22 Dec, 22
Happy Holidays from the Zerocap Team
Ok (deep breath) – what a year!
Despite its challenges, this has been a year of substantial development for Zerocap and the industry as a whole. We significantly increased our client base and opened an office in London, partnered with ANZ Bank to launch their A$DC stablecoin, are building blockchain infrastructure with the ASX and other major financial institutions, launched our award-winning Smart Beta Bitcoin fund and won several other awards including Blockchain Australia’s prestigious Blockchain Organisation of the Year.
Institutional adoption accelerated further: Compound Treasury received a B- credit rating from S&P Global Ratings, JPMorgan filed trademarks for a crypto wallet, PayPal integrated with MetaMask, Tesla now accepts DOGE as payments, Polygon integrated with Instagram for NFTs, Fidelity Investments launched commission-free trading for retail investors through their Fidelity Crypto product – and the list goes on!
With the full extent of the mismanagement at FTX and Alameda Research still unfolding, as is the domino effect of exposed counterparties, it is important to reflect on the positives and remember: that situation is a result of irresponsible management (and a complete lack of governance), not the technology which underpins the asset class.
Through 2017-2018, we saw most of our counterparties and peers wiped out; we’re now seeing it again due to extreme market conditions but, more importantly, insufficient risk management. Counterparty risk is something we’ve been thinking about since the inception of the business and has always been a priority to solve.
This is why we were very early in actively pursuing regulation (still a differentiator to most of the market), and are involved in consultations globally with regulators, senators, central banks and treasury departments to advise based on our experience how the industry should be regulated.
It’s why we engaged Lloyd’s of London and built the first custody insurance policy in the APAC market (which protects against the theft, loss, damage or destruction of the private keys), scalable to a billion dollars. It took over a year to develop and have them validate our risk management protocols, resulting in protection that has never been more important to our clients.
It’s why we brought more veterans of TradFi who have lived through the GFC into the business to not just create new products, but manage risk.
It’s why we have an extremely high standard of governance and compliance, with every transaction through our infrastructure screened for AML CTF purposes, so we always understand who we’re dealing with.
Due to our position in Australia as the leader in the institutional segment and an emerging leader globally, we have a unique perspective on the market. Based on the nature and volume of enquiries we’re getting from institutional clients, and seeing our “tokenisation of everything” thesis starting to play out, we’re more bullish than ever on the future of the asset class, the ecosystem and our role in it.
But risk management is extremely important; there is volatility and uncertainty ahead. Talk to us, we’re here to help and educate.
In the meantime, we will continue to build the infrastructure and investment products needed to truly institutionalise the asset class. Next year is going to be big.
Happy Holidays and all the best in 2023.
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This article will explore the fundamentals and purpose of crypto seigniorage and its stablecoins, including how they allow for the existence of decentralised monetary policies.
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