The cryptocurrency industry is growing at a rapid pace, with the market capitalization of crypto assets reaching $3 trillion in November this year. With new investors entering into the crypto space, it is essential to have robust insurance solutions in place to manage and hedge risks in the crypto sphere.
On Nov 23, 2021, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) — collectively referred to as the ‘agencies’ — issued a joint statement summarizing their interagency ‘policy sprints’ focused on crypto-assets.
On November 8, 2021, the United States Department of the Treasury sanctioned cryptocurrency exchange Chatex and its associated support network — IZIBITS OU, Chatextech SIA, and Hightrade Finance Ltd — for facilitating financial transactions for ransomware actors.
Stablecoins — pegged to a dependable fiat currency such as the US dollar — have become a cornerstone of the crypto ecosystem. As per industry reports, there has been an increase in the issuance of stablecoins and the market cap has grown 18 fold over the past year, surpassing $100 billion in May 2021. The stablecoin market cap is currently $112.15 billion. In particular, stablecoins such as Tether (USDT), USD Coin (USDC), and Pax Dollar (USDP) have jumped from $30 billion in circulation in January 2021 to about $125 billion as of mid-September.
With the advent of financial institutions exploring the DeFi space, panelists for Merkle Science’s second Regulating Defi webinar Jai Ramaswamy (Chief Regulatory Officer at a16z), Jason P. Allegrante (Chief Legal & Compliance Officer at Fireblocks), Vanessa Grellet (Head of Portfolio Growth at CoinFund), and Sandra Ro (Chief Executive Officer at Global Blockchain Business Council) discussed the possible implications of the convergence between traditional financial and crypto markets. With the DeFi industry witnessing a massive surge from financial institutions (FIs) and the regulatory scrutiny around DeFi increasing, our panelists forayed into several timely topics including striking a balance between fostering innovation and the need to protect consumers, combating anti-money laundering activities, and preserving financial stability.
Of Late, the U.S. has been hit by a wave of disruptive ransomware attacks. In the official press release detailing the actions taken by regulators to counter ransomware, the U.S. Department of Treasury noted that roughly $400 million in ransom was paid to malicious cyber actors in 2020, more than four times the amount in 2019. Globally, the frequency of ransomware attacks has increased dramatically in 2021, with ransomware attacks surging 93% in the last six months.
Decentralized Finance (DeFi), which is pegged to be the next frontier of fintech innovation, has grown exponentially over the past year. With regulatory scrutiny over DeFi increasing at a rapid pace, Merkle Science’s President, Americas and Global Chief Legal Officer Mary Beth Buchanan was joined at Blockchain Central UNGA 2021 — hosted by the GBBC — by industry experts Ambre Soubiran (CEO, Kaiko), Daniel Peled (Co-Founder, Orbs), Harriet Browning (Director, Business Development and Strategic Sales Manager for EMEA, ConsenSys), Raymond Zenkich (President and Founder, Evertas), and John Salmon (Partner, Hogan & Lovells) to talk about the advancement of DeFi and crypto.
On September 7, El Salvador officially became the first country to make Bitcoin legal tender. According to President Nayib Bukele’s tweet, on 6 September 2021, El Salvador bought 400 bitcoins amounting to roughly $21 million in two lots. El Salvador, taking advantage of the dip in price bought another 150 Bitcoins. The country now holds 550 Bitcoins which is equivalent to about $26 million. All values in this piece are expressed in US dollars.
[Update 28.12.2022]
Decentralized Finance (DeFi) which is pegged to be the next frontier of fintech innovation has grown exponentially over the past year. The DeFi market cap has shown a 382% increase since the beginning of the year, setting a new all-time high at $95.7 billion. The continued growth of DeFi in the first quarter of 2021 is directly proportional to the growth in other sectors within DeFi for example increase in — (a) the price of top decentralized exchanges’ (DEXs) governance tokens, (b) supply of stable coins, (c) investment in DeFi platforms, and (d) surge in DEXs’ trading volume.
