In the last six months, the crypto economy experienced significant milestones, fueling the record surge of the digital asset; and the industry is expected to preserve momentum even after rallies come to an end.
Although we only just entered the second quarter of the year, we have seen a number of noteworthy developments in the field of cryptocurrencies, some of which are highlighted below.
- On April 20, 2021, Venmo announced it is adding crypto support to its platform, joining the long list of companies that recently began recognizing and accepting virtual currencies.
- As announced in the first week of April 2021, Square Inc., Fidelity and Coinbase are forming The Crypto Council for Innovation, with a mission to serve as the industry’s voice and “communicate cryptocurrencies’ benefits to policymakers, regulators and people around the world”.
- During that same week, Goldman Sachs announced it is making Bitcoin funds available to its wealthy clients, speeding up the institutional adoption of the virtual currency. The investment bank will soon be helping wealthy clients invest in cryptocurrency, through a new Digital Assets Group within its private wealth management division.
- On March 30, 2021, Paypal announced it has started allowing U.S. consumers to use their cryptocurrency holdings to pay at millions of its online merchants internationally. As a result, customers who hold virtual currencies in PayPal digital wallets will now be able to use their assets at checkout to make purchases. This check-out feature builds on PayPal’s offering to buy, sell and hold cryptocurrencies, which was only launched in October of last year.
- A few days prior to PayPal’s news, Tesla Inc. announced that the company would now start accepting Bitcoin as a form of payment. While PayPal’s technology settles the transactions in fiat currency, limiting any exposure for merchants, Tesla will be holding the Bitcoin used as payment. Despite high price volatility and associated solvency risks, the tech-billionaire, Elon Musk, has embraced Bitcoin and other cryptocurrencies more than any other major CEO and this type of operating model is not expected to be widely adopted by many. Tesla also announced it invested $1.5 billion in Bitcoin to “further diversify and maximize” the return on its cash in a Securities and Exchange Commission (SEC) filing earlier in February 2021. As an influential business leader, Elon Musk’s constant support for Bitcoin and other cryptocurrencies, often through Twitter, has been a significant contributor to cryptocurrencies’ all-time high prices.
- In late March 2021, Visa announced it will allow the use of cryptocurrency USD coin, a stable cryptocurrency whose value is pegged directly to the US dollar, to settle transactions on its payment network. As part of a pilot program, the payments network will work with the Crypto.com platform and Anchorage, a digital-asset bank.
- On March 18, 2021, Bank of New York Mellon, one of the largest custody banks in the world, invested in cryptocurrency custody Fireblocks, a market leader in providing secure technology to support digital asset services. Earlier this year, BNY Mellon said it would offer Bitcoin and other crypto custody services to its clients. BNY Mellon plans to use Fireblock’s technology towards its plan to serve as a custodian for digital assets on behalf of its institutional investors.
- Fireblocks was also the custodian of Facebook’s rebranded digital asset, Diem, which is also expected to launch in 2021. Facebook’s digital currency project, previously known as Libra, has been in the works since 2019 and was offset by several roadblocks from regulators, supervisors, policymakers as well as central banks, and governments from the wider G8. Despite addressing the regulatory challenges, concerns regarding a social media giant being at the epicenter of the global financial system are still well-grounded.
- Morgan Stanley becomes the first big U.S. bank to offer access to Bitcoin funds for their wealthy clients, announced on March 17, 2021. The investment bank will offer access to three funds that enable ownership of Bitcoin for investors with an “aggressive risk tolerance”.
- During the same week, JPMorgan announced it is exploring Bitcoin and cryptocurrency clearinghouse options, emphasizing the need for a middleman to sit between over-the-counter (OTC) desks and traders to create market liquidity and guarantee trade enforcement.
- Square Inc., an American digital payments company, is another company after Tesla, which began to embrace the world’s biggest cryptocurrency, Bitcoin, with its own investments. Square announced in February 2021, that it is investing $170 million more in Bitcoin, in addition to a $50 million Bitcoin purchase in October 2020.
- As of February 18, 2021, the world’s first Bitcoin exchange-traded fund (ETF) in North America was approved and launched. The ETF is owned by Purpose Investments, a Canadian investment firm, and is traded on Toronto Stock Exchange (TSX) after obtaining approval from Canada’s securities regulator.
- In January 2021, Blackrock added Bitcoin futures for two of its funds as a potential investment, according to filings with the SEC. The two funds are BlackRock Strategic Income Opportunities and BlackRock Global Allocation Fund.
- Popular trading applications such as Revolut and Robinhood also had Bitcoin and other popular cryptocurrencies available to their users for the last few years, since 2017 and 2018, respectively; yet have experienced a spike in their cryptocurrency trading volumes and new traders on their platforms. Robinhood said its cryptocurrency service has added 6 million funded accounts in the first two months of 2021 only, when its total customer count was 13 million users in May 2020.
Overall, the emerging crypto market is not only attracting retail investors, but also traditional financial institutions and large corporations that are looking to profit from the emerging trend of digital assets. Accordingly, we are experiencing the greatest appreciation of cryptocurrency in history and it is becoming clear the field is here to stay.
