The Breakdown - Even in an Off Week, Bitcoin Had Quietly Massive Institutional Adoption News

Starting point is 00:00:00 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io and circle and produced and distributed by CoinDesk. What's going on, guys? It is Saturday, June 26th, and that means it's time for the weekly recap. First on the recap, let's revisit a theme from earlier in the week. I argued that if we were headed into a bear market, it was a a bare market that would be incredibly well capitalized. Well, two more monster rounds announced this week to add to the list that I shared then. For the second time this year, Chainalysis has raised a nine-figure round. Their series D was in March and led by Paradigm and raised

Starting point is 00:00:51 $100 million at a $2 billion valuation. This series E was also $100 million, but led by Kowatu management at a more than doubled $4.2 billion valuation. A couple of months and your $100 million buys you half as much, right? Well, what happened in those couple of months? Well, the ransomware epidemic, of course, or more specifically, the broad public and regulatory focus on crypto's role in the ransomware epidemic, thanks to some extremely high-profile events like the Colonial Pipeline attack. In that context, firms that can help law enforcement track and even recover crypto used for illicit purposes are going to have some serious wind in their sales, so it's no surprise that chain analysis is capitalizing while it's hot. Other firms in the

Starting point is 00:01:34 the space, TRM Labs, and CipherTrace raised 14 million and 27 million respectively over the last couple of weeks. How about a monster funding announcement on the fund side as well? Andresen Horowitz has announced Crypto Fund 3, a $2.2 billion fund. Here's the way they kick off their announcement blog post. We believe that the next wave of computing innovation will be driven by crypto. We are radically optimistic about crypto's potential to restore trust and enable new kinds of governance where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed. It's sort of notable to me that unlike in previous fund announcements,

Starting point is 00:02:12 they don't go deeper on the themes they're interested in. My take is that basically they're saying with a fund this size, they're going to play everywhere. Next, let's also talk regulation from a few different dimensions. If the title of the show is about quietly positive institutional news, I would also say that quietly positive is the perfect way to describe some regulatory action this week as well. First, two blockchain-related bills passed in Congress and are on their way to the Senate that would both effectively deepen the engagement of the Federal Trade Commission and the Department of Commerce around crypto,

Starting point is 00:02:43 with an eye not only to combating fraud, but to making crypto much more viable for good actors. They were sponsored by crypto advocates. Second, Hester Purse, aka Bitcoin Mom, has started singing the praises of Defi as well, specifically the disintermediating impact of defy. That's going to be an important energy as I believe defy will increasingly come under a regulatory lens. Third, in New York, Eric Adams has emerged as the leading mayoral candidate. Bitcoin advocate Andrew Yang has dropped out, but in a statement, Adam said that he wanted

Starting point is 00:03:14 New York to be a center for Bitcoins. There is probably a bit of just trying to get Yang supporters in the mix and in any case clearly a lot of learning to be done there. But, as a New Yorker who lives in the shhitty, US state regime around crypto. I will absolutely take it. Looking for the best way to unlock your crypto's liquidity? nexo.io is exactly what you need. Borrow against your digital assets at just 6.9% APR.

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Starting point is 00:04:28 Visit circle.com slash yield to learn more. That's circle.com slash yield. Fourth, and easily the most significant news, or non-news as it might be, the financial action task force or FATIF convened its second 12-month review on progress on crypto regulation. On the one hand, it said that so far, only 58 out of 128 reporting jurisdictions have implemented its revised standards. On the other, we thought we were getting finalized guidance on AML rules that everyone hated the initial draft of.

Starting point is 00:05:02 There was a significant concerted campaign to give them feedback and, apparently the amount they got was overwhelming. Jake Schrovinsky wrote today, Some big news in global crypto policy. The Fadoff was expected to finalize its quite bad draft guidance on AML regulation today, but instead will delay until October due to the volume of feedback they received. Thanks to everyone who wrote comments, this is a good start. This doesn't mean we're out of the woods,

Starting point is 00:05:27 but it does suggest that the powers that be are at least listening. Finally, let's discuss this quietly significant institutional news. I'm talking, of course, about personal finance guru, Sue's Orman, officially coming out as a Bitcoin Hoddler. No, no, I am not, although that's rad too. There are actually a few things. The first is that Citigroup's wealth management division has created a new internal division called the Digital Assets Group. Interestingly, they're not just discussing Bitcoin, but are trying to become the market-leading partner, those are their words, around cryptocurrencies, NFTs, stablecoins, and CBDCs. In May, city's global head of foreign exchange said that the bank had seen a very rapid growth and client interest

Starting point is 00:06:06 in Bitcoin since the end of last summer, so this makes sense as a follow-up to that. The news that I was actually even more interested in was the latest Nidig partnership. Nidig is an institutional Bitcoin mainstay. They have been the actor largely behind the insurance industries move into the space and are also doing things like supporting Morgan Stanley's recently launched Bitcoin funds. They're now partnering with a Texas fintech firm called Q2 to provide Bitcoin access to Q2's over 18 million users. Q2 provides banking software to over 450 small and medium-sized banks and credit unions. These are the types of community credit unions that so many people and local

Starting point is 00:06:42 communities prefer. Through the partnership, NIDIG will enable Q2's front-facing institutional partners to give their customers access to buy, sell, and hold Bitcoin directly from within their bank accounts. From both a user experience perspective and a trust perspective, being able to interact with Bitcoin from a known bank account, the one that you already use, is a massive leap forward from having to download some totally new app that you're just learning about then. Now, while the goal for many maybe to empower people to go bankless, shout out fellas, there are entire generations who aren't going to be comfortable with that. And I do mean generations.

Starting point is 00:07:20 So to me, this is a huge win in terms of actually getting new audiences to try and adopt Bitcoin. So summing it up on this rather quick little weekend briefing, if you were to just look at the prices this week, you wouldn't be super stoked. But as always, the real story is much more complicated than the price and is really, truly about the ever-growing web of people, companies, and infrastructure, expanding Bitcoin and Crypto as a whole. I hope you guys are having a great weekend. I appreciate you listening, and until tomorrow, be safe and take care of each other. Peace.

The Breakdown - Even in an Off Week, Bitcoin Had Quietly Massive Institutional Adoption News

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