Gluwa News Digest Vol. 3

8/03/2021 - 22/03/2021

The Biggest Story...

Morgan Stanley becomes first big US bank to offer Bitcoin funds...

Whilst major banking institutions have been flirting with Bitcoin for quite some time, Morgan Stanley has become the latest legacy player to offer its clients exposure to Bitcoin. CNBC reported that the US giant is planning on launching three new funds for its customers who harbour "an aggressive risk tolerance".

Whilst major banks have so far been reluctant to fully commit to the hottest asset class in town (for example, JP Morgan's recommendation that its investors commit a rather modest 1% of their portfolio into cryptocurrencies), this latest move by Morgan Stanley is a clear sign of warming interest from finance's biggest institutions.

Dissapointingly however, the new Morgan Stanley funds will be locked to wealthy clients - those with at least $2 million in assets already held by the firm. Further to this, the investment bank will limit investments in the cryptocurrency funds to 2.5% of their customer's net worth.

The move by Morgan Stanley was catalysed by popular pressure after its clients "demanded exposure" to the asset class. Indeed, many other financial institutions have reached the same conclusions, with Goldman Sachs admitting that "client demand is rising".

Goldman Sachs are also exploring the possibility of its own Bitcoin ETF (exchange traded fund), having only last year argued against the idea that cryptocurrencies should be considered a genuine asset class. Certainly, it seems evident that major banks are giving their old positions on crypto a radical rethink.

Fortunately there is good news for people looking to dip their toes into crypto. Crypto gives people the freedom to act and invest independently of centralized financial institutions. You don't need a bank in order to buy and hold Bitcoin. You don't need a bank to borrow money. And you don't need a bank to invest in Gluwa or our partners. Why anybody should need a bank for these things is a mystery we're in the process of solving.

Either way though, it simply confirms what we already knew - Bitcoin and Crypto are here to stay.

Policy + Regulation

• South Korea has ratcheted up its cryptocurrency regulations, reported Decrypt. The new laws will require companies to record their transactions with the country’s anti-money laundering watchdog and flag any suspicious behaviour.
• The Bank of Russia has announced digital Ruble trials beginning in 2022, Cointelegraph reported. Meanwhile, the Bank of Japan has called for CBDC “readiness”, with experiments planned for spring in anticipation this latest wave of technological development, Coindesk reported.
• UK crypto businesses have complained to the Chancellor of the Exchequer over delays as regulator’s struggle to keep up with the industry, Coindesk reported. So far, only four out of 200 applications have received a final decision on FCA (Financial Conduct Authority) approval.

Technology

• The new Fiat 500 will reward drivers with KiriCoins for sustainable driving, Decrypt reported. The new car will monetize your driving data with extra rewards for eco-friendly drivers. Drivers will earn roughly one KiriCoin per kilometre, which can then be spent in the Kiri marketplace.
• A bug related to Filecoin’s RPC code, the information channel used to verify deposits, resulted in a Filecoin ‘double deposit’ bug on Binance, Coindesk reported. The error was resolved with no malicious actors involved.

Institutions

• Paypal has acquired a Tel-Aviv based crypto security firm focusing on crypto-custody, Curv, for nearly $200m, Decrypt reported. The move signifies PayPal’s growing realignment towards the disruptive new digital currency sector.
• Morgan Stanley is rumored to be making moves to acquire a stake in Bithumb, South Korea’s largest crypto exchange, Cointelegraph reported. The US investment bank is clearly experiencing FOMO.

Markets

• Nearly $40 billion of the recent stimulus bill could be spent on Bitcoin according to a recent survey by Mizuho Securities, Coindesk reported. Whilst the numbers should be taken with a grain of salt there is no doubt the stimulus could affect Bitcoin’s price. Certainly it will add weight to the arguments of Bitcoin being a hedge against Fiat inflation.
• The South Korean cryptocurrency transaction volume exceeded that of the national KOSPI Index for a short while, Decrypt reported. Whilst the figures do not reflect the total stock exchange volume, the fact that cryptocurrency could overtake Korea’s largest share index at all is a whopping testament to crypto’s popularity in the country.