Around the block

Special Commentary

June 2, 2022

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

Off the block

  • Arguably the most notable event in crypto this month was the collapse of the TerraUSD stablecoin, which added to the volatility of digital assets. Our recent Portfolio Perspective commentary has more detail on TerraUSD.

  • The collapse of TerraUSD (UST) generated heightened regulatory interest. The Federal Reserve (Fed) released a new paper titled: Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis. It examines the potential monetary policy impact of a retail CBDC (central bank digital currency) on the Fed, commercial banks, and U.S. households.

  • The U.S. has become the world leader in bitcoin mining as its global share has increased from 3.4% in early 2020 to roughly 37.8% today. After China’s mining “ban” in 2021, its global mining share fell from its peak of over 70% to an official 0% in a few months. Some undetected mining likely continues.

  • The relatively inexpensive energy costs have led to this seismic shift towards U.S. mining activity, where the state of Georgia holds a commanding lead of 31% mining share. services.

  • President Biden will nominate Michael Barr, a former advisor to crypto firm Ripple, as Federal Reserve vice chair of supervision.

Industry developments

  • Software company and prominent bitcoin holder, MicroStrategy’s (MSTR), market capitalization is now $2.9 billion versus the value of its bitcoin holdings of $4.1 billion.

  • The collapse of TerraUSD (UST) generated heightened regulatory interest. The Federal Reserve (Fed) released a new paper titled: Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis. It examines the potential monetary policy impact of a retail CBDC (central bank digital currency) on the Fed, commercial banks, and U.S. households.

Regulatory developments

  • Senators Lummis (R) and Gillibrand (D) announced their bi-partisan digital asset legislation bill will be released on June 7 providing jurisdictional clarity.

  • Republican senators introduced draft legislation prohibiting app store transactions conducted in China’s digital yuan.

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