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A few days ago, Bakkt officially announced that it will provide BTC safe storage and custody services from September 6, in preparation for the official launch of delivery-type BTC futures contracts on September 23. From the gradually standardized asset custody business, we will explore the broad prospects of the encryption market.
Summary
Summary
Topic: Looking at the gradually regulated encryption market from the custody business. Since the birth of the encryption market 10 years ago, it has experienced rapid and brutal growth. However, due to the lack of supervision and industry norms, traditional big funds can only hover at the gate of the encryption world. Bakkt announced a few days ago that it will provide BTC safe storage and custody services from September 6. Bakkt will set up a special custody institution, which will be regulated by the New York State Financial Services Authority to provide sufficient security protection measures.
Security and compliance are the core demands of token asset custody business. In recent years, more and more giants have deployed token asset custody business, which will promote the encryption market to become more and more standardized. BitGo is the first blockchain security platform in the United States to obtain a certificate asset custody service license; Coinbase, the world's largest compliant exchange in the encryption market, has launched Coinbase Custody, an encrypted certificate custody solution for institutional customers. Fidelity Digital Assets, a subsidiary of the US financial services giant Fidelity Group, also provides token asset custody services.
Market: The rebound is weak, and the shock is down. This week, the total market value of digital tokens was US$252.12 billion, down 8.3%; the average daily trading volume was US$52.73 billion, up 2.2%; the average daily turnover rate was 20.1%, up 1.3%. The current price of BTC is US$9,598, a decrease of 7.8%. The average daily trading volume of BTC this week is US$15.9 billion, and the average daily turnover rate is 8.9%. The current price of ETH is US$168.8, a decrease of 13.3%. The average daily trading volume of ETH this week was US$6.4 billion, and the average daily turnover rate was 33.1%. This week, the BTC balance on the exchange was 874,300, a decrease of 9,300; the ETH balance on the exchange was 9.17 million, a decrease of 78,000. In the BICS secondary industry, the market value of communication services and the number of supply chain certificates have increased significantly.
Risk warning: regulatory policy risk, market trend risk
Risk warning: regulatory policy risk, market trend risk
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1 Topic: From the point of view of custody business to see the gradually regulated encryption market
Since the birth of the encryption market 10 years ago, it has experienced rapid and brutal growth. However, due to the lack of supervision and industry norms, traditional big funds can only hover at the gate of the encryption world. With the entry of the regular army, the custody business of token assets has been effectively developed, and it is expected to bring trillions of funds into the market.
1.1 Attack on Bakkt
Bakkt belongs to the Intercontinental Exchange Group (ICE), the parent company of the New York Stock Exchange. It was born with a golden key and flows with the blood of traditional finance. A few days ago, Bakkt officially announced that it will provide BTC safe storage and custody services from September 6, in preparation for the launch of BTC futures contracts on September 23.
Approved by the New York State Department of Financial Services (NYSDFS), Bakkt will establish a custodian — Bakkt Trust Company. Bakkt Warehouse, part of the Bakkt Trust Company, uses the same cyber and physical security protections as the New York Stock Exchange and purchases insurance for digital assets stored in cold wallets.
The Bakkt warehouse will keep BTC for physically delivered futures, and deliver BTC to customers when the contract expires, providing customers with regulatory transparency and security.
Bakkt has previously acquired DACC (Digital Asset Custody Company), a digital asset custody company, and is committed to developing secure digital asset storage solutions. BTC futures exchange Bakkt may acquire Digital Asset Custody Company (DACC) for $11 million, according to an analysis of Intercontinental Exchange’s (ICE) second-quarter financial report. Meanwhile, Bakkt is partnering with BNY Mellon to build a "geographically distributed" private key storage system.
1.2 Security and compliance are the core demands of token asset custody business
Security issues are the core demands of customers for the token asset custody business, mainly to prevent accidents such as token loss or theft. Token asset custody business often needs to design a more reasonable multi-signature mechanism, reliable software and hardware design and risk control design. Additionally, hosting platforms often purchase insurance. For example, BiGo, Coinbase Custody, Fidelity, Gemini, and Kingdom Trust have all purchased insurance, and insurance companies include well-known insurance companies such as Lloyd's of London, AIG, Allianz, Chubb, and XL Group.
Compliance is also a relatively important core requirement. The development of the encryption industry is not yet mature, and the regulatory system is also very imperfect. Large-scale traditional funds face risks such as fraud, running away, and policy uncertainty, and can only hover at the gate of the encryption world.
BitGo is the first blockchain security platform in the United States to obtain a certificate asset custody service license. In order to seize the market for token custody business, BitGo acquired Kingdom Trust, a custody company with US$12 billion in custody assets, in January 2018. Technical service capability and risk management level are the main indicators inspected by regulatory agencies.
According to the report submitted by Bitwise to the SEC, the encryption custody business has developed rapidly in recent years, and more and more custody platforms have obtained regulatory licenses.
1.3 Giants have deployed token asset custody business
In September 2018, BitGo announced that its encrypted token custody service, BitGo Trust, was approved by the South Dakota State Banking Department. BitGo has thus become the first regulated custody entity designed and created specifically for token assets, and will mainly provide institutional clients with encrypted asset custody services.
Coinbase is currently the world's largest compliant exchange in the encryption market. In early July 2018, it launched Coinbase Custody, an encrypted token custody solution for institutional customers. Coinbase Custody is operated by an independent capital entity, Coinbase Trust Company, LLC, regulated by the New York Department of Financial Services (NYDFS).
American financial services giant Fidelity Group announced on March 8, 2019 that its Fidelity Digital Assets has begun operations and provides token asset custody and transaction execution services, but currently only for selected customers .
Not only in the United States, giants in other countries have also taken a fancy to the vast market of hosting business.
In November 2017, Shinhan Bank, South Korea's largest financial institution, announced the launch of custody business, mainly for institutional investors.
In August 2018, the custody platform Kingdom Trust (Kingdom Trust) announced that the British insurance giant Lloyd's of London (Lloyd's of London) will provide insurance for the company's managed token assets.
In August 2018, the custody platform Kingdom Trust (Kingdom Trust) announced that the British insurance giant Lloyd's of London (Lloyd's of London) will provide insurance for the company's managed token assets.
2 Market: the rebound is weak, and the shock is down
2 Market: the rebound is weak, and the shock is down
2.1 The overall market: a deep correction
The total market value of digital tokens this week was US$252.12 billion, a decrease of US$22.74 billion or about 8.3% compared to last week. The market continued to fluctuate within a narrow range last week, and the market has made a sharp correction this week.
The average daily turnover of the digital token market was US$52.73 billion, an increase of 2.2% from last week, and the average daily turnover rate was 20.1%, an increase of 1.3% from last week.
This week, the BTC balance on the exchange was 874,300, a decrease of 9,300 from last week. The ETH balance on the exchange was 9.17 million, a decrease of 78,000 from last week. The balance of BTC and ETH on the exchange has decreased, and the selling pressure on the market has eased.
The market value of USDT is 4.02 billion US dollars, a decrease of 48.28 million US dollars from last week. At present, the enthusiasm for capital entry is relatively low, and USDT only has a small premium.
2.2 Core Tokens: All Ushered in Larger Recalls
The current price of BTC is $9,598, with a weekly decline of 7.8% and a monthly decline of 4.8%. This week, the average daily trading volume of BTC was 15.9 billion US dollars, and the average daily turnover rate was 8.9%. BTC continued to decline this week, leading the collective "diving" of mainstream tokens.
The current price of ETH is 168.8 US dollars, with a weekly decline of 13.3% and a monthly decline of 22.8%. The average daily trading volume of ETH this week was $6.4 billion, and the average daily turnover rate was 33.1%. ETH is subject to the big market and ushered in a big correction.
The current price of EOS is $3.22, with a weekly drop of 12.6% and a monthly drop of 27.3%. This week, the average daily trading volume of EOS was 1.4 billion US dollars, and the average daily turnover rate was 44.3%. EOS is subject to the big market and ushered in a big correction.
The current price of BCH is $279.9, with a weekly decline of 11.7% and a monthly decline of 14.3%. The average daily trading volume of BCH this week was US$1.4 billion, and the average daily turnover rate was 25.5%.
The monthly volatility of major tokens this week was the same as last week. The monthly volatility of BTC was 18.5%, down 0.1% from last week; the monthly volatility of ETH was 19.5%, up 0.1% from last week; the monthly volatility of EOS was 20.0% %, down 0.8% from last week; BCH monthly volatility was 18.5%, up 0.1% from last week. This week, the volatility of mainstream tokens in the market has only slightly changed, which is the same as last week.
2.3 BICS industry: the market value of communication services and the number of tokens in the supply chain have increased significantly
Among the top five BICS (Blockchain Industry Classification Standard, Blockchain Industry Classification Standard) secondary industries, the market value of the payment and settlement industry has increased, from 75.0% to 75.1%. From the perspective of the change rate of market capitalization, the growth rate of the market capitalization of the communication services and physical assets industries is relatively high, which increased by 61.8% and 15.1% respectively compared with last week; Weekly fell by 8.7% and 7.8%, respectively.
The BICS secondary industry with a relatively obvious increase in the number of tokens this week is the supply chain, wallet & transaction, and banking services, which have increased by 50%, 16.7, and 15.4% respectively compared with last week; the BICS secondary industry with a significant decline in the number of tokens this week The top-level industries are other and public services respectively, which decreased by 38% and 22% respectively compared with last week.
2.4 Market opinion: a sharp correction, but the long-term upward trend has not changed
In the recent downward market, BTC has shown obvious resilience, but it still ushered in a major correction, and other mainstream tokens have also "dived".
BTC and other mainstream tokens have collectively pulled back sharply, which may "run up" the bull market. The retracement is for better acceleration. The general trend of the market has changed. Although the ups and downs are unpredictable in the short term, it is only the bottom range of the big market in the long-term perspective.
It is currently at a low level, and the callback can gradually increase the position. In the long run, high-quality tokens have a lot of room for imagination. It is still in the early stage of the bull market. This pullback is a rare opportunity to increase positions. Investors can make asset allocation according to their own conditions.
3 Output and popularity: the difficulty of mining has decreased, and the attention of ETH has decreased slightly
The difficulty of mining has been reduced, and the BTC computing power has rebounded. The mining difficulty of BTC this week is 10.2T, which is 0.0005T lower than that of last week. The daily average computing power is 175.5TH/S, which is 3.2TH/S lower than last week.
This week, according to Google Trends, the search popularity of the term Bitcoin is 11, which is slightly lower than last week, and the search popularity of Ethereum is 7, which is the same as last week.
4 Industry news: Blockchain is widely used and widely valued
4.1 The General Administration of Customs of Thailand will adopt the blockchain cargo tracking and information sharing platform TradeLens
According to an announcement published on the official website of Thailand Customs on August 28, the General Administration of Customs of Thailand will adopt a blockchain-based cargo tracking and information sharing platform to simplify procedures. Thailand’s General Administration of Customs is partnering with IBM Thailand and logistics provider giant Maersk to adopt the blockchain platform TradeLens to support Thailand 4.0 policies.
4.2 Japan's ORIX Group uses blockchain technology to develop power production systems
Japan's largest integrated financial services group, Oriex, is working with the University of Tokyo to develop a system to certify "power production areas," Nikkei reported. By using blockchain technology to verify the location and supplier of power generation, thereby enhancing corporate environmental awareness.
4.3 The Malaysian government is committed to formulating policies related to blockchain innovation
According to bernama reports, Tan Kok Wai, Malaysia's special envoy to China, said that the global economy has now been digitized, and blockchain technology is rapidly promoting innovation. The potential of blockchain has already been recognized by other countries in the region, and the Malaysian government is committed to formulating policies to make Malaysia an attractive country for high-tech and high value-added digital economies and industries in the region.
4.4 Japan's Daiwa Securities Group will participate in the establishment of a blockchain investment fund
