Blockchain Bites: The ‘Silver Lining’ for Bitcoin

XRP and silver went viral – showing mind-meld market mechanics are still in play – though both hit limits.

(Shutterstock)

Feb 1, 2021 at 5:51 p.m. UTC

Three stories

India’s Parliament is considering a bill that would ban “private,” non-sovereign currencies, including cryptocurrencies. This is the latest attack on the growing crypto industry in the country after a two-year ban was overturned by the country’s supreme court in March 2020, CoinDesk’s Tanzeel Akhtar reports.

The Cryptocurrency and Regulation of Official Digital Currency Bill 2021 also looks to create a framework creating an official digital currency to be issued by the Reserve Bank of India (RBI). The scope of the bill is still being debated, which leaves room for unspecified exceptions.
“This is (the) time to be nervous,” an official at a large cryptocurrency exchange said to the Economic Times of India on the condition of anonymity. Meanwhile, Nischal Shetty, CEO of Mumbai-based cryptocurrency exchange WazirX, warned, “Wrong or hasty regulations will set us [India] back by a decade. Right regulations will catapult India to the forefront of this technology.”
With a united Parliament, the bill has a good chance of becoming law, making India the first major Asian economy to ban private cryptocurrencies rather than regulating them like corporate stocks.

Switzerland now lets tokenized securities trade on a blockchain with the same legal standing as traditional assets. The law, which went into effect today, treats tokenized securities as a new asset class providing legal ownership rights to investors via a blockchain, CoinDesk journalist Ian Allison reports.

In a move that could have strategic significance for other jurisdictions, Switzerland’s legislators decided against creating a separate digital asset regulatory regime but instead grafted rules concerning distributed ledger technology onto the existing legal framework.
Switzerland’s two regulated crypto banks, Sygnum and SEBA, have pounced on the news by issuing tokenized securities. Sygnum tokenized a range of premium investible wines, while EBA is issuing its Series B equity shares as Ethereum ERC-20 tokens.
Separately, Zurich-based Crypto Broker AG was granted a securities house license by the Swiss Financial Market Supervisory Authority (FINMA), allowing the firm to deal in the emerging world of regulated security tokens.

Visa is exploring ways to make cryptocurrencies more “safe, useful and applicable.” In an earnings call, Visa CEO Al Kelly said the payments giant’s strategy “is to work with wallets and exchanges” to enable users to buy and cash out crypto “using their Visa credentials.”

“These wallet relationships represent the potential for more than 50 million Visa credentials,” Kelly said. He added that 35 of “the leading digital currency platforms and wallets” already work with Visa.
The payments executive said stablecoins could be fit for “global commerce” and that “digital currencies running on public blockchains as additional networks just like RTP or ACH networks,” though bitcoin has yet to be “used as a form of payment in a significant way at this point.”

At stake

Silver lining?

Crowd-driven market dynamics that took the world by storm last week are still in play. After traders on the Reddit forum WallStreetBets drove shares of GameStop from $19 in December to $347 last Wednesday, squeezing the short position of a formerly high-flying hedge fund, some are saying the genie is out of the bottle: Small investors are empowered like never before. Their magic? Virality.

This morning, silver traded above $30 an ounce, after being promoted on Twitter and Reddit all weekend. Similar spikes occurred in crypto markets last week. Dogecoin went parabolic, briefly entering the top 10 cryptocurrencies by market cap. Perhaps this isn’t so surprising for a coin that’s little more than a meme, as world’s richest man Elon Musk said on Clubhouse last night.

Bitcoin also benefited from internet exuberance after Musk updated his Twitter bio to just #bitcoin on Friday. A surge to $38,000 wiped out $387 million worth of short positions, though the momentum didn’t last long. Even comments from Musk last night that bitcoin is “a good thing” have failed to move the needle.

While it appears WallStreetBets has yet to rally behind bitcoin, despite repeated calls for hivemind price action to send it to the moon, XRP did. As CoinDesk’s Omkar Godbole reported, the Buy & Hold XRP Telegram group, founded on Saturday, successfully orchestrated a classic pump and dump of the beleaguered cryptocurrency.

The crypto hit a two-month high, erasing much of the value lost after the U.S. Securities and Exchange Commission filed suit against Ripple Labs, which holds a significant chuck of XRP. (Ripple responded to SEC allegations on Friday, arguing “the functionality and liquidity of XRP are wholly incompatible with securities regulation.”)

But as of press time, XRP is down 40%, showing the limits of coordinated buying. It’s unknown why the price tanked, though “it’s quite possible that a whale (large investor) took advantage of the price rise and dumped his holdings,” Godbole noted.

Is it all bad? Well, as Bloomberg noted, at least part of the reason silver didn’t go higher was the trouble in sourcing and moving its physical stock. Overwhelmed dealers said they were unable to process orders due to unprecedented demand.

Clarifying his thoughts on bitcoin, famed investor Ray Dalio noted its strength as a gold-like “storehold” of value. Unlike other alternatives, bitcoin is easily transferred and can be privately held.

You could call that a silver lining for digital gold.

Quick bites

HOLLYWOOD BETS: A movie about WallStreetBets, Gamestop and Robinhood is reportedly in the works, with the Winklevoss Twins attached. (CoinDesk)

KRAKEN LINK: The fourth-largest cryptocurrency exchange is running its own Chainlink node, making its spot price data available for DeFi applications and developers. (CoinDesk)

THE FLIPPENING: Someone bought an NFT for $130, sold it for $130,000. (Decrypt)

ROCKS CRYPTO: KISS frontman Gene Simmons praises BTC, ETH and LTC – again. (Modern Consensus)

ETHEREUM TRUST: Grayscale’s trust is back online. (CoinDesk)