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HEALTH, WEALTH, AND HAPPINESS

July 12, 2022

"Wealth does not trickle down to the poor. Oxfam knows this, the IMF knows this, the World Bank knows this. Poor people have always known this."

- Winnie Byanyima

The Half-Year Report 2022 (Binance Research): Excellent summary of the first two quarters of 2022, written for crypto investors scouting out the next opportunities. Here's the summary:

Investor takeaways:

• Layer 1s are fighting to unseat Ethereum as the top blockchain development platform. Some investors are betting on L1s like Solana, Avalanche, Polkadot, or Cardano.
• Layer 2s are becoming more popular because of their lower costs and faster processing speeds. The L2 strategy is to load up on tokens like Polygon, Arbitrum, and Optimism.
• DeFi is making its way to other chains outside Ethereum. Some investors are quickly moving to DeFi platforms on competing blockchains, like Binance Smart Chain and Algorand, where early adopters may enjoy higher yields.
• NFTs remain hot. Rather than individual NFTs, some investors are buying shares in NFT marketplaces (OpenSea, the largest, is still privately held, but available via EquityZen).
• Regulation is the big unknown. Good regulation could put the industry into hyperdrive overnight; bad regulation could bring the market to a standstill. Current outlook is positive.

One number that has consistently increased during the first half of 2022 is the amount of staked Ethereum:

Investor takeaway: As Ethereum moves to Proof of Stake in its planned upgrade later this year, a final investor strategy is simply to stake your Ethereum to earn interest or yield.

The most popular service by far is Lido, which lets you stake any amount of Ethereum, for which is currently pays 4% APY. (Be sure to read our article on How Crypto Interest Works.)

Hi everyone,

Last month, U.S. lawmakers proposed regulatory guidelines for the crypto industry. Last week it was the European Union. And this week global regulators are jumping into the fray. If 2021 was the year for regulators to think about crypto regulations, 2022 is the year those thoughts turn into rules and laws. 

It seems the recent market downturn has caught the attention of regulatory groups across the globe.

The latest news is out of Basel, Switzerland. The Financial Stability Board (FSB) is a coordinator of national financial authorities and international standard-setting bodies. The mandate of the agency’s predecessor, the Financial Stability Forum, was broadened following the financial crisis of 2007-2009, leading to the establishment of the FSB. With the goal of preventing financial crises, the group reports to the G20. It has no lawmaking powers. Instead, its members commit to applying its regulatory principles in their own jurisdictions.

This statement from the FSB noted that the failure of crypto market players would threaten not only investors but could send systemic shockwaves through the crypto asset landscape, as well as the traditional financial system. The FSB said that proposals for “robust” rules for cryptocurrencies would be forthcoming this October. Last week the association that represents the primary securities and futures regulators, the International Organization of Securities Commissions (IOSCO), issued its roadmap for crypto-assets. The organization plans to set up two working groups that will issue recommendations around market integrity and investor protection as well as guidance for a regulatory framework for both DeFi and crypto-assets. The DeFi group will be headed by the U.S. Securities and Exchange Commission, while the U.K Financial Conduct Authority will chair the crypto group.

The Treasury Department also issued a statement last week regarding President Biden’s executive order on crypto regulation. The report stated that global cooperation was needed in order for the United States to combat illicit digital asset transactions and that the country needed to be a “leader in the discussion on CBDCs and digital payment architectures.” 

There is regulation ahead, no doubt. Is that a bad thing? Enhanced oversight could reduce uncertainty around the asset class and drive enhanced investment and adoption.

Regulation may not be the worst thing for crypto-assets—but only if regulators can align their rules so that the innovations that allowed the industry to flourish can continue.

Make it a great day!

Evamarie Augustine

Market Analyst

Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Alexandre Lores.

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