Fuzenomics Weekly #11

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Birds Eye View (vs Last 7 Days)

?? Overall Crypto Market Cap: $2.28 Trillion (-2.1%)

?? BTC Dominance: 53.09% (-0.8 PPT)

?? Price Snapshot:

?? Bitcoin: $61379 (-3.51%)

?? Ethereum: $3433 (-1.22%)

?? BNB: $575 (-1.17%)

?? Solana: $145 (+10.8%)

Stablecoin Issuers Now 18th Largest Holder of U.S. ???? Debt

Stablecoin issuers are quickly becoming a major source of demand for U.S. Treasury notes. ??

Data from Tagus Capital shows that issuers now hold over $120 billion in U.S. Treasury notes. This makes them the 18th largest holders of U.S. debt globally, surpassing countries with large current account surpluses like Germany ???? and South Korea. ????

Tether Ltd, which issues tether (USDT), holds about $91 billion in Treasuries. Circle, the issuer of USDC, holds short-term U.S. debt, including repos, worth $29 billion, according to Tagus Capital.

Interestingly, among the many crypto bills in the U.S. political scene, stablecoin legislation has come closest to passing through Congress. There is still hope that a new stablecoin law will be enacted before the elections this year. In April, key congressman Patrick McHenry was optimistic that the U.S. would have a stablecoin law by year-end.

However, efforts to include stablecoin regulation in an unrelated reauthorization bill failed. McHenry later stated, "we're so close on this, we just need a legislative calendar to get things across the finish line in the Senate."

The U.S. government debt went over $34 trillion early this year and is growing faster, about $1 trillion every 100 years. Interest payments on this debt, called debt-servicing costs, are expected to hit $892 billion in 2024. The rising debt has led the Treasury to increase bond supplies since 2023. ??

On Tuesday, the Congressional Budget Office stated that the national debt might reach $50 trillion by 2034, which would be 122 percent of the yearly economic output. ??

Earlier this year, CBO cautioned that unchecked debt could cause Liz-Truss-style market chaos, with a sharp drop in the U.S. dollar and political uncertainty. Crypto experts have echoed this, saying that debt worries and loss of confidence in Treasuries could boost the use of alternative assets like bitcoin and gold.

Will stablecoins keep on getting bigger in the next decade? Let us know your thoughts in the comments below! ??

South Korean ???? crypto firm Hashed Ventures expands to Abu Dhabi ???? : Bloomberg

South Korean crypto investment firm Hashed Ventures is moving into Abu Dhabi after forming a partnership with the city's tech ecosystem group, Hub 71.

Bloomberg reported on June 27 that Hashed CEO Simon Seo-Joon Kim said his firm will set up an office in the city and has started discussions with other major South Korean crypto firms to help them enter the growing United Arab Emirates crypto market.

The Seoul-based venture capital firm is one of the largest crypto companies to expand to the UAE's capital, which has been working hard to attract crypto talent.

Kim said he believes Korean crypto entrepreneurs are among the best globally, but a shrinking local population and other challenges in the country's domestic market make overseas locations like the UAE more appealing to crypto founders.

Kim added he was already assisting other South Korean companies with valuations over $1 billion to move to Abu Dhabi.

"UAE is a very special market for us because regulatory wise, Abu Dhabi has the most friendly and clear guidance for the Web3 startups," Kim said.

On Feb. 15, Hub 71 announced a digital asset initiative that will support blockchain and crypto projects coming to the city with more than $2 billion in capital.

At the time, Hub 71 said it would aim to provide crypto startups with top-notch infrastructure and a more progressive and clear regulatory environment domestically.

Hashed was founded in 2017 and manages around $700 million in assets worldwide.

The firm has invested in several notable crypto projects, including the play-to-earn game Axie Infinity, perpetual trading platform dYdX, and Bored Ape Yacht Club creator Yuga Labs.

What other South Korean firms would you like to see coming to Abu Dhabi? Let us know about them in the comments below! ??

Nigerian ???? SEC announces new rules, compliance program for digital assets

The Nigerian Securities and Exchange Commission (SEC) has revised its rules on Digital Asset Issuance, Offering Platforms, Exchange, and Custody.

In a public notice, the SEC detailed its plans to update these important regulations. The revision aims to improve the regulatory environment, making it more thorough and adaptable to the complexities of digital asset markets.

As part of this regulatory update, the SEC introduced a special compliance program called the Accelerated Regulatory Incubation Programme (ARIP). This program is tailored for virtual assets service providers (VASPs) and provides a way for these entities to meet the new regulatory standards. ?

According to the circular on the SEC's website, a special window has been set up for the onboarding process, allowing VASPs to join the ARIP.

The onboarding process is available through the SEC's ePortal. While this application process aims to enhance compliance, VASPs must complete it within 30 days from the circular date.

The SEC also issued a strict warning that it will take action against any non-compliant VASPs, enforcing regulatory measures against those that do not follow the directives in the circular.

The revision of the initial Rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody, issued in May 2022, follows the appointment of a new Director-General, Emomotimi Agama, at the SEC.

Meanwhile, the urgent need for the Nigerian government and regulators to responsibly regulate the virtual assets industry rather than enforcing clampdowns, crackdowns, and shutdowns has been strongly emphasized to reposition the Nigerian market.

In March, Nigeria's SEC proposed an amendment to the rules guiding platforms offering crypto services, suggesting a hike in the registration fee for crypto exchanges from 30 million naira ($18,620) to 150 million naira ($93,000).

Nigeria has become one of the fastest-growing crypto economies in recent years. In 2023, it was also the second-biggest economy in terms of crypto adoption. In August 2022, Nigeria was named the most crypto-obsessed country in the world by the number of Google searches for "cryptocurrency" or "buy crypto."

Do you think Nigeria is going to cross countries like Pakistan and Philippines soon in terms of crypto adoption? Let us know in the comments below! ??

Bitget launches $20M The Open Network (TON) Ecosystem Fund

The Open Network (TON), a blockchain and cryptocurrency system closely linked with the Telegram messenger, is getting another boost with a new fund supported by the Bitget crypto exchange. ??

Bitget is introducing a $20-million TON Ecosystem Fund in partnership with Singapore-based investment firm Foresight Ventures. ??

The $20-million TON Ecosystem Fund aims to back early-stage projects on TON amid the rise of TON-based applications and the native cryptocurrency, Toncoin (TON).

The fund is set to fully support project development within the TON ecosystem, including providing liquidity on the Bitget platform, the announcement states.

The funding initiative aims to leverage the rapid growth of TON in 2024. According to Delphi Digital, the TON ecosystem's expansion is driven by Telegram's monthly user base of 900 million, bringing more users to crypto daily. ??

By mid-June, the TON blockchain recorded more active addresses than Ethereum almost every day for nearly a month.

The total value locked (TVL) in the TON ecosystem has also grown more than fivefold over the past two months, reaching $600 million due to the influx of new projects and assets such as TON-based Tether (USDT), DeDust.io, STON.fi, and others.

Additionally, TON's native Toncoin cryptocurrency has been reaching all-time highs over the past few months, peaking at $8.17 on June 14. According to CoinGecko data, TON has returned more than 400% since the start of 2024.

With the new funding initiative, Bitget and Foresight Ventures ultimately aim to drive mass adoption of crypto, according to Bitget CEO Gracy Chen.

"We are pleased to see that the TON ecosystem is experiencing a positive feedback loop due to the growth in users, TVL, and token price," Chen said, adding:

"We believe in the potential of TON and its ability to create a more equitable future. Our Telegram Signal Bot is just one example of how we are empowering the community and enhancing the user experience."

The new TON Ecosystem Fund isn't the first Bitget effort to move into the fast-growing TON ecosystem.

On June 25, Bitget's non-custodial wallet, Bitget Wallet, launched a comprehensive support package for the TON network, aiming to connect decentralized applications within the TON ecosystem.

Previously, Bitget launched the Telegram Signal Bot, which was designed to streamline direct trading signals across trading communities.

Which other companies do you think need to partner up with TON and take it to the next level? Let us know in the comments below! ??

Asset tokenization to reach $2T by 2030: Mckinsey

Tokenized financial assets have had a slow start, but they are projected to reach a market size of about $2 trillion by 2030, according to analysts at McKinsey & Company.

"In an optimistic scenario, this value could double to around $4 trillion," the analysts stated on June 20, even though they are "less optimistic than before."

McKinsey's analysts noted there's been "visible progress" on tokenization, but widespread adoption is still distant as updating current financial infrastructure is "difficult, especially in a regulation-heavy industry like financial services."

The analysts predicted cash and deposits, bonds and exchange-traded notes (ETNs), mutual funds and exchange-traded funds (ETFs), loans, and securitization to achieve "significant adoption" first — meaning a $100 billion tokenized market cap by 2030. ??

McKinsey's analysts highlighted that tokenization faces the typical "cold start problem," where tokenized assets need users to have value.

The technology struggles with limited liquidity, which hinders tokenized issuance. Fear of losing market share can also result in tokenized assets with a "parallel issuance on legacy technology."

The analysts mentioned tokenization needs a use case where it provides a benefit over traditional finance systems.

"One example is the tokenization of bonds. Hardly a week passes without news of a new tokenized bond issuance," McKinsey's analysts wrote.

"While there are billions of dollars in tokenized bonds today, benefits over traditional issuance are minor, and secondary trading is still rare."

In their example, the analysts said the slow start could be improved by offering "greater mobility, faster settlement, and more liquidity."

McKinsey's analysts added early adopters who "ride the wave" of tokenization could gain a large market share and set standards, along with enhancing their reputation.

"But many more institutions are in 'wait and see' mode," they said.

The analysts noted that there are signs indicating when tokenization has reached a tipping point. These include blockchains capable of handling trillions in volume, seamless blockchain connectivity, and regulatory advancements providing clear guidelines on data access and security.

What do you think? Is Mckinsey's prediction overstated or are we really moving towards a HUGE tokenization market? Let us know in the comments below! ??

ORA raises $20M in funding for tokenizing AI models

Oracle protocol ORA has secured $20 million in funding from Polychian, HF0, and Hashkey Capital, among other backers. ?? The protocol is developing technology to tokenize artificial intelligence models on the blockchain.

The funds will be used to grow ORA's ecosystem, focusing on research and development of oracles and blockchain infrastructure, as announced on June 26. ??

The protocol is advancing its optimistic machine learning technology, or opML, which allows blockchain to perform AI model inference while adding verifiability and traceability. This means every AI interaction, including the AI model used, data inputs, and outcomes, is recorded and can be verified.

ORA is also launching a new mechanism called initial model offering (IMO), which enables the tokenization of AI models. Based on an ERC-20 token, this mechanism allows anyone who buys a token to own and share revenue generated by an AI model.

A fee is charged each time an AI model is used on the blockchain, and this fee is distributed to IMO tokenholders through the ERC-7641 Intrinsic RevShare Token, an ERC-20 extension created by the protocol.

ORA launched its onchain AI oracle on Optimism's OP mainnet in April. According to its team, their operational oracle is the only one capable of effectively handling any size AI model.

Using optimistic systems and zero-knowledge technology, it will offer secure and efficient onchain machine learning with privacy-preserving features, the company stated.

Developers are currently exploring several applications using ORA's technology, according to a spokesperson. Some use cases include processing insurance claims directly on the blockchain based on specific rules and identifying anomalies that deviate from normal patterns. Additionally, AI oracles are being developed to help in dispute resolutions and settlements by examining data to make neutral decisions.

Vanuatu expects to pass long-awaited crypto bill in September

The Pacific Island nation of Vanuatu plans to pass a long-awaited digital asset and service provider bill by September.

Vanuatu Financial Services Commission (VFSC) Commissioner Branan Karae announced at a digital assets symposium on June 27 that the bill is expected to be enacted during the first week of Parliament.

VFSC policy consultant Loretta Joseph, who spoke at the conference, said that the bill had been ready for years but faced delays due to multiple cabinet changes.

First introduced in 2020, the bill will set licensing and registration requirements for virtual asset service providers (VASPs) in the country, allowing them to operate legally within the island nation for the first time.

Joseph said the bill will help Vanuatu meet the standards set by the Financial Action Task Force (FATF). The FATF requires countries to assess and mitigate risks associated with crypto service providers and activities.

"The FATF is calling on countries to have legislation around virtual assets. No country in the world can ignore this," Joseph said.

Under the proposed act, five license classes will cover service providers that offer exchange between virtual assets and fiat currencies and those that provide crypto custody, among other functions.

The VFSC will monitor all VASPs to ensure they follow Anti-Money Laundering and Counter-Terrorism financing laws.

The regulator's Commissioner will have the power to veto licenses and can appoint an inspector to ensure licensed VASPs comply with the Act.

There will also be a "Fintech Sandbox Utility" — allowing a company seeking to become licensed a way to operate for 12 months without a license first.

The act requires any person carrying out VASP activities to be licensed, with penalties including fines of 25 million Vanuatu vatus ($207,700) or imprisonment for 15 years, while a corporation can be fined $2.1 million.

Joseph noted that many smaller nations, including Vanuatu, need ways to "bring economic prosperity" and that the bill could establish the country as an international financial center.

"These jurisdictions, which become offshore financial centers, play a very important role in economic traffic and moving money around," she said.

Vanuatu, located in the South Pacific Ocean and consisting of 13 principal islands, had a gross domestic product of $1.1 billion in 2022, according to the World Bank.

Its economy is primarily based on agriculture, with 80% of the population engaged in agricultural activities. It is also regarded as a tax haven and international financial center, according to the U.S. State Department.

The country is home to around 2,300 registered institutions offering offshore banking, legal, accounting, insurance, and trust services, among others.

Which other countries should explore this as well? Let us know in the comments below! ??

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