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Eterna's Insights - January 2022

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Big Tech Jumping into NFTs As we entered 2022, we were met with challenging macro conditions and thus turbulent financial markets. While the overall blockchain market was a recipient of this impact, some sectors within blockchain have been excelling. The excitement around NFTs (non-fungible tokens) has continued to grow at a rapid rate, which has been fuelled by Big Tech’s race to NFT dominance. NFTs are unique tokens that can act as digital representations of physical items or digitally native items whose proof of ownership can be verified on a public blockchain. January 20th was a big day for both Meta and Twitter as they went back and forward trying to outplay one another. The day started with reports coming out that Meta is drawing up plans to allow users to create and display NFTs on their profiles. It was also reported that Meta was planning on launching an NFT marketplace to rival the likes of OpenSea. Later that afternoon, Twitter fired back by launching NFT profile pictures. This new feature will verify the Twitter user’s ownership of a specific NFT, by allowing the user to link their Ethereum wallet to their Twitter account. Finally, it was announced that the Associated Press will be launching an NFT marketplace for photographs. Metaverse Still Front and Centre January was another big month for the Metaverse. Major companies made announcements with plans for Metaverse expansion. Tencent launched a string of services to support Japanese companies entering businesses related to the Metaverse. Walmart is quietly attempting to enter the Metaverse and has recently filed 7 patents with the US patent and Trademark Office to register several services and offerings related to the Metaverse. Reports have also suggested that Apple is planning on releasing a VR headset, which would be huge news for the Metaverse and would rival Meta’s VR headset, Oculus. To add to this hype, Tim Cook was also reported saying that “we see a lot of potential in the space (Metaverse) and are investing accordingly.” Institutional Interest Continues The wealth management sector is starting to adopt digital assets and as such many digital asset exchanges are starting to look to offer wealth management services. Bitria, a digital asset wealth management start up, whose tools help advisors manage holdings of Bitcoin and other tokens, was recently acquired by Gemini. There are also reports suggesting that Coinbase and other major exchanges are starting to venture into the space. iTrustCapital, a platform that allows one to invest their IRA into digital assets, recently raised a $125m Series A at a $1.3bn valuation. Regulation Incoming Over the last few months, there has been much uncertainty from the US on what blockchain regulation will look like. Different US federal agencies have come out with their views on blockchain, yet there is still a lack of consensus between US federal agencies on what regulation will look like. This should be about to change in the coming weeks, as towards the end of the month, a report came out suggesting that a forthcoming executive order from President Biden will be released. The executive order will outline a comprehensive government strategy on cryptocurrencies and will ask federal agencies to determine their risks and opportunities. This will place the White House in a central role overseeing blockchain regulation. In addition, the Federal Reserve finally released its long-awaited paper on Central Banking Digital Currencies (CBDCs). The paper did say that the Fed does believe that the current financial system would be bolstered by the creation of a CBDC, but only one that works between the current network of private banks. As we move into February, regulation is obviously going to be an area to keep an eye on. The impact of Biden’s executive order will be of much interest to the global blockchain community. The US’s movement on this has been slow, which is hindering innovation and adoption in this sector, due to the lack of clarity. Another area to follow is global regulation. The Russian government and central bank have divergent views on blockchain. The central bank reportedly wanted a complete ban of all blockchain related activities, while Putin has said that he supports a plan to tax and regulate mining, suggesting that some sort of blockchain regulation could be in the pipeline. The UK government is yet to release any formal regulation, yet they have started cutting down on blockchain advertising activities. We could expect some regulation coming out of the UK soon.


Disclaimer: this newsletter was put together for informational purposes only based on our review and analysis. This should not be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment or engage in any transaction.

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