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Global Central Banks Launch Project Agorá to Explore Tokenization in Financial Systems
The Bank for International Settlements (BIS), representing 63 global central banks, is pioneering Project Agorá to explore the potential of tokenization in enhancing financial systems' efficiency. This initiative aims to digitize real-world assets and integrate tokenized commercial bank deposits with tokenized wholesale central bank money, leveraging smart contracts for automatic transactions. Project Agorá involves monetary authorities from the U.K., Japan, South Korea, Mexico, Switzerland, New York, and Europe, alongside private financial entities. This collaborative effort seeks to develop a programmable financial platform that could streamline the monetary system, retaining its two-tier structure. The project underscores the growing interest in tokenization, as seen in the U.K. government's encouragement for local firms and HSBC's venture into tokenized gold in Hong Kong. Project Agorá's outcomes could lead to a more interconnected and efficient payment infrastructure, with plans to involve more private financial institutions actively.
SEC Requests Public Comments on Grayscale, Bitwise, and Fidelity's Spot Ethereum ETF Proposals
The SEC is inviting public feedback on proposed spot Ether ETFs from Fidelity, Grayscale, and Bitwise, with comments due in 21 days. This request for input signals ongoing regulatory considerations for ether-based investment products but also reflects growing skepticism regarding the SEC's readiness to approve such ETFs. Bloomberg analysts Eric Balchunas and James Seyffart noted a significant decrease in the likelihood of a spot Ethereum ETF approval by May, highlighting the uncertain regulatory environment and the impact of the SEC's silence on the prospects for these ETFs.
Relm Insurance Launches Comprehensive Crypto Coverage Suite Amid Growing Industry Need
Relm Insurance, regulated by the Bermuda Monetary Authority, has introduced a comprehensive suite of insurance products tailored to address various cryptocurrency-related risks, ranging from wallet security to investment management within the digital asset sector. This suite includes cyber coverage, crime coverage for hot wallets, coverage for investment managers of digital asset funds, and specialized coverage like reimbursement for Ethereum staking losses due to inactivity. Highlighting the traditionally limited availability of adequate crypto insurance, focused mainly on commercial crime and high-value item storage, Relm's offering signifies a potential shift towards greater insurance capacity for the crypto industry. Marsh's recent announcement of an $850 million cold storage and custody solution insurance product parallels this trend. Relm, which also insures emerging sectors like cannabis and psychedelics, aims to fill gaps in crypto insurance by providing coverage for exchanges, payment platforms, custodians, software developers, and DAO foundations, addressing complex exposures with tailored insurance solutions.
Trading Desk Insights
Bitcoin has been experiencing a phase of sideways price action since the equity markets wrapped up yesterday. The release of disappointing ISM services PMI figures seemed to inject some volatility, propelling BTC to climb past the session's highs. This movement suggests we might be stabilizing at a short-term floor, especially as the price nudges closer to the 50-day moving average and touches the lower boundary of a symmetrical triangle formation on the daily chart. Also, the "kimchi premium" spiked, reaching a peak of 10.88% on March 16th, as per Cryptoquant, marking its highest surge since May 2021.
The upcoming release of significant jobs data on Friday holds the potential to sway market sentiment. Outperforming the job estimates could place downward pressure on risk assets at large, whereas underperforming could buoy market prices.
On the ETF front, Tuesday witnessed a net inflow of $40.3 million despite Grayscale and Ark registering outflows of $81.9 million and $87.5 million, respectively. Reflecting on the month's activity, Bitcoin ETFs saw a substantial increase in trading volume in March, reaching $111 billion—nearly threefold the volume seen in February and January, predominantly led by BlackRock, Grayscale, and Fidelity.
In the equities market, futures dipped on Wednesday, underscoring the challenges Wall Street faces as it enters Q2 of 2024. The release of the ADP jobs report earlier today, which indicated a stronger-than-anticipated growth in private payrolls for March, underscores the economy's durability. This development has pushed bond yields up, reflecting growing investor apprehension about the Federal Reserve's interest rate trajectory.
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Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
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Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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