What has been happening around Blockchain Technology and Cryptocurrencies this week? The most relevant local and international developments as well as appealing background reports in a pointed and compact way in retrospect in our weekly review.
In recent months, a few companies have announced that they have invested part of their liquid assets into Bitcoin. The most prominent example is the car manufacturer Tesla. Can this be seen as an emerging trend? What is certain is that institutional interest in the digital currency is beginning to increase. This could be seen, for instance, in the active participation of the information event of Microstrategy. US market researcher Gartner Financial published a survey on Bitcoin investing earlier this week. A total of 77 financial managers were surveyed, including 50 CFOs. Nearly 84% of the decision makers interviewed are currently not interested in a Bitcoin investment. The biggest concern addressed the volatility of the crypto asset. However, risk aversion, regulatory uncertainty and slow adoption as a means of payment also appeared to be key criticisms. Conversely, it can be noted that one in five responsible managers are considering an investment. This represents a considerable boost in the perception of the alternative digital investment alternative compared to previous times. The survey was especially conclusive among CFOs from companies in the technology sector. In contrast to other sectors, in this area fifty percent of respondents could already envisage a Bitcoin allocation.
The traditional banking sector is for the most part quite pessimistic about Bitcoin and has a hard time with evaluating the new field of crypto assets. This will change, thinks Crypto Broker CEO Rupertus Rothenhäuser. The fact that the disruption of new technologies can hardly be stopped is obvious, he says. According to Rothenhäuser, in the future every bank will need to have a strategy for crypto assets. The interest in digital assets must be met with trusted advisors, he said. So a merger of the old and new financial worlds should be welcomed, even though it may mean a lot of work. Challenges definitely exist, an occurrence with any new development. Dormant banks would lose their competitive edge if they don’t have a clear startegy for digital assets. For Bitcoin, a detectable evolution from speculative investment to store of value is discernible. Rothenhäuser is convinced that this trend will continue.
Decentralized Finance (DeFi) architecture can create a financial system with unprecedented transparency and little need for third parties. The St. Louis Federal Reserve Bank recently published an in-depth study of the field. Study author Fabian Schär, a professor at the University of Basel, sees great potential in DeFi to fundamentally change our current financial system. The emerging ecosystem can not only create new financial instruments for the banking industry, but also provide access for different scopes of application and even for unbanked people. This reality makes it easier to trade crypto-assets and tokenized versions of stocks or other real-world commodities in a decentralized way. DeFi is based on transparent, open protocols that do not require an intermediary. Currently, the most widespread use cases are decentralized exchanges of digital assets and the lending area. In the highly vigilant sector, the central bank sees some constraints. The biggest concern lies with regulatory uncertainty.
The scope of cryptocurrencies is growing steadily. Integration into popular payment applications such as Paypal provides direct access to services and goods. Switzerlands canton of Zug is going one step further. Here, taxes can be paid with cryptocurrencies as of now. Already a few months ago, the canton from which the “Crypto Valley” originated decided to accept Bitcoin (BTC) and Ether (ETH) for tax contributions.
In addition, seven-time national soccer champion AC Milan (five-time UEFA Super Cup and two-time Cup winner) joins a growing list of world-class teams embracing blockchain. The club is launching its own fan token, which will entitle users to privileged rights. Distributed ledger technology (DLT) can be leveraged in this way to encourage fan participation in sports. This at a time when the COVID pandemic is keeping spectators away from matches.
Selected articles in the weekly review:
According to a survey by market researcher Gartner, more than 80% of financial executives are not interested in investing in Bitcoin.
Digital assets are increasingly finding their way into the traditional financial world. Banks must prepare for this development and come up with a clear strategy, says Crypto Broker CEO Rupertus Rothenhäuser.
The St. Louis Fed has published an in-depth study on blockchain-based decentralized finance (DeFi). The report sees high potential for the emerging technology.
Tax payments with Bitcoin and Ether are possible in the canton of Zug as of this week.
Football club AC Milan launches its own fan token. The fact that several clubs are entering the blockchain industry shows the broad possibilities of the technology.
Would you like to receive the Weekly review and other interesting formats via push message?