility, so we’re proud to announce that we’re leveraging Ledger Vault to boost our insurance and diversify our custodial infrastructure. With the added coverage from this new integration, Nexo’s total insurance portfolio now amounts to $375M and is a decisive step towards our plan to have $1B in insurance by end-2021. Read more about it on Decrypt, Cryptobriefing, or our blog.

The Latest In…

Institutions

There has been a metric ton of research and analysis from the big banks and other firms around crypto this week – showing just what a priority this space is for them at the moment. Morgan Stanley released a piece saying that buy and hold behavior made Bitcoin harder as a payment mechanism (we would refer them to the above). Bank of America released a report about privacy regulation. And putting them all to shame is Deutsche Telekom AG, who are actually staking in DeFi.

Still, it feels like the biggest news of all on this front comes from BNY Mellon. BNY is the world’s biggest custody firm, holding $41T in assets. This week they announced that they would be launching an entire suite of digital asset services, starting with custody. WHAT. A. WEEK.

The Latest In…

Regulations

From a global perspective, crypto is having a bit of a rough week on the regulatory front. India is trying to fast-track a bill that would simultaneously ban private cryptocurrencies while also providing a framework for the Reserve Bank of India to launch an official digital rupee. The Central Bank of Nigeria meanwhile told banks to stop serving any crypto customers. Maybe it’s actions like these, and a desire to see them not repeated in the USA, that caused Jack Dorsey to pony up a $1M donation to CoinCenter?

The Latest In…

NFTs

Every day, it seems like some new artist or musician gets into the weird and wild world of digital collectibles, a.k.a NFTs. This week, that included the popular DJ Alesso, who is part of a project that is auctioning off NFTs of public figures for charity. It also included Lindsay Lohan, who tweeted “Bitcoin to the moon!” 🤯 and then followed it up with a pitch for her new NFT. Something tells us we’ve only just begun to see what this part of the space might do. Kim..?

Hot Topics

What the Community Is Discussing

While many are discussing the corporate treasury purchases of Bitcoin, others are actually thinking even farther out to a bigger buyer: central banks themselves.

There has been a huge amount of interest around Doge (thanks, Elon). Is it a bad look for crypto? Mark Cuban doesn’t think so.

As the environmental FUD picks up, Bitcoiners are hitting back with a much more sophisticated set of arguments.

Our Take

@AntoniNexo This Week

• It was a busy week for our nascent industry and with it – for Antoni. Business Insider reached out to him for comment on Tesla’s move and we have to say — his poetic take makes us wanna do great things: "Tesla and Bitcoin — the archetypes of volatility — inevitably meet again because they are tools that came about out of frustration and courage, to paraphrase the old saying. Frustration at the way things are, and courage to make sure that they do not remain as they are."
• When Elon Musk is endorsing Bitcoin, the debate about crypto is over. But should you believe everything you read online? Antoni advocated for responsible investments when contacted by the Express: "Sure, we love it when big names embrace digital assets, but we love it even more when you DYOR because Bitcoin has never been about entertainment.”
• Is Elon's investment approach sound cash management? “Corporations with ever increasing dry powder have a most obvious cash management option: partial BTC allocation,” Antoni told MarketWatch. “Sitting on piles of cash offers little to no return and gets constantly devalued by central banks’ excessive QE measures. Having a treasury policy that diversifies risk and return, as well as looking into ‘the fastest horse’, is not only a sound policy, but is also the one that most adheres to the key principle of maximizing shareholder value,” he said.

What to Watch for Next Week:

• Bitcoin and $50K playing hide-and-seek
• The next corporate copycats of the BTC allocation trend
• Antoni’s AMA with Charlie Shrem on Tuesday 😉