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In April, Uniswap marked a significant milestone by reaching $2 trillion in total trading volume, confirming its status as a leading decentralized exchange despite intensifying competition, particularly from networks like Solana. However, the exchange faced regulatory challenges when it received a Wells notice from the SEC on April 10, suggesting a potential crackdown on decentralized finance (DeFi). Uniswap is distinctive in that it does not restrict U.S. users despite the regulatory risks, operating simply as a portal to smart contracts. This situation has rallied substantial community support for Uniswap, with its founder expressing readiness to contest the SEC's actions vigorously. Despite this setback, and a temporary dip in its governance token's (UNI) price, trading volumes on Uniswap have remained robust. The platform also increased its fee on certain swaps, possibly to fund its legal defenses, demonstrating Uniswap's proactive approach to navigating through regulatory and market challenges.
PV01 Launches First Tokenized Bond Under English Law, Pioneering Blockchain Corporate Debt Market
PV01, a tokenization company led by B2C2 founders, has successfully completed its first tokenized bond sale under English law, a significant milestone in their goal to establish a bond market on blockchain, specifically for corporate debt. This initial "proof-of-concept" issuance involved a $5 million U.S. Treasury bill tokenized on the Ethereum blockchain, with investments from market makers such as B2C2, BlockTower Capital, and Keyrock. Unlike competitors who use tokens as a wrapper for money market funds, PV01's tokens represent the bond itself with the entire lifecycle managed on-chain, eliminating intermediary layers and enhancing transparency and speed in transactions. This approach could potentially mitigate issues like the 2022 crypto credit meltdown by making debt obligations clear on public ledgers. PV01 aims to expand this model to include tokenized corporate bonds and plans a future issuance involving a well-known crypto player issuing a corporate bond on-chain.
UK to Enact Comprehensive Crypto Regulation by July, Including Stablecoins and Exchange Oversight
UK Economic Secretary to The Treasury, Bim Afolami, announced at the Innovate Finance Global Summit that the government intends to enact legislation by the end of July to establish a regulatory framework for cryptoassets. This framework will include provisions for the oversight of stablecoins, crypto staking, and the licensing of exchange and custody services. This legislative effort follows the government's proposals published in October 2023 and a consultation response in August that outlined plans for regulation, including authorization requirements for firms conducting crypto-related activities and co-supervision of systemic stablecoins by the Bank of England and the Financial Conduct Authority (FCA). These developments build on the Financial Services and Markets Bill passed earlier in 2023, which laid the foundation for regulators to manage stablecoins and other cryptocurrency financial activities effectively.
Trading Desk Insights
Bitcoin remains under pressure as it has not fully recovered from the recent sell-off that dampened global risk sentiment yesterday, pushing it towards the lows in March lows. Currently, Bitcoin is hovering at a critical juncture. From a technical analysis standpoint, trading below the 50-day moving average signals a bearish trend. Nonetheless, maintaining levels above $61,000 could suggest the potential for a rebound from recent lows. A recovery from this zone could restore confidence in a return to previous highs. Conversely, a descent below this threshold might catalyze a broader sell-off, potentially driving prices down towards $53,000.
Turning our attention to ETF flows, the market registered net outflows totaling $36.7 million, despite $73.4 million in inflows to Blackrock and significant outflows from Grayscale amounting to $110.1 million.
In the NFT space, Bored Apes Yacht Club, once a prominent collection during the last bull market, is now facing significant challenges with a decline exceeding 90% in value, falling from a peak of 120 ETH to just over 10 ETH. Despite this downturn, Bored Apes remains the leading Ethereum NFT collection as of Tuesday, boasting a market capitalization of $340 million.
On Wall Street, the Dow Jones experienced another turbulent day, marking its sixth consecutive session of losses—the longest streak since June. This sequence effectively wiped out most of the index's gains for 2024. Meanwhile, the Volatility Index (VIX), often viewed as a measure of market fear, closed at its highest level since October.
In geopolitical developments, Israel has not yet finalized its response to the extensive drone and missile attacks launched by Iran on its territory last Saturday. The Israeli war cabinet is scheduled to reconvene on Tuesday to deliberate further actions.
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Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.
Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
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