29 June

DeFi firm Compound Labs, the creator of the Compound money market on Ethereum, has a new company: Compound Treasury. It could be one of the most significant developments in “institutional DeFi” to date.

In cooperation with Fireblocks and Circle, Compound Treasury lets neobanks and fintech firms send dollars that are converted into USDC. Those USDC tokens will then be deployed on Compound for a guaranteed interest rate of 4%, vastly better than anything firms would get from a savings account or even a certificate of deposit.

Compound Treasury enables large holders of U.S. Dollars to access the interest rates available in the USDC market of the Compound protocol, while abstracting away protocol-related complexity including private key management, crypto-to-fiat conversion, and interest rate volatility.

From the start, it was always the plan to build the protocol and then build a business atop the protocol that would have a revenue stream, which brings us to Compound Treasury.

This is what Compound Labs is offering, a dollar on-ramp to the protocol. I think this could be shockingly big and shockingly profitable.”

According to SEC filings, the noted tech investor is applying to create the ARK 21Shares Bitcoin ETF. The vehicle would tap 21Shares’ expertise in spinning up crypto ETFs, mostly in Europe. Wood joined the board of Amun Holdings, the parent company of 21Shares, in May.

ARK joins the swelling ranks of companies hoping this will be the year the SEC approves a bitcoin ETF.”

“The speech was in sharp contrast to recent comments from other Fed officials. Speaking at the 21 Utah Bankers Association Annual Convention, Quarles added that the U.S. central bank has a “strong regulatory interest” in stablecoins but also said there is no need to fear them.

When our concerns have been addressed, we should be saying yes to these products, rather than straining to find ways to say no. Indeed, the combination of imminent improvements in the existing payments system such as various instant payments initiatives combined with the cross-border efficiency of properly structured stablecoins could well make superfluous any effort to develop a central bank digital currency.

Among the concerns Quarles highlighted was the possibility stablecoins that were fractional rather than fully reserved could create a “run risk” for consumers.”

See Also: Singapore’s Central Bank, IMF Launch Global Challenge for CBDC Solutions

Crypto investments in the country have surged to $40 billion from $200 million a year ago. It’s a considerable jump, demonstrating a shift in thinking among the country’s youngest investors away from the precious metals that older generations in the country typically favor.

I’d rather put my money in crypto than gold. Crypto is more transparent than gold or property and returns are more in a short period of time.

More than 15 million Indians are now trading crypto, roughly 8 million fewer than in the U.S. and many more than the U.K.’s 2.3 million. Despite the regulatory roller coaster Indians have faced from the country’s central bank, courts, and political corridors, crypto is beginning to take root in the country of 1.33 billion.

Meanwhile, India’s financial regulators are considering classifying bitcoin as an asset class under a bill that could be presented as soon as next month.”

“Polygon has announced the rollout of a general-purpose, scalable data availability solution called Avail. Avail will function as a data available tool for execution layers like sidechains, standalone networks, and layer-two protocols.

Rather than creating their own data availability protocols, execution layers can offload the role to the Avail layer with the latter acting as a secure data hosting site. Avail utilizes erasure coding and polynomial commitment to combat data encoding fraud proofs by creating a two-dimensional data availability layer.

Avail is a key component of a new paradigm in which blockchains will work in the future.”

Like Binance, “global” crypto exchanges are widely used in jurisdictions where they are not explicitly licensed to operate. The series of actions this past weekend could be a preview of a sterner worldwide clampdown on that class of crypto exchanges.

Exchanges like KuCoin and Bitfinex have based much of their growth on what’s known as “regulatory arbitrage.” The term refers to the exploitation of differences between laws in different places to evade oversight and control. It can also refer more simply to the exploitation of unclear or weakly enforced regulation. Uber’s growth was a mainstream example of regulatory arbitrage.

In the case of the exchanges, regulatory arbitrage has mainly involved putting headquarters in low-regulation jurisdictions while offering services in restricted countries via the superficial digital wink-and-nod of virtual private network (VPN) software.

This arguably began with the U.S. filing criminal money laundering charges against Arthur Hayes and other executives of BitMEX. While uncertainty, indifference and VPNs have allowed global exchanges to play games with regulators for years, leaders looking at those sorts of personal consequences may finally start to take regulators seriously.”

See Also: UK Regulator FCA Has ‘Huge Issue’ with Binance’s Lack of HQ
See Also: China’s Longest-Running Crypto Exchange Closes Bitcoin Business Following Crackdowns
See Also: Coinbase Receives Crypto Custody License From German Regulator BaFin

For all of the digital yuan’s consequence, it is a toe peeking out from a giant red curtain. Behind is an ambitious and largely invisible infrastructure program to rewire the country and its economy with a distributed ledger technology known as blockchain. China has moved deliberately to secure first-mover advantage in what it believes is the future of the internet.

If the digital yuan is Beijing’s tender for the digital frontier, its blockchain initiative is its bid to build the railroads.

Chinese officials are right to talk about the digital currency as if it’s a new frontier. What are the full implications for financial, banking and payment systems, or the conduct of a monetary policy? I don’t think anybody has a firm grip on that. And that includes China.

When it comes to blockchain, China appears to have taken a lead in a technology of consequence. After President Xi in 2019 promised blockchain would “lead the next wave of the digital transformation of China,” thousands of companies reportedly initiated blockchain projects related to everything from retail banking to global shipping and supply chains. This profusion of activity continues apace.

These projects are transforming a digital ecosystem that was already among the world’s most sophisticated. China has 850 million internet users and more than a quarter of the world’s most successful startups. One of them is Hangzhou-based Ant Group. The financial services giant has over 50 blockchain-based decentralized apps, or dapps, in areas such as shipping, insurance claim processing and charitable donations. Internet search firm Baidu, the Google of China, has 20 dapps, including one that has handled 35 million pieces of electronic evidence for China’s ‘Internet Court.’

It’s a field of one. No other country is even close.”