Stablecoins instead of digital dollars, ma…

Stablecoins instead of digital dollars, ma… post thumbnail image

Review of the cryptocurrency market in July.

SUMMARY

  • The stablecoin market, as before, occupies a dominant share in cryptocurrency turnover. Regulators take note of this. In particular, in the United States there are already proposals to consider the issue of digital dollars in token format backed by national currencies.

  • China has banned bitcoin mining in some of its provinces. This is a logical continuation of the general regime of disliking cryptocurrencies on Beijing’s part. However, for the digital asset market itself, such an authority decision can be very positive and open up opportunities for value growth.

  • The NFT segment gathers fans and adds value, analysts are exploring expanding the reach of the niche to use this tool. Now some of the biggest players have joined the market, for example – Ripple.

  • The Binance exchange is under pressure from several regulators at once. They demanded to reorganize their activities in accordance with local laws. The biggest cryptocurrency players are ready to meet halfway.

  • A new CBDC project will be announced soon.

Stablecoins claim more

The share of stablecoins in the cryptocurrency’s daily turnover is around 75% currently, according to coinmarketcap. Three tokens from this category, Tether, USD Coin, and Binance USD, are among the top 10 cryptocurrencies in terms of capitalization. Against the backdrop of market developments, the US Treasury made plans to develop a regulatory framework.

A final decision on the regulatory format has not yet been made. In addition, it is unclear whether private stablecoins will be banned, or whether the nationalization of the emission infrastructure will lead to the formation of a new digital dollar market, different from the familiar CBDC model. Fed and Yale University employees argue about this in a new article “Taming the Wildcat Stablecoin”. Bloomchain has adapted it for reading.

Top 10 cryptocurrencies by capitalization at 30.07. Source: coinmarketcap

Blockchain startup and USD partner Coin Circle will go public on the New York Stock Exchange. According to the plan, this will happen through a merger with SPAC by the end of 2021. The company’s current $4.5 billion Circle also disclosed the USDC guarantee structure. The stablecoin’s main competitor, USDT, published similar information in May this year.

Reserve structure for the largest stablecoins Tether and USD Coin. Source: Tether Report, Circle Report. The backup structure for stablecoins has been compiled by Bloomchain Research for better data comparability. Similar colors highlight similar categories on the chart

Mining under pressure

China’s regulatory restrictions continue to affect the mining market. In July, three more provinces, Henan, Gansu and Anhui, banned bitcoin mining in their territories. However, the cryptocurrency hashrate has recovered quite a bit this month. Prior to that, from mid-May to early July, the figure was down more than 50%, according to Blockchain.com.

Source: blockchain.com

Analysts at the Center for Alternative Investment Studies at Cambridge University believe that the decline in Chinese companies’ share in production started even before tightening regulatory requirements. According to research, from September 2019 to April 2021, its share fell by 30 p.m. up to 46%. However, the data collection methodology raises a number of questions. The data is collected by a pool that covers only a third of the hash rate at the time of release, and the issue of hiding IP addresses by miners via proxy servers has not been resolved. Bloomchain discovers what implementing “China risk” can cause and whether this will affect concentration issues in bitcoin emissions.

The earnings of major cryptocurrency miners have been declining since April. For the incomplete July, the figure is $886 million, according to The Block. The decline is directly related to the decline in the bitcoin exchange rate, as the data is presented in US dollars.

Source: Blok

Despite the “reshuffle” in the industry, mining company Argo Blockchain is planning a secondary listing on the Nasdaq. This is due to the opening of a mining center in Texas. Now that Argo Blockchain is traded on the London Stock Exchange, its capitalization is $700 million. The company’s stock has returned to its value a month ago.

NFT market records

The market for non-exchangeable tokens is gaining momentum. NFT trading volume exceeded $750 million in the second quarter of 2021, which is nearly 50% higher than the previous period’s results, according to NonFungible.NFT: active addresses, buyers, sellers and trading volume. Source: NonFungible Report

Ripple participates in the development of the market for non-exchangeable tokens through investments in the Mintable project. In total, the site raised $13 million during the current round. The startup allows clients to create, buy and sell NFTs. In the future, integration with Ripple XRP Ledger is planned, it will reduce power consumption when buying and selling NFT and commissions. Additionally, SBI Holdings recently released a report on the benefits of using XRP Ledger for the non-exchangeable token market.

IOTA is also interested in the market, it has launched the NFT platform in the testnet. However, the company believes there are a number of challenges in the industry, including transaction fees in blockchain.

Binance is not banned

Binance, the largest exchange by trading volume, is experiencing regulatory difficulties. Three more countries in early July drew attention to the lack of a license from Binance to do business in their territories. Among them are the Cayman Islands, Singapore, Thailand. Previously, claims were announced in Japan and the UK. Moments later, in the middle of the month, Italy and Malta, as well as Malaysia, made similar appeals.

Against this background, some financial organizations refuse to cooperate with exchanges. However, big players like Visa and Mastercard continue to work with Binance. Also, exchanges must stop trading tokenized securities. The service existed for three months, and during this time attracted the attention of German regulators. The organization questioned the legality of this type of activity.

In a recent speech, the head of Binance, Changpeng Zhao (CZ), said that the cryptocurrency exchange intends to regulate work according to jurisdictional requirements. Already, the Binance US division has launched in the United States, and cryptocurrency exchanges have begun to cooperate more frequently with global law enforcement agencies. There are plans to add a staff of compliance specialists.

The share of cryptocurrency exchanges in trading volume. Source: Blok

New CBDC

National digital currencies continue to attract the attention of central banks. The US may ship a digital dollar white paper this fall. One of the representatives of the Fed said that America does not plan to rush to launch, the priority is directed at the quality of development.

The Bank of Canada has recognized the need to issue a digital currency to maintain the country’s competitiveness in international financial markets. However, no decision has been made for the launch. The ECB announced its readiness to launch a digital euro project. Work in this direction has been going on for several years. There are currently no plans to replace physical banknotes with digital money. Commercial banks will also participate in the distribution of digital euros.

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