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Meet in the Middle: Crypto Companies and Banks Are Evolving Together

Source: Dune Analytics, CoinDesk Research

The RGB protocol, currently in beta, is a second layer network that aims to bring smart contracts and tokenized assets to Bitcoin. TAKEAWAY: This reminds us that Bitcoin may have a simple and resilient protocol, but it is also an evolving technology. While the base code may be difficult to change, developers are working on code layers that connect to the Bitcoin blockchain and that allow for additional functionalities. Some of these may one day end up being a key driver for bitcoin demand, much like the growing demand for applications on the Ethereum blockchain was one of the factors that boosted the price of its native token, ETH.

A leaked version of rules to be issued later this month by the European Commission proposes an all-encompassing set of regulations covering the trading or issuance of digital assets, effectively treating them the same as any other regulated financial instrument. TAKEAWAY: The legal clarity will be welcomed by many, although Europe has a well-earned reputation for passing blanket rules with good intentions that end up having the opposite effect than that intended. That said, European regulators have on the whole been supportive of blockchain technology, and some countries have encouraged the development of digital asset market infrastructure, so this could end up being a positive development. Blockchain services firm Diginex is officially merging with publicly traded 8i Enterprises Acquisition Corp., a special purpose acquisition company (SPAC). The merger is a key part of its plan for a “backdoor” Nasdaq listing. TAKEAWAY: Diginex’s businesses include crypto derivatives exchange EQUOS.io, digital asset trading technology platform Diginex Access, securitization advisory firm Diginex Capital, as well as a digital asset custody provider and an investment management business. Some see irony, as it represents the merging of decentralized assets with centralized markets (a crypto company listing on Nasdaq). Others see perfect synergy, however, as Diginex covers a range of crypto-focused businesses that are pushing the innovation envelope for capital markets. Either way, it heralds the eventual merging of decentralized and centralized concepts, and a maturation of crypto market infrastructure.

According to blockchain forensics firm Chainalysis, the number of “young investment” wallets (those that are one to three months old and rarely send bitcoins) has jumped to the highest level since February 2018, double that of six months ago. TAKEAWAY: While it’s hard to draw clear conclusions from address data, this does hint at growth in interest in cryptocurrency from new entrants into the market. The theory is that new addresses used for transactional purposes would have outgoing as well as incoming transactions – those that are almost all incoming are more likely to be investment accounts.

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