10 May

More than 200,000 ether have been deposited to the network since the start of the week, data from the on-chain analytics tool Nansen show, marking the first time deposits have outpaced withdrawals since Shapella went live last month. The additions bring the number of ether locked for staking purposes to over 19 million tokens – about 15% of the total circulating supply.

The influx comes as traders flock to meme coins such as pepecoin (PEPE), which has strained the Ethereum network and sent transaction fees to a 12-month high.

[The deposit queue stands at 17 days, relative to the 5 day withdrawal queue, at the time of writing].”

Claiming a combined total of $943 million in cryptocurrency assets as of March 31, 2023, the filing shows a 56% increase over the company’s previous quarter where PayPal disclosed $604 million. The lion’s share of the fintech’s held cryptocurrency assets lies in BTC and ETH with $499 million and $362 million, respectively.

PayPal’s reported total financial liabilities for this quarter were $1.2 billion, with crypto assets making up 77.9% — up more than 10% from 2022’s reported fourth quarter liabilities.”

See Also: 32% of home offices invest in digital assets — Goldman Sachs

“The ink still hasn’t dried on the passing of the EU’s new Markets in Crypto Assets (MiCA) bill, a landmark in comprehensive crypto legislation for the bloc’s 27 states, and already the furnaces of invention are fired up for at least one European crypto company.

Berlin-based fintech startup Unstoppable Finance announced today it will be rolling out Europe’s first compliant “DeFi-native bank” alongside a fiat-backed Euro-pegged stablecoin following MiCA’s guidance. The DeFI banking arm will ensure that the stablecoin is fully backed by reserves, as outlined by the new legislation from Brussels.

Grosskopg highlighted the recent liquidity crises that depegged Circle’s native stablecoin USDC ‘because [Circle holds] parts of its reserves in different bank accounts.’

With [Unstoppable’s DeFi bank] we are able at any time to deposit money to an European Central Bank (ECB) account. It’s guaranteed money and that’s what we try to maximize.”

See Also: DeFi Broker Prime Protocol Introduces Bridgeless Cross-Chain Token Transfers
See Also: MakerDAO launches Spark Protocol, a new DeFi lending solution for DAI users

The U.S. Securities and Exchange Commission (SEC) went too far when it proposed a new rule demanding investment firms safeguard all of their clients’ assets – including crypto – with approved custodians, according to an array of critics not often in alignment.

From Wall Street, executives at JPMorgan accused the SEC of taking an “overly broad approach” that ‘would disrupt a significant portion of the operations in the financial markets which have been well-functioning for many years.’

The U.S. securities industry’s chief lobbying group, the Securities Industry and Financial Markets Association, called it ‘jurisdictional overreach, resulting in indirect and inappropriate regulation.’

As the two-month public comment period expired this week, the Small Business Administration (SBA) argued the SEC ‘drastically underestimates potential impacts‘ from its proposal, according to a letter from senior SBA lawyers who said the cost of the “sweeping changes” could threaten smaller investment advisers and force them to merge with others or get out of the business.

And from the crypto sector, investment firm a16z said, ‘We believe this proposed prohibition to be illegal, infeasible, and dangerous.’ The letter signed by several executives suggested investment advisers would find the rule almost impossible to comply with, because it ‘largely failed to consider the logistics of how custody works for many crypto assets, the economics underpinning crypto asset markets, and even the basic statistics and other data that should inform a considered regulatory approach.‘”

See Also: Market Makers Jane Street, Jump Retreating From U.S. Crypto Trading: Bloomberg

Financial technology company Digital Asset will start a privacy-enabled interoperable blockchain network designed to provide a decentralized infrastructure for institutional clients, the firm announced on Tuesday. The network connects applications built with Daml, Digital Asset’s smart-contract language, allowing various systems in financial markets to interoperate and synchronize.

Participants of the network, which is called the Canton Network, include BNP Paribas (BNP), Deloitte, Cboe Global Markets (CBOE), Goldman Sachs (GS), Broadridge (BR), S&P Global, and Microsoft (MSFT), among many others.

The Canton Network is a powerful answer to industry calls for a solution that harnesses the potential of blockchain while preserving fundamental privacy requirements for institutional finance. This unique approach, coupled with the ability to execute an atomic transaction across multiple smart contracts, is the building block needed to bring these workflows on chain.

While Digital Asset provides and owns the technology behind the infrastructure, the Daml smart contracts and the Canton protocol which enables the applications, it does not own the network itself as it is owned by its participants, which include Digital Asset.”

“Digital Currency Group (DCG) is looking to refinance outstanding obligations with its bankrupt lending division Genesis and raise growth capital, the crypto conglomerate said on Tuesday. The lending platform’s bankruptcy filings from January revealed DCG’s total debt to Genesis includes $575 million due this month, and a $1.1 billion promissory note due June 2032.

Parties to Genesis’ bankruptcy proceedings have agreed to a 30-day mediation period to iron out the terms and conditions of DCG’s contribution to the reorganization plan. The move is meant to provide “further financial flexibility” as DCG engages with stakeholders in Genesis Capital’s bankruptcy proceedings, DCG said.

We are committed to reaching a fair outcome for all and look forward to a productive resolution during this mediation period.”

See Also: Bitcoin Trades at Nearly $650 Premium on Binance.US as Liquidity Providers Flee Exchange
See Also: Bankrupt Crypto Exchange QuadrigaCX Will Start Interim Distribution for Some Users, EY Says

“Bankman-Fried, who is set to go on trial this fall, faces over a dozen different charges ranging from wire, securities and commodities fraud allegations to bribery claims.

In his pretrial motions, Bankman-Fried’s attorneys moved to dismiss charges of conspiring to commit wire fraud on FTX customers; of wire fraud on FTX customers; of conspiracy to commit wire fraud on Alameda Research lenders; of wire fraud on Alameda Research lenders; and of conspiracy to commit bank fraud, on the grounds that prosecutors did not “state an offense for failure to allege a valid property right.”

They also moved to dismiss the bank fraud conspiracy, unlicensed money transmitter operation, unlawful political contribution and bribery charges on discovery grounds. A final motion seeks to dismiss the bribery and political contribution charges.

Bankman-Fried’s attorneys did not seek to dismiss charges alleging conspiracy to commit securities fraud, securities fraud and conspiracy to commit money laundering.

Part of the argument is that under the terms of the extradition treaty between the Bahamas and the U.S., the Bahamas needs to “consent” to the charges brought after the extradition, and the Bahamas – where Bankman-Fried resided at the time of his arrest – could not consent without additional information that has not been provided.

Other memoranda of law lay out additional arguments for Bankman-Fried’s motions for dismissal, which include claims that FTX did not need to register as a money transmitter and that some of the laws Bankman-Fried is being charged under don’t apply as FTX is based outside the U.S.”

9 May

Crypto exchange Bittrex has filed for bankruptcy in the U.S. state of Delaware on Monday, months after announcing it would wind down operations in the country and weeks after being sued by the Securities and Exchange Commission (SEC). These changes have not affected Bittrex Global, the non-U.S. crypto exchange.

The exchange believes it has more than 100,000 creditors, with estimated liabilities and assets both within the $500 million to $1 billion range, according to a court filing.”

See Also: Private-Equity Giant Apollo Is Part of a Bid to Buy Bankrupt Crypto Firm Celsius
See Also: P2P Bitcoin Exchange Paxful Back Online After Temporary Suspension

“Bitcoin was recently trading at around $27,350, down over 5.5% in the past 24 hours, as investors continued to mull over a surge in interest in the PEPE meme coin and Binance congestion issues that forced the exchange giant to temporarily suspend bitcoin withdrawals over the weekend.

[Meanwhile], ETH’s deflationary narrative post-Ethereum Shapella upgrade has strengthened as ETH’s net issuance, or the annualized inflation rate, recently dropped to -2.7%, according to ultrasound.money. More than 62,300 ETH, worth around $116 million, have been burned over the past seven days.

The PEPE craze appeared to be waning with its market cap dropping to some $878 million after peaking above $1 billion before the weekend, Messari data showed.

DiPasquale said BTC might test support between $25,000 and $27,000 before bouncing again, although the economic outlook is favorable for BTC and the broader crypto market to thrive. He called accumulating BTC and ETH on dips a “sound strategy.” ‘Both BTC and ETH haven’t tested near-term supports since the rally we saw around mid-March.’

Greg Cipolaro, global head of research at bitcoin investment firm NYDIG, wrote in a Friday newsletter that despite short-term price fluctuation, BTC is increasingly serving as a “buy-and-hold asset” based on on-chain data.

With more bitcoins being held for longer, a dwindling supply is available for short-term trading. This may result in upward pressure on prices if the demand for bitcoin grows.”

See Also: PEPE Meme Coin Craze Spreads Wealth to Ethereum Validators Running Blockchain
See Also: Pepecoin Drops Nearly 50% From Highs as Traders Likely Taking Profits for Ether

Binance has once again resumed bitcoin (BTC) withdrawals after a second pause, as the Bitcoin network suffers from unprecedented congestion.

Binance briefly paused bitcoin withdrawals for around two hours Sunday afternoon U.S. time as the number of unconfirmed transactions hit a record high. Its second pause, taking place Sunday evening U.S. time, was also for just over two hours.

The number of unconfirmed transactions was approaching 500,000 when the second halt took place, from around 400,000 when the first pause occurred. It is now beginning to decline, and is currently just over 430,000 over a 12-hour period.

To prevent a similar recurrence in the future, our fees have been adjusted. Our team has also been working on enabling BTC Lightning Network withdrawals, which will help in such situations.”

See Also: Meme Coin Trading Volume Surges to Two-Year High, Signals Caution for Bitcoin Bulls
See Also: Bitcoin BRC-20 Tokens Near $1 Billion Market Cap as Exchanges List ORDI

“In a May 7 blog post, Coinbase said CEO Brian Armstrong and some of the firm’s executive team planned to discuss the potential for the UAE “to be a strategic hub” for the crypto exchange. According to the company, it was working with regulators in the Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority as part of efforts to potentially expand into the region.

[The UAE is] exciting for us as a potential hub to build, as well as an international hub for Coinbase that could serve not only in the Middle East but parts of Africa or other countries in Asia.

I think the U.S. right now is a little bit behind in terms of regulatory clarity and some of the rhetoric from the top.

The UAE has steadily opened up opportunities for crypto firms. Dubai established a legal framework for cryptocurrencies and set up the Virtual Assets Regulatory Authority in March 2022, taking advantage of the Emirates’ free-trade zones with separate rules and regulations.”

“Liechtenstein is planning to add bitcoin (BTC) as a payment option for government services.

Any crypto received as payment will likely be immediately exchanged for Swiss francs, Liechtenstein’s national currency, Prime Minister Daniel Risch told the newspaper. Although crypto is too volatile to entrust portions of the country’s multi-billion dollar annual savings, that could change, the Prime Minister reportedly signaled.

MEV Burn w/ Justin Drake and Dom

The Disrupt Weekend

“On May 2, a Texas House committee passed a bill to create 100% reserve gold and silver-backed transactional currencies. Enactment of this legislation would create an option for people to conduct business in sound money, set the stage to undermine the Federal Reserve’s monopoly on money, and possibly create a viable alternative to a central bank digital currency (CBDC).

The legislation would require the state comptroller to establish and provide for the issuance of gold and silver specie and also establish digital currencies that are 100% backed by gold and silver, and 100% redeemable in cash, gold, or silver. Specie is defined as ‘a precious metal stamped into coins of uniform shape, size, design, content, and purity, suitable for or customarily used as currency.’

In establishing gold and silver specie, the comptroller would be required to authorize the Texas Bullion Depository as issuer and ensure that the holder of the specie may use the specie as legal tender. The comptroller would also be required to create a mechanism to use 100% backed gold and silver digital currencies in everyday transactions. Physical gold and silver backing the digital currency would be stored in a pooled account at the Texas State Bullion Depository.

The creation of state-issued gold-backed and silver-backed digital currencies would create currency competition with Federal Reserve notes and undermine the Fed’s monopoly on money. It would also provide a sound money-backed competitor if the Federal Reserve implements a central bank digital currency.

Professor William Greene, an expert on constitutional tender, said in a paper for the Mises Institute that when people in multiple states actually start using gold instead of Federal Reserve notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.

On May 2, the House State Affairs Committee passed HB4903 by a 7-6 vote. HB4903 will now move to the Calendars Committee. This committee determines which bills move to the House floor for a vote. Supporters of the bill in Texas have created an online tool to register support for the bill.

This is one of several bills introduced in the Texas legislature this year to promote sound money, including legislation to establish state gold and silver reserves, and a bill to make gold and silver legal tender in the Lone Star State.”

“Binance, the world’s largest crypto exchange, temporarily paused bitcoin (BTC) withdrawals Sunday morning U.S. time as the Bitcoin blockchain became overwhelmed with pending transactions and sky-high fees. On-chain data shows that there are nearly 400,000 unconfirmed Bitcoin transactions, which is higher than anything seen during the bull runs of 2018 and 2021.

Biggest difference now between this jump in transaction fees and past ones with inscriptions is that BRC-20 standard is a new way to inscribe. Adoption of this standard is driving fees up.”

See Also: U.S. Justice Department Investigating Binance for Russia-Related Sanctions Violations: Bloomberg

“A new frenzy is sweeping cryptoland – so-called “BRC-20s” are fungible tokens deployed on the Bitcoin blockchain. The proposed new standard was introduced in March by a coder known online as Domo.

But Domo, and most other experts, have issued strong warnings against financial speculation in the new token format. In fact, just after the experimental standard was launched, Domo declared that ‘These will be worthless. Please do not waste money mass minting.’

Above all, BRC-20s aren’t broadly compatible with smart contract or decentralized finance (DeFi) systems. Despite borrowing their nomenclature from Ethereum’s ERC-20s, they’re not technically parallel. There are certainly possible use cases for simple tokens on Bitcoin, but their structure may wind up being radically different from tokens on Ethereum.

There’s a much more immediate downside to BRC-20s current limitations, even for degens happy to play the decentralized Ponzi game of memecoins. The lack of DeFi compatibility means that BRC-20s can’t benefit from liquidity provided by DeFi services like trading pools. So even pure speculation in the tokens may not have the frothy upside of a similar token issued on Ethereum.

[Further], the BRC-20 standard is just a proposal at this point, and there’s no guarantee it will be widely integrated into blockchain tools like wallets and exchanges. The design of BRC-20 isn’t necessarily finalized, much less fully vetted or adopted. If a competing or improved standard winds up being more widely adopted, the current wave of BRC-20s could become little more than digital museum pieces.”

“Implementing the new on-ramp service aims to support Web3 companies by providing a user-friendly way for customers to top up their crypto wallets. This comes after mobile payments service Venmo announced its own fiat-to-crypto payment service on April 28. Meanwhile, Robinhood announced its fiat-to-crypto on-ramp at Consensus on April 27.

Companies interested in offering cryptocurrency and blockchain-enabled experiences often face a cold start problem: Their customers don’t have the crypto in their wallets to carry out transactions.

Stripe’s newly launched fiat-to-crypto on-ramp, which Stripe itself will host, will allow Web3 companies to offer United States-based customers the ability to purchase crypto “at the precise moment they need it” without the need to embed any code into a website or app.

Several Web3 companies, including privacy-focused browser Brave, decentralized finance protocol 1inch and blockchain protocol Lens Protocol, have already implemented Stripe’s fiat-to-crypto on-ramp.”

See Also: Deloitte integrates blockchain for digital credentials

The Immutable Passport offers fiat deposits, withdrawals, and crypto swaps within the wallet, so users won’t have to go through the hassle of using a third-party crypto exchange and migrating funds. This also means that if games want to offer users the ability to pay with fiat currency instead of IMX or Ethereum, they’ll be able to do so from their wallet.

The two biggest challenges facing Web3 game studios today are security and player onboarding. The complexity of a crypto wallet often leads to confusion and skepticism.

The vast majority of wallet solutions available today aren’t designed for gamers and actually detract from an immersive gaming experience. Our aim is to bring down the cost of install by more than 10-20X—all without compromising self-custody.”

6 May

“One potential driver of ETH is its appeal as a deflationary asset, a topic Goldman’s Crypto desk recently explained. ETH’s value is a function of multiple factors, depending on one’s view of ETH as an asset – a store of value, means of exchange or a financial asset.

The London hard fork introduced changes to the fee mechanism, whereby the base fee paid for a transaction is burnt, decreasing the net ETH issuance. However, this heavily depends on Ethereum network activity: More on-chain activity = more ETH burnt. [Further], following the Merge, Ethereum’s transition to Proof of Stake reduced ETH issuance by ~90%.

On the back of these upgrades, the net ETH issuance is lowered by (i) the base fee burn and (ii) the decline in block rewards. This is what has led ETH to be referred to as ‘ultra sound money’.

Since the Merge (Sep’22), ETH has become an increasingly deflationary asset over the past months. In 2023 alone, ~374k ETH has been burnt. In April, daily ETH issuance was deflationary every day. This trend is on the back of increased on-chain activity, led primarily by DEXes, NFT platforms and stablecoins.”

See Also: Ethereum Gas Fee Surges to 12-Month High as PEPE Frenzy Grips Market

French bank BNP Paribas (BNP) is promoting the use of China’s digital yuan by linking wallets to bank accounts. The bank will also be exploring the use of the CBDC for smart contracts, supply chain finance and for cross-border payments.

BNP Paribas’ corporate clients will be able to connect to China’s central bank digital currency (CBDC) – or “e-CNY,” as it is known – through a connection to the Bank of China’s (BOC) system. BOC is one of eight banks authorized to handle China’s digital currency business.

The system will link clients’ digital yuan wallet to [their] bank accounts to enable efficient real-time and convenient use of the CBDC.”

See Also: China’s crypto stance unchanged by moves in Hong Kong, says exec

Web3 Social Media Landscape Explained

“The U.S. added 253,000 jobs in April, up from a downwardly revised 165,000 in March and ahead of economist forecasts for 180,000. The unemployment rate was 3.4%, down from 3.5% in March and against expectations for 3.6%. The price of bitcoin (BTC) fell about 1% to $28,900 in the minutes following the news.

While Friday morning’s headline jobs number is a strong one, downward revisions to February (to 248,000 from 326,000) and March (to 165,000 from 236,000) knocked a total of 149,000 in gains from those two reports.

Though slowing modestly in recent months, the employment picture has remained strong, giving the U.S. Federal Reserve reason to continue to hike interest rates.”

The New York legislation could directly oppose some core tendencies of crypto companies to provide a range of activity, such as trading platforms, custody and brokerage services. That all-in-one approach would be counted as an illegal conflict of interests under the attorney general’s proposal. The legislation also seeks to ban marketplaces from keeping custody of customer funds.

The bill would grant the Attorney General jurisdiction to enforce any violation of the law, issue subpoenas, impose civil penalties of $10,000 per violation per individual or $100,000 per violation per firm, collect restitution, damages, and penalties, and shut down businesses engaging in fraud and illegality.

Andrew Hinkes, a partner at law firm K&L Gates, tweeted that the bill was “destined to fail” because it misunderstood crypto. It won’t be possible to apply the provisions to decentralized organizations, and the market doesn’t exist to offer the kind of auditing or insurances James is proposing, Hinkes said.

In the absence of federal oversight of crypto, New York has been a de facto leader in U.S. regulation of the industry – an approach that other states including California and Illinois have sought to follow but haven’t yet established regulations.”

See Also: White House to build international standards for DLT
See Also: U.S. Regulatory Crackdown Sees Institutional Investors Prefer Gold to Bitcoin: JPMorgan

“Lawyers for Voyager Digital say the bankrupt crypto lender will self-liquidate its assets and wind down operations after failing to clinch a deal on a sale to either FTX US or Binance.US. The announcement, made in a court filing on Friday, comes 10 days after Binance US abruptly pulled out of a $1 billion deal to purchase Voyager Digital’s assets following a U.S. government intervention to block part of it.

According to the filing, Voyager’s customers will receive an initial recovery of 36% of their crypto holdings – an abysmally-low recovery rate compared to both estimates of their recovery rate of 72-73% if either of the acquisition plans were successful, as well as recovery estimates for creditors of other bankrupt crypto platforms. Celsius’ creditors, for example, will receive an estimated 70% of their holdings.

The recovery rate could rise, according to the filing, if defunct crypto trading firm Alameda Research’s bid to claw back $446 million from Voyager’s estate fails.”

RBZ announced in April that the tokens, meant to combat its volatile local currency, will be issued on May 8. In March, inflation in Zimbabwe stood at 87.6% after hitting a high of 285% in 2022.

The central bank has split up the issuance and usage of the token into two phases. In the first phase, tokens will be issued for investment purposes and available for sale through banks. Tokens will be held in digital wallets or cards and available for person-to-person and person-to-business transactions in the second phase.

Holders of physical gold coins, at their discretion, will be able to exchange or convert, through the banking system, the physical gold coins into gold-backed digital tokens.”

See Also: Argentina’s central bank halts cryptocurrencies from payment apps
See Also: 3% Tax on Crypto Transfers Part of Kenya’s Proposed Budget: Bloomberg

Liquidity Cycle At A Key Turning Point That Will Now Push Markets Higher?

5 May

The U.S. Securities and Exchange Commission (SEC) has been ordered by a U.S. court to respond to cryptocurrency exchange Coinbase’s (COIN) complaint over how it applies securities laws to digital assets.

The crypto exchange referred to a 2022 petition asking for formal rulemaking within the digital assets sector, to which the SEC is yet to respond. The Third Circuit Court of Appeals said in a Wednesday filing that the SEC must file its response within 10 days.

Coinbase has been attempting to launch a pre-emptive strike against the SEC, which said in March it expected to sue the exchange over allegations of offering unregistered securities products.”

“The cabinet, known as the Federal Executive Council, directed regulators including the Central Bank of Nigeria and the Securities and Exchange Commission (SEC) ‘to develop regulatory instruments for the deployment‘ of blockchain tech across various sectors of the economy.

The vision of the Policy is to create a Blockchain-powered economy that supports secure transactions, data sharing, and value exchange between people, businesses, and Government, thereby enhancing innovation, trust, growth and prosperity for all.”

“Optimism, an Ethereum-based layer 2, will be using Ethereum Attestation Service (EAS), an on-chain attestation protocol to enable users to assess the trustworthiness of the platform’s users and vouch for whether something actually happened on the blockchain.

Any Optimism user can use the technology to attest to information that they believe is accurate, such as whether a person built, or contributed to, a particular project, whether an individual makes profitable trades or not, and more. The team said the technology will allow developers to create innovative identity products across Optimism, and other networks such as Base, Polygon and Ethereum.

We’re trying to be a base layer where identity platforms can exist, where supply chain companies can attest to supply movements, and provenance, where governments can attest to land registries and entities can vote.”

See Also: Arbitrum-Based Exchange Chronos Attracts $170M to Yield Pools in a Single Day

Hamilton Lane (HLNE), an investment-management firm with $824 billion in assets under management and supervision, is offering tokenized access to a second fund. The access is provided through a feeder fund from Securitize on the Polygon blockchain. The feeder is the second of three tokenized funds Hamilton Lane announced last year.

Tokenization is a growing field that claims to widen access to traditional finance products by making private market investment available to investors who don’t fall into the institutional or ultra-high-net worth net bracket. In this case, the minimum investment is lowered to $10,000 from $2 million.”

See Also: Coinbase Ventures Backs $10M ZkLink Raise Ahead of Mainnet Launch

“Stocks of several regional banks tanked, including those of Los Angeles-based PacWest Bancorp (PACW) dropping 50% Thursday afternoon and Phoenix-based Western Alliance Bancorporation (WAL) falling 38%. PacWest is weighing its options, including a possible sale. Western Alliance denied a report that it’s for sale.

The financial crisis that we seem to be sleepwalking into will almost certainly become real.

Banks will struggle even more now given that the yield curves are so incredibly inverted. And, ultimately, this will likely force the [U.S. Federal Reserve] into urgent rate cuts and a return to something akin to quantitative easing – or else the economy and the banking itself will be in deep, deep trouble.”

See Also: Bitcoin drops with stocks as analyst warns of banking crisis ‘endgame’

4 May

“The Fed’s [rate increase] was widely expected. The price of bitcoin (BTC) held steady in the immediate aftermath of the news.

The policy statement [however] was notable for leaving out prior language that suggested continuing rate hikes were a certainty. The statement did take note of “tighter credit conditions” as weighing on the economy going forward.

While inflation has fallen from nearly a double-digit pace one year ago to the current level of about 5%, it remains well above the Fed’s 2% target. The Fed, however, is fighting a two-front war, with its rate hikes possibly having helped expose balance sheet issues at a number of U.S. banks.”

See Also: Bitcoin, Ether Decouple From Stocks: What’s Next for Crypto After Fed Rate Hike?
See Also: RFK Jr. Raises Crypto Taxes, Regulation as Issues in Opening Days of 2024 Presidential Race

Bitcoin mining company Bitdeer (BTDR) said it will work with the Bhutan government to establish cryptocurrency mining operations. Bhutan’s goal for the venture is to ‘accelerate the Kingdom’s digital transformation and economic diversification by exploring emerging sectors.’

The Nasdaq-listed miner and the government’s commercial arm, Druk Holding & Investments, will establish a $500 million fund to raise money for the venture from international investors and expect fundraising efforts to start this month.”

“Centralized crypto exchange giants Binance and Coinbase have suffered large outflows of staked ether (ETH) since Ethereum’s Shanghai upgrade as investors flock to decentralized rivals, blockchain data shows.

Coinbase’s staking platform has endured a $367 million net outflow of staked ETH since April 12. The staking service of Binance has had a net outflow of $340 million. Decentralized liquid staking protocols, on the other hand, have enjoyed a sharp rise in deposits. The amount of ETH staked on Frax and Rocket Pool has grown 32.5% and 31% in the past 30 days, respectively, according to DefiLlama data.

Regulatory risks and aversion to centralized crypto platforms after last year’s bankruptcies are likely among the reasons that drive investors to decentralized staking protocols. Investors could also be swayed by higher staking rewards that decentralized protocols can provide.

The upgrade has been “a major catalyst” for decentralized liquid staking systems.”

See Also: Curve Finance Deploys Native Stablecoin on Mainnet

“The number of non-fungible tokens (NFT) tied to the Bitcoin blockchain surged above 3 million earlier this week after a one-day spike in activity that mainly consisted of text-based assets, data from Dune Analytics show.

These cost much less than digital art or meme coins because network fees are dependent on the amount of data inscribed. Monday saw over 372,000 unique inscriptions on the Bitcoin blockchain, of which 371,000 were text based. Just 316 image-based inscriptions were created.”

3 May

“Coinbase is opening a derivatives exchange in Bermuda as part of an international expansion plan that comes as the publicly traded firm faces regulatory headwinds at home.

Called Coinbase International Exchange, the new facility will initially let traders bet on the price of bitcoin and ether via perpetual futures contracts with up to five times leverage and all trades will settle in the stablecoin USDC. In a blog post Coinbase said trading has begun.

Rest assured that Coinbase is committed to the U.S., but countries around the world are increasingly moving forward with responsible crypto-forward regulatory frameworks to strategically position themselves as crypto hubs. We would like to see the U.S. take a similar approach instead of regulation by enforcement.”

See Also: Coinbase Grew Quickly by Working With U.S. Regulators. Will It Expand Even More by Disregarding the SEC?
See Also: Coinbase Sued for Privacy Violations Over Users’ Biometric Data

“Sports Illustrated’s ticketing marketplace SI Tickets has developed “Box Office” in partnership with Ethereum software firm ConsenSys, the company behind crypto wallet MetaMask.

The announcement on Tuesday says it will be the world’s first complete NFT ticket service, allowing event owners, organizers and promoters to use Box Office to build further engagement opportunities into tickets, such as highlights, collectibles and offers through a feature called “Super Ticket.”

Blockchain is the future of ticketing, and now owners, promoters, hosts and attendees have access to an advanced ticketing experience that transforms the antiquated barcode into engaging and collectible content.

Blockchain technology offers significant benefits for consumers, particularly ticketing, including enhancing payment security, and eliminating scalping and fraud.”

“Interest in “Bitcoin Request for Comment,” or BRC-20, tokens built with Ordinals and stored on the Bitcoin base blockchain has skyrocketed. A pseudonymous on-chain analyst named Domo created the BRC-20 token standard in early March to facilitate the issue and transfer of fungible tokens on the Bitcoin blockchain.

The BRC-20 standard sounds like the popular ERC-20 standard, but the two are different, with the former lacking the ability to interact with smart contracts. Most active BRC-20 tokens fall into meme coins.

This [BRC-20] is not a token standard like you’re accustomed to with [Ethereum Virtual Machine] chains, which create smart contracts that manage the token standard and its various rules. Instead, it’s simply a way to store a script file in Bitcoin and use it to attribute tokens to satoshis and then allow them to be transferred between users.”

See Also: Sui Token and Network Launch: What You Need to Know
See Also: Bitcoin ‘Flash Rally’ Briefly Pushed BTC Derivatives Above $56K on Bitfinex

“Tax advisers in the U.K. have welcomed proposed rules for decentralized finance (DeFi) lending and staking activities, calling it a positive step that offers some “certainty” for the crypto industry. The new framework proposes that capital gains tax charges for DeFi lending or staking be triggered only with some activities – and not for all transactions.

The government said in its consultation that it agreed with industry members who had previously called for specific rules for DeFi markets, similar to those for repo and stock lending. Advocates were calling for new crypto tax rules for DeFi lending as the old ones triggered too many taxable events and were “outdated” policies.

We applaud HMRC for being the first tax administration to provide specific rules for DeFi.”

See Also: White House Pushes for Punitive Tax on Crypto Mining
See Also: US congressmen chide presidential advisers over crypto stances in economic report

“Crypto conglomerate Digital Currency Group (DCG) said Chief Financial Officer Michael Kraines stepped down in April and revealed that it fully repaid a $350 million senior secured term loan during the first quarter. DCG has engaged Heidrick & Struggles for a new CFO search, according to a letter to shareholders.

Also in the letter, DCG reported first-quarter revenue of $180 million, up 63% from the fourth quarter as crypto prices soared. DCG lost $1.1 billion in 2022 citing plunging crypto prices and the restructuring of Genesis.”

Arthur Hayes explains how Bitcoin will reach $1 million

2 May

Following the revelation that the small Himalayan kingdom has been quietly accumulating crypto, the country is also mining Bitcoin. Moreover, the country of less than 800,000 people leverages green energy to power its Bitcoin mining operations.

First reported in an exposé in local Bhutanese news and followed by inquiries from Forbes, Bhutanese officials confirmed that mining began when the price of Bitcoin was around $5,000 in April 2019. The kingdom has reportedly explored partnerships to expand its mining operations further. Notably, it is negotiating with Nasdaq-listed mining company Bitdeer to secure 100 megawatts of power for a Bitcoin mining data center in Bhutan.

The scale of Bhutan’s mining operations remains a mystery, with little information available about the location, size and profitability of its mining farms. Some Druk Holding and Investments (DHI) employees have listed “crypto mining” as their tasks and skills on their LinkedIn profiles.”

The American banking giant JPMorgan Chase is set to acquire First Republic Bank’s (FRB) assets after early efforts to rescue it failed. JPMorgan will assume all assets of First Republic Bank, including uninsured deposits. FRB currently has $229.1 billion in assets and $103.9 billion in deposits. All depositors of FRB will become a part of JPMorgan and have access to their total deposits insured by FDIC.

The California Department of Financial Protection and Innovation closed FRB on May 1 and entered into an agreement with the Federal Deposit Insurance Corporation (FDIC) as the receiver. The FDIC then entered into a purchase and assumption agreement with JPMorgan to protect depositors.

Apart from the transfer of assets, a loss-sharing agreement was also agreed upon between the FDIC and JPMorgan for residential and commercial loans acquired by the FRB. The losses and any recoveries on the loans covered by the loss-share agreement will be split between the FDIC, in its capacity as receiver, and JPMorgan.”

See Also: Bitcoin Drops Below $28K; JPMorgan Takes Over Embattled First Republic Bank

“Art auction house Sotheby’s is expanding its non-fungible token (NFT) art offerings through the release of a specially curated, peer-to-peer secondary marketplace. Sotheby’s Metaverse will now offer a curated, peer-to-peer marketplace via the Ethereum and Polygon networks, and users can pay in either native token ETH or MATIC.

The opportunity to expand Sotheby’s Metaverse with a fully on-chain peer-to-peer market is an important step forward in our evolution within the digital art and collectible space.

Artists featured on Sotheby’s secondary marketplace will rotate every few months. The platform will launch with works from 13 leading digital artists.”

See Also: NFT Marketplace Blur Launches Blend, a Peer-to-Peer Lending Platform

Nigeria’s Securities and Exchange Commission is considering allowing tokenized coin offerings backed by equity, debt or property – but “not crypto” – on licensed digital asset exchanges, Bloomberg reported Monday. The regulator is also processing applications for digital exchanges on a trial basis, intending them to undergo one year of “regulatory incubation”.

We always like to start, as a regulator, with a very simple, clear proposal before we go into the complex ones.

Despite the central bank’s resistance, there have been attempts to include crypto in the scope of regulations, with a new bill in the works that could recognize crypto as capital for investment.”

See Also: Industry heavyweights respond to UK’s crypto asset regulatory framework proposal

Crypto price tracking site CoinMarketCap is diving into the world of reality TV, releasing a competition show called “Killer Whales” that draws inspiration from the popular TV series “Shark Tank.”

In partnership with Web3 entertainment company Hello Labs, the new program will allow entrepreneurs to pitch their projects to the “Killer Whale” judges made up of entrepreneurs, influencers and founders of Web3 companies. Filming for the show begins in June, and the show is slated for release across major streaming services.

Our aim is to open the door to the next billion users into Web3 by entertaining and educating them on all things crypto.”

“Mediation is underway to resolve the outstanding issues between DCG, Genesis, and Gemini. For Earn users, Gemini said, two important dates to keep in mind are May 8, before which two mediation meetings are planned to take place, and May 9 to 11, the period during which DCG is expected to pay the Genesis bankruptcy estate a sum of $630 million.

The mediation will be narrowly focused on DCG’s economic contribution to the bankruptcy estate for the benefit of all creditors, including Earn users, and is designed to bring resolution to the Genesis bankruptcy plan.”

See Also: Crypto Exchange Poloniex Agrees to $7.6M Fee to Settle Sanctions Violation Charges

The Disrupt Weekend

The U.S. House Financial Services Committee and House Agriculture Committee will put together legislation to oversee the crypto sector in the “next two months” after holding joint public hearings starting May, said Rep. Patrick McHenry (R–N.C.), chair of the House Financial Services Committee.

When asked whether such a bill could be signed by President Joe Biden in the next 12 months, McHenry told a crowd at CoinDesk’s Consensus 2023 event, “yes.” The bill will address both securities and commodities regimes and issues that are hard to fix on either side.

Sen. Cynthia Lummis (R-Wyo.), the other panellist during the session, said the House had a better chance than the Senate at getting legislation through earlier. Lummis told the crowd at Consensus that a new-and-improved version of the bill will be unveiled in six to eight weeks.

We have tried to keep partisan tinge off this subject. This is a bipartisan subject we need to address before the 2024 election.

We have to fix this problem, we have to provide certainty that you can bank in a safe and sound manner. This is a great example of why Congress must legislate and provide clarity. Several jurisdictions are ahead of us. We are falling way behind. These countries are telling us to catch up.”

See Also: Crypto Tax Guidance Could Come in ’12-ish’ Months, Says IRS Official

Crypto and blockchain are on the cusp of becoming ordinary, regulated businesses. While it’s always extremely difficult to separate signals from noise, I see three big positive signs for the future.

  • Surge in enforcement actions by law enforcement – Enforcement actions are much more effective than warnings and social-media flame-wars.
  • Contradictions and inconsistencies in public policies – The legal system must try to make some consistent sense of how the law is applied. In those cases, regulators must present a clear and consistent opinion of what the law means. This clarity will take some time to emerge, but it is coming.
  • Maturing industry leadership and product – The boom-and-bust cycle of the tech industry tends to happen when expectations and excitement far outstrip the capacity of companies to actually deliver products and earn revenues.

Not dissimilar to many blockchain and crypto business models in 2018-2022, the dot-com bubble saw companies go public or raise hundreds of millions of dollars without meaningful revenue streams, or occasionally without even well-structured business plans. Today, e-commerce and online business is everything we were promised in 1999. Technology stocks represent more of the U.S. stock market than the financial sector and the energy sector combined. And while there have been ups and downs, there hasn’t been a single technology bust since 2000.

The reason for that is simple: Technology has become a regular industry where valuations are driven by revenue and profit growth, not starry-eyed predictions of the future.

The signs of maturing blockchain and crypto products and businesses are starting to emerge as well. While it’s early days yet, overall, non-fungible tokens (NFT) seem to have found a permanent place in the user and business ecosystem both as collectibles and as digital trophies, tickets and proof of engagement or attendance. At EY, “boring” businesses like supply chain management, product traceability and emissions tracking are all growing as industrial companies put blockchain to work for use cases that have nothing to do with financial engineering. Privacy technology (not to be confused with anonymity) has proven key to unlocking practical use cases among companies that want to leverage shared, public technology infrastructure without sharing their sensitive business information.

As we clear a path through the wreckage of the crypto winter, the same bright future is coming for the blockchain industry. Bad actors are going to jail. Rules are getting clearer. And, most importantly, the companies involved in this ecosystem are starting to build real products and have valuations based on revenue and profits. The result is that blockchain and crypto can become regular industries with regulated products and outputs that are widely accessible.

As a regular industry we will still have ups and downs, but we’ll no longer have ridiculous booms and busts.

“Blockchain development firm Recursive is bringing a new addition to the crowded Ethereum Layer 2 ecosystem that aims to help connect roll-ups like Optimism, Arbitrum, zkSync, and Starkware, among others.

The project ultimately wants to enable use cases like cross-rollup stablecoins and other DeFi primitives that can aggregate liquidity from different Layer 2 rollups. The Omni platform is being designed to build on top of the EigenLayer, another blockchain protocol.

The Omni Network will collaborate with major rollup partners like Arbitrum, Polygon’s zkEVM, Scroll, ConsenSys’s Linea, and Starkware to launch the first version of the platform in the coming year.

Omni allows developers to think globally, not locally.”

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Bob Michele, the chief investment officer of J.P. Morgan Asset Management, is unsure how United States regional banks are going to operate when the Federal Deposit Insurance Corporation (FDIC) and Federal Home Loan Banks (FHLB) emergency lending programs expire, warning that the possible collapse of First Republic Bank may cause a domino effect.

Michele blamed the “high price of everything” as a significant factor leading to the recent banking crisis: The “bottom quartile of earners” in the United States have been “most punished” and forced to deplete their deposit balances “just to live,” he said.

I think it’s somewhat naïve to say that this is just limited to First Republic.

Michele believes a resolution is urgently needed as regional banks are “heavily dependent” on the FDIC and FHLB. During the last quarter of 2022, both Signature Bank and Silvergate Bank reportedly received substantial loans from the FHLB — a consortium of 11 regional banks across the United States that provides funds to other banks and lenders — totaling nearly $10 billion and $3.6 billion, respectively.

U.S. Department of the Treasury staff members are reportedly studying ways to expand the current deposit insurance beyond the maximum cap of $250,000 to cover all deposits in the United States. According to the FDIC, domestic U.S. bank deposits totaled $17.7 trillion as of December 31, 2022.”

See Also: ‘Good luck bears’ — Bitcoin traders closely watch April close with BTC price at $29K

The level of optimism people have about crypto is very high. The people I know best are from traditional finance and they, too, remain quite high on the future of crypto and moving TradFi stuff to crypto or crypto-adjacent infrastructure.

The lack of policymaking and predictable enforcement in D.C. is a wider threat to the U.S. than we might think. It’s a concern for American competitiveness at large and, at this point, it’s really unforgivable. Europe and much of Asia now have relatively clear frameworks – and in what is supposedly a major hub for blockchain industry, we still don’t. That affects an increasingly large number of people and organizations.”

Coinbase responds to the SEC’s Wells notice