Crypto asset regulation once again took center stage in July.
The US District Court decision that the sale of Ripple’s XRP token on exchanges does not violate securities laws was an undeniable milestone in the legal treatment of crypto assets. However, this decision is not a silver bullet for regulatory clarity and uncertainty will remain in the US until a broad regulatory framework is put into place. Read our take on the decision here.
Fortunately, the US Congress made some progress on this front last month, including the House Financial Services Committee approving digital asset oversight legislation that would clarify what is and isn’t a security.
The regulatory environment wasn’t the only thing capturing our attention in July. Our research team shared their views on why the current combination of secular and cyclical factors is creating a “Lollapalooza” moment for crypto investors. And in his most recent Notes from the CIO, Samir Kerbage covers why a generational gap is so important to Ethereum’s future.
As always, our team is here to answer any questions you have about these markets.
-Your Partners at Hashdex
After a strong first semester, with the Nasdaq Crypto Index (NCI) rising 68.3%, the index recorded a small loss in July, dropping 3.4% for the month. The retreat was led by Bitcoin (BTC) and Ethereum (ETH), which fell 3.8% and 3.2%, respectively. The month had little oscillation, with BTC spending most of the month between $30,000 and $31,000 until the 24th when, amid tensions caused by the FOMC and rumors of new developments in the Binance case, the price dropped to the range between $29,000 and $29,500.
While BTC and ETH didn't show much action, the same cannot be said for some of the so-called altcoins. Ripple (XRP) obtained an important (partial) victory over the SEC in court, which has set a precedent for determining whether crypto assets are securities or not. As a result, XRP closed the month up over 50%, helping the Vinter Hashdex Risk Parity Momentum Index rise 6.8%.
The crypto assets that had been mentioned in the SEC's lawsuits against Binance and Coinbase also reacted to the judicial decision. Solana (SOL), Cardano (ADA), and Polygon (MATIC) rose 24.6%, 9.3%, and 6.4%, respectively, pushing the CF Smart Contract Platforms Index up by 6.2%. The CF Digital Culture Composite Index also saw an increase of 2.5%, but the standout among the sectoral indices was the CF DeFi Composite Index, which rose by 12.8%, driven by Uniswap (26.6%) and Maker (46.4%). In addition to Uniswap, other constituents of the NCI that also stood out were Stellar Lumens (37.4%) and Chainlink (20.8%).
In summary, July was a month in which smaller assets that had generally lagged behind BTC and ETH in the first semester regained some lost ground. The month was a good example of how dynamic the crypto asset market is, and we remain optimistic about the outlook for this asset class into the second half of 2023.
Landmark crypto bill approved by US congressional committee
The US House Financial Services Committee approved digital asset oversight legislation that would clarify what is and isn’t a security, marking an important step toward regulatory clarity as Coinbase and major players face ongoing legal uncertainty from US regulators.
Amazon expands blockchain services, Google goes deeper on Web3 and NFTs
Amazon expanded its Amazon Managed Blockchain (AMB) services and Google Cloud is plotting more Web3-focused products and Google’s Play Store will integrate digital assets like NFTs into their apps and games, signs of the increasing integration of crypto into traditional businesses.
Société Générale obtains France's first license for crypto custody and brokerage
The bank is the first European institution to receive this license, an action that supports our belief that institutions are in crypto to stay.
Curve Finance hack exposes potential DeFi vulnerabilities
The exploit of the decentralized exchange involved vulnerabilities present in some of its liquidity pools and is one example of smart contract risk, raising questions around the robustness of the DeFi protocol and fears of contagion in other decentralized applications.
Chainlink update will help bridge blockchains with traditional markets
The update reinforces the current interoperability trend in crypto, strengthens the case for a diversified crypto allocation, and may help facilitate banks' exposure to crypto.
Chile to integrate Nasdaq’s digital assets capabilities
Chile plans to integrate Nasdaq’s digital assets capabilities to support the issuance, registration, and settlement of digital securities, and is looking into the use of smart contracts to automate bond interest payments and other life cycle events.
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