Ten31 Timestamp 798,121

Jul 10, 2023

Major government bond yields around the world spiked to potentially noteworthy levels this week. The US 10 year bumped up against 4.1%, a range not seen since right before the sudden collapse of Silicon Valley Bank. The jump was partially driven by much stronger than expected June jobs data (though as always, the data came with some major caveats) and its potential read through implications for the Fed’s next move, just the most recent example of the late-stage fiat mantra that “good news is bad news for markets.” Across the pond, UK gilt yields rose beyond the range where the Bank of England intervened to save British pension funds less than a year ago. Meanwhile, in a perhaps aptly timed pivot given ballooning volatility in the world’s “risk-free” assets, BlackRock CEO Larry Fink – once a critic of bitcoin as an “index of money laundering” – took time out to praise bitcoin as an “international financial asset” with the potential to “revolutionize finance.”

Portfolio Company Spotlight

Battery Finance is a credit opportunities asset management firm capitalizing on some of the ways that bitcoin will impact traditional finance. Battery focuses on project finance with unique dual collateralization in the form of both underlying physical assets and bitcoin. Battery seeks to lend to traditional infrastructure ventures at competitive rates while requiring project sponsors to partially re-denominate real asset equity into bitcoin exposure. Upon maturity, borrowers repay principal and a portion of their bitcoin appreciation to Battery, giving Battery exposure to bitcoin’s upside while reducing medium-term volatility via project cash flows and collateralization of traditional physical assets.

Selected Portfolio News

Unchained announced Unchained Signature, a new white-glove service offering:

Unchained also added trading desk support for Louisiana:

Media

Strike CEO Jack Mallers sat down with Block CEO and Twitter founder Jack Dorsey for the inaugural episode of his new Money Matters podcast.

IBEX Co-Founder and CEO Jose Lemus joined the On the Brink podcast to discuss lightning network adoption in emerging markets.

River Founder and CEO Alex Leishman appeared on the Last Trade podcast to discuss River’s infrastructure and bitcoin custody.

Kody Low, Head of Developer & Product Support at Fedi, participated in an AMA on Stacker News.

Ten31 Managing Partner Jonathan Kirkwood published an article on how bitcoin is a “cheat code” for emerging technology companies.

Market Updates

US manufacturing PMI data for the month of June came in below consensus, reaching levels not seen since the early days of COVID lockdowns.

Later in the week, however, private sector payroll data for the month came in substantially above expectations.

The details were far less encouraging than the headline (and nonfarm payrolls missed expectations the next day), but yields spiked on the news, with the US 10-year yield approaching decade highs (and levels last reached just before the collapse of Silicon Valley Bank).

Overseas, UK gilts continued their months-long rout, with yields blowing past the levels at which the Bank of England intervened last October.

BlackRock CEO Larry Fink, once known for his dismissal of bitcoin, praised it publicly this week for its role as a “digital gold” and an “international asset” that could “revolutionize finance.”

In the wake of several recent legal actions and an SEC lawsuit, several key executives – including the General Counsel and compliance officers – resigned from crypto exchange Binance this week.

Regulatory Update

The IRS ordered US exchange Kraken to provide extensive personal data on users who traded more than $20,000 on the platform in any year between 2016 and 2020.

The government of Belarus announced it is preparing legislation to restrict P2P bitcoin transactions, ostensibly in the interest of “reducing fraud.”

A new report suggests 130 countries are currently exploring or planning to issue CBDCs.

Noteworthy

Lightning Labs released new tools for developers to build AI applications integrating lightning payments.

CivKit, a P2P marketplace for bitcoin trading leveraging the Nostr protocol, released its roadmap.

Crypto exchange Huobi patched a vulnerability – apparently present since June 2021 – that could have exposed user KYC information to a malicious actor.

Following riots in France over the last few weeks, the government passed a bill allowing police to spy on citizens, including the powers to remotely access phone cameras, microphones, and geolocation data.

China restricted the export of two key metals used in semiconductor manufacturing in response to recent US trade restrictions.

Ten31 Timestamp