New Partnership with NovitasFTCL // There is no such thing as Digital Fiat. What is CBDC?

Bitcoin halving not priced in. Kraken futures, KeyTango, Nickel, Ramp, Deribit, Seba, BTCX IPO

Hi Everyone, Thank you for supporting the European crypto ecosystem 🇪🇺.

Etienne Twitter, etienne@blockwyre.com)

ps: don’t hesitate to send me an email if you enjoy this newsletter, Always great to have feedback :)


💡New Partnership: NovitasFTCL - Leading European FinTech Corporate Finance Advisor

  • At the cross-road of capital markets and digital assets, the digital assets capital markets ecosystem remains difficult to navigate for most investors and startups. I am joining as an advisor to NovitasFTCL to share my insights, network and knowledge in the European digital assets capital markets ecosystem.

  • We want to thank our partner NovitasFTCL, a leading boutique firm of corporate finance advisors to the European Financial Technology sector. Based in London, NovitasFTCL has 45+ years of combined experience in the FinTech sector and executed over 120 transactions across Europe including M&As and Fundraisings. 

  • NovitasFTCL provides clients with extensive industry knowledge, long standing industry contacts and the ability to execute complex and often cross-border transactions. Do not hesitate to contact me if you want an introduction. 

🕵️‍♂️There is no such thing as Digital Fiat. What is CBDC?

  • There has been lot of noise about central bank digital currency (CBDC) following announcements by China, Bank of England, Australia and more recently from Giancarlo, fmr top American regulator.

  • However, most crypto thought leaders are confusing the definition of money by the central bank. There is no such things as digital fiat. This is pure science fiction…

  • Central banks see CBDC as a third form of base money coexisting with repos and banknotes.

  • The main use case of a CBDC would be to serve as a settlement medium allowing individuals and global enterprises to make payments in dollars irrespective of space and time.

  • In other words, CBDC would offer a cheaper, faster and more inclusive global financial system because it would not need middle mens such as commercial and retail banks as well as more broadly clearing systems.

  • The threat for retail banks is quite important and as such make the CBDC likely to be used only for niche use cases - at least at the beginning. A good example could be a CBDC for transfer between central bank and financial institutions.

  • In addition to Banking-sector disintermediation, there are other number of challenges including run risk, Central bank balance sheet and credit allocation, International implications and Costs and risks to the central bank. For more info, have a look at the IMF paper.

  • Some may have noticed that there is no mentioned of the term blockchain in CBDC. That’s because there is no real need of a blockchain for this. Yup. It will likely be a private blockchain at best and more likely a classic database managed by the central bank.

  • Finally, Mr Zuckerberg recently warned the US Congress that if the company’s Libra project was blocked, it could lead to China overtaking the US in financial innovation and global influence. There is actually very little similarities between Libra and a China CBDC. The latter will fall under the renminbi’s capital controls, which restrict how much can be taken out of the country and the former is a basket of currencies.

  • In summary, there is no such thing as digital fiat. This is not monopoly. There is definitely some interest but the novelty of this new form of money still require more research, regulation and discussion among central banks. Let’s see how this progress over the next years…

  • /(la) fin

🐦 Tweets of the week

Meanwhile…

🤹 Startups News

  • A great article on crypto Tax by Accointing.com [Source]

  • Kraken Futures hired its first Russian representative in a bid to ramp up its operations. Between 10 % and 15 % of the trading volume on the most popular crypto derivatives exchanges like BitMEX, Deribit and Kraken comes from Russian traders, most of whom are professionals [Source]

  • KyberSwap exchange is moving out of Malta to the British Virgin Islands. The exchange said 5AMLD regulations “would put too high a barrier for the majority of traders, both – regulatory and cost-wise”. Just last week, Deribit said it is leaving the Netherlands for Panama due to 5AMLD [Source]

  • Israel-based cryptocurrency settlement solution provider, KeyTango, has partnered with GSR Markets, to enable OTC crypto desks to reduce counterparty risk and avoid the responsibility of cryptocurrency custody [Source]

🎁 Startups Product & Partnership

  • Nickel Digital Asset Management, a privately-owned London-based investment firm, announced the launch of its second cryptocurrency offering, the Nickel Digital Gold Institutional fund. The fund will be supported by a bespoke Walled Garden solution developed by digital assets prime brokerage, Copper. [Source]

  • Ramp launched its Pools solution, All trades are automated and users are in control of theirs assets at all time whether they want to withdraw them, move them or top up [Source]

  • U.S.-based Silvergate Bank has launched a bitcoin collateralized loan product with Bitstamp as its launch partner. The crypto exchange will act as the bank’s agent to manage and provide custody for bitcoin collateral. The product utilizes Silvergate Bank’s Exchange Network to fund loans and process repayments in real time [Source]

  • Software maker Trading Technologies (TT) announced it would provide trading tools to users of leading crypto exchange, Deribit, including a suite of advanced order types, charting and analytics as well as access to a feature allowing users to create algorithms for bot trading [Source]

🏭Corporates

  • A building on the prestigious Banhofstrasse in Zurich, Switzerland worth $134m+ was successfully tokenized and sold on the blockchain. The new owner of the building is Swiss real estate investment company BrickMark. The company has issued bond-backed crypto tokens that figuratively represent “shares” of ownership in the building [Source]

💰Fundings & M&A

  • Seba, a young Swiss-based digital asset bank holding regulatory licensing, looks to attempt a secondary capital raise to garner over $95 million in additional funds [Source]

  • Swedish Crypto Firm BTCX Wants to Conduct an IPO. Note, it would not be the first Swedish crypto firm to conduct an IPO. Quickbit, a company specializing in crypto payments for e-merchants, made its way to NGM in Stockholm [Source]


About the author: Etienne used to head principal strategic investment (Companies, Funds and token investment) at Elwood, One of the largest European digital assets investment firm spun off of Brevan Howard, billion-dollar Macro Hedge fund. Previously, he was part of the founding team at the largest Capital Markets Venture Fund in London, Illuminate Financial.