Currently Relevant
October 12, 2023

Currently Relevant: Edition 14

This week: MiCA paves the way for expansion of the European digital asset sector; Meta’s metaverse gets some legs; JP Morgan fires the starting pistol on institutional asset tokenization.

Welcome to Currently Relevant, THE RELEVANCE HOUSE’s regular roundup curating the best of news, views, and stories from the blockchain, crypto, and Web3 space.  

This week: MiCA paves the way for expansion of the European digital asset sector; Meta’s metaverse gets some legs; JP Morgan fires the starting pistol on institutional asset tokenization.

What’s currently relevant in THE RELEVANCE HOUSE

Short notice, but if you happen to be around in Vaduz this afternoon (October 12th) then come and join CCA Token Summit 2023! Our Co-founder German will be delivering a keynote with some uncomfortable but necessary branding truths for Web3 founders – find out more on this LinkedIn post.

Also, a reminder that German will also be speaking at the HeroFest event in Bern TOMORROW – October 13th – for more details, please check out this LinkedIn post. No spoilers about his costume…

The Big Picture

In each edition, THE RELEVANCE HOUSE founder German Ramirez brings his marketing and strategy insights to the biggest stories from the world of Web3, delivered with a pinch of spice.

Banking on Europe

While the never-ending drama of the SBF trial dominates headlines, I’ve been on the lookout for other stories that have consequences for our sector. Not that anyone would know it from the crypto headlines, but the outlook for the regulated crypto sector in Europe is looking increasingly sunny.

Last week, Kraken announced that it will acquire Dutch crypto broker Coin Meester as part of its European expansion plans. In addition to the Dutch acquisition, the company has also already secured VASP registrations in Spain, Ireland, and Italy, and we can expect more to follow.

This week, the CEO of longest-running crypto exchange Bitstamp told Coindesk that the company was in talks with no fewer than three household-name European banks regarding its white-label exchange-as-a-service offering. While he didn’t name the banks, he did say that he believed they would be in a position to make announcements by early next year.

All of this comes against the backdrop of the increasing regulatory divide between the US, which has traditionally held a substantial share of value and innovation in the Web3 space, and the rest of the world – as noted in my last newsletter. What we are seeing is an increasing consolidation of the crypto exchange markets into Europe, Canada, and other crypto-friendly jurisdictions away from the US.

While all this European growth and expansion offers some desperately-needed relief in the current market, there is a challenge ahead for legacy Web3 firms. With banks and other large fintech providers such as PayPal lengthening their inroads into the digital asset space, it will become increasingly difficult for crypto exchanges to stand out from the competition.

In the unregulated crypto wild west of the old days, it was enough for crypto exchanges to pay for a sports team sponsorship or onboard a celebrity influencer to get eyeballs on their logo. But in the newly regulated, potentially less global market, brands will need to stand out to be seen. And not just from one another – from household name financial institutions that already have a foot in the door with their established customer base who know what they stand for.

In this new world, crypto exchanges will need to have a clear message about what they stand for, and the reality is that today: they don’t. Based on the proprietary branding research recently published by THE RELEVANCE HOUSE, crypto exchanges have plenty of work to do when it comes to establishing consistent narratives about their own offering and values. The 19-page report is available as a free download, but we can also offer an exclusive, extended 50-page version that dives deep into the specific narratives of each brand in scope, identifying strengths and weaknesses. If this is of interest to your company, or anyone in your network, please PM me.

So while the good news about European expansion continues to roll in, crypto brands must make sure that they are ready to stand up to the competition when it comes to attracting and onboarding users in these new markets.

Funding news

  • It won’t come as a surprise to industry insiders, but Messari data shows that crypto VC funding has fallen to levels last seen in Q4 2020, the end of the last bear market. Interestingly, Messari noted that while infrastructure investments have proven to be an attractive target, VC funding focus is likely to shift more towards user-facing applications in order to ensure that infrastructure projects can deliver on their promise.
  • However, the slump doesn’t mean that there aren’t still pockets of VC activity happening across the sector. Hong Kong-based VC firm CMCC Global has just completed a $100 million financing round for its newly launched Titan Fund focused on early-stage Asian Web3 startups.
  • The Web3 Foundation, the main backer of the Polkadot blockchain, has also announced a $22 million fund dedicated to developing the Polkadot ecosystem.
  • Crypto prime brokerage firm Membrane Labs has raised $20 million in Series A funding from investors including Brevan Howard, Jane Street, and Jump Crypto.

What’s new in Web3?

  • The Lex Fridman Podcast welcomed Meta CEO Mark Zuckerberg for an episode with a twist – the hour-long conversation took place entirely in Meta’s newly-revamped metaverse. The pair showcased photorealistic avatars, which also featured the most notable missing feature from Zuckerberg’s previous avatar demos – legs.
  • Nike, ever the trailblazer when it comes to Web3 branding innovations, has announced it will drop the first physical sneaker as part of its .SWOOSH Web3 platform later this month. A full circle from its initial digital sneakers, the TINAJ shoe will only be available to .SWOOSH members who have previously opened one of the platform’s Our Force 1 virtual boxes.
  • Following stablecoins and a MetaMask integration, PayPal is reaching even further into the Web3 sector with a new patent application for an NFT marketplace. The firm evidently foresees it being used for more than digital media, with the application making reference to property deeds, event tickets, and legal documents.  
  • Scientific journal Nature has proven to be an unlikely endorser of Web3. An editorial for the journal’s biotechnology section explains how DAOs (decentralized autonomous organizations) could be used to convene scientific communities and funding around niche research areas that would otherwise go unexplored.

Focus on fintech and digital assets

  • JPMorgan has executed its first blockchain-based collateral settlement transaction on the blockchain, involving Blackrock and Barclays bank. Blackrock used JPMorgan’s Onyx blockchain (based on Ethereum) and the bank’s Tokenized Collateral Network (TCN) to tokenize shares in a money market fund. Barclays then took custody of the tokenized shares as collateral in an over-the-counter derivatives trade.
  • Hardware wallet maker Trezor has released its first new product since 2018 as a celebration of its ten-year anniversary. The Trezor Safe 3 is also being released with the Trezor Keep Metal, a physical private key storage solution.
  • The outbreak of war in Israel has led crypto firms, including Fireblocks and the Israel Blockchain Association, to launch a crypto fund to raise aid for victim support. Crypto Aid Israel will host a multi-sig wallet to collect funds in several cryptos and stablecoins.

Inside the infrastructure

  • Bitcoin’s Lightning Network, which has come in for criticism for being underutilized in the past, has seen growth of over 1,200% in the last two years, according to a report. The report suggests that in August alone, Lightning Network handled over 6.6 million transactions.
  • In other Bitcoin network news, a developer from Swiss firm ZeroSync has created excitement with a paper that suggests how Ethereum-type smart contracts could be used on the Bitcoin blockchain. The move would be a further enhancement of Bitcoin’s functionality following the launch of Ordinals earlier this year.
  • Deutsche Telekom has furthered its support for the blockchain ecosystem with an announcement that it will become an indexer on The GRaph network, meaning it will organize and serve blockchain data to users. Deutsche Telekom also serves as a validator on several networks, including Ethereum, Polygon, Celer, and others.

Weird crypto story of the week

The trial of onetime exchange mogul Sam Bankman-Fried has been dominating the headlines with every salacious detail of the trial grabbing tweets and column inches. Among the many bizarre tidbits are Caroline Ellison’s “list of things Sam is freaking out about” (Binance and Snapchat, in case you’re wondering) and the fact that SBF was convinced his hair was netting him higher bonuses.

But the best one has to be Ellison’s testimony that SBF told her he had a 5% chance of becoming the President of the United States. We can only imagine her reaction.

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