Monthly Review of September 2023

In this monthly review, we will examine the most significant cryptocurrency-related news from September. The notable developments in the world of cryptocurrencies this month included advancements in bank-issued cryptocurrencies and blockchain technology, the approval of the European Parliament's directive on cryptocurrency tax reporting, ETF applications filed in the United States, and MicroStrategy's Bitcoin purchases.

              
September in the Cryptocurrency Markets
Cryptocurrency prices were on the rise in September. Of the cryptocurrencies offered by Northcrypto, Chainlink performed the best, with its price surging by over 40% during the month. Aave also saw a substantial increase of nearly 25%. Bitcoin and Litecoin prices rose by more than five percent, while Ethereum experienced a slight increase of just under five percent. On the other hand, Polygon and ApeCoin prices faced declines of approximately one percent and ten percent, respectively.

Advancements in Bank-Issued Cryptocurrencies and Blockchain Technology
German bank Deutsche Bank, one of Europe's largest banks, announced in September that it is working to initiate the offering of cryptocurrency custody and tokenization services. Initially, the bank intends to provide custody services for selected cryptocurrencies and some stablecoins. To achieve this, Deutsche Bank is collaborating with Swiss-based Taurus, which specializes in cryptocurrency custody. Earlier in June of this year, Deutsche Bank had applied for a license to provide cryptocurrency custody services in Germany.

Positive news related to banks also came from the United States in September when Citigroup, one of the country's largest banks managing approximately 1.6 trillion euros in assets, unveiled its blockchain-based solution. This solution aims to offer institutional customers services such as cross-border payments, liquidity, and automated trading finance solutions. Citigroup's Citi Token Services solution also utilizes smart contracts, serving as an alternative solution to traditional bank guarantees. Information released about Citi Token Services is currently quite limited.

Meanwhile, Japan's largest investment bank, managing assets of nearly 500 billion euros, Nomura's cryptocurrency-focused subsidiary, Laser Digital Asset Management, introduced a Bitcoin fund in September. The Laser Digital Bitcoin Adoption Fund is targeted at institutional investors. According to Sebastian Guglietta, the head of Laser Digital, Bitcoin is one of the enablers of global economic digitization. Nomura's Bitcoin-based fund is the first of several cryptocurrency-related funds that the bank plans to launch.

European Parliament Approves Directive on Cryptocurrency Tax Reporting
In September, the European Parliament approved the DAC8 directive on cryptocurrency tax reporting with a significant majority. According to DAC8 documents, the directive's purpose is to empower tax authorities to monitor cryptocurrency transactions made by individuals and organizations in EU member states. As a practical consequence, cryptocurrency operators functioning within the EU will be required to report the actions of EU residents to tax authorities. DAC8 directive will officially come into effect at the beginning of 2026.

ETF Applications for Bitcoin and Ethereum Filed in the United States
Franklin Templeton, a US asset manager overseeing approximately 1.4 trillion euros in assets, joined the ranks of major asset managers like BlackRock and Fidelity in September by submitting an application for a Bitcoin spot ETF. An ETF refers to an exchange-traded fund, and a spot ETF includes the actual underlying asset, in this case, bitcoins.

Asset manager Ark Invest and cryptocurrency service provider 21Shares also submitted the first application for an Ethereum spot ETF in September. Since this is a spot ETF, the fund would contain ethers. Prior to Ark Invest and 21Shares' application, several applications had been filed for Ethereum futures ETFs, which include futures contracts instead of actual ether.

MicroStrategy's Continued Bitcoin Purchases
MicroStrategy, a US-based company offering business intelligence solutions, cloud-based services, and mobile software, continued to purchase more bitcoins in September. At the end of September, MicroStrategy announced that it had acquired slightly over 140 million euros worth of 5,445 bitcoins at an average price of approximately 25,850 euros per bitcoin. The company had announced its first Bitcoin purchase in August 2020 when the price of Bitcoin was around 10,000 euros. Since then, MicroStrategy has purchased bitcoin multiple times and, after its latest acquisition, holds more than 158,200 bitcoins.

Summary
September was a positive month for both cryptocurrency price movements and cryptocurrency news. Particularly, there were several positive developments related to banks from around the world in September. With its announced actions, Deutsche Bank aims to likely become a pioneer in cryptocurrency services among European banks. In the United States, Citigroup's announcement regarding its blockchain-based solution marked an interesting and somewhat divergent move from the trends of recent years. Previously, US banks had primarily focused on offering cryptocurrency services, but now Citigroup is among the first banks developing their own blockchain-based solutions. Nomura's subsidiary's introduction of a Bitcoin fund represents one of the first steps taken by Japanese banks in the world of cryptocurrencies, and it will be interesting to see how soon other banks follow suit.

The DAC8 directive approved by the European Parliament follows the MiCA cryptocurrency legislation passed earlier this year. Both directives aim to harmonize and clarify the practices of EU member states regarding cryptocurrencies. Both directives are expected to facilitate the entry of institutional players into the cryptocurrency markets, which is naturally positive for the future of cryptocurrencies.

Following Franklin Templeton's submission of the Bitcoin spot ETF application in September, the combined assets managed by asset managers who have submitted Bitcoin spot ETF applications in the United States in recent months have risen to approximately 16.6 trillion euros. This reflects the world's largest financial players' willingness to meet their clients' growing demand for Bitcoin. Demand has also been increasing significantly for Ethereum, as evidenced by the first Ethereum spot ETF application submitted in September. Nevertheless, the approval of Ark Invest and 21Shares' application in the near future is considered rather unlikely. In September, the US company MicroStrategy continued its Bitcoin purchases in a familiar fashion. Although MicroStrategy's Bitcoin purchases are currently somewhat in the red, acquiring bitcoins has been a highly positive development for the company's stock price. MicroStrategy's stock price had increased by approximately 160% from the time of its first Bitcoin purchase in August 2020. During the same period, for example, the Nasdaq stock exchange had risen by approximately 20%.


Ville Viitaharju
Cryptocurrency specialist