15 February

“Coinbase will hire up to 2,000 people in 2022 as it seeks to take advantage of opportunities in the development of Web 3, and other areas. The company plans to expand its product, engineering and design teams. Coinbase will also add products to expand its offerings in hosting general content such as NFTs and the Coinbase Wallet.

We believe our industry is in its infancy and that building onramps for individuals to participate is critical to driving the next generation use case of crypto.”

Coinbase, FTX, Crypto.com and eToro all brought crypto-related sales pitches to the big game, as did TurboTax, with an ad nodding to the nightmare of handling digital assets during tax season. Meta had a commercial, too, albeit a somewhat depressing one.

Here’s my brief (subjective) ranking of the crypto- and fintech-adjacent ads from this year’s Super Bowl broadcast.”

See Also: Coinbase Forced Into Outage Following Super Bowl Ad After More Traffic ‘Than Ever Encountered’

“Responding to the now weeks-long, trucker-led protests that have snarled streets in Ottawa and blocked key crossings at the U.S.-Canada border, Canadian Prime Minister Justin Trudeau this afternoon invoked the Emergencies Act for the first time since the law was passed in 1988.

Though the Emergencies Act allows for the military to be called in, Trudeau, for now, said he has no plans to do so. The government instead appeared set to take aim at protester finances. Speaking alongside Trudeau, Deputy Prime Minister Chrystia Freeland said banks can immediately freeze or suspend bank accounts without a court order and without fear of civil liability.

In addition, the government is broadening the scope of Canada’s anti-money laundering and counter-terrorist financing rules to now cover crowdfunding platforms and the payment service providers they use. These changes, said Freeland, cover all forms of transactions, including digital assets such as crypto.

The Tallycoin bitcoin fundraiser had reportedly raised more than 20 bitcoin (BTC) – or nearly $1 million – for the truckers. The organizers have shut down the fundraising page, and are asking for all to “stay tuned” about next steps.”

“Protocol Controlled Value is a term for the amount of funds the treasury owns and controls, and the Wonderland treasury currently manages in excess of $700 million, down from a peak well over $1 billion. Depending on how a protocol’s treasury is managed, PCV often undermines DeFi’s claims to decentralization.

While some decentralized autonomous organizations (DAOs) leverage on-chain governance and votes directly and programmatically lead to fund disbursements, others simply use DAO token-holder votes as “signals” from the community to a centralized group of fund managers who theoretically may or may not choose to enact the community’s wishes – a dynamic that could draw the attention of regulators.

While Wonderland’s PCV was ostensibly owned by token holders, it was largely unilaterally managed by the Sestagalli and Patryn.

According to a number of legal experts, however, it may also be exactly the case that the SEC has been looking for.

If you’re the SEC, this is probably one of the better opportunities to get some precedent on the books that would at least let you start clawing into DeFi.

Belton “absolutely” expects there will be regulatory activity on the PCV front – the first of what could be a number of cases where agencies test the sector’s claims to decentralization, as the agency analyzes ‘whether they’re dealing with a securities instrument, or a vehicle that needs to be regulated under the Investment Company Act.'”

“Her Majesty’s Revenue and Customs (HMRC), the U.K.’s tax and law enforcement agency, has seized non-fungible tokens (NFTs) and made three arrests as part of a fraud investigation. HMRC said it is the first law enforcement agency to seize NFTs and warned the public that the arrests are an example and warning to anyone who thinks they can use crypto assets to hide money.

We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”

The Disrupt Weekend

“One of the hallmarks of the crypto industry since its inception has been its commitment to open source development as well as its transparency-centric ethos. In this regard, the Crypto Open Patent Alliance (COPA), a group that promotes the advancement of cryptocurrency-enabled technologies by removing patents as a barrier to growth and innovation, recently welcomed social media giant Meta as a member, with the latter vowing to make all of its crypto patents accessible to the world.

The goal of the association is to accrue patents from its members to create a collective patent library that will help stimulate innovation within the global blockchain sector by reducing instances of patent litigation.

Meta published a statement announcing that by joining COPA, it will become one of the 30 firms committed to not enforcing their “core cryptocurrency patents.” Core cryptocurrency patents refer to those technologies that allow for the ‘creation, mining, storage, transmission, settlement, integrity or security of cryptocurrencies.

With Diem no longer Meta’s primary focus, the company is ready to explore other areas.

The fact that the company is solidifying pathways to patenting crypto and blockchain technological innovations means it likely plans on making some such advancements of its own. That’s an auspicious outlook for the space, one that tells us Meta is getting into the very building blocks of our future on-chain life.”

“Ethereum gas fees have been untenable for years. And for yield farmers, these gas fees have been seriously eating into profits. You can’t be paying hundreds of dollars in fees when you’re farming with a few thousand, or less. The economics just don’t add up.

To that end, the Ethereum community dialed in on a rollup-centric roadmap and it’s finally coming to fruition. Arbitrum, Optimism, and others have all launched on mainnet, opening up the gates for developers to build and degens to ape.

As such, we’ve seen an explosion of applications extend onto L2s while some have bypassed mainnet altogether. Look closely and you’ll see parallels to DeFi Summer 2020. DeFi apps are coming in droves and offering juicy yield opportunities.

Here’s why these yield opportunities are 🔥:

  1. More gains on L2s. Gone are the days of triple digit APYs on Compound. But on L2s, where activity is still climbing, APYs have not been diluted and still offer double digit returns in many cases.
  2. L2s are cheap. What’s the point of aping $100 into a 69% APY pool on mainnet is the gas costs to deposit and withdraw eat your profits away?
  3. Tokens are coming. Using L2s increases your chances of receiving future L2 token drops!!!

Not only are these yields high, but the gas fees are nothing. Users are paying a couple of bucks to transact instantly on L2, allowing them to reap the full yield rewards without eating into the margins.

Here are the best yield opportunities on L2.”

See Also: Layer 2 Tokens Are Coming

“In the United States, for example, the tax regulations provide that a joint venture or other contractual arrangement may create a separate entity if the participants ‘carry on a trade, business, financial operation, or venture and divide the profits therefrom.’ (By contrast, mere co-ownership of property that is maintained, kept in repair, and rented or leased does not constitute a separate entity for tax purposes.)

Thus, to the extent that a DAO is created by investors who intend to vote and opt for investment proposals, contribute funds for investment, and share the profits, the DAO may be a separate tax entity. Some DAOs formed for purposes other than carrying on a trade or business and making profit, such as a DAO created for raising funds to purchase a copy of the U.S. Constitution, are likely not considered tax entities.

Because DAOs typically exist solely on the blockchain and do not register with any state secretary, DAOs, perhaps surprisingly, could potentially be classified as a foreign partnership for tax purposes — even in situations where all DAO owners are U.S. tax residents. Partners must annually report their share of the partnership’s income and losses. A DAO could potentially be classified as a foreign publicly traded partnership (PTP) if the DAO’s tokens are traded on “a secondary market.”

Aside from tax, investors have had growing concerns about the legal liability resulting from their investments in DAOs (i.e., their personal assets could be put at risk for any lawsuits or debts of the DAO). As a result, two states Vermont and Wyoming, have allowed DAOs to register in their states as DAO LLCs which, like regular LLCs, provide the benefit of limited liability for the DAO members.

From a tax perspective, a DAO LLC, because it is registered under state law, may be treated as a domestic partnership for tax purposes.”

See Also: Ultimate Crypto Tax Guide

“After years of development, a blockchain-based trading card game is hoping to attract crossover appeal with a gaming community that so far has proven to be suspicious of non-fungible tokens (NFT). On Tuesday, Skyweaver announced the launch of its Open Beta after months of private access-only gameplay. The game has been in development since 2019, when Reddit co-founder Alex Ohanian led a $3.5 million funding round.

By the numbers the Skyweaver is already one of the most popular blockchain-based games on the market. The game’s phone app boasts 233,000 installs, a waitlist of 345,000 users and $1.7 million in sales on the project’s decentralized marketplace.

It remains to be seen, however, if the game can achieve true crossover appeal with users who are unfamiliar with blockchain technology.

The overwhelming response has been that these players adore Skyweaver for its gameplay alone – the strategy, the depth, the graphics, the new mechanics, all of that. They also love the player-owned economy, and I’ve seen how it can help them realize the potential of NFT economies.”

The plot is based on two main characters — Ilya Lichtenstein and Heather Morgan — the NYC couple linked to the 120,000 BTC heist and their involvement in laundering the stolen funds.

Netflix has ordered a documentary series about a married couple’s alleged scheme to launder billions of dollars worth of stolen cryptocurrency in the biggest criminal financial crime case in history.

Netflix notes that ‘as the value of the stolen Bitcoin soared from $71 million at the time of the hack to nearly $5 billion, the couple allegedly tried to liquidate their digital money by creating fake identities and online accounts, and buying physical gold, NFTs, and more – all while investigators raced to track the money’s movement on the blockchain.'”

“Crypto lender BlockFi will pay the U.S. Securities and Exchange Commission (SEC) $50 million and stop opening new accounts of its high yield lending product to most Americans as part of a settlement of an ongoing investigation into whether the product is a securities offering.

The settlement as described by Bloomberg does not appear to affect existing accounts.

We have been in productive ongoing dialogue with regulators at the federal and state level. We can confirm BlockFi Interest Account clients will continue to earn crypto interest as they always have.”

How To Buy and Sell NFTs

12 February

“The U.S. Treasury Department in a letter sent to a group of senators on Friday signaled that crypto miners and stakers won’t face tax reporting obligations that will be implemented for exchanges.

The letter addresses concerns from the crypto industry that last year’s Infrastructure Investment in Jobs Act would impose undue tax reporting burdens on entities such as crypto miners and stakers that don’t deal directly with customers by broadening the definition of a “broker.” The requirements require brokers to collect detailed information on customers and their trades.

According to the letter, the department’s view is that ‘ancillary parties who cannot get access to information that is useful to the IRS (Internal Revenue Service) are not intended to be captured by the reporting requirements for brokers.’

Davidson added that the Treasury Department plans to issue proposed regulations that reflect how it defines a broker. That process will give the general public and industry participants a chance to comment.”

See Also: Asset Manager Van Eck Says Stablecoins Should Be Treated as Investment Funds, Not Banks
See Also: Intel Launches Crypto Mining Initiative; Argo, Block to Get First Chips This Year

FTX US has begun to accept users for a wait list to learn about its soon-to-be-launched stock trading platform.

Last month, rival crypto exchange eToro announced it would offer stock and exchange-traded fund (ETF) trading to its U.S. customers, while BitStamp also disclosed plans to do so. Meanwhile, many primarily stock trading apps such as Robinhood have been moving to offer crypto trading.”

See Also: Uber Will ‘Absolutely’ Accept Bitcoin—When It Becomes More ‘Environmentally Friendly’: CEO
See Also: OpenSea Expands Into the Venture Capital Business

“The Ontario provincial government in Canada has been granted an order from the Superior Court of Justice to freeze millions of dollars in donations on the GiveSendGo platform from reaching the Freedom Convoy protesters.

This is the second time the truckers have been denied access to funds since GoFundMe froze $10 million in donations last week. As of Thursday, “Freedom Convoy 2022” had raised $8.4 million and “Adopt-a-Trucker” had received $686,000.

A group of supporters [has now] formed the HonkHonk Hodl organization specifically to help the convoy raise funds in Bitcoin. As of the time of writing, the group had raised 21 BTC ($902,000).

One of the benefits of Bitcoin is its censorship resistance. Bitcoin fixes this…”

See Also: Anti-Mandate Truckers Have Raised $700K in Bitcoin—And Have Elon Musk’s Support

“Real estate startup Propy has sold its first NFT-backed property in the U.S., the company announced Friday. The 2,164-square-foot house in Gulfport, Florida, fetched $653,000 (210 ETH) at auction, with the winning bidder being awarded a non-fungible token (NFT) as proof of the home’s ownership.

The logistics of the NFT itself are a bit complicated – the token is linked to the ownership of an LLC that owns the physical asset, not the housing deed itself – but represents continued experimentation. Propy says the NFT can be used as collateral for crypto borrowers and investors. Propy also plans on offering decentralized finance (DeFi) mortgages to its users in the coming months.”

See Also: Play-to-Earn Ethereum NFT Game Axie Infinity Nears Free-to-Play Shift

Geopolitical risks shook markets on Friday as BTC dipped below $43K. On Friday, U.S. President Biden urged Americans to leave Ukraine immediately, warning “an invasion could begin at any time.”

Bitcoin (BTC) dropped as much as 5% over the past 24 hours, compared with a 4% decline in ETH and a 7% dip in SOL. Stocks were also lower while traditional safe havens such as gold and the U.S. dollar rose. Markets eventually stabilized later in the New York trading day.”

11 February

YouTube is looking at NFT integrations to provide new methods for creators to engage with fans and develop additional revenue streams. Mohan suggested creators could tokenize their videos, photos, art and experiences as a way to engage with fans.

There’s a lot to consider in making sure we approach these new technologies responsibly, but we think there’s incredible potential. We believe new technologies like blockchain and NFTs can allow creators to build deeper relationships with their fans.

Finally, we couldn’t have a piece about innovation without touching on the Metaverse! We’re thinking big about how to make viewing more immersive. The first area in which you can expect to see an impact is gaming.”

See Also: Porn-Friendly Platform OnlyFans Adopts Ethereum NFT Profiles
See Also: Alfa Romeo Is Building NFTs Into Latest Hybrid Car to Record Vehicle Data

Trading app Robinhood wants cryptocurrencies to be a central part of its business strategy, according to one of the company’s top executives.

We have aspirations to take this brand global and we would do so crypto first.

Robinhood has set aggressive goals to start opening its crypto platform up to customers internationally in 2022. The company believes in the immense potential of the crypto economy and sees a big opportunity in serving customers across the globe.”

See Also: MakerDAO launches biggest ever bug bounty with $10M reward

“Binance will assume half of the $400 million commitments from institutional investors, which was announced in August, effectively making it one of the two biggest owners of the publication. Patrick Hillmann, chief communications officer at Binance, and Bill Chin, head of Binance Labs, will join the Forbes board.

As Web 3 and blockchain technologies move forward and the crypto market comes of age we know that media is an essential element to build widespread consumer understanding and education. We look forward to bolstering Forbes’ Digital initiatives, as they evolve into a next level investment insights platform.”

See Also: Crypto M&A Surged Nearly 5,000% in 2021, PwC Report Says

“Bitcoin (BTC) struggled to remain above $44,000 on Thursday, as U.S. stocks fell further following hawkish remarks by a Federal Reserve official.

Responding to a surprisingly high rate of inflation, Bullard said he supported raising interest rates by a full percentage point by July. His comments came after the U.S. Labor Department on Thursday reported that the consumer price index (CPI) for January hit 7.5%, which was higher than what analysts expected earlier.

Buyers reacted quickly to a nearly 5% price drop early in the New York trading session and maintained short-term support at above $43,000. The next level of resistance is at $46,710, which represents a 38% retracement of the previous two month-long downtrend.

For now, momentum signals are improving on intraday charts, although price action is volatile following the U.S. inflation report. Stronger resistance is seen at $50,000 if buyers sustain short-term momentum.”

See Also: US Inflation Hits New 4-Decade High of 7.5% in January
See Also: Fitch Downgrades El Salvador to CCC Weeks Before Bitcoin Bond Issue

“Chinese entertainment conglomerate Tencent has been approved by the United Nations to lead a project exploring the creation of a standard technical and security framework for non-fungible tokens (NFTs) .

The U.N. agency for information and communication technologies, The International Telecommunication Union (ITU) approved the project, which is expected to complete an initial draft by the end of 2022. Any recommendations advised by the ITU only become mandatory and enforceable when nations adopt them as law.

The international standard aims to specify the technical architecture, technical flows, functional requirements, and security requirements for blockchain-based digital collectibles.”

See Also: FlamingoDAO’s NFT Portfolio Is Now Worth $1B

“Samsung has unveiled its new range of Galaxy S22 premium smartphones at its virtual Samsung 837X space in the Decentraland metaverse.

Over 100,000 users attended the “Samsung Unpacked 2022: The Epic Standard of Smartphone Experiences” event in the first 11 hours making it one of Decentraland’s most experienced destinations to date.”

“Yesterday, the EU finance chief said that early next year a bill for a digital euro would be proposed. The European Central Bank last year conducted research on the advantages of a digital euro.

A digital euro would be the EU’s version of a central bank digital currency (CBDC).”

See Also: Digital yuan transactions beat out Visa at Winter Olympics venue: report
See Also: Canadian MP introduces bill aimed at encouraging growth in crypto sector

“CEO Yves La Rose tweeted Thursday that the foundation is taking steps to hold Block.one ‘accountable for its past actions and broken promises. Review of ALL possible legal recourse to seek $4.1B in damages underway.’

The foundation has enlisted a Canadian law firm to investigate Block.one’s actions and pledges to the EOS community and investors to determine whether options are available for legal proceedings.

The EOS community feels Block.one has shifted its focus and funding – including its vested EOS tokens – to new crypto exchange Bullish, which was unveiled last May with PayPal co-founder Peter Thiel and digital asset manager Galaxy Digital among its backers.

The relationship between the two deteriorated, with La Rose saying in November that EOS was a “failure” and its native currency a ‘terrible investment.'”

Squeeth: No liquidation, squared leverage!

10 February

The New York-based company, which manages over $10 trillion in assets for institutions, plans to enter the cryptocurrency space with ‘client support trading and then with their own credit facility. In other words, clients would be able to borrow from BlackRock by pledging crypto assets as collateral.

Sources said BlackRock will allow its clients – which include public pension schemes, endowments and sovereign wealth funds – to trade cryptocurrency through the asset manager’s integrated investment management platform. The timetable for unveiling the service is unclear.

A second person with knowledge of the plans said BlackRock was ‘looking to get hands-on with outright crypto‘ and was ‘looking at providers in the space.’

They see all the flow that everyone else is getting and want to start making some money from this.”

See Also: TMX Group Canada to unveil crypto futures product later this year

“On Monday, Aave founder Stani Kulechov announced the launch of Lens, what he described on Twitter as an ‘open, composable [Web 3] social media protocol to allow anyone to create a non-custodial social media profile and build new social media applications.’

Interoperability and composability will be key features of the new platform. Lens serves as a platform on which developers can hypothetically build a wide range of applications – all while growing on and drawing on a shared base of users.

The cool part is that every app will expand the social graph, essentially there is less need for developers to growth hack for users, instead the focus can be shifted towards better and more humane user experience.

The protocol allows users to create NFT-based profiles that can store posts, publications and follower history; revenue-sharing features for content hosted on IPFS; it also has built-in governance for groups of mutual followers. The protocol is built on Polygon.

A grants program for developers who want to build applications on the protocol is currently open, and a homebrewed social app designed to demonstrate how the platform might be leveraged is ‘coming soon.'”

“Instead of banning cryptocurrencies, the Russian government has decided to regulate them, legitimizing a $2 trillion asset class in the world’s 11th-largest economy. Notably, the plan has the support of the central bank, which had called for a ban on crypto mining and trading.

The government’s blueprint released Tuesday says cryptocurrency purchases in Russia may take place, but only through locally registered and licensed companies so that users are fully verified. Cryptocurrency exchanges and peer-to-peer marketplaces would have to register as legal entities and join an official register of digital-currency exchange operators.

According to the newspaper Kommersant, the approach puts cryptocurrencies on a level with foreign currencies, which are regulated in a similar fashion. The new laws and directives are likely to come into force in the second half of 2022 or early 2023.

This is the second major regulatory cloud to have been lifted from the global crypto market in a month. India last week took a step toward legalization with a tax on digital asset transfers.

Russia’s move reflects a broader shift in regulatory attitudes towards these assets in various jurisdictions around the world. The political and economic cost of banning crypto will outweigh the risk to governments from allowing it to coexist with legacy financial institutions.”

See Also: El Salvador Bitcoin Bond Issuance Coming as Soon as March 15: Finance Minister
See Also: IMF Chief Touts Advantages of CBDCs Over ‘Unbacked Crypto Assets’ and Stablecoins

The two bills introduced on Feb. 2 propose allowing the state of Tennessee as well as its counties and municipalities to invest in crypto, as well as forming a committee aimed at studying crypto and blockchain.

Powell asked Tennessee lawmakers to consider forming a study committee aimed at making the state ‘the most forward thinking and pro-business state for cryptocurrency and blockchain and to foster a positive economic environment for blockchain and cryptocurrency.'”

“The announcement explains that with Tap to Pay, iPhone-owning merchants receive contactless payments by using their mobile devices as a point-of-sale machine.

According to Apple, the soon-to-be-launched Tap to Pay feature will extend support to ‘Apple Pay, contactless credit and debit cards and other digital wallets.’ It basically means that unless Apple places a direct barrier for it, customers who are using Coinbase Card, Crypto.com Visa Card or a similar payments card would be able to use their cryptocurrency holdings to make payments via Tap to Pay.”

“Buterin claims, ‘Rollups are in the short and medium term, and possibly in the long term, the only trustless scaling solution for Ethereum.’ Plenty of alternative layer 1 blockchains have looked for expandable systems outside of vertical rollups but have sacrificed liveliness, state growth and more, something the Ethereum developer community has taken a strong stance against.

Are current layer 2 companion networks cheap enough?

Rollups are significantly reducing fees for many Ethereum users: Optimism and Arbitrum frequently provide fees that are ~3-8x lower than the Ethereum base layer itself, and ZK rollups, which have better data compression and can avoid including signatures, have fees ~40-100x lower than the base layer.

Even without token subsidies, these rollups have seen significant adoption and are highlighting the demand for cheaper access to Ethereum. Arbitrum, for example, currently has over $2 billion in total value locked (TVL) and is home to a DeFi ecosystem that is beginning to show some promise. However, Buterin believes rollup fees must be even cheaper if they are going to encourage adoption in payments, gaming, and Web 3-focused products.”

The mobile gaming giant expects to announce partnerships with, and possible purchases of, blockchain firms by the end of the second quarter. Zynga plans to expand the blockchain gaming team from the current 15 people to as many as 100, including filling out senior roles such as creative director and lead producer.

We’re fully tuned up to do acquisitions on the [Web 3] game publisher side. We are taking our community building seriously. We are ramping up that team deeply. When we ignite the community, we will be actively engaged.

Zynga initially gained name recognition through popular Facebook-based social games like Farmville. The move into blockchain gaming offers “future proofing” for the company, said Wolf.”

See Also: GameStop stock up on rumors of Microsoft NFT game partnership

“The Washington Nationals baseball team said Wednesday it will “explore” in-stadium payments of Terra’s UST stablecoin as part of a nearly $40 million sponsorship. The thrust of that deal centers on exclusive seating naming rights. For the next five years, the ballpark’s home plate VIP lounge will be called “The Terra Club” and feature crypto branding prominently.

We are excited to partner with Terra to name our most exclusive club and explore bringing powerful new fan experiences to Nationals Park, including the use of UST cryptocurrency to make purchases.”

“A decentralized autonomous organization (DAO) that is raising money to support whistleblower Julian Assange’s defense has collected a record-breaking 12,350 ether ($38 million).

The DAO is a group of “cypherpunks” who started to form on Dec. 10, when a court in the U.K. ruled that Assange can be extradited to the U.S., where he faces 175 years in prison. Earlier this year, the WikiLeaks founder was given the right to request the U.K. Supreme Court block his extradition.

Proceeds will support Assange’s defense through the Hamburg, Germany-based nonprofit Wau Holland Foundation.”

See Also: McDonalds files trademarks for McMetaverse restaurants… that deliver

Passive Income w/ Crypto

9 February

“Wells Fargo Investment Institute, the research division of Wells Fargo Wealth and Investment Management, has released a report highlighting the potential of cryptocurrencies as an investment opportunity akin to the early days of the internet.

The strategy team said it did not subscribe to the idea that it was “too late to invest” in crypto, given that the space is “relatively young” in terms of other asset classes.

According to the banking giant, the technology behind crypto is following an adoption path similar to that of the internet in the early-to-mid 1990s. Like the internet, the rising number of crypto users suggests ‘the world is beginning to embrace the technology — and quickly.’

If this trend continues, cryptocurrencies could soon exit the early adoption phase and enter an inflection point of hyper-adoption, similar to other technologies. There is a point where adoption rates begin to rise and do not look back.

The report added that the removal of regulatory roadblocks was also necessary for greater adoption, noting the environment was slowly changing to ‘solidify cryptocurrencies as investment assets.'”

See Also: Bitcoin Will Reach $200K, ETH $12,000 in Second Half of 2022: FSInsight
See Also: Bitcoin Cracks $44K as Short-Term Investors Take Profits
See Also: Crypto Fund Inflows Follow Pickup in Market Sentiment

“The privately held firm said Monday it acquired bitcoin (BTC) and ether (ETH) on its balance sheet through Gemini Trust Company’s execution and custody services.

KPMG in Canada is bullish on cryptoassets [and] we believe they are here to stay. We’ve invested in a strong cryptoassets practice and we will continue to enhance and build on our capabilities across decentralized finance (DeFi), non-fungible tokens (NFTs) and the metaverse, to name a few.”

Agents arrested two individuals in New York on Tuesday on charges they conspired to launder proceeds from the Bitfinex hack in 2016. The married couple, Ilya “Dutch” Lichtenstein and Heather Morgan, will appear in court at 3:00 p.m. ET in New York.

Some 120,000 BTC was stolen in the 2016 hack, then worth around $60 million and representing nearly one-sixth of the total trading volume at the time. At today’s prices, the total amount of bitcoin stolen is valued at $4.5 billion, but the DOJ only seized about 94,000 BTC valued at $3.6 billion. The DOJ release alleges the two conspired to launder these proceeds and heavily implies, but does not claim, they were the original hacker(s).

“Unauthorized transactions” moved the stolen bitcoin to Lichtenstein’s wallet, and some 25,000 of the BTC were transferred out over the past five years. The remaining 94,000 BTC remained in Lichtenstein’s wallet. Last week, on-chain sleuths spotted a transfer of over 94,000 of Bitfinex bitcoin. The transfer was a seizure conducted by federal agents.

Law enforcement officials were able to access the initial recipient wallet, dubbed Wallet 1CGA4s, after decrypting a file “saved to Lichtenstein’s cloud storage account,” which included 2,000 crypto wallet addresses and their private keys.

Blockchain analysis confirmed that almost all of those wallets were directly linked to the hack.

In a statement, Bitfinex said it would work with the DOJ to try and recover the seized bitcoin. If it does, it will repay investors in its UNUS SED LEO token, which was created to try and backstop a fiscal hole created after an unrelated payment processor used by Bitfinex was seized by authorities in three different countries.”

See Also: What We Know About the Accused Bitfinex Money Launderers
See Also: Bitfinex Hack Laundering Suspects Released on Bond

“On Monday, the publicly traded crypto firm registered “​​Coinbase Innovation PAC” with the Federal Election Commission, sending a strong signal of its desire to sway federal officials during the 2022 midterm election cycle. The crypto exchange is hardly alone: Industry heavyweights formed their own pro-crypto PAC late last month.

The growing number of crypto PACs speaks to an industry hungry for political influence. Shaken by last year’s messy (and unresolved) crypto tax debate, firms such as Coinbase ran up their largest-ever lobbying bills in an effort to hold the line. Coinbase spent $740,000 lobbying the Senate during the fourth quarter.

We believe the bipartisan potential is clear and we intend to support crypto-forward lawmakers who align with our mission to advance economic freedom for all Americans.”

See Also: Leading Digital Exchanges Launch Crypto Market Integrity Coalition

“PayPal has formed an advisory council to support crypto-related products and help guide the company on creating a digital financial system.”

See Also: Bitcoin Lightning Network goes live on Cash App
See Also: Crypto Payments Firm Wirex Expands to US, Begins Distributing Crypto-Linked Visa Debit Card

The funding will be used to build Web 3 applications, including Polygon PoS, Polygon Edge and Polygon Avail, which are similar to Amazon Web Services’ offerings for Web 2 developers, Polygon said in a statement.

Polygon is also investing in zero-knowledge technology that it said will be key to onboarding the next billion users to Ethereum.

The funds were raised through a private sale of Polygon’s native MATIC token, which surged after the funding was reported by CNBC on Monday. As of press time, the MATIC price was up 17% in 24 hours. The market capitalization is now about $20 billion.

Web 3 builds on the early Internet’s open-source ideals, enabling users to create the value, control the network and reap the rewards.”

See Also: ETH Staking Startup ssv.network Raises $10M as Ethereum ‘Merge’ Inches Closer
See Also: Assange DAO Has Now Raised More Ethereum Than ConstitutionDAO Did

“According to the analysts, stablecoins tie up assets unnecessarily.

Tying up safe and liquid assets in a stablecoin arrangement means they are not available for other uses, such as helping banks satisfy their regulatory requirements to maintain sufficient liquidity.

The authors raise the question of why the central bank would use stablecoins if it could issue tokenized deposits.

Bank depositors would be able to convert their deposits into and out of digital assets – the tokenized deposits – that can circulate on a DLT platform. These tokenized deposits would represent a claim on the depositor’s commercial bank, just as a regular deposit does. Customers can exchange these deposits for goods or services using well-functioning existing payments infrastructures.”

See Also: US lawmaker pushes for state-level regulations on stablecoins at hearing on digital assets
See Also: Japan’s Biggest Bank to Issue Yen-Pegged Stablecoin for Settlement: Report
See Also: New FDIC Acting Chair Says Evaluation of Crypto Risks Is a Top Priority for 2022
See Also: EU Weighs Potential Metaverse Regulation: Report

Why MakerDAO is Underrated

The Disrupt Weekend

“Beyond the popularity of investing in digital assets, futurists envision blockchain technology as a disrupter poised to reshape the entire finance and investment industry from top to bottom – and this future might not be as far off as we once thought.

Last week, traditional asset manager WisdomTree announced that it is launching WisdomTree Prime, a digital wallet that will be made available to investors via a mobile app.

The result is an offering unlike any currently available to investors, said Peck, where they can see their cryptocurrency, other digital assets, stocks, bonds, real property and banking assets within the same architecture and the same user experience.

We can now fractionalize anything with an NFT, and that allows us to take any physical asset we’re very confident in the pricing trajectory for over the next 50-100 years and fractionalize the risk of ownership and make it liquid so people can trade it whenever they want to. That’s a huge innovation because that is how the stock, bond and commodities markets work – now you’ll see cars, watches, art and physical assets creep in and gradually start to trade in the same way.

There isn’t a single instrument that has been invented in the past 100 years that can’t be tokenized.

If you want to know what’s coming down the pike, it’s a tremendous amount of institutional and high-net-worth capital.”

See Also: Connext has partnered with Nomad

“This week, researchers at the Federal Reserve Bank of New York published an academic-style study in which they tried to estimate the impact on bank lending under three different regulatory frameworks for stablecoins.

With appropriate safeguards and regulations, stablecoins have the potential to provide a level of stability that is on par with traditional forms of safe value.

Scenario 1: “Narrow bank” – Under this framework for stablecoins, physical cash would be tokenized and issuers would be required to back their stablecoins with central bank reserves. The impact on bank lending would largely be minimal. When it comes to deposits, however, this framework could have a negative impact because the deposit-backed funding for lending would be reduced as regular commercial bank deposits would move to separated accounts at the central bank.

Scenario 2: Two-tiered intermediation – In this scenario, stablecoins would be backed by deposits held at commercial banks. And then the banks could lend the stablecoins to new borrowers. Contrary to the narrow-bank approach, large inflows into stablecoins could have a positive impact on lending, while the overall balance sheets and asset holdings of commercial and central banks would remain unchanged.

Scenario 3: Security holdings – This framework would require cash-equivalent securities to be held as reserved collateral for stablecoins. The central bank’s balance sheet would shrink slightly with lower banking reserves. The impact on lending would be neutral because commercial bank deposits would be recycled back into the banking system.

The researchers concluded that the “two-tiered” system could help to maintain traditional forms of bank lending even as stablecoins grow. The “narrow-bank” framework, meanwhile, could lead to credit disintermediation but might ‘bring the most stability.’

Recommended read.

“From using bitcoin and monero to updating your computer’s operating system, Seth for Privacy presents 10 security tips.”

“Solana’s spectacular rise, which has seen it vault into the top ten coins, has come from its spiffy technology and also from a certain celebrity pixie dust sprinkled by the likes of FTX founder Sam Bankman-Fried and others.

But lately, the shine has started to come off Solana as the upstart blockchain has been battered by a series of issues.

The most recent came this week when a hacker exploited a cross-chain bridge called Wormhole, making off with $320 million worth of wrapped Ethereum in the process. A forensic analysis by Paradigm researchers revealed the hack came about due to a flaw in Solana’s interface with Wormhole.

The stolen funds were not exactly chump change, and people blasted Solana for neglecting the security side of Vitalik Buterin’s famous “Blockchain Trilemma.” And they have a point. Solana is in the big leagues now, and hackers should not be able to waltz away with $320 million.

The episode was smoothed thanks to the Chicago investment firm Jump Crypto swooping in, but it also served to highlight another issue with the blockchain: the outsize role of venture capitalists’ involvement with the project. Solana’s token allotment is more stacked toward professional investors than most. Retail SOL buyers are likely to get hosed when token lock-up periods expire and the professionals dump their bags on the open market.

Put all this together—the security breach, the VC-heavy token allotment, the congested chain—and it’s hard to view Solana in the same fresh light that made everyone fall in love with it in 2021.

“Axie Infinity eliminated the daily quest and the adventure mode, meaning gamers would now earn SLP tokens only through area combat. The decision expects to reduce the SLP token daily supply by 56%. Simply put, the Season 20 update would make SLP scarcer, thus potentially making Axies more valuable.

That is vital as players burn SLPs to enable old Axies to breed new ones. Of late, the Axie Infinity team created more SLP to reward players than burned through breeding. Unfortunately, that led to a higher SLP inflation, prompting its per token rate to crash from its summer 2021 highs of $0.40 to $0.008 on Feb. 3.

The Axie economy requires drastic and decisive action now or we risk total and permanent economic collapse.”

See Also: GameFi Faces Regulatory Headwinds in Major Asian Markets

“BuzzFeed published an investigation revealing the identity of two of the four BAYC co-founders, who until now have been known simply by their ape personas, Gordon Goner and Gorgamel.

It turns out these apes are two fairly ordinary 30-somethings from Florida named Wylie Aronow and Greg Solano, who once had literary aspirations but then got into crypto. The company behind BAYC, Yuga Labs, confirmed their identities after BuzzFeed’s report.

BuzzFeed’s report did not contain anything scandalous about the men, but the reaction on Crypto Twitter has been ferocious.

Fundamentally, the controversy over BuzzFeed and BAYC boils down to whether crypto billionaires should be able to avoid the same sort of scrutiny that politicians and business leaders are subject to in free societies–scrutiny that helps citizens hold them accountable and understand who is running powerful segments of society.

The opposite view, in which any sort of public scrutiny is treated as unacceptable invasion of privacy, prevails in China and Russia where wealthy elites silence and jail their critics.

As for Solano and Aranow, both men appear to be taking the controversy in stride.”

Top 5 Crypto Dates for 2022

5 February

Technical indicators point to additional price gains for bitcoin if buyers are able to maintain support above $37,000 over the weekend. Further, a decisive move above $40,000 could signal the start of a recovery phase. Some analysts expect crypto buyers to return, similar to what occurred after the July 2020 price bottom at $28,000 BTC.

Friday’s crypto rally forced many short sellers to liquidate positions.

Much of the momentum is likely due to $160 million of combined short liquidations for BTC and ETH over the past 24 hours.”

See Also: Bitcoin Tops $40K for First Time in 2 Weeks
See Also: Bitcoin Attempts to Break Downtrend; Faces Resistance Toward $45K

“The U.S. Securities and Exchange Commission (SEC) has expressed concerns about how Grayscale will head off share manipulation, fraud and other possible issues in its proposal to convert its Grayscale Bitcoin Trust (GBTC) into a bitcoin spot exchange-traded fund (ETF). The regulator also flagged its concerns about the liquidity and transparency of bitcoin markets, as well as the “suitability” of bitcoin as the underlying asset for the fund.

The SEC has asked the public to comment on these issues, and given them 21 days to do so, with an additional 14 days for responses to those comments. Earlier this week, the SEC requested investment manager Bitwise to respond to similar concerns about its own spot bitcoin ETF proposal.”

On-chain data shows that on Thursday, Sun’s wallet borrowed 99,000 COMP tokens worth over $13 million and later sent 102,000 tokens to Binance. On Friday, an address that received $9 million worth of COMP tokens from Binance proposed adding TUSD as a collateral asset on Compound, which would allow Compound users to take out loans against their TUSD holdings.

The pattern is reminiscent of a similar vote that took place in stablecoin issuer MakerDAO’s governance in January. Creating a stability module would allow users to swap TUSD for MakerDAO’s DAI stablecoin at a fixed rate. In the poll, the community voted the proposal down before it could move to formal voting.

Justin borrowed a large amount of MKR from Aave. Presumably this was to vote on a poll to create a TUSD-DAI Peg Stability Module. After it was noticed, he returned the MKR before voting.”

“The 40-page report, published in accordance with the Anti-Money Laundering Act of 2020, found there is some evidence to suggest high-value art is involved in money laundering, but likely not in any terrorist financing. However, the document did suggest NFTs could be used to facilitate more illicit transactions in the art market.

The emerging digital art market, such as the use of non-fungible tokens (NFT), may present new risks, depending on the structure and market incentives.

Platforms might be considered virtual asset service providers (VASP) by the Financial Action Task Force (FATF) and therefore be subject to existing know-your-customer (KYC) and anti-money laundering (AML) laws.

The report recommended that the Treasury Department weigh the costs and benefits of applying anti-money laundering and counter-terrorist financing rules to art market participants, including possible customer identification and suspicious activity report rules.”

See Also: NFL to offer virtual NFT tickets at Super Bowl in Los Angeles
See Also: CryptoPunks Controversy: Creators Apologize for ‘V1’ Ethereum NFT Sales

“The price of one ZPG will equal the value of one gram of gold and will be guaranteed by Sumitomo Mitsui Banking Corp., Nikkei wrote. The coin will run on a private blockchain.

Mitsui plans to also use ZPG as a payments tool, used at the trading house’s affiliated retailers through a smartphone app and other digital payment systems, according to the report.”

Crypto TA

4 February

The gaming retail giant said Thursday it tapped the layer 2 system, to be used atop Ethereum, because of Immutable’s ‘zero gas fees for trading and minting NFTs in a carbon-neutral environment. The marketplace is tapping Starkware for help with its back end, which is a zero-knowledge proof technology that can combine thousands of Ethereum transactions into one.

GameStop plans for its marketplace to include ‘billions of low-cost, in-game assets that can easily be bought and sold,’ specifically mentioning digital real estate and in-game skins.

Along with the marketplace news, GameStop and Immutable announced the launch of a $100 million fund dedicated to supporting Web 3 game development in its ecosystem. The fund aims at attracting game developers and studios to the marketplace.”

See Also: Who’s Using the Metaverse? Poker Players in Decentraland

“The Federal Reserve Bank of Boston and MIT’s Digital Currency Initiative published open-source research software to support a “theoretical” central bank digital currency on Thursday. The Boston Fed and MIT have been jointly researching CBDCs for nearly two years. Thursday’s publication brings the central bank one step closer to a technical framework that could support a U.S. CBDC.

Thursday’s publication, which includes OpenCBDC and a research paper, explain that the Boston Fed was able to develop “a core processing engine” for a general purpose CBDC that could support nearly two million transactions per second with high-speed settlement finality.

Developing OpenCDBC was only the first phase of the project. Phase two will test the different designs and features not included in phase one, as well as assess what, if any, trade-offs there might be with different sets of features. Privacy and interoperability are two of the issues to be analyzed in phase two.”

See Also: Russia’s Minister of Finance Suggests Letting Banks Sell Crypto: Report

“Canada-based Purpose Bitcoin ETF attracted over $38 million worth of Bitcoin (BTC) this Tuesday, its third-largest daily inflow to date. That suggests that Purpose ETF investors have been buying the Bitcoin dip.

It continues to suggest investors are beginning to cautiously add to positions at these depressed price levels.”

Wormhole’s parent company has stepped in to prevent chaos across the Solana DeFi landscape.

In a tweet this morning, Wormhole confirmed that funds had been restored and that the bridge’s operations had resumed after the attack vector had been patched. The Wormhole team said that a disclosure report is forthcoming.

Daddy Jump has a lot of money.”

See Also: Solana’s SOL Tumbles 10% After $326M Wormhole Exploit

“Yuga Labs, the startup behind Bored Ape Yacht Club, is in talks with venture capital heavyweight Andreessen Horowitz (a16z) over a funding round that would give it a valuation as high as $5 billion.”

The fundamental point of contention underlying the lawsuit is the classification of staking rewards as either taxable income or created property, which is not taxed until it is sold. The Tezos bakers argue that earning coins by staking is akin to baking a cake or writing a book, and thus these coins should not be treated as taxable income.

On Thursday, Joshua Jarrett released a statement that the U.S. Government has offered a refund of the taxes in question as part of the settlement. [However], without a court ruling there would be nothing to prevent the tax service from taxing his staking rewards again.

I need a better answer. So I refused the government’s offer to pay me a refund.

Jarrett’s goal is to get the IRS to clarify its position on taxing staking and block rewards for both proof-of-stake and proof-of-work systems.”

Bloomberg: This State is Becoming America’s Crypto Capital

3 February

The popular bridge for connecting Ethereum, Solana and more is now attempting to negotiate on-chain with the hacker. The Wormhole team has reached out to the exploiter’s address on the Ethereum network, offering a $10 million bounty for returning the funds.

The hack has raised alarm in DeFi circles because it now means ETH that has been bridged to Solana may be unbacked. Cross-blockchain bridges often work by taking an asset, such as ETH, and locking it in a contract to issue a parallel asset on the bridged chain.

George Harrap, founder of Solana DeFi platform Step Finance, said he expects Jump Capital, which purchased Wormhole developer Certus One in August 2021, to step in to backstop the hacked ETH. If not, he added, a number of Solana-based platforms that accept ETH as collateral may now be partially insolvent.

If nobody backs it and the coins are truly gone then Wormhole ETH is worth 0 and everyone who has a balance of it becomes worthless.

In a follow-up tweet, Wormhole confirmed a total loss of 120,000 ETH and said that funds would be added to the bridge to backstop the wrapped ETH on Solana, though the team did not specify who would provide the funds.

Presciently, in a Reddit post in January, Ethereum co-founder Vitalik Buterin argued that bridges will not be popular in the future, due in part to risks to the backing of bridged assets.”

See Also: Hackers Move $3.55B Worth of Bitcoin From 2016 Bitfinex Hack
See Also: New malware targets MetaMask and 40 other crypto wallets

Sundar Pichai, the CEO of Alphabet, said there are several “areas of interest” for Alphabet, hinting at augmented reality and exploring how blockchain technology may be utilized to power computing and service layers like YouTube and Google Maps.

Any time there is innovation, I find it exciting, and I think it is something we want to support the best we can […] The Web has always evolved, and it’s going to continue to evolve, and as Google, we have benefited tremendously from open-source technologies, so we do plan to contribute there.”

“Bitcoin prices have plunged alongside stocks as the Fed moves to reverse nearly two years of emergency monetary stimulus. But some top crypto analysts argue that Fed Chair Jerome Powell and his colleagues may quickly back off from their new campaign to tighten monetary policy – due to worries that traditional markets, the banking system and the real economy can’t handle the higher borrowing costs.

I anticipate that we are to see some slowdown in the pace of Fed monetary-policy tightening. If there’s some cracks in the economy and the Fed goes slower, that is going to provide a spark for bitcoin.”

See Also: $1B worth of ETH burned in the past 30 days due to record high OpenSea NFT transactions
See Also: Crypto Prices Plunge Late After Weak Meta Earnings

Institutions now make up 50% of Coinbase’s business, up from 10% three years ago.

There has been an “avalanche of hedge funds” entering the bitcoin space over the past year.

A far more recent emerging theme, he said, is retailers interested in non-fungible tokens (NFT). This may lead these companies into holding bitcoin in their treasuries, once they are comfortable with the concept, and then accept customer payments in crypto. Tejpaul also noted institutions are getting comfortable holding stablecoins, from roughly $10 billion three years ago to $150 billion today.”

See Also: Anchorage Closes In on FDIC Crypto Custodian Deal, Documents Show
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Today, 68-year-old magazine Sports Illustrated announced an alliance with NFT startup OneOf to launch a sports NFT series on Polygon, with an initial lineup of nine sports icons including Muhammad Ali, Wayne Gretzky, and Mia Hamm.

OneOf plans to launch the platform later this month following Super Bowl LVI on February 13, with its first drop featuring NFL veterans Emmitt Smith, Jerry Rice, and Dick Butkus.”

See Also: Digital Artist Pak and Julian Assange Launch Ethereum NFT Collection
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“MetaMask currently has 21 million monthly active users, but the acquisition would bring the wallet to more platforms and deepen its integrations as it is currently offered only through mobile apps and web browser extensions. MyCrypto offers its Ethereum account management solutions through browsers and desktop applications.

With our talents combined, and our strong sense of shared ethics and goals for this ecosystem, I think we’ll be able to provide a wallet experience that is much more able to help its users make the best decisions through this rapidly evolving Web 3 wallet landscape.”

Grayscale has launched the first equity exchange-traded fund (ETF) tracking the Bloomberg Grayscale Future of Finance (BGFOF) index. With the launch of its first equity ETF, Grayscale is now broadening its product range away from strictly cryptocurrency investing and giving investors exposure to mainstream markets.

The index, which can include payments, exchange, asset management, hardware, blockchain/tech and mining companies, is rebalanced every quarter. The list of companies includes Silvergate Capital (SI), PayPal (PYPL), Coinbase Global (COIN), Block (SQ), Robinhood Markets (HOOD), Argo Blockchain PLC (ARB) and more.”

See Also: SEC Asks Bitwise to Address Concerns About Proposed Spot Bitcoin ETF

A Bloomberg report noted that Russians own about 12% of the total global crypto holdings. The estimates are believed to be on the lower side, given that crypto regulations are not yet clear in the country and many users prefer to use anonymous tools to carry out their transactions.

Russia is currently third in terms of Bitcoin network mining input and Putin acknowledged the same, calling for the use of surplus energy for crypto mining. With the finance ministry and president onboard, Russia could soon regulate crypto trading and mining.”

See Also: India to introduce 30% crypto tax, digital rupee CBDC by 2022–23
See Also: Hester Peirce Warns Proposed SEC Reform of Securities Trading Platforms Could Threaten DeFi

Crypto TA