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A survey obtained by The Block from investment banking giant Goldman Sachs suggests that investors continue to be bullish about crypto. 

The New York-based bank, which operates a digital assets desk, surveyed 172 clients on their attitudes towards digital assets. 60% of those surveyed expect to increase their digital asset holdings in the next one to two years.

Of those expressing enthusiasm about crypto, 32% said that they expected to “significantly increase” their crypto holdings. 

Meanwhile, 51% of its clients reported exposure to crypto, compared to 40% from the previous year. About 55% could allocate up to 5% of total assets to crypto, according to the survey. 

DeFi, altcoins in focus 

The Goldman Sachs digital asset client survey also indicated that institutional investors are warming up to DeFi, altcoins and NFTs.

Whilst BTC and ETH continued to show strong interest — 22% each — 15% of respondents took an interest in altcoins, 14% in DeFi token exposure, and 9% in NFTs. Previously, a mere 16% took interest in coins other than the holy trinity of BTC, ETH, and stablecoins. 

The news comes after the digital assets trading unit at the Wall Street firm made its first-ever over-the-counter (OTC) crypto transaction with a bitcoin non-deliverable option on Monday.  Previously, the bank has also connected its clients to Galaxy Digital’s ETH fund along with investing actively in space — for instance, it participated in crypto bank Anchorage’s $350 million Series D last year. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Larry Fink, the Chairman and CEO of investment giant BlackRock, said that the war in Ukraine has the potential to accelerate digital currencies.

In a letter to investors on Thursday, Fink highlighted the implications of the Russian invasion of Ukraine for companies, countries and clients, also addressing the impact on energy sources.

“The war will prompt countries to re-evaluate their currency dependencies,” Fink said, adding that some were already looking to play a more active role in digital currencies even before the start of the war. As an example, he pointed to the US Federal Reserve’s study on the implications of a central bank digital currency

“A global digital payment system, thoughtfully designed, can enhance the settlement of international transactions while reducing the risk of money laundering and corruption,” as well as bring down cross-border transaction costs, Fink said.

“As we see increasing interest from our clients, BlackRock is studying digital currencies, stablecoins and the underlying technologies to understand how they can help us serve our clients,” he went on to write.

BlackRock has reportedly been planning to offer crypto trading to its investors. In December of 2020, Fink noted that growing interest in bitcoin could be a sign that the cryptocurrency would gain its place in the global financial system and last year the company bought bitcoin futures.

Earlier this year, BlackRock’s iShares filed for an exchange-traded fund to track the performance of an index composed of blockchain and crypto companies.

In the letter, Fink said that the war will intensify some of the trends already brought on by the pandemic when it comes to how nations are connected in the global economy.

“The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades,” he said.

The chairman argued that while the shift in energy sources across the globe due to the war will slow down progress towards zero net emissions in the short term, eventually it will accelerate the shift to greener energy sources. According to the Fink, the current crisis will push countries to come up with solutions that will secure their access to energy. For many that will mean investing in wind and solar power.

The head of the investment group also noted that BlackRock had joined other companies in freezing out Russia from their portfolios, although the company didn’t have significant investments in the country to begin with.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto lender Nexo is ramping up the level of client funds it allots to liquid staking DeFi protocols as it seeks to boost returns.

Nexo started employing liquid staking — which effectively leaves staked tokens free to use in other trades — about a year ago and has been steadily increasing its use since, DeFi strategist Kiril Nikolov said in an interview at the Avalanche Summit in Barcelona on Wednesday. 

Nexo is a centralized service that lets users lend out crypto and receive a return. It generates this yield in a few ways, including lending funds to institutions, trading tokens and staking tokens. Staking is a big part of its business and is used to generate the yield for most newer coins, such as solana, luna and avalanche. 

About a year ago, Nexo began experimenting with liquid staking as a way to not only generate more yield but to free up liquidity, particularly for ether. Since then, it has expanded its range of liquid staking platforms across different blockchains and increased the amount of capital allocated to such protocols. 

“It’s still a very low percentage” of Nexo’s business, Nikolov explained, although it “will increase as time goes by and ETH 2.0 comes closer.” 

What is liquid staking?

Liquid staking is a way of freeing up liquidity and generating extra yield on assets that are being staked. When you stake with a liquid staking provider, you receive a token that represents your staked assets. These tokens essentially have an equivalent value and you can use them in other DeFi protocols to generate further yield or for any purposes, such as trading. But you will need to return the tokens to unlock the original staked assets.

Nikolov explains the main problem lies with Ethereum. While Ethereum lets you stake tokens — and some $32 billion worth are being staked already — the network has not yet fully moved to proof of stake (POS) validation, meaning unstaking is impossible. Any funds staked on Ethereum are locked in until the POS switch – perhaps later this year.

Here’s an example of the dilemma. Say one of Nexo’s customers deposits ether (ETH) and Nexo stakes it on Ethereum to get the staking yield. If the customer wants to remove their funds from the platform, Nexo has to give them back their ether. Yet for Nexo, it’s still stuck on Ethereum.

“With Ethereum, you can never unstake until ETH 2.0 is ready. This is the obvious one where, if you need any kind of liquidity, then liquid staking is for you,” said Nikolov.

With liquid staking, you can sell the staked tokens on the open market at any time, rather than waiting to unlock them. Typically this will roughly reflect the underlying value of the staked assets, since anyone can arbitrage the difference. The biggest concern for Nexo is that sometimes there’s a premium for those looking to cash out immediately, something that would hurt its returns.

“So that’s again, a huge problem, right? When it comes to ETH, if you’re making 5% a year, a 1% discount is a very big concern,” he said.

A question of risk

Nexo primarily uses Lido Finance, the largest liquid staking provider on Ethereum (and other chains), which Nikolov described as battle tested. He added that Nexo tries out newer liquid staking protocols on other chains but starts with small sums and builds up over time as the protocol shows it’s safe.

Beyond liquid staking, Nexo has put its own funds to work in DeFi protocols but has largely avoided experimenting with client funds – simply due to the levels of risk involved.

In contrast, rival crypto lender Celsius has been more aggressive in the DeFi industry and has a dedicated DeFi team. Yet it lost around $50 million when DeFi protocol Badger DAO was exploited. At the time, Celsius declined to comment on what percentage of customer funds were held in DeFi protocols.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The total value locked (TVL) on Stargate, a multi-chain bridge on the LayerZero protocol, has risen to a couple of billions of dollars within a week of launch, according to data tracking site DeFi Llama.

Stargate lets users transfer assets between blockchain networks based on the messaging protocol LayerZero. It went live last week, following a public auction of its native token.

On 18 March, Stargate auctioned off 100 million stargate (STG) tokens and used the proceeds to create the bridge’s initial liquidity. In the auction, the team raised $25 million using a bonding curve (where the prices of tokens increase during the sale).

The auction was open to all investors who could buy stargate tokens at a price of $0.25 per tokens vested for up to a year. Currently, the token trades at $2.30, per CoinGecko data, almost ten times the initial price.

The $2 billion worth of liquidity is spread across tokens pools on several blockchains: Ethereum, Avalanche, Optimism, BNB Chain, Polygon, Arbitrum, Optimism and Fantom. Traders will have, in part, deposited their tokens with the platform to take advantage of the 20-25% yield it currently offers on stablecoins.

Stargate’s offering

The team has touted Stargate as the first to solve “the bridging trilemma” — a triple set of properties that, according to the team, makes any multichain bridge ideal for usage. 

Unlike other bridges, it does not rely on wrapping — a process where tokens have to be continuously minted and burned in order to move assets from one chain, and uses a ‘omni-chain token’ called stargate.  

Using the native token instead of trading wrapped tokens improves security, the team has claimed.  

“Native assets reduce the surface of attack vs traditional bridges by orders of magnitude and offer the ideal end user experience both at the application and consumer levels,” LayerZero Labs CEO Bryan Pellegrino told The Block.

Notably in the past, crypto bridges such as Multichain, Wormhole and Poly Network that use wrapping have become victims of multi-million dollar hacks.

Pellegrino added that relying on a native token to move funds may also help the bridge achieve ‘DeFi composability’ or how easily tokens can move from one DeFi application on one blockchain to another. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The UK’s top financial regulator on Thursday set out a number of concerns it believes crypto firms should be keeping in mind as the deadline approaches for inclusion on its AML cryptoasset register. 

In a mildly worded statement, the Financial Conduct Authority (FCA) highlighted the importance of being clear with customers, taking into account prudential and custody considerations and assessment of risks related to financial crime. 

The regulator said that it expects firms to check against its unregistered cryptoasset list before doing business. It also said that it would continue to monitor the use of cryptoassets in custody arrangements and “act where appropriate, supporting responsible innovation, while protecting consumers and ensuring market integrity.” 

The statement comes amid a backdrop of confusion about the future of a number of high-profile crypto providers in the UK. Both custody service Copper and neobanking giant Revolut are among the firms waiting to hear the outcome of their applications to be included on its register, as time marches on towards the deadline of March 31. 

Those not included on the register will have to cease crypto activity in the UK. 

Ahead of the deadline, firms have even begun to pull out of the UK market in favor of other jurisdictions. SBI-owned B2C2 Ltd., one of the crypto sector’s largest market makers, withdrew from the temporary register earlier this month — effectively ending its application.

Sources suggest B2C2 is far from the only crypto firm packing up its UK business, but as of yet, The Block hasn’t been able to confirm which other companies are following suit.

One such firm on the temporary register, which a source described but refused to name, is also said to have been left with “no choice but to withdraw” and look for alternative locations for its crypto activities.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Bank of England said the risks to financial stability from cryptocurrencies and DeFi are small, reflecting their limited size and interconnectedness with the wider financial system, as the UK central bank outlined an updated regulatory framework.

The bank’s Financial Policy Committee (FPC) will conduct regular risk assessments with a focus on monitoring risks to systemic financial institutions and core financial markets, risks to the ability to make payments, and impact on real economy balance sheets, according to a report published on Thursday.

While the BOE acknowledged risks to the UK financial system are currently limited, interest in cryptoassets is increasing, with YouGov polling suggesting 9% of people in the UK had bought cryptoassets as of January 2022, up from 5% a year earlier. 

The FPC has further recommended that crypto technology performing an equivalent economic function to one performed in the traditional financial sector should be brought under the umbrella of existing regulatory arrangements, with relevant regulatory perimeters being adapted as necessary to ensure an equivalent regulatory outcome.

Stablecoins — which the UK government has proposed in certain circumstances should come under regulatory supervision of the BOE — will be under particular scrutiny due to concern that widespread adoption could undermine public confidence in money and payments “if a systemic stablecoin used for payments fails to meet its obligations.”

An increase in popularity of stablecoins backed by central bank reserves could also cause “a substantial shift away from household wealth being held as deposits at commercial banks to central bank reserves.” 

“Such a shift could reduce the proportion of money in the economy that is backed by loans issued by commercial banks to the real economy,” stated the report.

 “This means banks would instead need to seek alternative sources of funding, which may be more expensive (for example, long-term wholesale funding) and could reduce the efficiency with which commercial banks extend credit.”

Nevertheless, the BOE reiterated it’s considering the case for issuing a Central Bank Digital Currency, a consultation for which will take place this year.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Bank for International Settlements (BIS) Innovation Hub partnered with central banks in Australia, Malaysia, Singapore and South Africa to create two prototypes for an international settlement platform using multiple central bank digital currencies (CBDCs). 

“This initial phase of the project successfully developed working prototypes and demonstrated practicable solutions, achieving its aim of proving that the concept of multi-CBDCs was technically viable,” the executive summary of the project report states.

The collaboration, called Project Dunbar, focuses on how a shared platform incorporating several CBDCs could help make cross-border payments “cheaper, faster and safer” as described in that report.

“Led by the Innovation Hub’s Singapore Centre, Project Dunbar proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform,” BIS said in a March 22 announcement about the project. “This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions.”

The report highlighted three key challenges when it comes to settling transactions through a common platform. The first has to do with questions of access to the CBDCs on the platform, such as whether banks should be able to access CBDCs from countries where they do not have a local presence. Another challenge was how to simplify cross-border payments while still respecting each country’s regulations. And finally, a third challenge was coming up with a governance structure that allowed countries to share their payment infrastructures while taking factors like national security into account. 

“Allowing entities to directly hold and transact in CBDCs from different jurisdictions could reduce the need for intermediaries in cross-border payments, but it would need to be done in a way that preserves the security and resilience of these payments,” Michele Bullock, assistant governor at the Reserve Bank of Australia, said in a statement. “While there is clearly more work to be done in thinking about the feasibility and design of multi-CBDC platforms, the findings from Project Dunbar provide a good platform for future work in this area.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Honduras’ central bank issued a statement Wednesday clarifying that bitcoin is not regulated as a currency there, following rumors that the Central American country would imminently announce moves to make cryptocurrency legal tender.

The announcement, posted to the central bank’s Twitter account, explains that bitcoin is not regulated in Honduras and is also not considered legal tender in the majority of other countries. It reminds the public that Honduras’ central bank is the only entity that can legally issue bills and coins within the country’s borders and that the Lempira is the national currency.

The announcement also references several previous communications from Honduras’ central bank regarding cryptocurrencies. These clarified that the central bank does not supervise or guarantee any transactions using cryptocurrencies as a payment method and that anyone making these transactions would be doing so at their own risk. 

Honduras’ central bank also said it would continue working on conceptual, technical and legal studies to determine the feasibility of issuing a central bank digital currency (CBDC). 

Twitter has been awash in speculation that Honduras’ president Xiomara Castro would make cryptocurrency legal tender this week, but The Block has been unable to find any evidence corroborating such an announcement as of press time.

Honduras is a small country, but its adoption of bitcoin as legal tender could be significant for geopolitical reasons. Neighboring El Salvador was the first country to bitcoin legal tender last September, and a few months later announced plans to create a new municipality known as “Bitcoin City.” That city would be located along the Gulf of Fonseca, a body of water that shares a border with Honduras and Nicaragua.

El Salvador had been expected to launch its first so-called bitcoin bond between March 15 – March 20, which would help support the construction of Bitcoin City. However, the project is now on hold without a revised launch date.

Honduras is not the only country whose financial authorities have issued an announcement after becoming the center of crypto news. Mexico’s central bank, banking regulator and finance ministry issued a statement last June reiterating that cryptocurrencies were not legal tender there, following a tweet from billionaire Ricardo Salinas Pliego saying that his bank was working to be the first in the country to accept bitcoin.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Meta Platforms, previously known as Facebook, has recently filed for eight trademark applications for its blue, two-loop logo, according to filings in the U.S. Patent and Trademark office.

The logo is described as “a geometric design consisting of two loops” on the applications, and the trademarks cover crypto tokens, blockchain software, virtual currency exchanges, currency trading, and digital, crypto, and virtual currencies. 

“These filings reflect the company’s strategy for moving into the metaverse. Meta clearly has significant plans for the virtual economy that will drive it,” said Mike Kondoudis, a trademark attorney, said in a statement that first broke the news.

Many brands have recently been filing for trademarks, possibly as a precautionary measure to avoid lawsuits like Nike v StockX. Traditional trademark applications that cover physical goods also don’t necessarily convert into the digital world. The Block recently covered how NFT and metaverse applications in the first 3 months of 2022 alone have almost surpassed the number filed in 2021 in total.  

Companies think “we could litigate this and it could cost hundreds of thousands of dollars, or we could file a trademark application. It’s the cost-effective response,” Kondoudis said in a previous interview with The Block. 

What these filings exactly mean for Meta is not clear based not the applications alone, but it could signal Meta’s plans to move into crypto and virtual products.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Krafton, a South Korean firm that specializes in developing and distributing video games, announced Wednesday that it signed a business deal with Solana Labs, the team building the Solana blockchain. 

Krafton and Solana Labs will collaborate on building games based on blockchain technology such as non-fungible tokens (NFTs), in addition to jointly marketing, designing and investing in projects. 

“Through this cooperation, Krafton will acquire the insight needed to accelerate its investment in and output of blockchain-based experiences,” the firm’s head of web3 roundtable Hyungchul Park said in a statement.

Krafton earned over $1.57 billion in revenue in 2021, the firm self-reported in February of this year. Of that total, a game distributed by Krafton called Player Unknown Battle Ground (PUBG) Mobile — a free-to-play battle royale-style game — earned the firm $1.18 billion in revenue.

Krafton joins other game developers such as Square Enix and Ubisoft to eye blockchain-based gaming opportunities, despite opposition from traditional gaming channels like Steam.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.