The Crypto Stories You Need to Know This Week (#166 - 28 Jan 2023) - Crypto Users Rise, Crypto Devs Data, BTC ETF Fees, Nexo Strikes Back

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1. Global Crypto Users Pass Half Billion Mark

A new report by Crypto.com shows that global cryptocurrency owners increased 34% in 2023, rising from 432 million to 580 million users globally.?

Bitcoin and Ethereum owners grew in the past year by 33% and 39% respectively.

This is important as despite what you may be hearing in the media, grassroots ownership and usage of crypto is continuously growing, especially in emerging markets.

The actual report with all the details is worth a read and is available here.

2. 3/4 Of Crypto Developers Are Now Outside of North America

Crypto developer numbers fell 24% in 2024, but 3/4 of crypto developers are now outside North America, and 1/3 are multi-chain, according to Electric Capital, which just published its latest crypto developer report.?

Here are 3 key highlights from the report:

1. While developers overall are down 24%, the most valuable segment of developers (2+ year tenure who contribute the most code) continues to steadily grow.

In addition, developers who have been in crypto for 2+ years are at an all-time high after growing at 52% annualized for the past 5 years.

2. Crypto is now clearly Multi-chain.

30% of developers now support more than one chain, up 10x from 3% in 2015.

In addition, developers who support 3+ chains grew to 17% of all developers in 2023, an all-time high.

3. Crypto is global.?

The US continues to lose developer share with 72% of developers now outside of North America.

The US has lost -14% of developer share since 2018 and is now only 26% of crypto developers.

South Asia, Latin America, Eastern Europe, Western Africa, and Southern Europe collectively grew developer share by +20% since 2018.

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3. 1inch DAO Votes To Hire Lawyers?

The 1inch DAO voted to hire permanent legal counsel to help it navigate the challenges associated with decentralization.?

To my knowledge, this is the first time a decentralized autonomous organization (DAO) has voted to hire legal counsel.

The token holders of the DAO conducted the vote.?

Interestingly, DAOs have yet to be recognized as legal entities in most jurisdictions (except in some U.S. states like Wyoming).

Still, a US court last year determined that a DAO is “a person” under the Commodity Exchange Act.

In the coming months, I expect to see some forward-looking jurisdictions that try to provide legal clarity around DAOs.??

4. European Bitcoin Access Products Reduce Fees Post Bitcoin ETF?

Whilst the physical Bitcoin ETF approval in the U.S. got (rightly so) all the media attention, many forget that other Bitcoin access products have existed for some time, from listed Bitcoin ETFs in Canada to various ETPs (exchange-traded products) across Europe.?

But the launch of the U.S. Bitcoin ETF is creating massive competition and driving down prices, especially as these U.S. listed ETFs have low fees (from 0.20-0.50% on average).?

The latest example is Coinshares, which is reducing the fees of its ETP in Europe from 0.98% to 0.35%.

This is a phenomenon we should expect to see globally.

In Canada, for example, most investors can easily access U.S. markets and buy the U.S.-listed Bitcoin ETFs instead of the Canadian (more expensive) ones.?

These lower fees are generally positive for investors. However, it brings into question how sustainable these Bitcoin access products are in the long run, as it will likely be a market where 2-3 players will have the majority of the AuM.?

Definitely a space to follow!

5. Nexo Seeking $3 Billion In Damages From Bulgaria

Crypto lender Nexo is seeking $3 billion in damages from Bulgaria stemming from a dropped investigation.

Nexo has accused the country of "wrongful and politically motivated actions...involving unjustified and oppressive criminal investigations."

The Bulgarian Prosecutor’s Office launched a very publicized investigation against Nexo in January 2023, alleging tax offenses, banking without a license, and computer fraud, with a focus on four of its executives.?

However, in December 2023, prosecutors closed their investigation into Nexo because there was no evidence of criminal activity.

Nexo claims that the investigations damaged its brand and reputation and led it to lose specific business opportunities, such as a potential initial public offering (IPO) in the U.S.

This is a significant development, especially considering the timeline.

When this investigation was made public in January 2023, it was in the weeks following FTX, and many regulatory or law enforcement agencies tried to use this opportunity to attack the crypto industry, which was very vulnerable then.

And this was a global phenomenon.

As I have mentioned numerous times, if you were a politician or a prosecutor in Q1 2023, you would be an idiot not to go after the crypto industry as it was such an easy target and great for personal promotion.?

The fact that this investigation had to be dropped shows that there was perhaps no merit to this investigation and a potential breach of due process.

I am happy that Nexo took this action, and this will be an important development to follow.?

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Henri Arslanian

*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with. This newsletter is for educational purposes only, and none of its content should be construed as investment or financial advice of any kind.?

Who is Henri?

Henri Arslanian is the co-founder and managing partner of Nine Blocks Capital Management, an institutional-grade hedge fund focused exclusively on digital assets, with a market-neutral crypto fund focused on generating alpha from inefficiencies in crypto markets using relative value, arbitrage, and quantitative strategies.?

Henri was previously a partner and global crypto leader at PwC. In that role, he advised many of the world’s leading crypto exchanges, investors, financial institutions, and tech firms on their crypto initiatives and numerous governments, regulators, and central banks on crypto regulatory and policy matters.

With over 500,000 LinkedIn followers, Henri is a TEDx and global keynote speaker, a best-selling published author, and is regularly featured in global media, including Bloomberg, CNBC, CNN, BBC, The Wall Street Journal, The Economist, and the Financial Times.?

Henri was named by LinkedIn as one of the 2022 global Top Voices in Finance and is the host of the CryptoCapsules? social media video series as well as The Future of Money podcast and newsletter.