Kinson Lo

2024 has been a defining year for stablecoins, with market cap peaking at $170bn📈. New entrants like PayPal’s PYUSD and First Digital’s FDUSD are gaining traction, while Stripe’s acquisition of Bridge marks a major step forward in embedding digital currencies with core financial services. One question looms large: is there a ceiling to this growth? Stablecoin issuers typically operate under a narrow banking model, holding reserves in safe assets like T-bills. Tether.io alone now holds $100bn in U.S. Treasuries, making it a top-20 holder. If stablecoins continue to grow at even half their recent rate, within four years, the top five issuers could hold $440bn in U.S. debt. In today’s terms, this would position them the 4th largest holder globally, just behind Japan, China and UK. 🌎 Such growth, however, holds risks⚠️. A sudden sell-off due to regulation or loss of confidence could spike yields and disrupt liquidity in short-term funding. Similarly, as capital shifts from traditional bank deposits to stablecoins, banks might have fewer resources to lend, impacting the money multiplier effect. A Federal Reserve Board study suggests this could lead to a contraction in the money supply if deposits increasingly move into reserve-backed stablecoins. It’s unsurprising that governments are paying close attention🧐. The U.S. Department of the Treasury recently discussed tokenising T-bills on a government-managed blockchain, while proposals like the Clarity for Payment Stablecoins Act and Lummis-Gillibrand Payment Stablecoin Act seek to establish regulatory clarity in the U.S. How can we mitigate stablecoins' growing influence on U.S. debt? One option is to limit large redemptions to prevent sudden sell-offs, although the decentralised nature of DeFi makes it challenging to control the redemption flows🔄. A more feasible approach might be capping the percentage of U.S. T-bills that stablecoin issuers can hold - a change that holds major implications. If U.S. T-bill holdings are restricted, billions of capital could be reallocated to assets like cash, non-U.S. government bonds, commercial paper, or reverse repos. We might also see the rise of bank-issued stablecoins (such as Societe Generale - FORGE ’s EURCV), backed by commercial deposits. Non-bank issuers might be required to hold a significant portion of reserves in tokenised bank deposits, therefore, giving banks enough ammunition to continue to lend, maintaining credit creation akin to a two-tiered CBDC model. This evolving landscape could create substantial opportunities for the startup ecosystem🚀. Key themes to watch include (see the comments section for a full analysis): • Stablecoin diversification: Reserve Liquity Fortunafi • Tokenised liquid assets: BlackRock Fidelity International • Yield enhancements: Hashnote Ethena Labs Ondo Finance • Infrastructure solutions: Kaleido Adhara • Liquidity management: August (prev. Fractal) M^0 Labs • Treasury management: Palm Coinshift

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If you want to raise money, you need vesting schedules that allow investors to exit at least some liquidity during the bull run. Nobody will invest into a project with an 8 month cliff whilst expecting the bull market to end in January 2025. Not only do they miss out on huge gains by not deploying capital elsewhere, but they also start getting their tokens as the market is falling to $0. Pointless.

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I had a fascinating conversation with Brian Elders (布萊恩) 🇮🇪🇭🇺🇭🇰🇪🇺🌍 from SORS this morning all about stablecoins. We talked about the history of Sors from its Hong Kong heritage to growing into a multi-faceted virtual asset service provider (VASP) registered with the Central Bank of Ireland before diving into stablecoins. Check out the recap and episode recording below to learn all about these innovative digital currencies from their definition to major players to the fast-evolving regulatory landscape.

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Exciting Times for the Crypto Space! The recent launches of projects like Grass and Tap Protocol have shown incredible momentum, with strong market receptions underscoring a renewed interest in high-quality ventures. It's clear: the market is starting to price in the value of strong, innovative projects. 💡 This is a fantastic signal for our VC portfolio at Token Metrics! As we've anticipated, quality is beginning to shine through the noise. We’re particularly optimistic about projects in our pipeline, such as Peaq, Andrena, Vana, and Gravity. Each brings unique tech and transformative potential, and we're thrilled to be supporting them on their journeys. These recent launches validate our belief that the market is ready for projects that bring genuine innovation. We can’t wait to see how this trend develops and to continue supporting visionary founders who are shaping the future of the decentralized world. 🌐🔥 #Crypto #VC #Blockchain #TokenMetrics #Web3 #Innovation

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Whilst the digital asset market has certainly recovered strongly since the darkest depths of the recent crypto winter, with Bitcoin hitting new record highs earlier this year, one area of the industry remains well behind its peak 2021/22 levels: #VC funding. Last year, VC giant Sequoia Capital cut the size of its crypto fund by over 50%, while overall crypto VC funding declined by 68%. There are several potential reasons for this. For one, the tighter macro environment is affecting fundraising across all industries. Within the tech space, however, the rise of #AI has captivated the public imagination (alongside the computing power to support it, as evidenced by NVIDIA's record performance), making it a dominant theme across many investment committees. As VC dollars are finite (at least, until the Fed turns on the quantitative easing machine again), the marginal dollar is directed to the hottest topic. More importantly, the recent crypto bear market trauma has played a significant role. While there might have been uncertainty about allocation to crypto and #Web3 during pre-crash raises in 2021, the FTX and the broader market collapse have elevated resistance to another level. However, we may have reached a turning point, as illustrated by Paradigm's completion of an $850 million raise for a new VC fund this week. While this remains behind the record-breaking levels of a16z crypto's $4.5 billion fourth crypto fund (2021), Haun Ventures' $1.5 billion debut in 2022, or even Paradigm's own $2.5 billion fund (also 2022), the amount is certainly eye-popping and appears reflective of a broader recovery in VC funding. The new fund is the largest raise in the post-FTX world. It will concentrate on early-stage startups, including an incubation program. In a blog post announcing the fund, Matt Huang (who founded Paradigm in 2018 jointly with Coinbase co-founder Fred Ehrsam) noted, "It’s more important than ever to accelerate a positive future for crypto, not just as investors but as builders." Broader trends back up a return to funding; Q1 2024 reversed seven consecutive quarters of VC decline, with $2.4 billion of total investments, a 40% quarter-on-quarter increase (Reuters). VCs appear to be returning to digital assets. In an interview with Bloomberg, Steven Waterhouse, formerly a partner at Pantera Capital, who is now raising his own VC fund, highlighted the shifting perception of crypto: back in 2014-16, "the primary question was ‘does this thing even make sense?' Now the question is quite different: ‘What’s going to happen next and what’s the big deal?’" Time will tell how VC deal volumes will shape out, but the continued recovery of the crypto market, increasing institutional involvement (see 13F disclosure), and bipartisan support of #FIT21 (overwhelming 67% House vote) suggest the industry might be poised to offer another wave of burgeoning projects, driving new fundraises and VC deal flow. #digitalassets #evolution

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🌟 The UK urged to adopt a Bitcoin reserve! 🌟 Nigel Green, CEO of Devere Group, is calling for the UK to establish a national Bitcoin reserve. He highlights Bitcoin’s decentralized nature, limited supply, and inflation resistance as key reasons to integrate it into national reserves. 💎📈 A strategic Bitcoin reserve could strengthen the UK’s financial position, hedge against market volatility, and showcase its leadership in digital finance. The future of finance is here—will the UK lead the way? 🚀 https://lnkd.in/evaPtDyb #Bitcoin #UK #DigitalFinance #CryptoRevolution #FutureOfFinance #Blockchain

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Publicly listed companies hold more than 350,000 Bitcoin, 1.8% of the total supply. Richard Murray, CEO of Hilbert Capital and a former Brevan Howard investor relations manager, said that large institutional holders of Bitcoin are looking to generate yield on their multi-billion dollar holdings. Hilbert Capital and Xapo Bank launched a $180 million Bitcoin hedge fund last week. “Three years ago, there was a lot more speculative, short-term trading in Bitcoin. Now more people and institutions are holding Bitcoin with a long-term view,” Murray said. Publicly listed companies and their Bitcoin holdings: 1. MicroStrategy: 252,000 BTC. 2. Marathon Digital: 17,300 BTC. 3. Galaxy Digital: 15,400 BTC. 4. Tesla: 11,500 BTC. 5. Coinbase: 9,100 BTC. #bitcoin #hedgefunds https://lnkd.in/edDdH4RR

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The Crypto flywheel! ⚙ 🔝 ETH's ETF and the UK's stable coin have broken two more regulatory barriers and are fueling mainstream adoption by retailers and brands. As part of this movement, crypto cashback is becoming a notable feature, enhancing engagement with a broader audience. This momentum encourages regulators to remove additional regulatory barriers, creating a positive flywheel for innovation! 🚀

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Triton Liquid Fund is now live.    Triton Liquid is a digital asset hedge fund, which combines fundamental research with data analysis to invest in liquid tokens across the entire digital asset landscape. We have just been granted our In-Principal Approval from Abu Dhabi Global Market (ADGM) for a Financial Services Permission. We chose to domicile in Abu Dhabi because it is rapidly emerging as a globally recognized center for digital asset innovation, with a progressive regulatory regime and pragmatic leadership. FJ Labs initially anchored this strategy with $30M USD. Since November, we have increased our market exposure from 20% to 100%.    We continue to believe that now is the optimal time to allocate to crypto, and that there are a number of tailwinds that make this year particularly attractive. More about our fund launch in the comments below.

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Token Bay Capital is an early investor in MANTRA and we could't be more thrilled for the team as they sign a landmark deal for a US$1 Billion partnership with DAMAC Properties to tokenize real-world assets (RWAs) in the UAE enabling token-based finance in the Middle East. The partnership will allow Damac to leverage Mantra’s RWA-focused blockchain to tokenize its diverse portfolio which includes: - Real estate - Hotels - Resorts - Manufacturing - Capital markets - Fashion It's estimated the the RWA market will grow from a mere ~200 Billion today (mostly made up of stablecoins) to US$10 Trillion in 5 years (by 2030). Mantra is positioning itself as a key player in this market evolution and with ~US$1,600 Trillion worth of assets still to be tokenized across: - US$100 Trillion stocks - US$300 Trillion debt - US$600 Trillion derivatives - US$615 Trillion real estate the potential is enormous 🚀 Go team Mantra! John Patrick Mullin Stephen Peepels #blockchain #RWA #crypto #cryptocurrency #OM https://lnkd.in/gfF3nWJV

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Interesting that two of the largest fund raises over the past few weeks are for layer-1 blockchain builders. Berachain announced on Friday that it closed a $100m round led by Framework Ventures and the Abu Dhabi branch of Brevan Howard Digital. Just a few days earlier, Monad Labs announced that it had finalized a $225 million round led by Paradigm. These are big rounds, and the timing and size suggests that venture investors are still betting on engine builders. While I’m sure public-facing applications are also getting some funding, I haven’t seen them get this size of allocation. This is a reminder of how young this industry still is. https://lnkd.in/e2sMFVPv

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Anyone seen Leonardo DiCaprio Making Moves in Abu Dhabi? When Hollywood meets high finance, interesting things happen. Did you hear that Princeville Capital, who count Leonardo DiCaprio as an advisor, recently partnered with Abu Dhabi based Hub71's Climate Tech programme? It's not just a celebrity cameo - it's a signal of the booming investment landscape in the Middle East. Here's why fund managers and founders should pay attention: 1️⃣ Big Names Are Setting Up Shop - Princeville Capital isn't alone. Firms like Brevan Howard, Dalio Family Office, and PGIM have established a presence in the UAE recently. - General Atlantic and Marshall Wace are planning to open offices by year-end. - Nuveen, a TIAA company is also set to open in Abu Dhabi soon. 2️⃣ Opportunities Are Expanding - The influx of global asset managers means more networking opportunities and access to capital. - There's a growing appetite for investments in private equity, hedge funds, real estate, and climate tech. 3️⃣ Strategic Advantages - The UAE offers a strategic location, a business-friendly environment, and a vibrant ecosystem for innovation. If Leo sees potential here, maybe it's time you considered the Middle East for your fundraising efforts. Or, at the very least, there’ll be some good boat parties to attend at this year’s Abu Dhabi Grand Prix in December! That’s if you make the cut… 🎬⛵

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Economic uncertainty and rising US debt levels may increase demand for Bitcoin as a store of value. A new report by Matrixport points to Bitcoin’s resilience during times of financial instability, citing previous surges during events like the European debt crisis. As global cryptocurrency adoption nears 8%, Bitcoin continues to be viewed as a hedge against economic risk. With institutional investors showing growing interest, the stage is set for digital assets to play a central role in navigating economic volatility. #Bitcoin #DigitalAssets #CryptoAdoption

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Now this is why #blockchain was invented! Onchain lending and borrowing, fast secure, no gatekeeper, no intermediary. I am pretty sure GenZ and GenAlpha will use these kind of tools to earn a few bucks or to borrow some with the capital they will be inheriting in the next decade. Let's read this post again in 5 years, very curious how it will age.

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💡 Web3 Weekly Round-up - 02/08/24 🌱 - Probably nothing... 1️⃣ 🇺🇸 U.S. Senator Cynthia Lummis announces bill for US Treasury to buy 1 million bitcoins worth $68 billion 2️⃣ 🇬🇧 Bank of England - Tokenisation could allow payments to be embedded more efficiently and deeply into our increasing digital economy 3️⃣ 🇦🇪 UAE's leading crypto exchange M2, enables UAE residents to trade crypto directly with their bank accounts 4️⃣ 🌍 Bitlayer, a layer 2 built on Bitcoin, just raised an $11M Series A at a $300M valuation. 5️⃣ 🇺🇸 Cantor Fitzgerald CEO, Howard W. Lutnick, announced the firm's plan to establish a Bitcoin financing business with an initial $2 billion investment 6️⃣ 🌍 Bernstein analysts project a $20 billion total addressable market in Bitcoin mining hardware over the next five years 7️⃣ 🇮🇪 Central Bank of Ireland announces innovation sandbox theme: combatting financial crime 8️⃣ 🇪🇺 European Central Bank claims the digital euro will offer unprecedented privacy 9️⃣ 🌍 Pantera Capital - women in crypto earn more than men 🔟 🇺🇸 Ignoring quantum threats in CBDC design is reckless - North Carolina Blockchain Initiative #blockchain #ecosystems ❓What else happened? Gradually then suddenly...

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In the latest episode of Searching for Mana (in association with London Stock Exchange), I sat down with Jeremy Allaire, the visionary CEO of Circle, the company behind $USDC. Our conversation delves deep into the transformative power of stablecoins and how they're silently revolutionising the financial landscape. Jeremy shares fascinating insights on: - The explosive growth of USDC in recent years - How faster blockchain technology is turbocharging crypto adoption - The role of reduced transaction fees in driving stablecoin usage - The surge of stablecoins in DeFi, consumer applications, and digital content But this is just the tip of the iceberg. Jeremy paints a compelling picture of how stablecoins are poised to disrupt traditional finance in ways we're only beginning to understand. As we stand on the brink of the next wave of digital disruption, one thing is clear: the intersection of finance and technology is evolving at breakneck speed. Whether you're a fintech enthusiast, a crypto investor, or simply curious about the future of money, this episode is a must-listen. 🎧 The full episode is OUT NOW. Don't miss this opportunity to peer into the future of finance with one of the industry's leading innovators. #CryptoFuture #FinTech #Stablecoins #BlockchainTechnology #DigitalDisruption #SearchingForMana

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🚀 abrdn Leads UK in Asset Tokenization with Hedera Hashgraph 🌐 In a groundbreaking move, abrdn PLC, the UK's largest active wealth manager, has embraced distributed ledger technology by initiating asset tokenization on Hedera Hashgraph. This initiative, in collaboration with regulated digital asset exchange Archax, marks abrdn as the first major UK asset manager to issue a tokenized security. Key Developments: 1️⃣ Innovative Tokenization: abrdn has tokenized its interests in the Aberdeen Standard Liquidity Fund (Lux) – Sterling Fund, leveraging Hedera Hashgraph's technology. 2️⃣ Strategic Partnership: The collaboration between abrdn and Archax underscores the growing interest and practical applications of digital asset tokenization in the financial sector. 3️⃣ Regulatory Progress: The UK Treasury is exploring fund tokenization frameworks, indicating a strong move towards embracing Web3 technologies across the nation. Technological Advancements: - New Hedera Improvement Proposal: EVM developers have released a proposal to enhance Hedera’s functionality, focusing on improving the allowance and approval mechanisms for HBAR, Hedera's native cryptocurrency. - Enhancing DeFi Capabilities: This proposal is part of Hedera's DeFi 2.0 strategy, aiming to foster innovation and accessibility within the decentralized finance ecosystem. 💬 Discussion Point: How do you think abrdn's move into tokenization will influence traditional financial practices and the broader acceptance of blockchain technology in asset management? 🔄 Share your insights and keep an eye on how these developments might shape the future of finance! #Abrdn #HederaHashgraph #AssetTokenization #Blockchain #DigitalAssets #Fintech 🔗 Dive deeper into Abrdn's tokenization project and its impact on the market 👉 https://lnkd.in/eaWBzsh7 Feel free to share this post to spark a conversation on the future of tokenization and digital finance!

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a16z propels crypto innovation with a London startup accelerator, investing $500K and mentorship in promising talents, readying them to overcome the industry's stigma and thrive. @a16z #CryptoStartup #InnovationAccelerator

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