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This week in crypto: Mar 16-22

USDC market cap breaks $10 billion, Visa outlines crypto strategy, and investors hope for Bitcoin ETFs. All that and more in our latest report.

Published on March 22, 2021

The big picture

Billionaire investor Howard Marks, a longtime Bitcoin skeptic, has a new perspective on the digital currency. Citing Bitcoin’s fixed supply, Marks now seems to support the cryptocurrency’s core value proposition. "I was very dismissive of it because it doesn’t have intrinsic value," he said, "But there are a lot of things that people want and value highly which have no intrinsic value. The supply is fixed by the software ... so it can’t expand much, unlike the dollar which can be printed in infinite amounts. And the demand is growing because more people are interested in it." In other news:

  • Visa CEO Al Kelly outlined the credit-card giant’s Bitcoin strategy in a recent podcast: “We’re trying to do two things. One is enable the purchase of bitcoin on Visa credentials. And secondly, working with bitcoin wallets to allow the bitcoin to be translated into a fiat currency and therefore immediately be able to be used at any of the 70 million places around the world where Visa is accepted.”

  • Responding to customer demand, Morgan Stanley has become the first major U.S. bank to offer its clients access to bitcoin funds. The offering is only for “high-net worth individuals.” 

  • In a separate note to investors, Morgan Stanley analysts say a “threshold is being reached” for crypto as an investable asset class, citing such factors like growing investor interest, deepening liquidity, and increasing regulatory clarity.

  • Joining the chorus of institutional interest, Fidelity Digital Assets, a subsidiary of one of the world’s largest financial firms, reports significant demand for crypto among institutions. Fidelity reports that its crypto unit “experienced 4x growth during 2020 and is currently working with hedge funds, corporates, family offices, and registered investment advisers.”

One of the world’s oldest banks, BNY Mellon, invested in Bitcoin custodian Fireblocks. In February, Mellon launched a digital assets unit which is starting to provide accounting and administration services for a Bitcoin ETF (or exchange-traded fund) in Canada.

Chinese app maker increases crypto holdings to nearly $100 million

Over the last year, a growing number of publicly traded companies in the U.S. have begun adding Bitcoin to their corporate treasuries  — including Microstrategy, Tesla, and Square. But the trend isn’t just limited to the U.S. — or to Bitcoin. Earlier this month, Meitu, a Chinese developer of beauty apps listed on the Hong Kong stock exchange, announced a $40 million investment. This week, the company added another $49 million worth of Bitcoin and Ethereum to its reserves.

USD Coin breaks $10 billion

One of the most popular stablecoins is USD Coin (or USDC) — which has seen a huge increase in investment since the beginning of 2021 According to a report by Centre, the consortium that backs USDC (Coinbase is a founding member), the amount of USDC in circulation more than doubled in the first quarter of the year: “So far, more than $534 billion has changed hands using USDC.”

Canadian, Latin American Bitcoin ETFs raise US investor hopes

Bitcoin ETFs allow investors to access to crypto via normal brokerages and without having to hold it themselves — think of them as being kind of like the crypto equivalent of a mutual fund. Four US ETF applications are pending, but to date the SEC has declined all such applications. Successful Bitcoin ETFs in other parts of the Americas, however, are flourishing — and have raised investors’ hopes that a US-based fund will follow.  

This week, Brazil (Latin America’s largest economy) approved a Bitcoin ETF. The move followed the successful launch of the first Bitcoin ETF in Canada last month. Investors have already poured more than $1 billion into the fund, and two other Canadian funds have emerged in recent weeks.

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