This was a big news week in crypto!
Positive market outlook dominated again this week, even though we are still in a volatile place.
What were the biggest stories this week?
Russia appears to be embracing crypto, but it’s unclear what the motives are behind their moves. Central banks preparing us for their CBDCs. Mad money moving into crypto startups. Crypto taking a hand in media.
1 - Russia to recognize crypto as legal form of currency
2 - U.S. Central Bank releases speed data for CBDC
3 - VC Sequioa invests $450M in layer 2 Polygon
4 - January 2022 saw $5B in investment into crypto
5 - Binance invests $200M into media publication Forbes
6 - Aave launches web 3 social media platform
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1 - Russia announced this week that it plans to recognize crypto as legal tender. It did not name a specific currency such as Bitcoin like we saw with El Salvador. However, it contradicted a prior sentiment from the Russian Central bank that was anti-crypto.
What does this mean?
Well, it’s speculation but Putin is strategic and may be using game theory to force the hand of other world governments to also adopt crypto. And we don’t know if the central banks apparent stance against crypto is real. They have a history of playing both sides, and appearing like they are against their own policies.
This was part of their strategy when pushing for the US Federal Reserve system - several vocal bankers claimed it was not good for large banks, which made many citizens support the creation of a central bank.
I will continue to watch this closely, but with an air of skepticism. Russia supporting crypto looks like a positive move, but I am not quick to celebrate anything at this point. I am also interested in the relationship between the Russian government and their central bank, as that is not something I know much about.
2 - The US Central Bank has been releasing stories via mainstream press around their upcoming currency (CBDC). This week was a feature on how fast it can process transactions. This will likely one of the talking points to gather public support.
While I am still collecting data points to see the long term outlook for crypto & world governments, I have no doubt that CBDCs are not in the interest of most citizens. The potential scenarios for abuse of power and overreach are too countless to entertain any benefits to a centralized central bank controlled cryptocurrency.
3 - Venture capital firm Sequioa invests $450M in Polygon. This layer 2 solution built on Ethereum leverages the benefits of the Ethereum platform (smart contracts, wider adoption) but attempts to solve some of the limitations (slow, expensive transaction fees). The $MATIC token pumped this week as a result of this news.
4 - Even though the markets were down in January, the crypto sector saw a record breaking level of investment. I was hesitant to link to this because it’s behind a paywall, but next week I’ll link other sources that detail more about where these investments went.
The takeaway is that more money continues to move into crypto which means the market is growing.
5 - Binance invests $200M into Forbes. A long time traditional finance publication, Forbes, gives a different type of credibility to stories about crypto projects & investments. When new investors do research around tokens and other crypto investments, finding coverage in traditional media sources like Forbes will help adoption and growth.
6 - DeFi platform Aave announced plans for a web 3 social media platform. Media platforms come and go, especially over the long term, so it’s inevitable that Facebook and Twitter will be replaced at some point.
It’s anyone’s guess when that will happen, or by whom, but understanding what the traits are around new options is interesting.
Aave’s new platform is called Lens, and will be hosted on Polygon (who just got $450M in funding). A primary enhancement is that users will own their own content on the platform, which is not the case with FB, Twitter or YouTube. This is very appealing to content creators.
The fear index continues to move away from the extreme fear levels we saw most of January, confirming that the dark days are behind us, at least for a moment.