US Federal Regulator Says Banks Can Do Payments Using Stablecoins; Anchorage Becomes 1st Federally Chartered Digital Asset Bank & More

Bitcoin Bull market be like…

Hey, ?? fellow Blockchain & Cryptocurrency enthusiasts! Trust you are keeping all well and safe, and haven't lost your minds in quarantine ??

It's been a while since the last monthly recap. But I have some great news for you - this is the most interesting Month in Blockchain & Crypto thus far!

P.S. Before we dive into what happened in Blockchain & Cryptocurrency in December, check out my Connecting the Dots Newsletter, where you will get much more. Every Week????

January was quite a month when it comes to Blockchain & Cryptocurrency. First and foremost, the regulatory environment is getting more solid - OCC said banks can do payments using stablecoins while Anchorage became the 1st federally chartered digital asset bank. Second, big finance guys like Goldman might enter crypto custody very soon while Elon Musk (as always) was messing with crypto, and more super exciting developments and insights!

Without further ado, let us dive into what has happened in the new age of finance last month. Let’s connect the dots.

US Federal Regulator Says Banks Can Conduct Payments Using Stablecoins

Federally regulated banks can use stablecoins to conduct payments and other activities, according to the Office of the Comptroller of the Currency (OCC).

The first week of January started very strong. US federal banking regulator issued new guidance allowing US banks to use public blockchains and dollar stablecoins as a settlement infrastructure.

This means that banks can treat public blockchains as infrastructure similar to SWIFT, ACH, and FedWire, and stablecoins like USDC as an electronic store of value.

Additionally, it enables national banks and regulated financial institutions to run blockchain nodes and even become validators.

THE TAKEAWAY

It appears that the US government is betting on blockchain and crypto networks to be the foundation of future payments systems. And it makes sense. The public sector didn’t deliver much innovation and speed, which is crucial these days when it comes to finance and money. Therefore, the private sector is being trusted now with blockchain and stablecoins at the core.

Anchorage Becomes First Federally Chartered Digital Asset Bank

The OCC has given Anchorage Digital Bank National Association the green light to launch the first federally chartered digital asset bank.

The 2nd week of the month brought more good news from the regulatory perspective. Founded by two former Square employees in 2017, crypto custodian Anchorage has announced being the first-ever digital bank with a federal charter.

The Office of the Comptroller of the Currency led by the crypto-friendly Brian Brooks has granted the company conditional approval for a national trust charter, and the creation of Anchorage Digital Bank.

One must note that Anchorage is the first crypto company to receive a federal charter, though Kraken and Avanti have both received state charters for digital banking services in Wyoming. While the Wyoming charter enables both Kraken and Avanti to operate nationally, it comes with certain limitations. 

THE TAKEAWAY

Although it’s a conditional approval and it takes quite a bit of time to become an operational national bank, this is big news. In simple terms, the charter will allow traditional banks that don’t handle crypto to offer Anchorage’s services to clients hence broadening their offering and satisfying pro-crypto customers. Is more crypto demand just around the corner? ??

Bitcoin Spikes 20% after Elon Musk Adds #bitcoin to His Twitter Bio

Elon Musk-prompted BTC price surge has caused the liquidation of $387M in shorts.

The last week of January was all about Elon. Elon Musk, the richest man in the world worth over $200 billion, the man behind PayPal, Tesla, and SpaceX, didn't even say anything, just updated his Twitter bio...

That one-word bio caused the price of Bitcoin to spike to a 10-day high of $38,020 and sparked $387 million worth of short liquidations on major exchanges including Binance, Bitfinex, BitMEX, ByBit, Deribit, FTX, HuobiDM and OKEx. 

Friday’s short liquidation is the largest since January 2, when exchanges closed $575 million worth of shorts, according to data provider Coinalyze.

Since then, Bitcoin has dropped and at the point of writing is trading at close to $33,000.

THE TAKEAWAY

When it comes to influencing, Musk is the OG… In December, Tesla CEO tweeted “One word: Doge” sending the cryptocurrency to a 20% surge. Before that, his July tweet caused a 14% spike in Dogecoin price. Now you tell me about market manipulation… ??????

Quick Takes

• Digital asset services firm Ripio acquired BitcoinTrade, Brazil’s second-largest crypto exchange.
• Cryptocurrency exchange Bakkt, which is majority-owned by Intercontinental Exchange, is in advanced talks to go public via a merger with a special purpose acquisition company (SPAC).
• Morgan Stanley’s filling with an SEC on December 31 showed it had upped its stake in business intelligence firm by 455%.
• European Central Bank (ECB) president Christine Lagarde has advised that Bitcoin is ‘highly speculative’ and needs to be regulated.

??Money Moves??

• A new stablecoin-to-stablecoin automated market maker (AMM) called Saddle went live and announced that it has raised $4.3M.
• Cryptocurrency market maker Wintermute has raised $20M in a Series B.
• Maps.me, an offline mapping app that boasts 140 million users worldwide, has raised $50M in a funding round led by Alameda Research in an effort to build a decentralized finance ecosystem inside the map app.

Quote of the Month/??Food for Thought??

Blockchain is the answer? ??

Graph of the Month

A brilliant depiction of how Bitcoin is covered by the mass media.

January in Brief

Federally regulated banks can use stablecoins to conduct payments and other activities, according to the Office of the Comptroller of the Currency (OCC).

The OCC has given Anchorage Digital Bank National Association the green light to launch the first federally chartered digital asset bank.

Elon Musk-prompted BTC price surge has caused the liquidation of $387M in shorts.

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Continue reading by subscribing to Connecting the Dots Newsletter. You will receive fresh news about Blockchain & Cryptocurrency with hot takeaways every week.

P.S. You might enjoy my earlier pieces as well:

?? Making Sense of Tesla's $1.5B Bitcoin Buy

?? Robinhood: Robbing the Poor to Give to the Rich? A Story about the Fragility of the Brand

?? Cutting Through the Noise: Bitcoin Fundamentals & Why it Was Created

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading the company's expansion into Europe, I'm an active member of the FinTech community and a TechFin evangelist.

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