9 February

“Cryptocurrency data provider CoinGecko and 21.co, the parent firm of investment product provider 21Shares, are rolling out a classification system for crypto assets, the latest in a growing number of efforts to map the taxonomy of the industry and make it more accessible for participants in traditional finance (TradFi).

The Global Crypto Classification Standard, announced Wednesday, categorizes digital assets according to three levels. It joins a classification system called datonomy, constructed by financial services behemoths Goldman Sachs (GS) and MSCI (MSCI) with data provider Coin Metrics, and the Digital Assets Classification Standard (DACS) from CoinDesk Indices that classifies the top 500 digital assets by market capitalization into use case and technology and then into industry and sector.

The core of this trend is an attempt to impose structure on apparent chaos. There is a huge array of crypto assets, many of which have virtually nothing in common with each other, making the industry an intimidating one to enter.

It is crucial as there are still many misconceptions regarding crypto from traditional finance institutions. The term ‘cryptocurrency,’ widely used, is a misnomer as crypto assets can vary dramatically in nature, both as it relates to the asset (token) itself and the protocol behind it.

In short, the aim is to help companies and investors answer some basic questions about a network or protocol: What does it do? What type of token is associated with it? To what asset class does it belong?

Having the answers helps TradFi firms know what to expect when they enter a new asset class. It allows them to create index-linked products such as exchange-traded funds (ETF), which helps to attract investors who prefer passive rather than active exposure to an asset or basket of assets.

The value such products offer is illustrated by last year’s collapse of crypto exchange FTX and lenders Celsius Network and Voyager Digital. All of those operated as centralized platforms. In contrast, many DeFi lending protocols continued with business as normal, offering an alternative investment opportunity if only it can be identified.”

See Also: Deutsche Bank in Talks to Invest in 2 German Crypto Firms: Bloomberg
See Also: DeFi securitization of real-world assets poses credit risks, opportunities: S&P

A number of companies have already signed up to come on board. They span the crypto industry including individual projects, exchanges and blockchain analytics firms. The goal of the incipient group is to work with regulators around the globe, and to show how advanced the industry is when it comes to combating criminal elements.

[The creation of the group is] also to ensure there’s a mechanism in place to call out shortcomings and bad behavior in the industry, and help avoid larger contagion issues.”

See Also: Robinhood Board Authorizes Purchase of Shares Bought by FTX’s Sam Bankman-Fried, Gary Wang

“Leading MakerDAO community participants have proposed creating a liquidity market called Spark Protocol for lending and borrowing crypto assets focused on DAI, Maker’s $5 billion stablecoin.

The first product will be Spark Lend, which will allow users to borrow DAI at a set DAI Savings Rate, which currently stands at 1%. Future features will include fixed-term yield products and the inclusion of Maker’s own synthetic liquid staking derivative (LSD) called EtherDAI.

Spark aims to launch in April [and] bring extra revenue to Maker by its users’ lending and borrowing activity. Spark would use the smart contract system of Aave v3, the recently upgraded third version of the DeFi lending giant. In exchange, the developer team Phoenix Labs intends to send 10% of the protocol’s profits earned on the Spark Protocol’s DAI market in the next two years to Aave DAO.

The proposal builds on Maker founder Rune Christensen’s ambitious-yet-controversial “Endgame plan,” which is essentially poised to break up MakerDAO’s management structure into smaller blocks called SubDAOs. The team behind the Spark Protocol proposal is Phoenix Labs, a recently created company that includes leading figures in the MakerDAO developer community and focuses on building new products on top of the Maker protocol.”

“In Dubai, the issuance of, and all activities related to, anonymity-enhancing cryptocurrencies such as monero (XMR) are prohibited under new laws published Tuesday.

The new rules define anonymity-enhancing crypto as ‘a type of Virtual Asset which prevents the tracing of transactions or record of ownership through distributed public ledgers and for which the [Virtual Asset Service Provider] has no mitigating technologies or mechanisms to allow traceability or identification of ownership.’

Regulators in other jurisdictions like Japan have also taken steps to prohibit privacy-enhancing crypto. The European Union is also considering prohibiting tokens that hinder traceability.

Any obfuscation of fund flows poses a challenge to detecting illicit activities, so it is unsurprising that regulators react strongly to these kinds of asset classes and mechanisms.”

See Also: Coinbase’s CEO Cites ‘Rumors’ the SEC May Ban Crypto Staking for Retail Customers

“The U.S.’ role in protecting and preserving human rights around the world should rank among the greatest prides of democracy. Traditionally, the U.S. has used diplomatic pressure to promote freedom of association, organization and access to information. All of these freedoms rely on privacy as a backstop against arrests and violent crackdowns. It’s not just diplomatic pressure that allows the advancement of human rights, it’s privacy tools that are often created and run in the U.S.

A growing number of technology and thought leaders are urgently calling on the U.S. Congress to return to the principles of the Constitution, as well as their own innate understanding of the harm surveillance has wrought among their core constituencies. Everyday people should never be treated as criminals, guilty until government and corporate invasions into their privacy prove them innocent.

Fight for the Future, has released a letter signed by 40+ open-source, decentralized and/or privacy-preserving projects that asks lawmakers to protect a pro-privacy future. Signatories on this letter include Tor, The Blockchain Association, Nym, Protocol Labs, Proton, Zcash, Tutanota and Mysterium.

We have four simple asks:

Constitutional and human rights protections, both on- and offline: The first ask to Congress is straightforward: Do more to protect our constitutional and human right to privacy. The right to privacy has always been a foundational principle of the U.S. Champions of the right to privacy and the First Amendment must stridently oppose any actions that criminalize building and using privacy tools or the simple act of writing or running code.

Support the decentralization of power: Surveillance concentrates power – and surveillance states and human rights abuses go hand in hand. The more you are surveilled, the more power state and corporate actors have over your life. Surveillance capitalism pervades our digital economy, causing market forces to constantly erode user privacy by design.

It’s beyond time for Congress to invest in creating more resilient digital infrastructure, where power is decentralized and decisions are made by users. There are a host of strong legislative actions that would break Big Tech’s monopolistic and oppressive stranglehold on the internet.

Champion privacy technologies: Open-source developers and activists have done wonders for the human right to privacy by creating and promoting access to tools like end-to-end encryption and zero-knowledge proofs. Privacy innovations can restore trust in our communications and financial activity. Yet, many prominent lawmakers are reacting to these tools with condemnation.

Lawmakers must reverse course on pressuring companies not to implement or to break end-to-end encryption and other privacy-preserving technologies, and speak out when the FBI and Attorney General try to paint privacy as nothing more than a shield for criminality.

Pass data privacy laws.

“The verdict ends a year-long battle between the French luxury house and NFT artist Mason Rothschild over his MetaBirkin NFT collection.

The jury awarded $133,000 in damages to Hermès, determining that Rothschild did, in fact, profit off Hermès’ goodwill by producing NFTs based on the design house’s Birkin bags. The jury also decided the NFTs were not protected under the First Amendment of the U.S. Constitution, as Rothschild’s lawyers had argued during the trial.

The case sets an important precedent for NFT creators and builds the framework for intellectual property (IP) law as it relates to digital creations. Down the line, creators like Rothschild might have to be more careful creating NFTs with other brands’ IP to avoid future trademark lawsuits.”

See Also: Better Policy Can Turn NFTs Into an Intellectual Property Powerhouse
See Also: Bitcoin NFTs Explode in Popularity as BitMEX Research Shows 13,000 Ordinals

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