Trakx Weekly Update: DeFi gains on SEC ruling

Key Crypto Market Figures

CTIs Weekly Performance

Digital asset prices rebounded smartly over the past week, as highlighted by the near 10% gain in our flagship large cap Top10 Crypto CTI. The best performer amongst the Trakx suite of crypto indices was the Recovery CTI, after it rallied more than 21%, closely followed by the Cardano System CTI, which also rose more than 20%. At the other end of the performance stack was the typically defensive Digital Inflation Hedge CTI, with a modest 0.9% gain over the prior seven day period.

More US Regulatory Clarity

After falling behind on digital asset regulation under the Biden administration, the US is now rapidly catching up. Building on the momentum of last month’s Crypto Week, when three major digital asset bills were passed, the SEC last week issued updated guidance on liquid staking tokens, such as those from Ethereum’s Lido and Solana’s Jito. Unlike native staked tokens, which are locked to secure the network, liquid staking tokens remain tradeable. This makes them popular in DeFi for yield farming, borrowing, and leveraging, as they improve capital efficiency without losing staking income. By confirming that these tokens are not securities, the SEC has removed the need for liquid staking providers to register with them, easing regulatory pressure. This clarity also opens the door for institutional adoption, allowing firms to confidently offer these tokens within compliant frameworks. Overall, the SEC news helped our Top10 DeFi CTI gain just shy of 20% – making it one of the strongest performers over the past week.

In another boost for crypto, President Trump signed an executive order directing the US Labor Department to re-evaluate restrictions on including alternative assets, which would include cryptocurrencies as well as private equity and real estate, in 401(k) retirement plans – providing retail with yet another way to increase exposure to digital assets.

Real World Tokenization With A Twist

As we outlined in a recent Insight article in 2013 British IT engineer and Bitcoin enthusiast James Howells accidentally threw out a hard drive that he had been using to store 8,000 BTC earned from mining the world’s seminal cryptocurrency. Upon realizing his mistake Howells contacted his local authority in charge of the municipal rubbish dump to attempt to recover his hard drive. Unfortunately, the council refused permission for him and any associates to go shifting through 1.4 million tonnes of household rubbish in search of the hard drive. Despite numerous legal challenges, the council’s decision has been consistently upheld.

According to media reports, Howells has come up with a new approach to retrieve his Bitcoin stash, which at today’s prices is valued at over $900 million. The landfill is due to close next year and last week he announced that he had made a formal offer to acquire the site for just under $40 million. To raise the necessary capital Howells is planning to tokenize his legal ownership of the lost Bitcoin via a new Layer 2 smart token called Ceiniog Coin, making it one of the more unusual RWA tokens we’ve ever seen!

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Ethereum transaction volumes see year-high amid SEC staking drama: Cointelegraph
• Trump Set to Greenlight Crypto in 401(k)s; Bitcoin Rallies on Retirement Reform Push: CoinDesk
• Bo Hines to Leave White House Crypto Post, Eyes Turn to Successor: Decrypt
• Bitcoin’s transaction fees have fallen to a multi-year low: Protos
• XRP price jumps 11% as SEC and Ripple formally dismiss appeals: DLNews

Trakx CTIs Performance

Sources: Coingecko and AlphaVantage

*Return of bitcoin is calculated since 01/05/2020, while CTIs performances were calculated since their respective launch date.
**Includes simulated performance.
***The risk signal is determined according to the historical volatility level, the higher the riskier.

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Disclaimers: No Investment Advice. Index returns and statistics are for illustration only. Index returns do not reflect any transaction costs or expenses. Past performance does not guarantee future results. The information provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the newsletter content as such. Trakx.io does not recommend that any cryptocurrency should be bought, sold, or held by you. Readers shall conduct their own due diligence and consult their financial advisors before making any investment decisions.