On Thursday

We have written and given presentations on a number of occasions about how West Coast tech firms such as Apple, Amazon, Google, Facebook etc seem to be looking to ‘take a Byte out of the Big Apple’. All these tech bemouths have been busy building their own payment platforms, rivalling those which many of New York’s financial services firms have offered historically. 

If countries such as the UK are successful and manage to cause financial services companies to be excluded from the global tax proposals for the world’s 100 biggest companies (currently being discussed), how long will it be before we see these tech firms spin out their financial services subsidiaries? UK Chancellor of the Exchequer, Rushi Sunak, is striving to get the G7 to agree to exclude financial services firms in the global tax proposals. If this were to happen, there are concerns mounting that it would undermine the City of London as a location for banks such as HSBC and Standard Chartered to have their headquarters there, all the while deriving much of their income outside the UK. The stakes are high as it is estimated by the Institute for Public Policy Research that the global tax proposals could generate as much as £7billion p.a. purely for the UK treasury.

Some believe that Apple Pay, in the US alone, is generating $1billion of revenue p.a. and over 500 million customers globally Given how it is growing, as the world increasingly turns its back on cash and embraces digital payments, its outlook would appear to be very positive. Bearing in mind that, at $108 billion, PayPal is valued over 2.5 times the valuation of Goldman Sachs’ $130billion - so what would Apple Pay, with more clients than Paypal, be valued at? Will Apple Pay, Google Pay Samsung Pay, Amazon Pay etc be spun out too, in the same way Alibaba in China spun out AliPay to create Ant Financial in 2014? If big tech firms are to see their profitability challenged by the G7 governments as they scramble to repair their balance of payment post COVID-19, how long will it be for those astute accountants and tax advisors to the tech giants search for new ways to, once again, minimise the tech giants’ tax?

                     Apple Pay growth of users                                   Paypal growth of users

                                  Source: Statista.com                                                           Source: Statista.com                     

As Hayden Jones, from PwC, pointed out in last week’s Digital Bytes, it is digital currencies in the form of a stablecoin which offer considerable attractions to treasury departments of multinational firms. Digital currencies enable companies to move money around the globe, by-passing correspondent banks and offering real-time cash management. With comments such as: “So-called stable coins (cryptocurrencies pegged to other assets) need to be closely monitored. The outlook for stable coins as a means of payment … [has] It caused a lot of problems. It is imperative to ask difficult and appropriate questions about the future of these new forms of digital money” coming from the governor of the Bank of England, Andrew Baily, is this a sign that stablecoins are...


On Tuesday

For those who understand Cockney rhyming slang: “would you adam it?” (adam and eve - believe). If by passing legislation in El Salvador so that Bitcoin is treated as legal tender was not radical enough, the country’s president, Nayib Bukele, has now instructed the state- owned geothermal electricity company to look into mining Bitcoin.

Although El Salvador currently imports 19.23% of the electricity it needs, mining Bitcoin (especially at times when demand for electricity is low) may prove to be an efficient way to harness volcanoes’ geothermal energy 24/7. Will Bitcoin mining using volcanoes prove to be not only an eco-friendly way to make money for El Salvador, but profitable too? No doubt other countries will be watching with interest to see if El Salvador’s embracing of Bitcoin can encourage those who are unbanked and typically excluded from the traditional financial services. If there is a significant uptake by the citizens of El Salvador to use Bitcoin, how long will it be before El Salvador also makes a stablecoin (such as Tether or USDC) legal tender? Will we see El Salvador issue its own digital colón, backed by US$, with deposits either held by the El Salvador government or, to make it potentially more attractive, have the cash held by the IMF or World Bank? Now that would be a coup….

As the below chart shows, according to data from the World Bank the informal economy is significant, not just in El Salvador, but many other parts of the world i.e., there is a considerable amount of cash being used to pay for transactions. The informal economy is estimated to be worth USD 10 trillion, employing about 1.8 billion people globally. As a result, this makes it difficult for governments to balance their books and claim the taxes required to meet the needs of their citizens when there are vast sums of cash being used and no records of what has been paid to whom. Perversely, crypto currencies such as Bitcoin were historically heralded as a way to make payments and by-pass the banks and other financial institutions, yet now we see governments increasingly embrace cryptos and digital assets such as stablecoins and CBDCs.

Employment in the informal economy as a % of total non-agricultural employment

Source: Indexmundi.com

Another possibility is that other countries and renewable energy producers will increasingly come to realise that Bitcoin mining has the ability to help remove some of the risks associated with renewable energy projects. This possibility exists because surplus energy can be diverted to mine Bitcoin, whereby creating a valuable additional source of income. Mike Colyer, chief executive of Foundry, claims: “This could enable proposed renewable energy projects to havce a faster quicker return on eco-friendly investments, according to the head of one of North America's biggest crypto miners”. Citizens from El Salvador, Guatemala and Honduras are all sources of migrates into the USA. Therefore, instead of spending $millions on a wall between the US and Mexico, the Americans could do well to start investing in green renewable projects whereby enabling these countries to be less reliant on importing energy and, instead, turning them into cheap producers of renewable energy. The use of Blockchain technology could easily track the power being produced and the number of Bitcoins being mined. If the income from the mined Bitcoins could be identified as being spent appropriately, as...


On Thursday

This is the fifth in a series of articles by David Parsons, from TrustMe Property Exchange

As with digital assets, the saying "anything can be digitised" is now being fully put to the test as your imagination can now be turned into a digital asset. We will explore this alchemy and see what's behind this new digital sorcery.

...trust me, there is an invisible $18,000 statue sitting in my home library. I just had to buy it after seeing it at the artist's gallery in Italy. The artist initially wanted $100,000 but fortunately he accepted $18,000. As an invisible statue you would obviously think it's worth is much less (and closer to zero) however the sorcery is that it’s worth is actually closer to $100,000.

Value from your imagination, selling imaginary sculpture. Salvatore Garau

Source: Oddity Central

In the world of digital assets there are two types, real and imaginary - we will explore what differentiates real digital assets compared to imaginary ones. The difference between the two defines how they store value, when they are used in direct exchange, and the differences they have under the law. By understanding fully what these assets are, then the real and imaginary values can be defined, risks segregated, and their inherent uses identified.

Imaginary Digital Assets
Imaginary digital assets can be broadly defined as having no intrinsic, inherent or intuitive value (without 3i value). Generally, the only source of value is extrinsic and only therefore what other people believe the value to be based solely on their personal feelings of the asset’s worth. This opens up the value of the asset to be viewed very differently and widely by a multitude of people (example: ‘beauty is in the eye of the beholder’). The asset’s capability to be used as a storage of value, its perceived appreciation, its tradability / liquidity and the protection of the asset under the law are all very subjective. These traits lead to a trader’s dream of rampant speculation, uncertainty in value, uncertainty in protection of the law, and this ‘tradability’ (volatility) ultimately resulting in an asset becoming unsuitable for use in long term contracts or for commerce. Some examples of these imaginary digital assets are with us now in the form of Bitcoin, Ethereum and Dogecoin. 

Breaking down such imaginary digital assets’ traits into their constituent components helps us identify their value. Firstly, all of these assets in some jurisdictions (such as England and Wales) are protected by law for possession. However, the law cannot enforce ownership since no court can currently compel transfer upon these assets. No central authority or case law yet exists to control ownership. This uncertainty, therefore, creates questions as to whether the assets are truly suitable for institutional investors seeking the benefit and surety of long-term protection of the legal jurisdictions in which they operate.
The value of the above assets has no independent value other than what another person is willing to pay for them. This has led to wild swings in their perceived value. Interestingly, some of these Imaginary Digital Assets do attract considerable daily trading volumes in which billions of dollars can trade hands in just a few days or weeks. The challenge remains of using such Imaginary Digital Assets as a form of payment in a contract, as the value of such assets over the short to medium term is highly unpredictable. Such assets, then, have very limited utility value and, to add to the challenge that most of these assets are not backed by any tangible real-world assets, their value could plausibly go to zero at any time.

Source: Signet Classics
In summary, Imaginary Digital Assets would only appear to be suitable for speculative trading. This is not conducive for long term contracts or even short-term use in daily commerce.



On Tuesday

In 2014, the Swiss and the European Union began negotiations on an institutional agreement which ultimately broke down. As of July 2019, this break down resulted in the Swiss losing their recognition of equivalence meaning that EU investment firms would not be able to trade Swiss stock, such as Nestle, Novatis, Rocche, Chubb etc trading on Swiss stock exchanges. A repercussion of this could have been a collapse in volumes with a severe impact on the stock exchanges. So, to protect against this happening the Swiss government prohibited shares of Swiss companies (which are listed or traded on a Swiss stock exchange) from being traded on EU exchanges. The impact of this was that, because Swiss companies were not traded on European exchanges, European asset managers could trade Swiss equites on the Swiss exchanges or indeed any other exchange that they were quoted.

A crypto hand of friendship

Source: TeamBlockchain Ltd
On 3rd February 2021, Switzerland’s financial regulator, FINMA, finalised what had been negotiated for a while with the UK and Switzerland, allowing Swiss shares to trade in London (given the UK’s departure from the EU). As a result of this, UK-based ETC group has announced that it will be offering Exchange Traded Products (ETP), so giving exposure to Bitcoin. This Bitcoin ETP (BTCE) is listed on the Swiss SIX exchange and will be available to trade as of 7th June on the Aquis Exchange in London and Paris. This will be the first time a cryptocurrency as an ETP has been available for trading in the UK or any other European exchange.
The Swiss and its Crypto valley for a while has seen to be more embracive of digital assets and a number of organisation have established foundations (a legal structure that it not able to be formed in the UK). While the Swiss and the UK are relatively small in terms of population both are globally renowned for their robust legal and financial service. If we are to see further collaboration between UK and Switzerland especially in the field of digital assets, we could well see these two jurisdictions attract considerable capital and talent thus tax revenues. It could also see more accommodative regulation and legal clarity. We have already seen the Swiss change their law to allow the issuance of digital securities without the need for paper based documentation. The UK continues to attract investors. According to Coinidol:  “Start-ups plus growth firms including blockchain and fintech companies operating within London attracted funding worth more than $10 bln which makes over a quarter of overall investments within Europe and is about 3 times the level in Paris (France), Berlin (Germany), Stockholm (Sweden) according to the data by Dealroom”.
% Change in deep tech investment by country/region (2019/2020)

Source: Tech Nations, Dealroom2021 
The Bank of England has announced the creation of a task force to consider issuing a sterling Central Bank Digital Currency. A true leap forward would be if either the Swiss FINMA or the UK FCA were to allow institutions to be legally able to commence issuing and trading digital bonds or digitally-wrapped equities, similar to those being offered by Bitterex and FTX in Germany. Unfortunately, while great progress is being made it is not universal. The FCA has recently announced that it is pushing back the deadline for when it will be required to process those firms which applied in December 2020 to handle crypto assets. Originally the FCA agreed there would be transitional arrangements until 9th July 2021, but this deadline has been extended to 31st March 2022. Does this mean any new firms wishing to register in the UK to be engaged with crypto assets will be delayed further? Should this be the case, the risk runs high that companies will move off-shore resulting in a loss in valuable tax revenue for the UK which, in a post COVID-19 world, is desperately needed. Even more importantly, will this, in turn, undermine overseas investors’ confidence in UK FinTech and go elsewhere?...


Last Thursday

We have had a number of readers asking for a summary of the different types of digital assets and examples of each type. Keeping abreast of the various digital assets can appear daunting as different organisations quote competing numbers. Coincap.com claim there are 7,096 while Statista say that there are over 4,500.

Number of Digital assets globally 2013-2021

Source: Statista

Digital Assets have been issued by governments (Chinese digital Yan – which is currently being tested in more villages and towns around China), publicly traded companies (J.P. Morgan -JP Coin) but the fast majority have been issued by private companies many of which are start-up firms from all over the world.

Central Bank Digital Currencies (CBDC) or as the Economist are calling them “govcoins are a new incarnation of money. They promise to make finance work better but also to shift power from individuals to the state, alter geopolitics and change how capital is allocated.” The Chinese are well on their way rolling out the Chinese digital Yan and recently Mastercard has  announced that it is in talks with the Chinese authorities to have the Digital Yan accepted on its payment platform.
CBDC such as the Bermudian Sand Dollar- the worlds’ first national wide CBDC- use Blockchain technology, others such as the Chinese Digital Yuan do not use a Blockchain.

DeFi tokens
CNBC define DeFi as: “Decentralized finance, or DeFi, refers to a system of applications that aim to recreate traditional financial instruments with cryptocurrency”. 

Size of the DeFi market

Source: Coingecko

There have been a range of tokens created for the DeFi sector with the objective to enable decentralised financial services, without the need of a third party, such as a bank or the other intermediaries. DeFi tokens are rely on smart contracts i.e., computer coding and are designed to offer participants the ability to earn interest, get loans, trade etc without relying on any third party. This is a fast-moving sector and DeFi Tokens can fall and rise very fast which is what we are now seeing firms such as Novum Insights being set up to offer insight to the challenges and opportunities. With returns being offered as high as 84,000% p.a. which means that in a day your £1,000 becomes worth £3,300, (i.e., 230% per day), it is of little surprise that DeFi tokens have attracted so much interest. 

NonFungible Tokens (NFTs) in their simplest form can be described as digital collectibles. Typically NFTs are tied to art, photographs, pictures, music, or videos. 
They are called Non-fungible” as they are unique therefore can’t be replaced with something else.
NFT volume statistics in the last month

Source: NonFungible.com

NFTs have recently been in the news with the auction house Christies selling a NFT for $69million making the artist Beeple the third highest living artist ever. In Q1 2021 it is claimed that over $2billion of NFTs have been sold.

Security tokens
Investopedia’s definition of traditional securities is: “financial instruments that hold some type of monetary value and represent ownership (stock), a creditor relationship (bond), or the representation of rights to ownership (option). They can provide a variety of financial rights to the owner of the securities, such as equity, dividends, or interest”. Security tokens are digital representations including fractions of an asset such a real estate, commodity, an equity, a bond, and non-physical assets such as data, AI. Traditional securities and security tokens value is linked to an...


2 Weeks Ago

This is the fourth in a series of articles by David Parsons, Co-Founder of TPX™ (TrustMe™ Property Exchanges)

In the world of digital assets there are two types, real and imaginary. The famous children’s story “The Wizard of Oz” which some academics believe was based on the 1890’s United States monetary debate of creating fake money e.g., silver compared to sound or real money e.g., gold, we will explore what differentiates real digital assets compared to imaginary ones. The difference between the two, defines how they store value, used in direct exchange, and the differences under the law. By understanding fully what these assets are, the real and imaginary values can be defined, risks segregated, and inherent uses can be identified.

Value from your imagination

Source: Flickr

Imaginary Digital Assets
Imaginary digital assets can be broadly defined as having no intrinsic, inherent or intuitive value. Generally, the only source of value is what other people believe the value to be based solely on their personal feelings of worth. This opens up the asset to be widely viewed differently by a multitude of people. Storage of value, perceived appreciation, tradability and protection under the law are very subjective. These traits lead to rampant speculation, uncertainty in value, uncertainty in protection of the law, tradability ultimately resulting in an asset unsuitable for use in commerce. Indeed one of the earliest units of account (exchange) as we more commonly known money were  Yap stones, yes stones “money of Yap, a small group of islands in the South Pacific. The Yapese have used giant stone wheels called rai when executing certain exchanges. The stones are made from a shimmering limestone that is not indigenous to Yap, but quarried and shipped, primarily from the islands of Palau, 250 miles to the southwest”.
Some examples of imaginary digital assets are Bitcoin, Ethereum and Dogecoin. Breaking down their traits into constituent components helps us identify their value. Firstly, all of these assets in some jurisdictions such as England and Wales are protected by law for possession, however the law can not enforce ownership since no court can enforce a judgment upon these assets. No central authority exists to control ownership. This uncertainty, therefore, creates questions as to whether they are unsuitable for long term protection from institutional investors seeking the benefit of legal jurisdictions in which they operate.
The value of the above assets have no independent value other than what another person is willing to pay for them. This has led to wild swings in perceived value although interestingly some of these Imaginary Digital Assets do attract considerable daily trading volumes. A challenge of using such Imaginary Digital Assets in a contract is the value over the short to medium term is totally unpredictable. Additionally, since these assets are not backed by tangible real world assets their value could plausibly go to zero.

Source: The British Museum (Money Gallery 68)

In summary, Imaginary Digital Assets would appear to be more suitable for speculative trading. This is not conducive for long or even short term use in daily commerce. So what can substitute them?

Real Digital Assets
As described above, Imaginary Digital Assets are just that, imaginary with no intrinsic value. Real Digital Assets are the polar opposite of imaginary assets e.g., real assets. They are protected in a court of law with enforceability of ownership globally. They have intrinsic value, e.g., oil, gold, diamonds, real estate, etc. They are relatively stable over a short to long term. More importantly, ownership can be moved easily and as swiftly as Imaginary Digital Assets with the same level of confidence and using cryptographic security. 
The key difference in Real Digital Assets is they represent claim to title on real world objects. Today in the gold market, gold certificates are issued representing...


The value of the global remittance market in 2019 was $554 billion and is expected to fall to $470billion in 2021 as a result of the impact from COVID-19. Nevertheless, it is still a huge quantity of money being transferred around the world, and often by some of the lowest paid workers. The World Bank claims: “If the cost of sending remittances could be reduced by 5 percentage points relative to the value sent, remittance recipients in developing countries would receive over $16 billion dollars more each year than they do now.”

It should come of no surprise, therefore, that there are a number of firms targeting the global remittance market, with some being less successful than others. Humaniq, which burst onto the crypto market with its ICO in 2017 (at one stage being valued at $95million, only to crash to its current $2million level) has almost disappeared, despite its almost evangelical supporters in the past. Others have been more successful, such as Electroneum which is in rude health and available to use in over 160 countries. It, too, carried out an ICO in 2017 and in early 2018 was worth almost $950million, now with a market capitalisation of $390million.
More recently, the Celo Blockchain has been designed to allow the transfer of money internationally via a mobile phone at a fraction of the cost of usual global money transfers and offers the Valora app. In February 2021, Celo announced it had raised $20million,  positioning itself as a way to expand and enable financial inclusion and even managing to attract Andreessen Horowitz as an investor. Then, in April 2021, Deutche Telecom announced it had joined the 130 other firms which were part of the Celo Alliance, as well as purchasing an unspecified number of Celo’s tokens. Interestingly, when making this latest announcement, Celo also reminded readers that “the resources used to run the Celo network are carbon-neutral”, once again demonstrating the importance organisations place on proving their ESG credentials.

In June 2019, Facebook grabbed the attention of not just the crypto market but central bankers when it announced that it, too, was looking to create its own digital coin (subsequently re-named Diem) to enable people to send money faster and cheaper than by using a bank. Facebook, with its 2.6 billion active monthly clients (more than three times the total population of the G7 economies), has the scale and the balance sheet to sponsor a digital coin. It is of no surprise that Diem has yet to obtain authorisation, and central banks the world over have been frantically researching how they could also have their own CBDC.  Meanwhile, Diem has decided to relocate from Switzerland and move back to the US and set up a JV with the US bank Silvergate, which has agreed to start using Diem. If Diem were able to launch and tap into the Facebook users and firms which advertise on its platform, this could have the potential to seriously undermine the use of many other national currencies. So how long might it be before Facebook starts offering Diem as a payment method to its 2.6 billion customers?

The Facebook-backed Diem coin

Source: Finance Magnates

In the past, money transfer services were traditionally carried out by banks but these days there now exist a range of other money transfer firms. Of interest, included here is just a small selection. Competition from companies such as Electroneum or Celo, which charge as little as $0.01 per transaction, means that businesses need to use technology and automate as much as possible to stay competitive - hence...


3 Weeks Ago

A 2-minute video looking Blockchain technology’s likely impact on the insurance sector

The insurance sector has been slow to embrace technology and the use of Blockchain technology is no exception, despite some potentially very interesting ways in which it could be used. In very simplistic terms, Blockchain technology is likely to impact the insurance sector in two predominant ways: operationally - i.e., making infrastructure much less expensive in terms of the day-to-day way it conducts its business activities, and as an investor - i.e., the way insurance companies hold as well as the types of investments insurance firms’ trade.

The publication Raconteur highlighted that Blockchain technology is able to help the insurance industry in three ways by:
  • streamlining third-party transactions

  • smart contracts and re-insurance

  • data management and security

Financial services companies, including the life assurance firms, are being faced with the challenge of the transition from LIBOR to SONIA (interest rate benchmarks) in order to ensure any contracts with third parties are correctly updated. In its own report on this, the Investment Association points out there are a number of factors to consider. So, in view of this, why not use this time to replace paper-based agreements and embed smart contracts? As Robert Crozier at Allianz Technology has stated: “Leveraging blockchain can offer a significant leap forward in terms of productivity, something which financial services providers traditionally struggle to scale”. Furthermore, insurance companies need to be prepared for IFRS-17 which comes into force as of 1st January 2023, as this will present another set of challenges for the insurance sector with firms being required to be more transparent. According to EY:Data, systems and processes will need to be shared between Finance and Actuarial departments”. The good news is, is that Blockchain technology has been proven to be highly effective at improving transparency and therefore ought to be able to support insurance firms to hold and share data more securely.

Meanwhile, the adoption of Blockchain technology, and the digital assets it can create, is not itself without real and perceived challenges such as the negative reputation crypto currencies earnt historically and the variety of legal and regulatory challenges that exist  - although regulation such as MiCA will offer greater clarity. The transition of data to be held on a Blockchain is potentially the biggest challenge, i.e., the need for management to change and migrate from many of the existing analogue paper-based processes and procedures to retaining held data, digitally, in a structured format. However, for those companies in the insurance sector that are able to meet this challenge, the potential rewards are substantial. The use of Blockchain technology to bring greater transparency will not only help firms comply with IFRS-17, but ought to create more trust. In time, higher levels of trust should lead to less uncertainty, thus lowering risks, and, in turn, affording the ability to offer lower insurance premiums. Subsequently, it is not difficult to see that once the initial reluctance to change is overcome, and just one or two firms in the insurance sector adopt the use of Blockchain technology, we are likely to see many more firms embrace this technology, too.


This is the second in a series of articles by David Parsons from TrustMe Property Exchange

You have no doubt seen in the press numerous types of digital assets, as with government money, there are many different types. With digital assets, some are used for the paying out of fees or interest on invested digital asset funds or goods and services, whilst others are used for long term storage of value and seldom used in commercial transactions. The main difference between these two types is that one depreciates in value and the other appreciates in value. 

The value of government money (such as US Dollars, English Pounds or Euros) depreciates in value and has negative interest rates when combined with monetary inflation. In an uncertain economy, people and businesses tend to hold on to their money while the economy improves. However, this behaviour weakens the economy further, as a lack of spending causes further unemployment, a drop in prices and lowers profits. This reinforces economic uncertainty whereby giving individuals and companies even more incentive to hoard their money. As spending continues to slow, prices drop again, creating incentives for people to wait as prices fall further. This deflationary spiral is counteracted with monetary policies e.g., quantitative easing from central banks, debt monetisation, social spending and, more recently, negative-interest rates. With negative interest rates, government money deposited at a bank forces depositors to pay the bank to hold their money. This means that depositors are penalised whilst borrowers enjoy earning money by taking out a loan. This has the perverse effect of penalising responsible behaviour (e.g., saving your money), instead promoting irresponsible behaviour i.e., borrowing for speculation (also known as ‘shorting the currency’).
The original hamster money
   Source: TPX
Depreciating or ‘Hamster Assets’
Some Digital Assets share the same value attributes but with much more volatility. Dogecoin is a good example. The coin has no inherent control over the money supply, so from an inflationary perspective its relative value as a unit of account can be capriciously increased in an uncoordinated method. Its rampant speculation, based solely on demand, leads to massively gyrating values of hundreds of percent in a short period of time. This type of asset can only be used in the moment as a unit of payment based on another unit of account e.g., USD, GBP, EUR. It cannot be relied upon for constant purchasing power in an employment, mortgage, or commercial contract.
  Appreciating or ‘Squirrel Assets’
Some Digital Assets are used almost exclusively for storage of value, with Bitcoin being a good example. The coin has control over its supply so, from an inflationary perspective, it’s relative value as a unit of account can be predicted and modelled precisely. Its speculation, based solely on demand, leads to gyrating values of hundreds of about 10 percent in a 24- hour period. Long term, its value has been increasing relative to government money. This type of asset can only be used in the moment as a unit of payment based on another unit of account e.g., USD, GBP, EUR. It is not useful in long term contracts due to its price instability but is very useful as a unit of payment at time of payment.

Gresham’s Law ,which has its origins back in medieval times, is a simple way of summarising ‘Hamster and Squirrel’ assets. Gresham’s law is the concept of a ‘good’ Digital Asset (an asset which is undervalued, or an asset that is more stable in value) versus a ‘bad’ Digital Asset (an asset which is overvalued or loses value rapidly). The law holds that bad assets drive out those...


4 Weeks Ago

Dfinity, otherwise known as the Internet Computer, debuted onto the crypto market on  May 10th with its ICP token, itself surging in value to over $90 billion on day one and briefly making it the third most valuable crypto globally. However, having reached a high of $791 it fell to $301, still giving the tokens a value of over $35billion. “The Internet Computer works in a very different way than any other blockchain,” Dominic Williams, founder of Dfinityrecently told Bloomberg. Today, a lot of blockchains run largely on the cloud. The Internet Computer runs entirely on dedicated hardware that are installed by independent parties around the world.Dfinity is a Swiss-based non-profit foundation, established in 2016 by Williams and having 188 employees based in the US, UK, Japan and Germany. Dfinity has no shareholders but is governed by holders of ICP tokens, and its blockchain is accessed using ICP tokens.

Expect to see a lot more of the Dfinity logo

Source: Dfinity.org

Other blockchains, such as Bitcoin or Ethereum, rely on cloud-based computing services from technology bemouths such as Amazon, Google, IBM, Microsoft, Oracle etc. Dfinity will use a global network of data centres in France, Japan, Burkina Faso and Jamaica as it looks to break the strangle hold that a handful of big tech firms have on the internet, and potentially on Blockchain technology. Dfinity uses smart contracts and is following several other Blockchain firms, such as Binance smart chain, Cardano, Polkadot and Stratis now challenging Ethereum (which, due to its popularity, has become slow and expensive on which to carry out transactions).

In conversations Digital Bytes has with people from all over the world (who are typically over 35 and have business experience outside of crypto and the blockchain sector), a constant question arises: “How can some of these crypto businesses be worth so much?”, equally bemoaning: “I don’t understand how these cryptos attract the valuations that they do!” What we are seeing is the creation of a whole new infrastructure and way of doing business. Organisations such as Bitcoin, Cardano and Dfinity have been established as foundations and, instead of offering shares, they have issued tokens whereby enabling the buyers of such tokens to use their blockchain/services. The buyers believe that these foundations’ services offer tremendous growth opportunities and will become so popular that the value of the token prices will appreciate as they attract new buyers and users. It is not profitability that is driving the token price but faith that a limited number of tokens being issued by these foundations will result in the token price being driven up. 

To old-fashioned investors relying on balance sheets and earnings, they often overlook the fact that, in reality, stock markets are largely driven by sentiment. Indeed, they believe that certain companies’ products and services will be more popular than others in the future. Subsequently, even in the UK FTSE 100 index, we see long-standing, so-called secure and trusted companies, such as IAG (owner of British Airways) and British Telecom have Price Earnings (PE) of 2.68 and British Telecom a PE of 9.24 respectively. Conversely, the software computer services business, AVASAT, has a PE of 2,228 and OCADO a PE of 12,415. However, the one thing that many of the best-known publicly traded equities in the world yearn is the amount of turnover that many cryptos enjoy. In its first few days of trading, even a newcomer such as Dfinity attracted a 24-hour turnover of its tokens i.e., buyers and sellers had traded over $3billion worth of tokens in just a day. Since Dfinity, alongside other cryptos, can be traded globally 24/7/365 (subject to those jurisdictions that ban crypto trading), it would confirm there is no shortage of interest in this fast-growing new asset class. 

Meanwhile, who would have thought that 20 years ago a firm selling books would spawn the richest person in the world, Jeff Bezos? Furthermore, how many of you...


Once again, the equity and crypto markets are riding high with the total value of the crypto currencies reaching almost $2.74 trillion on 6th May 2021. However, be aware that bond yields are rising with some storm clouds on the horizon. 

A screenshot of a computer

Description automatically generated with medium confidence

Source: Bloomberg

There will be those who believe that higher yields are a precursor to higher inflation and will therefore turn to gold, while others will advocate increasing your exposure to property. There is also a growing band of investors who will wish to increase their crypto currency holds as an alternative non-correlated asset class.

Historically, an adage among stock market traders suggested: “Sell in May, come back St Ledger Day” At the time, it was thought that stockbrokers and wealth investors escaped from the heat of the City of London over the summer and headed off to their country estates, only to return at the end of September for the St. Leger's Stakes - the last of the major horse races on the flat in the British horse racing calendar. According to Investopedia, from 1950 to 2013 the Dow Jones Industrial Average posted lower returns during the May to October period, compared with the November to April period. But caution is required as, since 2013, there have also been some sizable rallies in the same period. Last year, the S&P 500 rose by 16%.

However, it has been disappointing for a few shareholders of Apple to see that, despite a rise in revenue of 54% to $89.6 billion in the last quarter, the share price of Apple is now lower than it was - before it reported these phenomenal results! And remember too, even Apple, with its $91 billion cash pile, joins the other 496 firms in the S&P500 that are not debt free, according to the ‘Retire before dad’ website. The question we all want to have the answer to is, if interest rates are to start edging higher (given the massive increase in corporate and national debt), will cryptos stay firm or even rally in the face of falling equity and bond markets? Maybe this explains why the list of companies and funds investing in cryptos continues to grow since it ensures that they, too, have diversification in the assets they hold. 

Whilst it is not cheery news for those in debt, according to the publication GoldMoney.com we are fast approaching a point where the Fed has “one alternative left to pursue, albeit with the greatest reluctance. And that is to raise interest rates - substantially”. For those earning a paltry return by holding cash in a bank account, higher interest rates will be a welcome relief. So, not all doom and gloom as economies flush out the excesses of the current debt-binged companies.


A Month Ago

In 2018, Deloitte identified Blockchain technology as being able to: “Prevent fraud, secure user identities, support next-generation network services and help support IoT connectivity solutions” for the telecoms industry. Now three years later in 2021, how true is this and what have been some of the drivers and challenges for the deployment of Blockchain technology in the telecoms sector?

Improving efficiency of inter-company roaming settlements 
Mobile phone customers travelling abroad are a source of revenue for mobile operators. Roaming revenues are estimated by Juniper research to be at approximately 6% of total operator-billed revenue (in 2019, prior to the COVID-19 pandemic). Within the industry there are roaming settlement processes to ensure the foreign mobile network is compensated for calls made and data used.  

In 2020, three operators (Deutsche Telekom, Telefonica, and Vodafone) successfully finalised a trial of automated settlement of roaming discount agreements using a solution developed by blockchain-based settlement company, Clear. Founded in 2018, Clear’s aim is to “remove friction in complex B2B trade and to make partnerships better.” As reported by Enterprise Time, the VP of Commercial Roaming Services for Deutsche Telekom Global Carrier stated the challenge it was facing, was that: “Roaming discount agreement reconciliation is a complex, costly process prone to errors. The benefits of the Clear solution included an ability to “transact seamlessly with an ecosystem of partners.” In view of this, Clear would appear to have achieved what it set out to do.

Other industry players, such as Syniverse, have projects underway in the same arena. In 2020, Syniverse launched the “industry’s first live mobile roaming solution for the IoT and 5G that is fully compliant with the new GSMA Billing and Charging Evolution standard ” - a new roaming settlement process built on the IBM blockchain platform and called Universal Commerce. Syniverse’s blog on the topic states that the solution uses Blockchain technology to replace manual processes and delivers “an enhanced level of security, transparency and rapid validation.” The blog also mentions that Universal Commerce enables smart contracts between mobile operators (or other partners), whereby improving efficiency.  

Enhancing digital procurement 
According to a recent article published by Zawya, the Vodafone Procurement Company (VPC) and Block Gemini are collaborating on a blockchain-powered solution to enhance digital procurement. VPC is responsible for purchasing and supplier management for Vodafone, managing a spend of more than €25 billion. Founded in 2017, Block Gemini is a consultancy, blockchain and software development firm headquartered in Dubai. Block Gemini’s case study on the project highlights the challenges faced: “Manual updates became very time consuming; updates were vulnerable to human errors; multiple versions of the same contracts existed; a lack of digital price repositories.” According to the case study, the approach was to use a blockchain-based Commercial Contract Management platform, integrated with existing legacy systems and providing multi-stakeholder access. Block Gemini claims an impressive “90% increase in catalogue back-office efficiency; savings on multi-million Euro procurement spend; security using Blockchain technology and greater transparency; less disputes and greater overall efficiency.” Following the VPC and Block Gemini collaboration, Tomorrow Street (a joint venture between Vodafone and Luxembourg’s national incubator, Technoport) has announced a partnership with Block Gemini, confirming the success of using a blockchain-powered platform in the telecoms sector.
Facilitating Next Generation 5G and IoT services 
The telecoms industry body, GSMA, is forecasting that 5G will account for as many as 1.2 billion connections by 2025. Using Blockchain technology...


One of the biggest challenges that faces the property sector is that it has been slow to digitise and often data and information on buildings is held in a wide variety of different places. Aon Reed Stenhouse, the insurance company, claim that 95% of the information on a new building in terms of the construction data currently gets lost on handover to the buildings first owner. It is for this reason that Briq, based in California USA, have developed a Blockchain-powered platform that keeps a record of the entire construction of a building.

 The carbon footprint of a city is receiving more attention and one way to reduce the carbon footprint is to analyse the carbon emissions from the materials that are used to construct building. 

Global Warming Has Concrete Problem When It Comes to CO2

Chart, bar chart

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Source: Ecori.org

The manufacturing of cement is a significant producer of  global carbon emissions  and after water cement is the most consumed product globally, as each year 3 tonnes of cement is produced for every person in the world. Cement accounts for over 4 billion tonnes of carbon dioxide emissions annually. Therefore, any smart city can significantly improve its carbon footprint by using less cement or cement that is produced in a low emission manner. Hansons have a cement manufacturing site in Wales and they are using a combination of renewable energy sources, solar and wind to help produce the power that is required to make cement. Hanson UK claims: “The carbon footprint of the Regen GBBS produced at the plant could be brought down to one-tenth of that of Portland cement.”

Tata in Wales have recently won a £20 million grant to help decarbonise Wales: “to explore the production of a hydrogen supply, carbon capture usage and storage and CO2 shipping from South Wales which would be the first CO2 shipping industry in the whole of the UK… This is all part of a wider initiative to manufacture low or net zero carbon cement and steel products, helping to drive the low carbon future of UK construction


Cities are major consumers of energy and with more and more companies pledging to go ‘carbon neutral’ there is a growing demand for users of electricity to have certainty as to the green credentials of the electricity they consume. This 2 min video from Shell explains how Blockchain technology is able to connect renewable energy producers with buyers offering a way to track and trace the provenance of the electricity in a highly trusted and transparent manner.

It is not just power generation that is using Blockchain technology to track carbon footprints. The Dutch based Blockchain business Kryha, working with The World Economic Forum has built a Blockchain-powered Carbon Tracing Platform, enabling traceability of carbon emissions from mine to the final product for copper.

According to the publication Sustainability News: “Climate experts suggest that blockchain technology could play a significant role in creating a system of standardization and accountability by accessing the carbon footprint of companies and tracking the offsets”. Indeed, cities and the same for governments and for companies that wish to reduce their carbon foot print they need to ascertain how much carbon they are creating and where from in order that they can understand what action they need to take to reduce their carbon emissions. The ability to track and trace in a transparent manner what their carbon footprint currently is and to be able to monitor the reduction in carbon emissions is going to be vital as society, staff and shareholders are likely to demand evidence and accountability.


There is a battle between two of the biggest global corporations in the world over transparency as Apple launched its new software updates iOS 14.5 and iPadOS 14.5. These new updates will ask iPhone and iPad users to opt out of tracking in apps that monitor their behaviour and share that data with third parties. While this is great for user’s privacy as it will stop other apps from tracking what they are looking at on their phones and ipads it potentially is not great for Facebook and Google.  Tech firms for years have been collecting data about when and what websites we are looking at and then they sell this data to companies to advertise to us. Facebook have been the masters of this activity and generated $86billion or 97.9% of its global revenue in 2020 was from advertising. 

New Apple upgrade gives users the ability to opt out

Graphical user interface, text, application, chat or text message

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Source: Record.com

Facebook’s CEO Mark Zuckerberg on 27th January 2021 said in a quarterly earnings call: “We increasingly see Apple as one of our biggest competitors using its dominant platform position to push its own apps while interfering with Facebook’s. Apple may frame this as a privacy service to its customers, but it’s really only in Apple’s own best anti-competitive interests”. CEO Tim Cook spoke at the Computers, Privacy and Data Protection conference on 28th January and while he never mentioned Facebook by name to many the target was obvious. “Technology does not need vast troves of personal data, stitched together across dozens of websites and apps, in order to succeed. Advertising existed and thrived for decades without it. And we’re here today because the path of least resistance is rarely the path of wisdom. If a business is built on misleading users, on data exploitation, on choices that are no choices at all, then it does not deserve our praise. It deserves reform.”

While Apple has been publishing its transparency report since 2013, listing the requests that it receives from governments on users data as a company Apple has been less than transparent in other ways. In November 2020 as reported by the Washington post: “Apple will pay $113 million to settle an investigation by nearly three dozen states into the tech giant’s past practice of slowing customers’ old iPhones in an attempt to preserve their batteries.” In 2019 Apple were suedfor alleged lack of transparency over iCloud data” In 2016 the publication 9to5 wrote: “Apple’s product secrecy may create ‘magic,’ but lack of transparency on upgrade cycles creates frustration.”

The reason for this focus on transparency is because one of the key attributes that Blockchain technology is able to bring greater transparency a business and indeed governments. Indeed the  European Parliament publication Europal wrote “One of the most appealing aspects of blockchain technology is the degree of transparency that it can provide. Blockchain has the potential to improve supply chains and clinical trials, enforce the law, enable responsible consumption, and enhance democratic governance, through traceability of information as a means of ensuring that nothing is unduly modified. The level of transparency that blockchain affords adds a degree of accountability that has not existed to date

A recent example of can be seen by the launch of the, Aura consortium, a collection of some of the world’s biggest luxury brands LVMH, Prada and Cartier have agreed to use the to use a ConsenSys and Microsoft Blockchain -powered platform to share information about their products’ authenticity and provenance with customers. This will match product ID with client ID, enabling customers to access product history and authenticity by tracking manufacturing process right from raw materials stage to the retail outlet. It is hoped that being able to have this level of granual data it will help in the fight against fakes and forgeries that plague the luxury goods marketplace.


How long will it be before we see Coinbase using its equity back on the acquisitions trail following its recent public listing on the NASDAQ exchange? Afterall, Coinbase has been growing fast with 35 million users in July 2020 and over 56 million clients - net income of $322.3 million in its 2020 profits and $1.8 billion of revenue in Q1 2021. It is certainly in rude health. Coinbase is no stranger to doing deals with notable acquisitions including Tagomi, a crypto currency brokerage platform, the controversial Neutrino, an intelligence company and  Xapo, an institutional crypto custody specialist firm, to name just a few. Arguably, Coinbase has a better understanding about the outlook and opportunities in the blockchain and crypto sectors than any other NASDAQ-quoted organisation. Coinbase has also been trying to influence politicians in the US, having spent over $700,000 on government lobbying since 2105 and with a bigger ‘war chest’ of cash, no doubt the amount Coinbase spend on lobbying will increase.

Another firm active with crypto currencies is PayPal (currently valued at over $310billion), having announced it will start accepting crypto currencies on its payments platform. In March 2021, PayPal announced it had acquired the Israeli-based crypto custody firm, Curv, for an alleged $200-$300million. According to a report from Bloomberg, PayPal is also interested in acquiring crypto currency companies. BitGo, a digital asset custodian announced in December 2020 that it had over $16billion of crypto assets in custody for institutional clients. Bloomberg’s report showed that crypto mergers and acquisitions had more than doubled in 2020 to $1.1 billion, compared to 2019. The US was the most dominant market with $785million worth of deals. Henri Arslanian, global crypto leader of PWC, believes that 2021 is on track “to significantly surpass 2020 from every single metric.” It would seem that Arslanian is, indeed, correct if you look at the recently announced Crypto/Blockchain VC deals.
Crypto/Blockchain venture funding by size

Source: Block Research
In 2020, there were just four venture capital-funded deals worth $100 million, and three deals worth between $50 million and $100 million. Already in the first three months of 2021 there have been six deals worth more than $100 million: BlockFi, NYDIG, Dapper Labs, FireBlocks and Blockchain.com (twice). Seven more were worth $50 million to $100 million. But not all institutions are bullish on crypto since HSBC now prohibits customers from buying quoted companies which hold Bitcoin, such as Square or Microstrategy. The image below is proof of HSBC’s current sentiment towards crypto-related assets.

Message from HSBC to its clients

Source: HSBC

Surely such a dictate from HSBC to its clients flies in the face of a freewheeling capitalist bank, such as HSBC? Maybe HSBC is now taking a much more cautious stance, having once been found moving vast sums of dirty money and been forced into paying record anti- money laundering fines. One wonders how long HSBC will continue pursuing such an aggressive stance towards crypto or will it, like JP Morgan, end up ‘eating humble pie’ and even begin to back organisations engaged with crypto assets? Afterall, HSBC clearly understands the benefits of Blockchain technology, which gave birth to the asset class of crypto currencies since, back in September 2020, it published a report: “How blockchain could revolutionise bonds”. Furthermore, HSBC’s Digital Vault offers custody of assets including assets such as equity, debt or real estate. HSBC digitises its clients’ holdings whereby enabling customers to check their records without the need to request the paper documentation that maybe required, for an audit, or to check an interest payment for tax returns, for example. The benefit of using Blockchain technology and the digitisation of the records are a lower cost for HSBC and give clients faster access to information.

Undoubtedly, there continues to exists a blurring between traditional institutions and those organisations engaged in crypto assets and, as the size of both the cryptocurrency market and digital assets grow, the boundaries are likely to blur even more. The amount of money being invested into these sectors is ever-expanding...

What have the Queen of England, the Catholic Church and Bill Gates all have in common? Landownership, and lots of it! Earlier this year, the Melinda and Bill Gates Foundation became the largest owners of farm land in the US, owning over 240,000 acres of land (approximately 97,000 hectares). The Catholic Church owns over 71 million hectares, which is a land mass the size of France, but the largest owner of land that is not a government is Queen Elizabeth II. According to the publication Love Money:By far the world's largest non-governmental landowner, Queen Elizabeth II is the head of the British Commonwealth and therefore legal owner of around 2.7 billion hectares of land, as estimated by The New Statesman. That's as much as a sixth of the planet’s land surface. The Crown Estate includes prime chunks of London, massive tracts of agricultural land in rural Britain and more than half of the UK's foreshore”. 

The real estate sector is estimated by Savills to be worth over $200 trillion globally with approximately $185 trillion as residential property and $15trillion as commercial real estate. More up-to-date figures from Associated Press last year claimed that the value of real estate world-wide was almost $270 trillion and expected to grow to over $330 trillion by 2023. In the UK alone, the residential property sector is valued at $8.7 trillion. Therefore, it ought to come of little surprise that many organisations are looking at how technology, including Blockchain, could improve the efficiency of how real estate is bought and sold and managed on an on-going basis. Much has been written about the tokenisation of real estate yet, to date, there have been relatively few examples - possibly because tokenised real estate creates a digital security which is subject to the same regulatory restrictions of any publicly offered equity or debt instrument. This means that issuing a digital security in multiple jurisdictions is not a straight forward process given one would need to comply with a range of different regulatory listing requiremnets.

It was therefore interesting to see that Binance, the world’s largest digital exchange, recently began offering tokenised equities i.e., an asset-backed security, but sold as a token. The offer from Binance gives investors the ability to buy a digital version of Tesla and Coinbase, yet it didn’t issue a prospectus (the normal requirement), but issued a one page document instead. This has stirred the German Federal Financial Supervisory Authority (BaFin) into action, cautioning Binance by stating that a prospectus would have to be published if they (who/what??) are to be “transferable, can be traded at a crypto exchange and are equipped with economic entitlements like dividends or cash settlements.” However, in Binance’s defence, the German-based digital platform, CM-Equity (where Binnace has listed its Tesla and Coinbase tokenised version) has already listed (what??) and is trading similar tokenised assets issued by FTX and Bitterex. 

Bitterex, itself, is offering access to the following equities for investors in various countries where it is usually not possible to trade such stock. Hence, it is easy to understand the attraction of creating tokenised stocks if the process is, indeed, legal:
Beyond Meat Inc 

As an aside, the demand for more digital fiat-backed stablecoins will no doubt increase if tokenised stock trading demand grows, since how will investors be paid the dividends they are entitled to? Surely not in fiat? As has been mentioned in previous editions of Digital Bytes, expect to see more organisations creating stablecoins in all the major currencies across the world. The creation of a host digital €, Yen, £, CHF and $ (of which there are a number already) will then enable real estate to start paying rental income in a digital format. The ability to pay dividends on equities and rental income from property in a digital format also offers the opportunity for companies and landlords to begin making distributions to investors more frequently. Most payment platforms, such as...


Coinbase’s recent listing on the NASDAQ stock exchange is yet more evidence of how digital assets (in particular, crypto currencies) are getting closer to the traditional financial markets. According to the New York Times, there was a keen appetite for Coinbase shares from institutions as Coinbase was initially vlaued at $68 billion, but at the end of its first day’s trading was worth $85.7 billion. Subsequently, this ensured that the venture capital firm Union Square Ventures had an extremely profitable day since, way back in 2013, it had invested into Coinbase at 20 cents a share, whereby now making its Coinbase holding worth $4.6 billion!

Matt Levine is a well-respected and followed reporter for Bloomberg, so no doubt his recent comments on Coinbase will not fall on deaf ears throughout Wall Street: “Cryptocurrency exchange Coinbase Global Inc. goes public today, and I remain amazed at what a good business it is, compared to regular finance. Almost $1 out of every $1,000 in the entire crypto market - not $1 out of $1,000 traded, but $1 out of $1,000 of all the crypto that exists - went to Coinbase. Another way to look at it is that Coinbase touched $335 billions of crypto trades in the first quarter and took about 0.54% of the value of those trades for itself. Just for being the exchange, the platform where cryptocurrencies were traded.” Indeed, on the same day that Bloomberg printed this article from Levine, Goldman Sachs announced its latest earnings, with its CEO highlighting the growing importance of digital currencies and, in particular, cryptos such as Bitcoin: “Central banks are looking at digital currencies, working to apply this technology to the local markets and determine the longer term impact on global payment systems. Also, significant focus on cryptocurrencies like Bitcoin, where the trajectory is less clear as market participants evaluate their possibility as a store of value”.
Without a doubt, crypto currency volatility and ‘hype’ has dissuaded many traditional banks and asset managers from being involved in this new asset class. However, as we see organisations such as State Street's partnership with Gemini Trust, Fidelity Investments and BNY Mellon are now offering institutional-quality custody for cryptocurrencies. Thus  questions regarding crypto’s legitimacy are beginning to recede. 
BTC as a share of the cryptocurrency market

Source: Trading view
Historically, Bitcoin has attracted much of the attention when people talk about crypto assets but, as the above chart indicates, in the last year Bitcoin’s dominance over the crypto assets class has been falling. This is, in part, down to the fact that the next five most valuable crypto currencies (excluding Tether, which is a stablecoin) have performed so strongly in the last year compared to Bitcoin, as the table below shows.
 Performance of the six largest cryptos in a year
Market Cap as at 20th April 2021
Performance 20/04/2020 to 20/4/2021
Binance coin
Bitcoin cash

Source: Coingecko
What is interesting is that four out of the six - Bitcoin, Ethereum, Cardano and Bitcoin cash - are blockchains which means they are very much infrastructure plays. Interest in gaining exposure to the required new infrastructure continues from investors. It is very likely that there will be more than one blockchain since different blockchains, with their various characteristics, will be more suitable in certain circumstances. This may help explain the reason as to why the price of these different blockchains has appreciated so much in the last year. As a crypto currency exchange, Coinbase offers investors exposure to crypto and Blockchain-related investment opportunities. Given Bitcoin’s dominance of the crypto market, buying Coinbase offers investors indirect exposure to this asset. Coinbase are  unlikely to the last company to list on a traditional stock exchange, indeed how long will it be...


Central Bank Digital Currencies (CBDC) is a topic that is regularly asked about by readers. It seems that it is also a topic very much on the agenda for central bankers around the world. The Chinese have already started the rollout of their own CBDC and France, Japan, Sweden, Switzerland, the Bahamas, France, the Philippines and Turkey are all at various phases of testing with a view to launch their own.

Furthermore, CBDCs have very much been on the EU Central Bank’s agenda, and on 14th April it issued a press release updating the public on its findings from a consultation paper about a digital Euro. The three main findings were: citizens and professionals alike value privacy most for a possible future digital euro.
preference for a digital euro being integrated into existing banking and payment systems.
public consultation to provide valuable input for Eurosystem’s decision in mid-2021 regarding commencing formal investigation for a digital euro.

Interestingly, the consultation paper attracted “8,200 responses - a record participation for an ECB public consultation. A large majority of respondents were private citizens (94%)”. This indicates the interest in a digital Euro/ CBDC and what we believe is inevitable being that it is not if, but when, the EU will follow China’s lead and issue a Euro CDBC. On the very same day, Christine Legarde, head of the EU Central Bank, called for regulation on Bitcoin saying, “the digital currency had been used for money laundering activities in some instances and that any loopholes needed to be closed”, although she did not detail any specific examples on which to base her concerns about how and where crypto currencies had been used.

Destination of funds leaving illicit services in 2020

Source: Chainanlysis

However, in a report released earlier this year from Chainanalysis it would seem that the EU is not, itself, a hot spot for nefarious actors using crypto, but Russia and America appear to be where such activity is concentrated. The Chainanlysis report claimed that only 270 digital wallet addresses accounted for over 55% of crypto currency money laundering. The United Nations estimates, $800 billion to $2 trillion is laundered globally each year, accounting for 2%-5% of the global gross domestic product. The UN has not quantified the exact size of the crypto laundering market. However, a report published by MIT (in the US) has claimed criminals laundered US$2.8 billion through crypto exchanges in 2019, compared to US$1 billion in 2018. As of 2019, total Bitcoin spending on the dark web was US$829 million, representing 0.5% of all Bitcoin transactions. 

In 2014, Canada became the first country to pass regulation on crypto currencies with respect to anti-money laundering. The first real global response was not until June 2019 when the Financial Action Task Force (FATF) published its guidance for virtual assets and virtual asset service providers (VASP) having stated, “The FATF strengthened its standards to clarify the application of anti-money laundering and counter-terrorist financing requirements on virtual assets and virtual asset service providers. Countries are now required to assess and mitigate their risks associated with virtual asset financial activities and providers; license or register providers and subject them to supervision or monitoring by competent national authorities.” Following on from this, the Monitory Authority of Singapore Payment Services Act (covering firms which were involved in handling crypto currencies) stated that such firms needed to have a license and were required to comply with Anti Money Laundering (AML) regulations. In July 2020, the MAS proposed another set of regulations to control the crypto currency...


As the lock down restrictions in many parts of the US, Australia and the UK begin to ease, people will no doubt be keen, once again, to pay a visit to their favourite restaurant, pub, or local bar. In the last year your local hostelry has possibly had a lick of paint, whilst the food industry has witnessed unprecedented investment into non-animal-based alternatives as people increasingly focus on not eating meat. Indeed, in the US, Food Dive has reported that the numbers of people eating meat fell from 85% in 2019, to 71% in 2020. Furthermore, the Good Food Institute has reported that investment in the alternative meat market rose threefold in 2020 to a record high of $3.1 billion, stating: “Companies focused on plant meats, eggs, and dairy (as opposed to fermentation and cell-based-meat ventures) accounted for the lion’s share of that windfall, taking in three times the amount of capital they raised in 2019”.  

This change in eating habits is set to continue, according to Boston Consulting Group and Blue Horizon Corporation, with their prediction that the demand for ‘alt-meat dining’ would comprise 11 percent of the protein market by 2035 - climbing to 97 million metric tons annually, from the mere 13 million that is now. One of the challenges restaurants and food suppliers face is how to prove to customers that the food they serve is what it is claimed to be on the menu, whether this be where the food has been sourced, ‘local organic vegetables’, or how livestock has been treated and reared. According to Paymentsense’s report, 66% of the population now believe that ethical considerations matter when choosing where to eat, with 36% of people looking for locally sourced ingredients when eating out. The connected food chain 

Source: FoodLogistics.com

If restaurants and shops are able to generate better trust regarding what they sell, then this is likely to lead to greater loyalty and increased business. But the key is, how to generate more trust based on facts, as opposed to shallow advertising slogans and marketing spin? Well, as beforementioned, the facts as to how, where and when the food sold in the shops or served in a restaurant is grown or reared, and how sustainably produced it is, is all eminently possible using simple QR codes and Blockchain technology. With a quick scan using a mobile phone customers are able to gain a detailed insight to the provenance of the food they are about to consume.
In an article in Food Engineering Mag.com, Herain Oberoi, General Manager of database, analytics and Blockchain marketing at Amazon Web Services (AWS), believes: “The lack of data compatibility exposes supply chains to problems like visibility gaps, inaccurate supply and demand predictions, manual errors, counterfeiting and compliance violations. This is where blockchain can allow organizations to gain real-time, end-to-end visibility into their supply chains. Transactions are always time-stamped and up to date, so companies can query a product’s status and location at any point in time”. Nestlé Australia Ltd is one of AWS’s clients which uses Blockchain technology for its ‘Chain of Origin’ coffee brand. Armin Nehzat, digital technology manager at Nestlé Australia Ltd., asserts that the following characteristics of Blockchain help to ensure that the company delivers on its mission. “The combination of these blockchain characteristics is what helps us better collaborate with our suppliers and ultimately connect consumers with the provenance of their products”:
Transparent - members on the blockchain network can see everyone’s activities whereby ensuring everyone is held accountable to their deliverables.
Verifiable - as the product moves across the supply chain, participants can verify each other’s activities and raise alarms when needed. 
Immutable - once an update is made on the network, it cannot be changed. This means that users can always go back and audit activities to detect anomalies and learn from their mistakes. 
There are many Blockchain-powered platforms offering solutions in the food supply industry for retailers and restaurants which, in effect, makes it easier to ‘plug...


The crypto currency market has grown to over $2trillion in size with various digital assets now being held in over 70million wallets. The turnover (especially in the larger crypto currencies) is particularly impressive, where it is not uncommon to observe 20% - 40% of the value of a crypto being bought and sold in a day whereby demonstrating the liquidity of these assets.

The volume of crypto currencies being traded has been increasing, as can be seen from the chart below, with the start of 2021 proving to be especially active for this asset class. In March 2021 alone, Bitcoin miners earnt a staggering $1.5 billion in fees, while Ethereum miners had earnt $1billion in February 2021. 

Volume of Cryptocurrencies traded per month (spot v derivatives)


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Source: Cryptocompare

The DeFi sector is now over $112billion in value and in the last 24 hours has turned over $16billion Meanwhile, we have witnessed an explosion of interest in Non-Fungible Tokens, in the last 30 days there has been $103million turnover from over 573,680 tokens. As the image below shows the amount of money that some NFTs attract is likely to stimulate further interest from artist and other owners of IP.


Size of the NFT market

Graphical user interface, application

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Source: Nonfungible.com

To give some context to these digital asset numbers the value of  equities traded in the US in March 2021 was $656billion and  the daily foreign exchange volume is approximately $6trillion a day.

Possibly the most impressive statistic for crypto currencies is the daily turnover enjoyed by a number of digital assets. It is not uncommon to have 20% - 50% daily turnover (especially for some of the larger crypto currencies) and, in some cases, even more of their capitalisation being bought and sold within a 24-hour period. These daily turnover figures illustrate the liquidity and interest of these assets and would be the envy of many small and mid-cap equities being traded on traditional stock exchanges, where liquidity remains a key challenge for traders and market makers. One possible explanation is that crypto currencies can be traded globally enabling the generation of greater liquidity, whereas traditional stock exchanges (certainly, historically) represent the trading with a particular country.

IT stocks daily turnover v Crypto daily turnover

      Company    Current market   cap*

Value turned over per day

Alphabet         $1.52 trillion

1.826m*$2,250= $4billion

Amazon           $1.67 trillion


Apple               $2.17 trillion

107m*$129= $13billion

Microsoft.       $1.91 trillion


Bitcoin             $1.08 trillion


Ethereum        $0.23 trillion


*as at 8th April 2021

The interest in digital assets keeps expanding by the amount of funds under management in various pooled/collective vehicles, as can be seen below.


Funds under management in Investment products

Chart, bar chart

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Source: Cryptocompare

Given the size of the various digital assets it is not difficult to see why these assets are attracting so much interest from traditional financial institutions. The interest is likely to receive a further boost since Coinbase has now announced that it is to be listed on the 14th of April in the US at a valuation of $100billion – although some feel this is too high! It will be interesting to see if the interest in digital assets remains, as and when we see a fall in traditional equity markets (which is long overdue), given we have not seen a substantial fall in equity prices now for over 10 years.


2 Months Ago

The profits of arbitraging an asset have been exploited by highly sophisticated investors, such as hedge fund managers, for years. These arbitrage profits can arise when an asset such as an equity, commodity, and now a crypto currency, can be bought on one exchange for less than the price it can be sold for on another exchange. Arguably, in theory this is a risk-free trade since you buy Bitcoin in one place and sell it for a higher price elsewhere.

Firms which are deeply engaged with crypto currencies such as Bitcoin, BitGo, BlockFi, Galaxy Digital and Genesis are increasingly targeting hedge fund managers, acting as lenders or, as some call them, shadow bankers. The hedge fund managers are exploiting pricing anomalies on Bitcoin between spot prices (the price offered on digital exchanges) and the futures price of Bitcoin, and executing trades that can generate annualised returns of 20%-40%. Meanwhile, many traditional banks are reluctant to engage with crypto currencies. Indeed, it can still be extraordinary difficult to even open a bank account in some jurisdictions if your company is involved in crypto currencies (although this is slowly changing). "The people with all the money - the banks, the brokerages - they're not in this space yet,” as has been reported by Jeff Dorman, chief investment officer for Arca Capital Management which specialises in digital assets. "Everyone wants to borrow dollars, but there's not enough dollars in the space. There is a huge cash shortage." Another indication of the lack of cash in this market is that most loans of stablecoins, which are typically backed by traditional currency reserves or a basket of other digital assets, also earn high yields. This is because stablecoins such as Tether and USD Coin are used, just like cash, to buy other crypto currencies.
So, how, in our so-called interconnected and sophisticated global financial services markets, can such pricing arbitrage opportunities occur? Well, it starts with the price difference between the spot price for Bitcoin and the value of a derivatives contract in a few months in the future. For example, on 30th March 2021 the Bitcoin spot price was US$56,925 while the July future’s price contract on an exchange in the US – CME - was at US$60,205. A hedge fund could buy Bitcoin at that spot price and sell the July futures, meaning the derivatives would gain value if Bitcoin were to fall. By doing so, a hedge fund could lock in a 4.9% spread between the cash and futures price and, annualising that between 30th March and July 30th (when the futures contract expires), could offer a profit of 19.6%. Therefore, hedge fund managers must have a means by which borrow from somewhere and, in theory, provided the cost of debt is less than the profit to be made, they will do these types of trades all day. 
But, you may say, what are the risks? The risk is shown in the above example that CME Group, quoting the futures price, goes out of business - which, if that happened, the hedge fund manager and the entire financial system would face more problems than a Bitcoin trade going wrong. Yes, it is possible (be it a remote one) that CME Group crashes, given how it is regulated it is. Meanwhile, the problem of banks not willing to engage with the crypto sector is well-known, in part due to a lack of regulatory and legal clarity over these assets and not helped by the perception...

There is noticeably a trend regarding posts on Linkedin. Digital Bytes has been commenting on and posting various articles about how global financial institutions are building the required infrastructure to enable the safe custody, management, trading, and expansion of digital assets including stablecoins, DeFi, NFTs and Cryptos. The common thread we have identified are the names of the organisations viewing the posts, together with the very global nature in terms of the cities and countries of the people who are viewing the posts.

Last week Digital Bytes this post which highlighted Visa’s announcement of its plans to have USDC and U$-pegged stablecoins on its platform, and concluded that this announcement ought to give the $63billion stablecoin sector even more awareness and interest. Indeed, stablecoins are a very liquid asset class and in the last month have turned over $100billion on average a day. The table below gives a snapshot of the 2,000+ viewers in the first few days following the previously mentioned Linkedin post and, as can be seen by the names of the financial organisations and locations of those viewing it, the range is truly international with viewers working for some of the best-known regulated financial services organisations globally.

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Source: TeamBlockchain/Linkedin

So far, in 2021, the pace of change and newsflow around cryptocurrencies has been very active. Last week, PayPal also jumped on the crypto bandwagon with its new ‘Checkout with Crypto’ (“PayPal converts users' crypto holdings to fiat currency at checkout, with no additional transaction fees”), allowing its US clients the facility of being able to pay for goods at 24 million online merchants around the world using a range of crypto currencies. 

The amount of stablecoins being held in exchange wallets

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This interest in stablecoins is undoubtedly expanding. French company, Coinhouse, has recently launched a Euro-backed stablecoin, with PwC France and Maghreb providing monthly attestations of the backing. Of real significance is the biggest stablecoin, Tether (with over $41billion of assets), having finally given the market comfort that it is, indeed, backed by reserves. Expect to see other payment platforms such as ApplePay, GooglePay, Mastercard, PayPal Square and SamsungPay all follow Visa's lead and start incorporating stablecoins too. It would seem that stablecoins are, in effect, preparing the way for government issued CBDCs…..


The success of a mutual fund has, historically, relied on three facets - good performance, confidence/trust in the asset management firm, and strong and effective distribution -because, even if you are best fund manager in the world, if no one has heard of you then it is tough to attract assets to manage. Performance takes time and can be very fickle, as can be seen by the fact that active funds typically underperform the indices that they are supposed to beat. Furthermore, in the past, large banks and insurance companies have had a captive investor- base or have been able to afford to pay to advertise nationally and, in some cases, globally, which has helped them funnel assets into their funds. However, confidence and trust need to be earnt as, after all, why would investors give their savings to an organisation which they did not trust? The regulators recognise this, and one of their main objectives is to ensure that confidence in the financial system is maintained with only honest and trustworthy individuals and organisations being permitted to be regulated and sell financial products. Unsurprisingly, this is why there is a prodigious amount of attention being paid to Neil Woodford, the UK-based disgraced fund manager who is alleged to have ‘broken the rules’ and invested too much into unquoted equities. The fallout of Woodford’s actions continues since one of the UK’s biggest financial advisors and ‘darling’ of many of the UK’s national press, Hargreaves Lansdown, is now being sued.

The Woodford fiasco could have been averted had his fund been subject to the rigor and controls required for being on a Blockchain-powered platform, whereby making the fund’s holdings transparent for all to see. Smart contracts could have been employed to automatically inform the regulator, administrator, auditors, custodians, financial advisors, fund analysist and, most important of all, the investors. These parties could have been informed in real time that Woodford had continued to ignore the fund’s stated strategy and was holding too big a % of the fund in potentially illiquid, non-quoted equities. For a while PwC has been saying that Blockchain technology can help mutual funds improve the efficiency of the way that the back-office settlement processes are handled by:
reducing costs - fewer reconciliation errors
speeding up settlement - faster validation 
increasing resilience - no single point of failure
improving transparency - easier to monitor

There is arguably now a fourth criteria to determine the success in terms of the size of a mutual fund - Environmental Social corporate Governance (ESG). The ESG credential of a fund is a key criterion adopted by more and more investors when making investment decisions, whether it be the fund managers in their selection of assets, or by advisors (or investors) when purchasing a mutual fund. This helps to explain why companies that offer fund analysis for financial advisors such as RSMR, are seeing increased demand from investors for this type of information. Again, a report from PwC claims that 77% of institutional investors plan to stop purchasing non-ESG products and in this same report PwC states further that: “ESG fund assets will account for more than 50% of total European mutual fund assets by 2025 at an annual growth rate of 28.8%.” The added transparency that Blockchain technology offers can enable fund managers to assess the ESG credentials of an equity or a bond and, in turn, blockchains can be used to show investors’ ESG credentials for a fund and how these ESG scores have worsened or improved over time. As the Institutional Asset Manager publication pointed recently reported: “Capco says that new technologies could improve ESG ratings, noting the growing use of “impact tokens” on blockchain as a way of offering proof that a positive impact has been delivered and attributing it to a particular investment.”

When looking at mutual funds, Blockchain technology can help asset managers, regulators and investors bring greater transparency to what has been a complex investment surrounded by acronyms and technical language which many private investors struggle to understand (assuming the small print has been read). Possibly, and more importantly, the use of Blockchain technology can greatly assist in the on-going regulatory monitoring, thus helping investors decide whether to keep the fund or not. The use of smart contracts can identify anomalies and raise attention in real time meaning compliance managers are able to spend their time on managing risks and potential breaches, as opposed to checking data and records which may be days or weeks out of date. Blockchain technology also...

The Danish Red Cross has turned to using a Blockchain-based solution for its recently sponsored $3million Catastrophe Bond (CAT bond) which will provide aid in the event of a volcanic eruption. Replexus, the Guernsey-based firm that issued the bond, claims that its Blockchain-powered platform can reduce the cost for each bond issue by up to $400,000

Source: Scitechdaily

Should it happen, the bond has an automatic pay out once the plume of volcanic ashes reaches a certain height. Cedric Edmonds, CEO of Replexus, announced that, “the volcano CAT bond will be placed on an insurance-linked securities blockchain, making the transaction particularly cost-effective for the aid agency and enabling secondary market trading among ILS investors. Additional benefits of the blockchain structure include allowing investors to hold their own securities on their own computer server rather than using a custody bank, and therefore saving five to 10 basis points per annum on the value of the securities they hold.”

Meanwhile, worldwide leader in data protection, Thales, has identified six ways that Blockchain technology can potentially be used in the insurance sector:
by eliminating the need for centralised control and the additional costs
to allow for trust to be distributed between blockchain members
to allow for transactions to be digitally signed using an asset owner public/private key pair
once recorded, data in a block cannot be altered retroactively
for providing open, distributed ledgers to record transactions between two parties efficiently, in a verifiable and permanent way
transactions do not have to only be data - they can also be code or smart contracts
Indeed, according to Munichre, it “envisions a future state where new life insurance applications are submitted using blockchain…Another potential use of blockchain would be the transmission of any type of digital evidence for underwriting, including the use of electronic health records (EHR). When digital evidence is easier to incorporate into underwriting, we can expect future changes into other areas of pricing and product development. The combination of the Internet of Things (IoT) and Artificial Intelligence (AI) will lead to automation of insurance processes that will make our industry look very different in the near future”.
How Blockchain technology can be used in the insurance sector

Source: Digital Insurer
It is not simply the use of Blockchain technology to help create back office efficiencies or, in some cases, new types of products, as there are a growing number of brokers such as Paragon Brokers in London and underwriters such as Peninsula Underwriters (based in Gibraltar) that offer specialist insurance cover. Furthermore, there is an increasing demand for insurance from companies which are offering Blockchain-powered solutions and/or digital assets and are searching for professional indemnity or director and offices policies.
One of the key tools that the insurance sector needs in order to see greater adoption of Blockchain technology is a way to be able to collect premiums and pay claims using a digital currency. This need is being addressed, however, as a number of stablecoins (each backed by a variety of fiat currencies) have been, and are, in the process of being launched. The adoption of a Central Bank Digital Currency (CBDC) in the insurance sector is another use case for governments to be mindful of as a means of driving down costs and improving the efficiency in the insurance industry which, itself, is still largely ran on analogue-based systems. Nevertheless, it is an industry which is looking to embrace...