The last few months have shown how intricate the relationships between digital asset platforms can become. We have seen that the fall of one piece can have a domino effect of unpredictable consequences and extensions, especially in the Decentralized Finance (DeFi) space. As in traditional markets, in the Digital Assets Ecosystem it is also necessary to be alert to systemic risks.
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Liquidity Crunches and Markets Keep Tanking... (as everybody runs for the exits)
The third week of June was defined by an epidemic of liquidity problems for large companies in the Digital Asset Ecosystem. Resembling Celsius and Three Arrows Capital, whose cases we reflected on in our Market Commentary, Asian lender Babel Finance joined the list at the end of the week, becoming the latest player to fall prey to liquidity imbalances following the generalized fall in prices.
The aforementioned scenario has had an impact on the price of digital assets, although the macroeconomic situation is a broader cause for the market distress. All this happens in a rising interest environment as The (U.S.) Federal Reserve hiked the Fed Funds rate by 0.75%, the largest increase since 1994.
All in all, the appetite of HNWIs, corporates, and traditional banking for digital assets does not seem to be fading, as evidenced by new reports and product additions to the offerings of several institutions. This happens as several regulatory measures move forward around the world.
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Solidus Capital, in its thesis of mixed exposure to liquid portfolios and direct investments in equity in this asset class, continues to structure private deals and opportunities for the acquisition of shares in the primary and secondary market of fundamental companies within the Digital Assets Ecosystem (DAE).
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MCD Fund: VC-style Fund that intends to offer exposure to transformational technologies in this Digital Age, including Blockchain, Artificial Intelligence/Big Data and Digital Assets Primarily equity investments in Blockchain and Artificial Intelligence/Big Data technology companies will be the focus. The Fund will have a second closing on June 30th.
Closing: June 30, 2022
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Five U.S. securities regulators to investigate Celsius
Following the freezing of user accounts and rumors of insolvency, securities regulators in Texas, Alabama, Kentucky, New Jersey and Washington opened investigations into digital asset lender Celsius.
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Babel Finance suspends withdrawals due to 'unusual liquidity pressures’
Following the Celsius episode and subsequent liquidity issues in the market, Asian digital asset lending service Babel Finance reported to its users that withdrawals are "temporarily suspended" due to the liquidity pressures they are experiencing from the current market state.
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BitMEX, FTX, and Deribit liquidated Three Arrows Capital
Exchanges BitMEX, FTX, Deribit, and likely Genesis and BlockFi, have liquidated the positions that hedge fund Three Arrows Capital (3AC) held with them, having failed to respond to respective margin calls. According to The Block, 3AC now owes US$ 6M to BitMEX.
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HNWIs have a 'growing appetite for Digital Assets', according to Capgemini
Wealth management firm Capgemini released its latest study, which found that 70% of HNWIs surveyed have invested in digital assets, and the appetite for investment continues to grow.
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More than US$ 120B invested in Metaverse projects by 2022, according to McKinsey
Strategy consulting firm McKinsey&Co published a report investigating value creation in the metaverse. Corporations, Venture Capital, and Private Equity have invested more than US$ 120B in various metaverse projects during the first months of 2022.
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Price drop does not affect purchase intentions for Digital Assets, according to Bank of America
A survey of 1,000 consumers by Bank of America revealed that 91% of respondents would continue to buy digital assets in the coming months, despite the price drop.
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JP Morgan wants to bring trillions of dollars in traditional assets to DeFi
During the Consensus event, organized by CoinDesk, JP Morgan bank revealed its plans to tokenize trillions of dollars in assets to bring them to Decentralized Finance (DeFi) and facilitate trading and lending on an institutional scale.
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Federal Reserve raises interest rates to the highest level since 1994
The U.S. Federal Reserve set a 0.75% increase in U.S. interest rates, the highest increase in 28 years. Fed Chairman Jerome Powell added that the increases will continue to combat inflation in the country, which is at its highest level in 40 years.
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Goldman Sachs makes its first Ether derivatives trade
Wall Street giant Goldman Sachs began trading activities with a type of derivative linked to the Ethereum asset, ETH. As reported by Bloomberg on Monday, June 13, it is a non-deliverable forward that pays out based on the price of ether, offering a new way for institutional investors to gain exposure to the asset.
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Illicit activity with Digital Assets declined to 0.15% according to Mastercard's subsidiary
Mastercard's recently acquired blockchain forensics company, CipherTrace, revealed in its latest report that illicit activity with digital assets declined from 0.65% in 2020 to 0.15% in 2021. This happens amid exuberant market growth.
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Panama's President returns Digital Assets Law
The so-called Crypto Law that would regulate digital assets in Panama was partially objected last Thursday, June 16, by President Laurentino Cortizo. The objection seeks to adjust the regulation to stricter standards in the fight against money laundering and terrorist financing, as Cortizo said.
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The founder of USDC will issue a new stablecoin anchored to the Euro
Circle, the USDC issuer, has announced that this June 30 it will begin issuing a stablecoin anchored to the price of the euro, with euro-denominated reserves deposited in U.S. banks. The stablecoin called EUROC seeks to facilitate digital euro movements on the Internet globally and with settlement in minutes.
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European Central Bank would limit digital euro to 1.5T units
European Central Bank Executive Board member Fabio Panetta reported on the progress of the development of the digital euro this June 15 before the European Parliament. According to Panetta, if the digital euro is issued, a limit of EUR 1.5T will be set for the issuance of the Central Bank Digital Currency (CBDC). This is intended to avoid "negative effects on the financial system and monetary policy," Panetta stated.
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Asset Manager AllianceBernstein to adapt its services to the blockchain ecosystem
Investment management firm with US$ 687B in assets under management (AUM), AllianceBernstein announced a collaboration with blockchain services provider Allfunds Blockchain to adapt its asset management services to the digital asset ecosystem. The purpose is to raise its standards for speed, speed, and accuracy, the firm commented in a press release.
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Elon Musk, Tesla, and SpaceX are sued for promoting Dogecoin
An American citizen filed a lawsuit against Elon Musk and his companies Tesla and SpaceX for having encouraged investments in Dogecoin, now that the price of the meme asset has fallen more than 90%.
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Exchanges of Digital Assets in Colombia must report operations as of July 1st
Next Friday, July 1st, the new regulations of the Colombian National Tax and Customs Directorate (DIAN) come into force, which obliges digital asset exchanges operating in the country to report operations over US$ 150, for individuals, and US$ 450, for entities.
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Ethereum's scalability advances through rollups
Data from the Ethereum blockchain shows that 1 in 4 transactions on the network occurs through scalability solutions known as rollups. Arbitrium and Optimism have gained the most traction in recent months, helping to decongest Ethereum's network.
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Solidus Capital is the leading firm in Digital Assets, which provides exclusive, agnostic, and institutional services such as Liquidity, Custody Solutions, Wealth (Private Accounts and Portfolio Management), Multi-Strategy Funds, Private Placements, and other sophisticated products in conjunction with bespoke accompaniment to High Net Worth Individuals, Family Offices, Companies, Wealth Managers and Banks.
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By relying on Solidus' services, investors avoid the classic fatal mistakes:
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- Lacking information in the context and moments of the market
- Executing operations inefficiently
- Using unreliable service providers and infrastructure
- Closing of accounts and freezing of funds
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Disclaimer
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