CRYPTO MOVERS AND PRICES
Bitcoin’s (BTC) market cap has surpassed the USD 1 trillion mark as crypto experiences a broad rally. Binance Coin (BNB) is seeing the largest gains in the Top 10 and was up 16% this morning.
Crypto Story of the Day
PayPal announced that it’s acquiring Tel Aviv-based crypto custody startup Curv in order to “accelerate and expand its initiatives to support cryptocurrencies and digital assets.” The acquisition reflects the challenges non-crypto firms face in participating in the space without the support of crypto-native firms.
PayPal revealed it would enable its users to buy, sell, and hold BTC, Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) in October 2020. Since then, the firm has placed crypto within broader plans for a “new digital future” and ambitions to grow to 750 million active users platform-wide by 2025.
PayPal’s announcement of the acquisition didn’t provide details of the deal, which is planned to be finalized in the first half of 2021. CNBC, however, has cited “a person familiar with the matter” who said the deal was worth “less than [USD 200 million].” Curv will join PayPal’s team focused on “blockchain, crypto, and digital currencies.”
Curv’s whitepaper describes cryptocurrency private keys as a “single point of failure.” As a response, the startup has developed a technique that allows transactions to be signed in a way that doesn’t rely on private keys.
Instead of private keys, Curv offers clients a portion of the instruction to generate the private key, while retaining the remaining portion. When clients want to sign a transaction— to send crypto, for example— Curv’s protocol runs between client devices and its own to “jointly sign the transaction, without ever constructing the private key or revealing shares to the other signing parties.”
In a “Looking Ahead” segment of its whitepaper, Curv’s approach to private keys is described as enabling “institutions and enterprises to easily and confidentially adopt blockchain,'' noting that it’s digital assets today, but it could be other applications tomorrow. Provided examples of further applications are “supply chain, identity, and financial securities applications…”
During PayPal’s “Investor Day” CEO Dan Schulman described the firm foreseeing a future financial system including tokenized assets on blockchains, central bank digital currencies, and “digital currencies,” or cryptocurrencies. In December, Fortune reported that PayPal’s talks with crypto custody provider BitGo over an acquisition fell through.
When MicroStrategy hosted their “Bitcoin for Corporations” seminar in early February, we commented that one of its major throughlines was that corporates looking to enter the space should seek out crypto-native advisors. Indeed, PayPal’s crypto offering is enabled through a partnership with crypto service provider Paxos Trust Company. PayPal currently relies on Paxos for trading execution and custody services.
Furthermore, efforts to develop an in-house custody solution also led the firm to seek the assistance of a crypto-native firm, albeit through an acquisition. This endorses the view that while mainstream awareness and some adoption of BTC has occurred, incumbent corporations and institutions lack the means to engage with the crypto market on their own.
As a result, for the foreseeable future, we believe it’s likely that traditional firms entering the space will rely on partnerships and acquisitions with established crypto-native firms.