Yesterday in Crypto - Issue #8

Read time: ~6 minutes

Here’s what you missed yesterday, 7/25/23

BlackRock, the world's largest asset manager, has made a bold move towards Bitcoin. The firm's study, conducted in April 2022, analyzed Bitcoin's performance from July 2010 to December 2021 and found that for a 60-40 portfolio (60% equities and 40% bonds) with a fixed risk aversion, the optimal allocation to Bitcoin is a staggering 84.9%. The remaining 15.1% is suggested to be split between equities and bonds, with a 60-40 ratio.

The study acknowledges Bitcoin's extreme volatility but highlights its pronounced positive skewness, which makes large allocations of the digital asset highly appealing and potentially dominating in utility functions. If all investors were to follow BlackRock's recommended Bitcoin allocation (they won’t), it could drive Bitcoin's value to new highs. For instance, if the total global wealth is around $800 trillion today, Bitcoin could potentially be worth $190 million per coin!

This recommendation comes amidst BlackRock's recent filing for a spot Bitcoin ETF, which is awaiting approval from the U.S. Securities and Exchange Commission (SEC). The firm's application is part of a larger race among several companies to launch the first Bitcoin spot ETF. The first deadline for the SEC's response to BlackRock's application is set for September 2, 2023. The approval of a Bitcoin spot ETF could potentially further boost the value of Bitcoin and solidify its position in investment portfolios.

Italy's Central Bank has chosen a project that involves Polygon Labs and Fireblocks to help traditional financial institutions explore the world of decentralized finance and tokenized assets. The Bank of Italy's innovation hub, the Milano Hub, will support the development of this project, known as the Institutional DeFi for Security Token ecosystem, for six months.

The project, led by Cetif Advisory, a consultancy spinoff of the Università Cattolica del Sacro Cuore of Milan's Cetif Research Centre, aims to provide a safe and regulated environment for traditional financial institutions to experiment with security tokens and execute transactions using DeFi protocols. This initiative is part of a broader trend of tokenization of real world assets, which is reshaping how value is transferred, settled, and stored across every industry, making transactions faster, lowering costs, and creating a more efficient financial infrastructure.

The project will involve Italian banks, asset managers, and financial institutions, including the country's largest banking group, Intesa Sanpaolo, with more than $1 trillion in total assets under management. The goal is to create conditions for DeFi to become a safe and open operating environment for supervised entities. However, the initiative does not have plans for commercial use at this stage.

This move by Italy's Central Bank is a significant step towards bridging the gap between traditional finance and DeFi, and it highlights the growing recognition of the potential of blockchain technology and tokenized assets in the global financial landscape.

Russian President Vladimir Putin has signed a bill into law that paves the way for the introduction of a Central Bank Digital Currency (CBDC), the digital ruble. This law, which is set to take effect from August 1, 2023, empowers the Russian central bank to launch the first CBDC pilot with real consumers.

The digital ruble, a project the Bank of Russia has been working on since 2020, is designed to serve as a payment and money transfer method. It will act as the third form of money alongside cash and non-cash rubles. However, the use of the digital ruble will be a voluntary choice for individuals, according to Bank of Russia governor Elvira Nabiullina.

The central bank will be the principal operator of the digital ruble infrastructure and will hold responsibility for all the stored assets. This move comes at a time when Russia is heavily sanctioned by the U.S. and Europe, and the digital ruble might become one of the ways to circumnavigate the massive financial restrictions imposed on the country by the West.

This development is a clear indication of the growing acceptance and integration of digital currencies into the mainstream financial system. However, the Russian government doesn't expect mass adoption of the digital ruble before 2025 or even 2027, indicating that the journey towards full acceptance of CBDCs is still a long one.We hope the Russian citizens, and the rest of the world, steadfastly refuse CBDCs. They are nothing but an instrument of control. The day will come when this is tried in the United States. DO. NOT. GIVE. UP. YOUR. FREEDOM. FOR. CONVENIENCE.

After all, CBDC really stands for “Central Bank Digital CONTROL”

That’s all for today. We’ll see you on tomorrow.

“Bitcoin is amazingly transformative because it’s the first time in the entire history of the world in which anybody can now send or receive any amount of money, with anyone else, anywhere on the planet, without having to ask permission from any bank or government.”

Roger Ver - Early Bitcoin Investor