Arbitrum surges 10%, USDT becomes a haven, and Hong Kong flexes

Happy Tuesday!

Market action is running hot, regulators are still struggling to get their heads around blockchain stuff, and TradFi is playing the long game. Here’s your overnight snapshot on decentralised finance…

Arbitrum outrunning Ethereum

A couple of weeks ago Arbitrum, the layer 2 blockchain network, stopped processing transactions for about an hour after a bug led to a shortage of funds to pay for gas. Not good. But that isn’t phasing investors. Arbitrum’s token, ARB, soared almost 10% early Tuesday morning UK time, to $1.20, and it’s up 20% in the last 14 days. That beats Ethereum’s 6.8% jump.

So what gives? As DL News reported last week, BlackRock and other institutional investors’ moves to bring out Bitcoin ETFs is generating mojo across the market. But check out Arbitrum’s daily volume: it has multiplied 19 times this year, to $435 million, according to DeFiLlama. Nothing spurs confidence like more users.

Russian crisis triggers stablecoin flight

Whatever anxiety investors may have about Tether’s reserves, many holders of Russian rubles didn’t hesitate to swap the currency for USDT during the Wagner crisis. Trading volume in the pair quadrupled to $15 million over the weekend, Fortune reports. That may not seem like such a high number but it’s yet another example of the attraction of USD-backed stablecoins during bouts of turmoil.

Hong Kong isn’t messing around

Under pressure from the Hong Kong Monetary Authority, banking giant HSBC is going to start providing account services to crypto exchanges. This is big. In most other mature markets — the UK, the US, the EU — lenders are extremely reluctant to bank firms dealing in digital assets. As the Financial Times reported overnight, Hong Kong officials are eager to jump start a crypto hub, perhaps as a foil for Singapore, or as a lab Beijing can use to experiment with blockchain technology. China is pushing forward with an ambitious plan to support blockchain across the developing world, albeit without tokens.

Tokenisation is so hot right now

Yes, it’s a buzzword de jour, and it’s easy to pooh-pooh tokenisation of TradFi securities because there’s been so little uptake. But as CoinDesk’s George Kaloudis wrote Monday, the IMF and the Bank of International Settlements are pretty keen on the technology. In its latest report, the BIS, which shapes policy for central banks, calls tokenisation a “key development” poised to drive a “major leap” for the global monetary system. Check out DL News’ story on Swarm Markets to see how crypto platforms are riding the trend.

What we’re reading around the Web:

Nomura’s crypto chief on finance ‘land grab,’ the SEC crackdown, and playing the long game — DL News

$27 trillion AUM is perched over Bitcoin and crypto: CoinShares CSO — CoinTelegraph

The internet is about to become a lot safer — MIT technology Review