The big boys want crypto

Good morning! Welcome to The Daily Moon. This year is almost over. And man, what a rollercoaster it has been. But crypto got mainstream and one of the ways it took that step into the light was with institutional adoption. Let’s take a look.  

Everyone Loves Crypto 

Name any global brand and we’ll find you a crypto connection. Citigroup, Goldman Sachs, JP Morgan, KPMG, Morgan Stanley, Tesla (lol). Institutions have lapped up crypto for their customers and to diversify their investments. Despite grey areas around regulation, crypto has gone mainstream. 

What’s fascinating is that institutional adoption has seen rapid growth over the past year. It’s not just Bitcoin purchases, Ethereum and other crypto blockchains are used for daily business activities as well. 

What’s hot?

From international payments, cross-border trade, contract execution, and decentralised finance, institutions have found multiple use cases for crypto. 

Take JP Morgan for instance. It’s among the most significant corporate adopters of crypto. Not only does it have a dedicated blockchain-led business unit, but the I-bank also has plans to offer crypto wallet services. That’s not all. Recently, JP Morgan completed its first DeFi trade on Polygon. 

Among corporations, there are three areas where crypto has found a space: 

• Investment: Crypto tokens such as Bitcoin offer the potential to diversify from traditional assets. That’s the reason companies have invested, both for themselves and for their clients. Here are some prominent crypto moves: 

  • MicroStrategy is the largest institutional holder of Bitcoin. It holds ~129,700 BTC worth ~$2.3 billion. 

  • Fidelity allows its clients to invest in BTC via their 401(k) retirement accounts. 

  • DBS Bank has launched crypto trading for select clients in Singapore. 

  • Morgan Stanley permits clients to buy Bitcoin. 

• Trade: Crypto networks have become tools for tokenised trading. In simple terms, this involves the conversion of bonds or other financial documents into digital ledgers stored on the blockchain. Here’s what some institutions have done: 

  • HSBC has set up a digital ledger technology (DLT) based bond tokenisation platform. 

  • Goldman Sachs helped the European Investment Bank issue a ~$104 million digital bond on the blockchain.

• Storage: Keeping crypto safe can be challenging, especially for those dealing in millions. Crypto custodians have come in to securely hold the token. Among them: 

  • BNP Paribas is keen to provide crypto custody services.

  • Citibank has partnered with Metaco to offer crypto safekeeping. 

  • Societe Generale has a subsidiary for crypto custody products. 

Apart from these, brands such as Microsoft, Twitch, Whole Foods, and Virgin Airlines accept Bitcoin payments.  

What’s not working?

We get crypto can be volatile. But short-term backers just make it worse. 

Elon Musk, for instance, has gone back and forth on Bitcoin. His electric vehicle company, Tesla, first allowed BTC payments, then reversed the decision in less than two months. He claims he’ll reopen the window if miners use renewable energy. 

While crypto curiosity has increased among companies, the uncertainty around its legality can be tricky. Many have tried a middle ground, but a private blockchain without a crypto network is tough to sustain. 

Meta, for instance, entered and exited crypto abruptly. It sold its crypto project Diem Association to Silvergate Capital. The social media company’s crypto wallet Novi has been shut down too.  

IBM faced something similar. Blockchain trade finance platform we.trade had to cease operations because it wasn’t able to get funding. Another project, TradeLens, backed by IBM and Maersk, will wind down in 2023 because it didn’t find many takers. 

Without crypto to power the transactions, a blockchain can only do that much. If institutions bring crypto along, banks are reluctant because of hazy regulations. It’s a catch-22 situation for now.

But, the big brands are knee-deep into crypto and they ain’t pulling back. We’re hoping that can be the nudge regulators need. 

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Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.