“3 observations and a chart” on the latest in the digital assets sector
Stablecoins continue to be “crypto’s next killer app” – fast, cheap, global payments showcase product market fit
Stablecoins are fast becoming a preferred mechanism for global payments and remittances. Stablecoins settled $8.5 trillion in transaction volume across 1.1 billion transactions in the second quarter of 2024, more than double the $3.9 trillion in transactions on the Visa network over the same period. It costs less than $0.01 to make an international wire transfer using the USDC stablecoin on the Base Layer 2 blockchain compared to $44 on average using traditional banking rails. Moreover, stablecoins facilitate global use of the US dollar and strengthen its position as the global reserve currency. We highlight the inevitable success of a technology that is faster, cheaper, more efficient and more inclusive, like the transfer of money over the Internet on blockchain rails.
Louisiana becomes first state to accept crypto for utility bill payments – significant step in digital asset adoption
Louisiana became the first state to allow residents to use Bitcoin and other digital assets to pay for public services, including utility bills. The state aims to target a younger, tech-forward population and provide its citizens with more payment flexibility. The state has already accepted its first crypto payment, a $50 fine to the Louisiana Department of Wildlife and Fisheries through the Bitcoin Lightning Network. Louisiana is working with Bead Pay to immediately convert crypto payments into fiat currency to protect the state against volatility and other concerns about holding digital assets. We highlight the strong message sent by Louisiana that digital assets can be more than just speculative investments and serve as practical tools for everyday payments.
Digital assets poised to break out on regulatory clarity in the United States – bipartisan support for blockchain continues to grow over the election cycle
We have never been more optimistic about the prospects for and impact of comprehensive crypto legislation in the United States. We have seen growing bipartisan support in Congress for innovation around digital asset technology. Pro-crypto PAC Fairshake has been one of the top spenders in the 2024 election cycle, deploying more than $140 million to Republicans and Democrats supportive of the industry’s interests. We think digital asset markets will rise with regulatory clarity. We point to Uniswap, a decentralized finance protocol, which announced earlier in the year that it would begin allocating transaction fees to token holders. The token rose over 40% on the announcement only to fully retrace when Uniswap reconsidered in light of regulatory concerns. We highlight the potential for the digital asset markets to rise as regulators in the US permit digital assets to serve as a true form of equity and capital raising mechanism with the potential to effectively align stakeholders including a company’s investors, customers and employees.
Chart of the Month – Microstrategy (and its BTC treasury) has outperformed Nvidia
Arena Digital Capital Partners is a liquid evergreen fund open to monthly subscriptions. We are always happy to discuss further with you or investors you think may have an interest in the sector. Please reach out to Bill Cline at williamc@arenadigital.capital.
Sincerely,
The Arena Digital Capital Management Team
Michael Schwartz, Michael Prober & William Cline
Arena Digital Capital Management was founded in January 2022 by three experienced traditional finance hedge fund professionals who have been deploying personal capital in the digital asset ecosystem since 2018. The team has managed billions of dollars of capital for high net worth individuals, family offices, and institutions ranging from pension plans and endowments to sovereign wealth funds. We have worked closely with institutional consultants, RIAs, and other advisors in serving their clients.
In May 2022 we launched Arena Digital Capital Partners, with the goal of providing a multi-strategy investment vehicle to access the digital asset ecosystem. Our mandate is to offer broad exposure across the growing digital asset and blockchain sector with an appropriate level of diversification, professional oversight, and manager selection. Our collection of skill sets and our history in the business allows us to understand, assess, and engage with the practitioners of this nascent asset class with a level of diligence required to be responsible stewards of capital. We are happy to periodically share our observations with you.
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