View profile

DeFi convergence; the emergence of ‘Satoxi’ in China


Satoshi&Co Daily Crypto Newsletter

November 7 · Issue #246 · View online

ZPX | Satoshi&Co Newsletters

Check out past issues of the newsletter along with more interesting crypto content as well as short (but great) conversations with leading crypto industry participants at our newly-launched website

DeFi rates continue to converge across platforms, but are still higher than mainstream rates, at least for now.
Over the past few weeks, the interest rates for stablecoin lending and borrowing declined across the board. The decline was triggered by the slashing of stability rates, which were as high as 20.5% a few months ago, to 5.5% on MakerDAO. As a result, borrowers defected to MakerDAO from other lending platforms such as Compound, resulting in the fall of interest rates.
This fall has led to the fall in rates for lending and borrowing of USDC as well across the board.
ETH locked in MakerDAO has surged by 20% m/m to 1.82 million ETH locked after the stability fees adjustment. 
The fall in interest rates makes DeFi lending and borrowing less attractive than they were a few months ago, but the rates are still higher than the ones offered by traditional fintech firms on dollar deposits. In an ideal world, DeFi rates should be marginally higher than traditional finance interest rates to accurately reflect the platform risk for DeFi lending and borrowing. 
Chinese premier Xi Jinping’s support for blockchain earns him the title Satoxi 
Among the major nations, China has formally made the first move towards towards adopting blockchain technology on a national scale, as a policy imperative. In response to Xi Jinping’s getting a better handle on all things blockchain, Chinese equities with the term ‘blockchain’ in their names have rallied up by about 10% since the announcement. Much like what happened to Long Island Iced Tea corp after they renamed themselves to Long Blockchain corp in 2017.
(Price surge in chinese equities with blockchain in their names!)
However, China’s vision for developing the ‘blockchain’ could be very different to the core principles of decentralization that most blockchain and crypto purists envision. Beijing pursues advancements in cutting edge technologies while maintaining tight control over them. Ever since Facebook unveiled its controversial plans for a global digital currency called ‘Libra’ earlier this year, it is believed that China has been furiously working behind the scenes to develop its own state-issued e-currency. Multiple nation states are trying to develop their own versions of sovereign cryptocurrencies. You can check out some of our past articles here, here and here.
At a time when the US president has publicly expressed his displeasure at the concept of virtual currencies and when there is a clear lack of clarity among US policy makers and among the myriad regulators on how to approach all things blockchain and cryptocurrency, China’s pro-blockchain stance could potentially give the country a leg up in blockchain innovation. In spite of a system that on paper formally banned bitcoin, some of the biggest exchanges in the world are from China. 
What one needs to be careful though is the spectre of yet another ‘blockchain-good-bitcoin-bad’ narrative trope. For the moment though, the crypto community will take all the help it can get as we head into the last few weeks of the decade. ‘Satoxi’ has been a key reason for the run-up in BTC prices over the past couple of weeks.
Meanwhile in Crypto Wonderland....
“Hong Kong’s New Law On Crypto Exchange Regulation”
Hong Kong’s Securities and Futures Commission has established a new regulatory framework that allows crypto exchanges to opt-in to be licensed and regulated. Starting Wednesday, centralized trading platforms can apply for a license, providing they meet certain requirements including adequate measures for the safe custody of assets, insurance, hot and cold wallets, and private key management. The Hong Kong Securities and Futures Commission (SFC) published a new regulatory framework for crypto exchanges on Wednesday. CEO Ashley Alder explained that the commission met with a number of crypto exchange operators after unveiling a conceptual framework that could be used to regulate crypto exchanges last year.
“New Russian Allows Authorities To Confiscate Crypto From Citizens”
Russian authorities are planning to bring a legal structure that will allow them to confiscate Bitcoin and other cryptocurrencies, RBC reported on Thursday. Citing anonymous sources, the publication detailed that the initiative will involve the Ministry of Internal Affairs, Rosfinmonitoring, the Prosecutor General’s Office, the Investigative Committee, the Justice Ministry, the FSB, the Federal Customs Service, and the Federal Security Service, along with the participation of the country’s Supreme Court. The agencies are aiming to bring the proposal by the end of 2021.
“Indian Govt Mulling Over Crypto Regulation”
State Bank of India’s (SBI) Chairman, Rajnish Kumar, has reportedly favoured the regulation of cryptocurrency in the country—a long debated issue. This was during a recent interview to a newswire agency, while attending International Monetary Fund (IMF) and the World Bank meetings in Washington, D.C., along with Finance Minister Nirmala Sitharaman. This statement comes in the backdrop of a draft bill ‘Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019’, which was submitted to the Finance Ministry in February. The Supreme Court is scheduled to hear writ petitions relating to this bill in January 2020 and is also addressing the Reserve Bank of India’s (RBI) banking restriction on the crypto industry.
“China Does U-turn On Crypto Mining Ban”
More than six months after the China National Development and Reform Commission proposed to categorize bitcoin mining as an industry to be phased out from the country, it appears the agency has now scrapped that plan. The National Development and Reform Commission (NDRC), a top-level economic planning agency under China’s State Council, published a finalized new Catalog for Guiding Industry Restructuring on Wednesday that will take effect from Jan 1, 2020. In the final version, which will replace the current one published in 2011, the agency has removed bitcoin mining or other virtual currency mining activities from the initially proposed category of industries that should be eliminated from China. Description related to virtual currency or bitcoin mining can’t be found in the finalized catalog.
Crypto Twitter Pick
1/ BREAKING Crypto mining is no longer "to be eliminated" in China. Today, the gov't released "Industrial Structure Adjustment Guidance Catalogue". Crypto mining, which was listed in the draft in April as an industry to be eliminated, is no longer in the list pending elimination.
What We Are Reading / Listening To
Overnight Performance of Top 10 Currencies
You are getting this newsletter because you or someone in your organization signed up for this. You can find more stuff to read at our news and research portal, our crypto index token and our upcoming relayer.
Brought to you by Satoshi&Co
Brought to you by Satoshi&Co
This newsletter does not constitute an offering of securities in any jurisdiction. The contents of this note should not be construed as investment advice or as a recommendation to purchase securities. This note is intended for the consumption of the recipient alone and not for public distribution. Please consult a certified financial advisor or other appropriate practitioner as may be appropriate as per your jurisdiction.
ZPX Copyright © 2019
Did you enjoy this issue?
In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Powered by Revue
ZPX | 21-01, Clifford Center, Raffles Place, Singapore- 048621