21Shares Research Newsletter - Issue 43

Market Outlook

The entire crypto asset market had a difficult week following on from last week's news of FCoin's insolvency and the two Decentralized Finance market manipulation attacks we mentioned in last week's newsletter. The market continued to fall on Monday 24 February coinciding with when global markets tumbled on heightened fears of the Coronavirus epidemic. The top five crypto assets performed as follows: BTC (-5.37%), ETH (-6.77%), XRP (-10.11%), BCH (-10.75%), and LTC (-2.66%).

The average on-chain transaction volume for the top-five crypto assets is as follows: BTC ($2.01B), ETH ($478M), XRP ($150M), BCH ($171M), and LTC ($46.2M). On average the total daily on-chain transaction volume number was down from $3.63B to $2.84B.

Product Updates - Germany's Second Largest Exchange Boerse Stuggart Lists the 21 Shares Short Bitcoin ETP (SBTC)

The 21 Shares Short Bitcoin ETP (SBTC), a new exchange-traded product (ETPs) that tracks the inverse value of Bitcoin BTC, is now available for trading on the Boerse Stuttgart in Euros. Boerse Stuttgart is Germany’s second-largest stock exchange, reporting trading volumes of EUR 68.5 billion in 2019.

Unprecedented in the crypto space as well as the ETP world, the tracker product's value represents the inverse performance of the underlying asset Bitcoin BTC; when the price of Bitcoin goes down, the ETP goes up correspondingly, minus a daily management fee. The product is fully hedged with the corresponding underlying asset 1:1. The launch of the first inverse ETP is a natural extension to our existing unleveraged range of crypto ETPs and offers a greater choice to investors by which they may better manage the increased volatility and changing dynamics of the cryptocurrency markets.

Our CEO Hany Rashwan was quoted as saying: “This is a first in the bitcoin industry to list a financial instrument wrapped as an ETP with an ISIN/WKN number and trading in EUR. Investors in Germany have demonstrated such strong support for prior crypto offerings."

Learn more here.

News - E-Commerce Giant Shopify Joins Libra Association | CoinDesk

What Happened?

Digital commerce platform Shopify has joined the Libra Association. The company announced the move in a blog post on Friday, becoming the latest member of the Facebook-founded stablecoin developer.

Shopify joins roughly a month after Vodafone pulled out of the organization to focus on its own digital payments system. This is the first new member of the organization since its formation four months ago. Shopify said in its blog post it intends to "work collectively" to build a payment network that works "everywhere."

Why Does It Matter?

Shopify's announcement of them joining the Libra Association will provide relief for the association's efforts, given the fact that in the last few months the following companies announced that they would be leaving Libra — Mastercard, Visa, eBay, Vodafone, Stripe, Booking Holdings, and Mercado Pago.

Given Shopify's vast array of merchants and increasing prominence — its gross merchandise volume topped $14.8B as of Q3 2019 — the company could be a large asset for the Libra association. Moreover, it is perhaps a signal that Libra may have made progress in quelling some of the legal and reputational fears that led to the aforementioned departures. The chart below shows Shopify's gross merchandise volume since Q1 2014, helping demonstrate the rapid growth in the business over the coming years despite potential competition from technology giants like Amazon.

Learn more here.

News - ICO Project Enigma Settles SEC Charges Over $45M Token Sale | CoinDesk

What Happened?

The U.S. Securities and Exchange Commission (SEC) has settled securities law violation charges with Enigma MPC, a blockchain startup that raised $45 million in a 2017 token sale.

The regulator announced Wednesday that under the settlement Enigma will refund "harmed investors" using a claims process, register its tokens as securities with the SEC, file reports to the agency and pay a further $500,000 as a penalty. Enigma sold ENG tokens in 2017, which the SEC said are securities. Enigma did not qualify for an exemption from securities registration requirements, according to the SEC. According to a blog post, Enigma will set up the claims process in the near future.

Why Does It Matter?

In a similar fashion to other cases where the SEC has settled with businesses, they have deemed to have conducted unregistered securities offerings with their initial coin offering. For example, Block.one reached an even more lenient settlement with the agency given that they have not needed to set up a claims process for their EOS tokens.

These signs point to the fact that the SEC is beginning to signal a standard process with which they will pursue many other businesses which had conducted ICOs over the last few. However, the way the agency has handled the cases points to the United States becoming a relatively forgiving jurisdiction for tokens and crypto asset businesses despite common perception — especially given SEC Commissioner Hester Pierce's safe harbor proposal for token sales.

Learn more here.