Around the block – Monthly cryptocurrency and blockchain-related highlights from the Truist Investment Advisory Group

Special Commentary

April 19, 2022

Off the block

Cryptocurrencies generated impressive double digit returns in March adding to the gains from February. This month we touch on three key topics:

Smart contracts led all sectors in March with outsized gains enjoyed by Solana, Cardano and Ethereum. Smart contracts are coded software protocols upon which crypto applications reside. They are analogous to iOS or Android operating systems used by Apple and Samsung smart phones. Smart contracts are the rails upon which crypto apps and commercial supply chain contracts, used by firms like Walmart and Honeywell, are executed. In an important milestone, Ethereum, the largest smart contract provider, will soon undergo its largest makeover, (the “merge”). This is expected to transform the scalability and environmental soundness of its protocol. All eyes will be on its execution.

On March 9th, President Biden signed his Executive Order on Ensuring Responsible Development of Digital Assets. The order outlines a “whole of government” approach to establishing a national digital asset regulatory framework addressing: investor protection, financial stability, illicit finance, U.S. competitiveness, financial inclusion, and responsible innovation. Respective government agencies were tasked with developing frameworks over the next several months.

The U.S. Treasury’s OFAC office warned that a North Korean state-sponsored group known as the Lazarus Group was tied to a recent $625 million cryptocurrency theft by stealing cryptographic keys and breaching the Axie Infinity digital game. This hack exemplifies the urgency to craft comprehensive digital asset regulation.

Industry developments

  • Exxon is running a pilot project with Crusoe Energy in the Bakken shale basin utilizing excess natural gas “flare” from oil wells to power Bitcoin mining servers.
  • Fintech leader FIS announced a partnership with Fireblocks to provide enterprise-grade digital asset investing, wallet technology, and decentralized finance solutions to its capital markets clients.
  • AMC Theatres announces their mobile app has added Dogecoin and Shiba Inu to its roster of cryptocurrencies it will accept for payments.
  • Mastercard is partnering with crypto lender Nexo to launch the first “crypto backed” payment card allowing users to pledge their crypto as collateral. 

Regulatory developments

  • Senator Pat Toomey (PA) released a draft bill of his proposed Stablecoin TRUST Act of 2022 to establish a federal stablecoin framework.
  • Senators Gillibrand (Dem-NY) and Lummis (Rep-WY) are working on a bi-partisan regulatory framework for cryptocurrencies jointly regulated by the CFTC and SEC among others.
  • Virginia unanimously passes House Bill 263 permitting state-chartered banks to provide cryptocurrency custody services.
  • President Biden will nominate Michael Barr, a former advisor to crypto firm Ripple, as Federal Reserve vice chair of supervision.

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