24 February

In a closely watched case with wide-ranging implications for the crypto market, Tether has admitted no wrongdoing and will provide reports on USDT’s reserve composition for two years.

The New York Attorney General’s office (NYAG) has settled with Bitfinex over a 22-month inquiry into whether the cryptocurrency exchange sought to cover up the loss of $850 million in customer and corporate funds held by a payment processor.

Under the terms of the settlement, Bitfinex and Tether will admit no wrongdoing but will pay $18.5 million and provide quarterly reports describing the composition of Tether’s reserves for the next two years.

The settlement may help resolve, one way or another, a question that has long bedeviled the entire $1.6 trillion global cryptocurrency market. By requiring Tether to provide a greater level of transparency than ever about the backing of its USDT stablecoin – a foundational piece of crypto’s plumbing – the arrangement could replace whispers and conjecture with regular data.

Contrary to online speculation, there was no finding that Tether ever issued tethers without backing or to manipulate crypto prices.

Since the case entered the public sphere, Bitfinex has tried to recover the funds held by Crypto Capital held by law enforcement officials in Portugal, Poland and the U.S. It’s unclear how long it might take for these cases to resolve, given the different jurisdictions and the ongoing cases against Crypto Capital’s operators.”

See Also: Tether Deal With New York State Brings Quick Reversal of Crypto-Market Sell-Off
See Also: Coindesk Commentary (Video)

“Castle Island Ventures partner Nic Carter said this was a historic “derisking event” for the industry. According to Carter, one of the largest hurdles for institutions to enter the market was the lack of certainty around USDT, despite its outsized role.

For instance, JPMorgan analysts said just last week a loss of faith in tether could cause a liquidity crisis in crypto. In addition to questions about USDT’s backing, there have been persistent conspiracies that tether is used to inflate the price of bitcoin.

I think we can put that to bed now.”

Ahead of its fourth-quarter earnings call Tuesday the payments firm announced it had purchased an additional 3,318 BTC as a reserve asset. The company’s total value of BTC on Square’s balance sheet is $394 million.

Square has $4.4 billion in total cash and securities, so the $220 million it spent on bitcoin is 5% of its total liquid assets.”

See Also: Square Cash App Bitcoin Revenues Swell 785% in 2020

The European Central Bank (ECB) is seeking the power to veto launches of stablecoins in the eurozone. According to the ECB, such stablecoin issuers should meet “rigorous liquidity requirements” on cash reserves similar to money market funds.

The assessment of the risk that stablecoins pose to financial stability in the eurozone should ‘fall within the exclusive competence of the ECB,’ the central bank said.”

“In what may become an industry standard, unused liquidity from Balancer will be deposited into Aave, significantly increasing depositor yield. In essence, the integration will allow users to earn two forms of return on their deposits: trading fees and yield farming from Balancer, in addition to lending interest from Aave.

The release of the feature is slated for “not too long” after Balancer’s V2 launch in March. The blog also notes that deeper collaborations, such as Balancer LP tokens as collateral on Aave.”

See Also: Layer-2 race heats up as Loopring (LRC) price gains 430% in 2021

CZ Blows a Shady Bubble

“Bitcoin mine operator Northern Data AG is reportedly planning a US listing and could raise up to $500 million via an IPO. The Frankfurt-based firm’s largest facility is located in Rockdale, Texas, and it claims to be the biggest Bitcoin mine in the world.

Northern Data’s stock has been trading on Deutsche Börse’s Xetra OTC-market since 2015. The firm is backed by a number of high-profile shareholders, including Block.One founder Brendan Blumer and Mike Novogratz of Galaxy Digital.”

“The “Multiple Central Bank Digital Currency Bridge” (m-CBDC) project will explore the possibilities of DLT and CBDCs in facilitating cross-border, multi-currency, real-time payments.”

See Also: India’s Largest Bank Joins JPMorgan’s Blockchain Payments Network

“Clearing firms act as intermediaries in the U.S. securities markets, facilitating payments and the transfers of securities for exchanges. If approved, Paxos would become one of just a handful of clearing firms in the U.S., joining the Depository Trust Company (DTC), Options Clearing Corporation and others.

Cascarilla also raised the idea that a blockchain-based clearing system might be more efficient than the current market infrastructure.

The GameStop issue really highlighted how blockchain infrastructure can help solve a lot of the problems in our markets.

There’s no firm timeline for when Paxos might submit the application, and after it does the SEC will likely publish it for a public comment period. Paxos has also applied to become a nationally chartered bank through the Office of the Comptroller of the Currency. This application is still being reviewed by the bank regulator.”

“Popularly referred to as Miner Extracted Value (MEV), the arbitrage strategy sees bots identify and target trades waiting in Ethereum mempools. Bots will copy that trade and up the gas price for its transaction. That way, a miner will package its copy trade before the original can go through.

After scraping the Ethereum blockchain starting from the first block of 2020 (9193266), we’ve found a total of at least $314M worth (~540k ETH) of Extracted MEV since Jan 1st 2020.

Failed transactions generally increase the average transaction cost on-chain – a sore spot for Ethereum users who have suffered under $20-$30 average transaction fees – in addition to “bloating” the Ethereum by leaving traces of the failed transaction on the blockchain’s state. In other words, MEV creates negative externalities for Ethereum (or any smart contract blockchain).

Some Ethereum mining pools have even built custom networks to deter front running – a form of MEV – such as SparkPool’s Taichi Network.”