15 March

“February inflation in the U.S. dropped to 0.4% from 0.5% in January, in line with economists’ estimates. On a year-over-year basis, inflation slowed to 6.0% from 6.4%, also in line with estimates. The core rate of inflation – which strips out food and energy costs – increased by more than forecast to 0.5% in February versus 0.4% in January, and against forecasts for 0.4%. The year-over-year core rate was 5.5%, as expected.

The bitcoin price (BTC) rose to a nine-month high of $25,484 in the minutes following the report. The world’s largest cryptocurrency by market cap then extended the advance, surpassing the $26,000 mark for some time before recently settling back.

Less than one week ago, traders had been betting the Fed would hike the benchmark fed funds rate by 50 basis points at its March meeting. Following the collapse of Silicon Valley Bank on Friday and the shutdown of Signature Bank over the weekend, traders quickly pivoted and are now pricing in only the slimmest chance of any rate hike in March and rate cuts by mid-summer.

The macro backdrop is transitioning from that of tightening to significant loosening, or at least this is what the market is predicting. Bitcoin and digital assets tend to lead the way in terms of anticipating these kinds of macro shifts, and this is why we’re seeing a pronounced rally in the crypto market.

The conditions for a sustained rally for Bitcoin and other digital assets are ripening – and, indeed, these conditions of banking instability and resulting monetary turbulence are exactly why Bitcoin was created in the first place.”

See Also: Bitcoin Is Pumping—But It’s Not Yet ‘Decoupling’ From Stocks, Analysts Say
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“Crypto conglomerate Digital Currency Group (DCG) is trying to find new banking partners for portfolio companies following the collapse of Silicon Valley Bank (SVB), Signature Bank (SBNY) and Silvergate Bank, according to a memo viewed by CoinDesk.

Santander (SAN), HSBC (HSBA), Deutsche Bank (DB), BankProv, Bridge Bank, Mercury, Multis and Series Financial are still willing to connect with crypto firms, according to the memo.

The memo notes that banks may restrict some services for crypto firms such as brokerage and money market services and the ability to wire money to third parties. Traditional banks may be willing to set up banking accounts for crypto firms but would place restrictions based on the level of crypto exposure, according to the messages.

Western Alliance and Bridge Bank are still opening accounts for crypto firms, despite the fall in their share prices. DCG had also reached out to international banks including Revolut in the U.K., United Overseas Bank (UOB) in Singapore and Bank Leumi in Israel.”

See Also: Gibraltar’s Xapo Bank Enables GBP Payments, Prepares USDC Option Amid U.S. Crypto Banking Crisis
See Also: Banking Crisis in U.S. Likely to Push Crypto Firms Offshore
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Blackstone (BX) and Apollo Global Management (APO), two of the world’s largest asset managers, are considering acquiring assets of Silicon Valley Bank, Bloomberg reported on Tuesday. New York-based investment manager KKR (KKR) is also reported to be interested.

Blackstone and Apollo are looking to purchase a book of loans held by Silicon Valley Bank, according to the report. Silicon Valley Bank’s assets were seized by financial regulators at the end of last week, with the Federal Deposit Insurance Corp. named as its receiver.”

See Also: Signature Bank Shutdown Caused by ‘Crisis of Confidence’ in Leadership, NYDFS Says

“In a recent interview, Circle’s CEO pointed out the irony of a traditional bank disrupting the wider crypto industry.

We are really trying to make sure that we’ve got the most solid infrastructure possible for [USDC], and it’s somewhat ironic that there has been a lot of talk of protecting the banking system from crypto, here we are in a situation where we are trying to protect a digital dollar from the banking system.

We took a lot of precautions late last week as we started to see a lot of things unfold. We’ve moved all of our reserve assets to the Bank of New York Mellon, which is an extraordinary custodian.

The Boston-based company also said that the $3.3 billion USDC reserve deposit held at SVB is now fully available, reiterating that ‘as a regulated payment token, USDC remains redeemable 1:1 with the U.S. Dollar.’ Though USDC has edged back to its dollar peg, he said Circle was prepared to intervene amid the recent chaos and use its corporate balance sheet if needed.

Circle also announced automated USDC minting and redemption for customers via new banking partners that are going live this week.”

See Also: Vitalik Buterin-Named Wallet Sent 500 Ether to Mint RAI, Buy USDC Amid Depegging

“A 2022 European Union bill known as the Data Act included provisions intended to give people more control over information from smart devices, but has generated concerns in the Web3 community.

Provisions included in del Castillo Vera’s redraft of the bill would mean that smart contracts must have to have access controls and protect trade secrets. They would also need to have functions to stop or reset – something that experts worry could undermine their purpose.

Article 30, as currently drafted, goes a step too far in addressing the issues raised by immutability.

Schrepel, a specialist in blockchain legal issues, believes that the legal text is unclear about who in practice would have to hit the kill switch on a smart contract and that it interferes with the fundamental principle that the automated programs can’t be altered by anyone.

The vote empowers del Castillo Vera and other lawmakers to negotiate with governments in the EU member countries to hammer out a final version of the law.”

See Also: U.S. Treasury Poised to Release View on How DeFi Used in Illicit Finance
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“Coinbase is in the process of recruiting a bunch of protocols to Base. Uniswap and Aave are two of those.

Coinbase’s Base layer 2 network is built using the Ethereum-scaling protocol Optimism and uses Ethereum’s native cryptocurrency ETH for fees on the network.”

“According to Rollkit, its new rollup solution lets users produce rollups by retrieving and storing data on the Bitcoin blockchain. A sovereign rollup is one that does not need a smart contract or use a settlement layer for validation—scalable and secure and with the “sovereignty” of a layer 1.

However, proponents of Ethereum, a network known to use layer-2 “rollups” as a transaction scaling solution, have taken issue with Rollkit’s use of the term. According to Alexei Zamyatin, founder of the Bitcoin DeFi protocol Interlay, sovereign rollups as proposed by Rollkit inherit “nothing” of Bitcoin’s security.

A sovereign rollup is actually an alt L1 that stores its block data on Bitcoin. Data availability—okay, but honestly, that’s been used since 2012.