Previous SOMA.finance Weekly Wrap-up
ISSUE #44
19 May 2023
Market Overview
Financial markets, on the whole, remained in a holding pattern over the past week as concerns related to the global economy – from rising inflation and interest rates to the threat of a debt default in the U.S. – have investors sidelined and scrambling to find a safe haven for their wealth.
ISSUE #44
19 May 2023
Market Overview
Financial markets, on the whole, remained in a holding pattern over the past week as concerns related to the global economy – from rising inflation and interest rates to the threat of a debt default in the U.S. – have investors sidelined and scrambling to find a safe haven for their wealth.
Matters improved slightly for markets on Wednesday after positive comments from both sides of the aisle in regard to debt talks emerged, but the situation remains tense as the countdown to the date when significant portions of the U.S. government may need to shut down due to a lack of funding draws near.
In response to Coinbase’s petition for mandamus, which asked the SEC to establish a clear regulatory framework for cryptocurrencies, the regulator argued that no applicable laws or regulations impose “an obligation to issue the broad new regulations regarding ‘digital assets’ Coinbase has requested,” nor are they required to do so on a specific timeline. The agency argued that even according to Coinbase’s own submissions, “considering the various paths it suggests is a necessarily complicated endeavor” and the process of formulating and approving a new regulatory regime could take years.
Little changed for the price of Bitcoin (BTC) over the past week as the top crypto continued to oscillate around the $27,000 support level after briefly falling to a low of $25,875 last Friday in a move that was highly anticipated by many technical analysts. The community now finds itself evenly split among those who think that price will steadily climb higher from here and those that think another tip into the $25,000 range – and possibly lower – is likely before the uptrend resumes.
At the time of writing, the total cryptocurrency market cap stands at $1.122 trillion, an increase of 0.35% over the past week. The DeFi market cap currently stands at $49.9 billion with a 24-hour trading volume of $2.11 billion, which is 6.6% of the total crypto market volume.
Crypto News
NFTV - A recent patent filed by LG Global indicates that the company is seeking patent protection for a television that is capable of connecting with a non-fungible token (NFT) market server to allow users to send, receive and display artwork and fulfill purchases via a cryptocurrency wallet that is connected to the TV set. The patent, filed with the World Intellectual Property Organization, suggests that LG sees ongoing consumer demand for NFTs in the future and sees a business case for making them more accessible. LG first delved into the integration of NFTs with its television sets last September when it released its “LG Art Lab” marketplace, which enabled users to trade digital collectibles via U.S. LG televisions running their WebOS 5.0 operating system. The marketplace is only accessible via LG televisions.
Focused on Innovation - China officially launched its National Blockchain Technology Innovation Center in the capital city of Beijing, promising to train more than 500,000 specialists in blockchain and distributed ledger technology (DLT) in the coming years. The center will collaborate with local universities, think tanks and blockchain businesses to advance the development of blockchain technology in China with a primary goal of connecting the siloed application chains developed in China in recent years. According to its operational plan, the center is looking to build a national blockchain computing power network composed of provincial and municipal backbone node networks and industry application node networks. This digital infrastructure will serve important industries and key areas of the national economy such as cross-border trade, supply chain finance, energy, production safety, and the food industry.
DEXtination Polkadot - The Uniswap decentralized exchange is looking to expand its domination of the DeFi DEX space by launching in the Polkadot ecosystem via Moonbeam (GLMR), a parachain in the Polkdadot ecosystem. The move comes after the Uniswap community gave near-unanimous approval to a proposal – put forward by the educational group Blockchain at Micigain – on the exchange’s governance platform. The smart contracts for the exchange have already been deployed to Moonbeam, and the only tasks left to fully launch it are “front-end integration updates and including Moonbeam to the auto router,” the proposal stated.
And in the World of Regulatory Actions…
No Entry for CBDCs - Florida Governor Ron DeSantis officially signed an anti-CBDC bill into law, banning the use of American or foreign central bank digital currency (CBDC) in the state. The bill was first announced on March 20, with DeSantis warning at the time that the creation of a digital dollar would grant “more power” to the government. During the Friday press conference following the signing, DeSantis accused President Biden's administration of wanting to “crowd out and eliminate other types of digital assets, like cryptocurrency.”
Regulation on the Horizon - The European Union’s Markets in Crypto-Assets (MiCA) bill, a landmark piece of legislation designed to establish a regulatory framework for the EU, reached another milestone as the bill was approved by the finance ministers of all 27 member states. The unanimous vote by the EU’s Economic and Financial Affairs Council means MiCA remains on track to become law by the third quarter of 2024. The next step is for the bill to be published in the Official Journal of the European Union. The European Parliament previously approved MiCA on April 20, with 517 members of parliament voting in favor and 38 voting against it. If the bill stays on track for enactment, provisions related to stablecoins could come into force as soon as July 2024, while many of the other provisions won’t take effect until January 2025 at the earliest.
DeFi Under the Microscope - Eun Young Choi, the U.S. Department of Justice’s top crypto enforcer, has indicated that the Justice Department is planning to start cracking down on cryptocurrency exchanges, mixers, and other sources of crypto crime that help hide the trail of transactions from regulators. Both companies that commit crimes as well as those that enable crimes such as money laundering to be perpetrated will be targeted in the enforcement. Choi said she believed focusing on platforms will “send a deterrent message” to other digital assets businesses that are circumventing AML and KYC rules or do not have robust compliance and risk mitigation measures. The DoJ’s crypto unit will also focus on investment scams, which caused $2.5 billion in losses in 2022, according to the FBI.
Related News
SEC to Coinbase: No need for new crypto regulation, enforcement actions will continue
Voyager bankruptcy plan approved, customers may recover 35.7% of claims initially
Tether Says It Will Buy Bitcoin for Stablecoin Reserves Using Realized Profits
Judge denies SEC motion to seal Hinman speech documents in Ripple case
SEC Believes Filecoin Is a Security, Grayscale Warns Investors
Grayscale, Bitwise Pumping Brakes on ETH Futures Plans
ISSUE #43
12 May 2023
Market Overview
From a micro perspective, the crypto market struggled over the past week as persistent inflation and the threat of a U.S. default on its debt weighed heavily on asset prices across all financial markets and will likely continue to do so for the foreseeable future.
Looking at things from a more macro point of view, little has changed for cryptocurrencies in nearly two months – ever since Bitcoin first surpassed the $27,000 mark – as the broader market has largely been in a sideways consolidation pattern since that time.
The big story making headlines this week has been the surge in transaction costs on both the Bitcoin and Ethereum networks. This has delighted miners and validators who have made a killing in fees at the expense of everyday users, who now have to pay an arm and a leg just to conduct a token transfer. For Bitcoin, the culprit behind the network congestion is the surging popularity of BRC-20s, which are essentially NFTs on the Bitcoin blockchain. For Ethereum, a spike in activity related to meme coins like PEPE and $SPONGE have been clogging up the network, increasing transaction costs and extending confirmation times.
The Bitcoin network’s inability to catch up with unconfirmed transactions resulted in Binance having to halt BTC withdrawals on multiple occasions on Monday, which took a toll on Bitcoin’s price as many grew disenchanted with transacting on the network. Around the time that Binance halted withdrawals, Bitcoin lost support at $29,00 and didn’t stop sliding until it bottomed out near $27,400, where it was then bid back above $27,700. On Wednesday, BTC price whipsawed following the latest CPI data report which showed inflation remains persistently high at 4.9% year-over-year. Following the volatile price movements, BTC now trades near support at $27,000.
At the time of writing, the total cryptocurrency market cap stands at $1.118 trillion, a decrease of 6.83% over the past week. The DeFi market cap currently stands at $48.1 billion with a 24-hour trading volume of $2.62 billion, which is 6.9% of the total crypto market volume.
Crypto News
A Different Approach - Grayscale Investments has decided to take a different approach in its efforts to launch a spot Bitcoin ETF in the U.S. and formed the Grayscale Funds Trust, a Delaware statutory trust structure that will allow the firm to independently manage its 1940 Act products as it continues to build out its ETF franchise. According to the registration statement, the fund will not invest in digital assets directly but “may offer indirect exposure to digital assets by virtue of its investments in companies and exchange-traded vehicles that use one or more digital assets as part of their business activities or that hold digital assets as investments.” The products Grayscale is looking to form Fund Trusts for include the Grayscale Ethereum Futures ETF, Grayscale Global Bitcoin Composite ETF, and the Grayscale Privacy ETF.
The French Connection - In a sign that the digital yuan continues to gain wider traction, BNP Paribas has partnered with the Bank of China (BOC) to enable their corporate customers to seamlessly transact in China’s central bank digital currency (CBDC), the digital yuan. The new partnership involves BNP Paribas China connecting with BOC to launch a digital yuan management system for its corporate clients. The system will link clients’ e-CNY wallets to their BNP Paribas bank accounts to facilitate “efficient, real-time and convenient” digital yuan usage. BNP Paribas is the first foreign-owned bank to be included in the country’s digital yuan rollout. The French bank will also explore the opportunities for expanding the use of China’s CBDC to smart contracts, utility payments, supply chain finance, and cross-border payments.
Now Accepting - The country of Liechtenstein announced that it is planning to add Bitcoin as a payment option for government services according to Prime Minster Daniel Risch. Risch, who also serves as the country's minister of finance, did not offer a timeline for adding the payment option, but said that any Bitcoin the government receives as payment would most like be immediately exchanged for Swiss francs – the country’s national currency – in an effort to avoid any exchange rate risks. Risch said that Bitcoin remains too volatile for Liechtenstein to consider holding a portion of the country's multi-billion-dollar annual savings in the digital asset.
And in the World of New Platform Launches…
Cloud Launching - Alibaba Group announced that it has partnered with the Avalanche network to release Cloudverse, a launchpad for metaverse projects on the layer-one Avalanche network. Alibaba Cloud, the digital technology and intelligence division of Alibaba Group, and Avalanche will collaborate on the platform which will give Alibaba’s clients access to a launchpad that is designed to help businesses customize, launch and maintain their own metaverse space. Alibaba and Avalanche are hoping that the ability to launch metaverses quickly and easily will lead to increased engagement from enterprises that don’t have the time or resources to develop these platforms themselves but are interested in the sector. The companies said that it would take about a month for a metaverse space to be up and running after the initial outreach by an interested firm.
Facilitating Connections - Binance is looking to woo the institutional crowd as they slowly enter the digital asset space with the launch of Capital Connect, a free platform for VIP-level users of the exchange that facilitates connections between investors and investment managers. All eligible Binance VIP clients that live in approved regions are eligible to apply as investors on Capital Connect, and investment managers who complete Binance’s know-your-business (KYB) verification process can also access the service. As part of its due diligence practices and to give investors insight into a fund's past performance, Binance has put requirements in place for listed investment managers to provide records of monthly returns that are verified by reputable fund administrators.
Blockchain for Institutions - Digital Asset, a fintech company that helps businesses create interconnected ecosystems, has joined with multiple firms to launch the Canton Network, a privacy-enabled interoperable blockchain network designed for institutional assets. The Canton Network is designed to provide a decentralized infrastructure that connects independent applications built with Daml, Digital Asset’s smart-contract language. Included in the list of Canton Network participants are BNP Paribas, Cboe Global Markets, Cumberland, Deloitte, Deutsche Börse Group, The Digital Dollar Project, EquiLend, Goldman Sachs, Microsoft, Moody’s, Paxos, S&P Global, and SBI Digital Asset Holdings, among others. The goal of the Canton Network is to help create opportunities for financial institutions to offer new innovative products to their clients while enhancing their efficiency and risk management.
Related News
Kenya eyes 3% tax on crypto, NFTs to boost revenue
U.S. Internal Revenue Service Files Claims Worth $44 Billion Against FTX Bankruptcy
Uniswap Volume Leapfrogs Coinbase Thanks to Pepe and Meme Coins
US House builds consensus toward crypto action, but visions still differ
Democratic Rep Says Self-Custody Wallets Should Have Federal Digital Identities
DCG settlement with Genesis still undecided as 30-day mediation period proceeds
ISSUE #42
4 May 2023
Market Overview
It was more sideways price action for the cryptocurrency market this week as the broader financial markets fell under pressure amid the ongoing banking crisis which saw First Republic Bank’s assets purchased for cents on the dollar in an echo of events that transpired in 2008.
While regulators in the U.S. continue to take a hard-nosed stance against Bitcoin and cryptocurrencies, they – along with global regulators – continue to prepare the public for a future of CBDCs.
On Wednesday, Federal Reserve Chair Jerome Powell announced that the central bank would be raising interest rates another 25 basis points, bringing the benchmark rate above 5% for the first time since 2007, and left the door open for additional rate hikes in the future.
Bitcoin (BTC) responded to the rate hike announcement by briefly pulling back to $28,230 before surging to a daily high of $29,350. The top crypto has since traded near support at $29,000.
At the time of writing, the total cryptocurrency market cap stands at $1.19 trillion, a decrease of 1.7% over the past week. The DeFi market cap currently stands at $53.6 billion with a 24-hour trading volume of $2.19 billion, which is 6.77% of the total crypto market volume.
Crypto News
Energy Tax - The Biden Administration’s Council of Economic Advisers (CEA) is looking to institute a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency mining operations as part of the White House’s effort to minimize the digital asset mining industry’s impact on climate change. The administration is looking to address the issue from the federal level as state or local regulations could result in the industry just moving to more welcoming jurisdictions. The current plan is to have the 30% tax phased in over three years, starting with 10% and increasing by 10% each year for two additional years.
COIN Expanding - Coinbase announced that they have launched a new derivatives exchange in Bermuda dubbed ‘Coinbase International Exchange.’ The new exchange, which is operational and trading, offers BTC and ETH perpetual futures settled in USDC with up to 5x leverage to institutional clients in eligible jurisdictions outside of the U.S. The company previously announced that it had obtained a license from the Bermuda Monetary Authority as part of its ‘Go Broad, Go Deep’ international expansion drive. Coinbase International Exchange will offer real-time 24/7/365 risk management with all liquidity provided by external market makers, meaning no proprietary trading.
Memecoin Mania - The frogs have overtaken the dogs in popularity for the time being as Pepe (PEPE) – a meme coin created as an homage to the popular internet ‘Pepe the Frog’ meme by Matt Furie – has stormed up the charts and excited the crypto Twitter faithful with a gain of 2,000% in just two weeks. “The Inu’s have had their day,” the website for Pepe states. “It’s time for the most recognizable meme in the world to take his reign as king of the memes. Pepe is here to make memecoins great again.” Some are hoping that the flash of energy in meme token land will harken back to early 2021 – when DOGE and SHIB helped kick off the bull market that year – and kick off the bull market of 2023 that extends on past the Bitcoin halving in April 2024.
And in the World of NFTs and ‘Killer Whales’…
NFT Utility - Sports Illustrated has announced the launch of “Box Office,” a self-service event management and the primary ticketing solution developed and released by SI Tickets, a fan-first ticketing site that offers a secure, NFT-based ticketing marketplace. The new service was developed in partnership with ConsenSys and operates on the Polygon network. With the new platform, event owners, organizers and hosts will be able to create, manage and promote a fully scalable, paid or free ticketed live sporting event, performance or function on the trusted Sports Illustrated Tickets platform. At launch, SI Tickets will offer access to a wide variety of venues from youth football, basketball, hockey, cheer and dance competitions to fashion shows and live music bars. The platform has future plans to partner with a range of organizers and vendors across sports, health and fitness, concerts, comedy and nightlife, industry functions, and philanthropy.
Cornering the Market - Art auction house Sotheby’s has expanded on its Sotheby’s Metaverse with the launch of its own secondary marketplace for fine art NFTs. The integrated sales system for the secondary marketplace will be fully on-chain via the Ethereum and Polygon networks, and users can pay using the native ETH or MATIC token. Work from artists selected by Sotheby’s digital art specialists will be featured on a rotating basis on the new marketplace. The Art auction house said it intends to utilize smart contracts in order to pay out artist royalties and will do so in accordance with each artist’s stated on-chain royalty rate. The company is also planning to launch a new digital art gallery through the Web3 art gallery platform Oncyber in June that will feature select works from the secondary market.
Sink or Swim - The cryptocurrency ecosystem is set to get its own version of the popular reality TV show Shark Tank as crypto aggregator CoinMarketCap has revealed its intention to launch ‘Killer Whales,’ “the world’s first globally broadcasted Web3 television show.” The new reality show is set to begin filming in June and is designed to serve as a way to entertain and educate the global public “on the intricacies and evolving tech of the Web3 world.” Similar to Shark Tank, contestants on Killer Whales will pitch their crypto and NFT projects to a panel of industry expert judges – referred to as “Whales.” Quality pitches can receive ‘Swim’ votes from the judges while those that lack the ability to survive long term in the judge's eyes will receive ‘Sink’ votes. The goal is to obtain the most ‘Swim’ votes and the fewest ‘Sink’ votes for a chance to rank at the top of the series leaderboard and be crowned the series winner.
Related News
FTX seeks to claw back $4B from Genesis in a battle of the bankrupt
Tiny Bhutan may already be a massive Bitcoin whale
U.S. SEC Changes Its Mind on Officially Labeling Digital Assets
Binance Users Deposited Over $4B to Farm SUI Tokens Ahead of Mainnet Launch
Ex-OpenSea Manager Nate Chastain Guilty of NFT Fraud, Money Laundering
Binance: ‘Thousands’ of accounts blocked needlessly
ISSUE #41
28 April 2023
Market Overview
It was a week of recovery for the crypto market after Bitcoin broke below support at $28,000 last Friday, plunging the top crypto to a low of $27,030 late on Monday as bears attempted to break the back of the last remaining support level before a plummet to $26,000.
The big news on the regulatory front was the passage of the Markets in Crypto-Assets (MiCA) bill by the European Parliament, setting the stage for a final vote by the European Council on July 1 that will make the law official if approved. Even if the law is approved on that date, it will still take 18 months for it to go into effect, allowing companies affected by the rule change time to prepare for its implementation.
In an effort to speed up the process of onboarding companies under the new legal regime, France announced that it was exploring the possibility of providing companies with a “fast track” option which would allow them to come into compliance with MiCA regulations as soon as possible.
The outlook for Bitcoin began to improve late on Tuesday when the top crypto managed to surge back above $28,000, hitting a high of $30,040 on Wednesday before once again returning to support at $28,400. The move higher for the top crypto helped to relieve the pressure that altcoins were experiencing and put the broader market back on an uptrend.
At the time of writing, the total cryptocurrency market cap stands at $1.18 trillion, a decrease of 1.33% over the past week. The DeFi market cap currently stands at $53.9 billion with a 24-hour trading volume of $4.88 billion, which is 7.6% of the total crypto market volume.
Crypto News
Hurry Up and Regulate! - Coinbase filed a lawsuit against the SEC seeking to compel it to provide a “yes or no” response to a petition that the firm originally submitted last July seeking clarity on cryptocurrency regulation. The petition in question sought to have the SEC propose and adopt a clear regulatory framework for the cryptocurrency industry in the U.S. and establish guidelines for companies like Coinbase to work from as they build out their businesses. While SEC Chair Gary Gensler has repeatedly stated that in his view, all cryptocurrencies aside from Bitcoin meet the definition of a security and should be regulated as such, the agency has yet to release formal guidelines outlining its stance.
Hiring for the Future - Visa revealed that it is looking to fill multiple new positions to help it execute its crypto product roadmap focused on driving mainstream adoption of public blockchain networks and stablecoin payments. The firm is particularly interested in software engineers with experience using Github Copilot and other AI-assisted engineering tools to write and debug smart contracts. Specialized qualifications include having a good understanding of Layer 1 and Layer 2 solutions, experience writing smart contracts using Solidity, a good understanding of public and permissioned DLT networks, security protocols and private key custody, and familiarity with Ethereum enhancements such as ERC-4337, which enabled the creation of smart accounts.
Stellar Use Case - The Stellar (XLM) network has become the first public blockchain to host a U.S.-registered fund following the integration of the Franklin OnChain U.S. Government Money Fund (FOBXX), which can be accessed via the Benji Investments app. The fund’s transfer agent maintains the official record of share ownership using a proprietary blockchain-integrated system that currently utilizes the Stellar blockchain network for transaction activity, making it the first U.S.-registered fund to do so. The fund currently offers a 7-day yield of 4.53%, paid monthly, and has a total AUM of $272.92 million as of March 31. The Fund is a regulated 1940 Act fund that invests at least 99.5% of its total assets in government securities, cash and repurchase agreements collateralized fully by government securities or cash.
And in the World of Adoption and Expansion…
Credit Ratings Go DeFi - TransUnion, one of the top consumer credit reporting agencies in the U.S., has revealed that it will start delivering credit scores to decentralized finance (DeFi) lenders thanks to a partnership with Spring Labs and Quadrata. With this integration, decentralized applications (DApps) will be able to utilize the new service to access off-chain credit data using Spring Labs technology and Quadrata, a digital passport network that was spun out from Spring Labs. The process developed by Spring Labs will enable the delivery of credit scoring data while maintaining the privacy of the consumer’s identity. This development comes at a crucial time for the crypto industry as the ongoing Operation Chokepoint 2.0 has significantly limited the number of baking partners willing to work with cryptocurrency platforms.
Stablecoin Rising - SG-FORGE, the crypto division of French banking and financial services firm Societe Generale, announced the launch of EUR CoinVertible (EURCV), a Euro-pegged stablecoin hosted on the Ethereum (ETH) blockchain. The new token officially launched on April 19 and is designed to bridge the gap between traditional capital markets and the digital assets ecosystem. EURCV is currently available for institutional clients of the bank and is part of Societe Generale group’s strategy of developing initiatives in the field of digital assets in a secure and transparent framework for institutional investors that abide by banking, legal and regulatory standards. The collateral assets that back the stablecoin will remain completely segregated from the issuer, and token-holders will have direct access to the collateral assets anytime they wish to convert.
The Coinbase Triangle - Following comments from Coinbase CEO Brian Armstrong that the exchange may consider relocating if the regulatory environment in the U.S. doesn’t improve, Coinbase announced that it has obtained a license to offer its services in Bermuda. The new operational jurisdiction comes as part of an 8-week international expansion drive – dubbed “Go Broad, Go Deep” – which was launched on March 8 with the goal of rolling out a number of new initiatives in countries across six continents: South America, Europe, Africa/Middle East, Asia, Australia, and North America. Coinbase has obtained a Class F license in Bermuda, which enables it to conduct a range of activities, including the issuance, sale, and redemption of digital assets. It also allows the platform to operate as both a digital asset exchange and a digital asset derivatives exchange provider.
Related News
France looks to fast-track the adoption of MiCA
UK financial watchdog to crypto industry: ‘Let’s work together’
Binance.US cites ‘hostile’ regulator, yanks US$1.3 billion deal to buy Voyager Digital
California approves blockchain-based digital wallet for gov't services
UK Tax Authority Proposes Changes to Treatment of DeFi Lending, Staking
Hong Kong's Crypto Licensing Regime Expected to Launch Next Month
Binance CEO denies his net worth is $28 billion: 'Numbers all wrong'
ISSUE #40
21 April 2023
Market Overview
The major correction that many had forecast finally came to fruition this week as the crypto market saw red across the board on Wednesday as Bitcoin bears tore through support at $30,000 and pounded the top crypto below $29,000.
There was no specific inciting event that sparked the market turndown, but rather a conglomeration of factors including the ongoing uptick in regulator scrutiny of the industry, Operation Chokepoint 2.0 and the diminishing number of banking partners, the threat of additional interest rate hikes due to stubbornly high inflation, and a hot start to the year which has seen BTC nearly double in price in four months.
In the latest move from the U.S. Securities and Exchange Commission’s crackdown on the crypto industry, the comments period was opened for a proposal to alter the definition of “exchange” to include decentralized finance (DeFi) platforms. Making sure to emphasize the focus on DeFi, SEC Chair Gary Gensler said, “Make no mistake: many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws.”
The move lower didn’t exactly come as a surprise to technical analysts and many of the more experienced cryptocurrency holders as the extended stay at $30,000 and a failed attempt to breakout above $31,00 on Tuesday meant a retest of lower support levels was a possibility. BTC originally fell below $30k on Monday, but bulls managed to bid it back above the psychologically important support level on Tuesday. Bears redoubled their efforts on Wednesday evening and not only broke through support at $30,000, but managed to continue the mauling through Thursday, pounding BTC to a low of $28,037.
At the time of writing, the total cryptocurrency market cap stands at $1.20 trillion, a decrease of 5.56% over the past week. The DeFi market cap currently stands at $56.6 billion with a 24-hour trading volume of $4 billion, which is 7.66% of the total crypto market volume.
Crypto News
Just NFT It – Nike became the latest highly recognizable brand to enter the realm of non-fungible tokens (NFTs) as the company announced it will soon launch its first NFT sneaker collection on .SWOOSH, the company’s platform for virtual creations. Dubbed “Our Force 1 (OF1),” the collection is co-curated by the .SWOOSH community and is “a tribute to the first 50 years of Nike and an homage to the creativity and versatility of the Air Force 1.” Nike is offering users a choice between two digital “boxes,” the Classic Remix box and the New Wave box. Each box contains an OF1 – which is a digital representation of an Air Force 1 – and can be purchased for $19.82. General access to the NFT sale will begin on May 10.
Sun Summoner – Justin Sun, the founder of the Tron network and part owner of the Huobi cryptocurrency exchange, has been issued a summons by a U.S. district court has 21 days from April 12 to respond regarding a lawsuit filed by the Securities and Exchange Commission (SEC). On March 22, the SEC filed a lawsuit against Sun, alleging that he illegally sold crypto securities and conspired to artificially inflate the trading volume of crypto assets. Failure to reply in the allotted time will result in a summary judgment. Soulja Boy and Austin Mahone were also named in the summons as they were the only two out of the eight celebrities charged by the SEC alongside Sun who did not settle their charges with the regulator.
Seeking acceptance - Brian Armstrong, the CEO of Coinbase, suggested that the company may eventually consider relocating to a more welcoming jurisdiction if the regulatory landscape in the U.S. continues to deteriorate or no clear framework is established. This statement follows the issuance of a Wells Notice to the exchange by the SEC, which is often the final step before formal charges are issued. Armstrong said that despite meeting with the agency over 30 times in the last years, they “never got a single piece of feedback from them about what we can be doing better or differently, and then this Wells Notice arrived.” During a speech Armstrong gave at the conference he was attending, he said, “I think if a number of years go by where we don’t see regulatory clarity around us... we may have to consider investing more elsewhere in the world. Anything including, you know, relocating.”
And in the World of Institutional Crypto.…
Daily expires - CME Group, the operator of the world’s largest derivatives exchange, announced that it plans to expand its suite of cryptocurrency options across its standard- and micro-sized Bitcoin and Ether contracts, pending regulatory approval. The new contracts are set to go live on May 22 and will offer options on Bitcoin and Ether futures with Monday, Tuesday, Wednesday, Thursday, and Friday expirations. The new offerings were created to complement the existing monthly and quarterly expiries currently available across all Bitcoin and Ether options on futures contracts.
London calling - LCH SA, the European-based arm of the London Clearing House (LCH) – which is majority owned by the London Stock Exchange Group (LSEG) – announced that it will begin offering the clearing of Bitcoin index futures and options contracts traded on GFO-X. GFO-X is a UK digital asset derivatives trading platform that has received approval from the Financial Conduct Authority to operate as a multilateral trading facility. The new service will be made available through LCH DigitalAssetClear, a new segregated clearing service developed by GFO-X. Bitcoin index futures and options contracts on LCH SA will be cash-settled through LCH DigitalAssetClear and will be based on the GFO-X/Coin Metrics Bitcoin Reference Rate (GCBRR), a benchmark regulation-compliant reference rate of the U.S. dollar price of Bitcoin.
X - Twitter users can now purchase cryptocurrencies and stocks directly through the social media platform thanks to a new partnership with eToro, an Israel-based social trading and investment company. The new feature has already gone live on the Twitter app and allows users to view market charts on a variety of different financial instruments directly from the social media platform. It also allows them to buy and sell cryptocurrency and other assets from eToro through the integration. A new button saying “view on eToro” has been added to the UI that redirects Twitter users to the eToro website where they can buy and sell assets. This development aligns with the longstanding rumors that Elon Musk is looking to create an ‘everything app’ – dubbed ‘X’ – which would include messaging and video chatting, the ability to facilitate payments and trade assets, play video games, share photos, hail rideshare and delivery services, shop, and more.
Related News
SEC looks to modify exchange rules to include DeFi platforms
SEC vs CFTC Turf War ‘Unhelpful’ and ‘Unsustainable’: House Subcommittee Chair
Bank of Russia to set up entities for crypto mining and cross-border settlement: Report
Trump’s Second NFT Collection Sells Out While Prices on First Collection Plunge
Coinbase gets Bermuda license, could launch offshore derivatives exchange next week
Sotheby's to Auction CryptoPunk, Other NFTs Owned by Bankrupt Three Arrows Capital
ISSUE #39
14 April 2023
Market Overview
Cryptocurrency proponents were in high spirits this week as Bitcoin once again saw its price climb above $30,000 while Ethereum climbed above $2,000, further signaling to many that the crypto winter is over, spring has arrived, and the market is on course to hit new all-time highs.
Aside from the surge in BTC price late on Monday into Tuesday, it was a relatively quiet week for the ecosystem, all things considered, as there were no notable exchange collapses, banking failures, or high-profile enforcement actions to cause a spike in volatility. Many were actually seen using the term “boring” to describe the market prior to Monday’s surge, suggesting we’ve all become a little too accustomed to shakeups in the market. Things livened up after the Ethereum network successfully integrated its Shapella hard fork late on Wednesday, enabling the withdrawal of staked Ether for the first time.
What is clear is that the global movement of de-dollarization continues to ramp up, with numerous countries announcing new trade agreements that utilize local currencies in lieu of the U.S. dollar. Some have speculated that the dump-the-dollar movement has also been providing tailwinds for the digital asset market as global investors have started to turn to cryptocurrencies as a viable alternative to fiat currencies that have a better chance of holding their value.
As mentioned above, the Bitcoin market was largely a snoozefest until late on Monday when the king crypto awoke from its slumber at the $28,000 support level to steadily climb throughout the week to close the Thursday candle at a price of $30,536. Technical analysts have long had their eye on resistance at $31,000 as the level to overcome to officially signal the start of a new bull market, and optimism is now starting to rise as the top crypto is within striking distance of that bear vs. bull showdown.
At the time of writing, the total cryptocurrency market cap stands at $1.28 trillion, an increase of 7.5% over the past week. The DeFi market cap currently stands at $59.2 billion with a 24-hour trading volume of $3.9 billion, which is 7.82% of the total crypto market volume.
Crypto News
Unstakable - The Shapella upgrade to the Ethereum network has been successfully implemented, enabling the withdrawal of staked Ether and any rewards generated for the first time since the Beacon Chain launched in December 2020. While many were concerned that the ability to withdraw staked tokens would lead to a dump in the price of Ethereum, no such sell-off occurred as multiple measures were put in place to ensure the security of the network by preventing a mass validator exodus. While the ability to unstake ETH was a welcomed development for many crypto holders, future upgrades that increase scalability and decrease transaction costs are what will really take Ethereum to the next level in terms of adoption.
Taping the private sector - The Central Bank of Montenegro (CBGC) announced that it signed an agreement with Ripple, the enterprise crypto and blockchain solutions provider, to develop a strategy and pilot program for the launch of the country’s first central bank digital currency (CBDC) or stablecoin. The pilot program will analyze the advantages and risks that a CBDC or national stablecoin poses in regard to electronic means of payment availability, security, efficiency, compliance with regulations and the protection of end users’ rights and privacy. There will be several stages to the project, including one that explores the practical applications of a CBDC or national stablecoin, and another that tests different designs to simulate its circulation and use under controlled conditions.
2022 crypto blues - The horrendous 2022 for the cryptocurrency market took its toll on cryptocurrency proponents, as a study conducted by Pew Research found that 75% of Americans who are at least somewhat familiar with cryptocurrencies are not confident in their reliability and safety. That translates to roughly two-thirds of U.S. adults holding an unfavorable opinion of the crypto industry in its current state. There was a noticeable split in terms of age, with adults aged 50 and older more likely to say they are not confident in its reliability and safety (85%) as compared to their younger counterparts (66%). And women showed more skepticism when it comes to investing in, trading or using cryptocurrencies, with 80% saying they are not confident as compared to 71% of men.
And in the World of Cryptocurrency in the U.S.…
Mining in focus - Cryptocurrency mining operations have come under the microscope following the crackdown on crypto-related banking services, as several states, including Arkansas, Montana, Texas, and Mississippi, have introduced legislation related to crypto mining, with some adopting an open stance, while others are looking to put limitations on the industry. At the federal level, crypto miners could soon be subject to a 30% tax on electricity costs based on the text of the budget proposal introduced by President Joe Biden on March 9 aimed at “reducing mining activity.” With issues related to power consumption remaining at the forefront of concerns for many states, it's likely that there will be many more legislative acts at both the state and federal levels related to cryptocurrency mining in the future.
Texas gold - Lawmakers in Texas have introduced bills in the State Senate and House that are looking to require the state comptroller to establish a digital currency that is fully backed by gold and fully redeemable in cash or gold. If passed, the bill would also require the creation of a mechanism that would allow the new gold-backed digital currency to be used by citizens for their daily transactions. All gold reserves backing the digital currency would be held in a trust with the Texas Bullion Depository that is controlled by the comptroller or another entity appointed by the comptroller. There will be no limit on the amount of gold-backed digital currency that Texans can purchase, and they will be able to redeem the digital currency for gold or cash at any time.
Coalition of the willing - More than 40 states have joined together to launch the United States Blockchain Coalition (USBC), an organization intended to foster multistate collaboration and maintain American leadership in the fields of digital assets, Bitcoin, and distributed ledger technologies (DLT). The coalition will be led by representatives from Texas, Washington, California, Florida, Wyoming, and Pennsylvania. Notably, the Washington Technology Industry Association – the largest technology industry association in the U.S. – is one of the coalition’s founding members. Each USBC member will be responsible for cataloging use cases for blockchain employed in their region, providing education to policymakers, building relationships with regulatory bodies, and “proactively seeking out new partnerships with industry, government, academia, and investors” to help facilitate the growth of the industry across the U.S.
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ISSUE #38
7 April 2023
Market Overview
Altcoins were the main attraction over the past week as Bitcoin (BTC) continued to consolidate near support at $28,000 while countries around the world slowly start to de-dollarize. Many crypto proponents were encouraged by the revelation that the top crypto has actually been able to strengthen its position since March 14, when the U.S. government made the first sale of the BTC stash it acquired from the takedown of the Silk Road dark market.
Massachusetts Senator Elizabeth Warren launched her re-election campaign on a platform with the stated goal of creating an “anti-crypto army.” The move received a tremendous amount of blowback from the crypto community, who highlighted that the banking system poses a far greater risk to the financial health of citizens. On the opposite side of the spectrum, the indictment of former president Donald Trump led to a surge in the trading volume and floor price of his NFT collection.
Ethereum climbed to its highest price since last August on Wednesday, hitting a high of $1,940 as interest in the token has started to ramp up ahead of the Shanghai hard fork scheduled for April 12. Once the hard fork is integrated, Ether withdrawals from the Beacon Chain will be enabled for the first time since the proof-of-stake chain launched in December 2020. Liquid staking protocols, including Lido Dao and Rocket Pool, have also seen a boost in token prices as a result of the pending upgrade.
Bitcoin largely traded flat on the week following the end of the first quarter of 2023 which saw the king crypto increase by 74% to end the quarter at $28,400. Despite the ongoing crackdown on crypto banking services in the U.S., digital assets continue to gain favor in the eyes of investors who are slowly losing faith in the various fiat currencies of the world. The fact that MicroStrategy has once again started making Bitcoin purchases – bringing its total holdings to 140,000 BTC – has only served to further embolden crypto proponents to declare that the next bull market has begun.
At the time of writing, the total cryptocurrency market cap stands at $1.185 trillion, an increase of 0.8% over the past week. The DeFi market cap currently stands at $57.2 billion with a 24-hour trading volume of $3.98 billion, which is 11.1% of the total crypto market volume.
Crypto News
A tragic loss - The crypto community was in mourning on Wednesday after news broke that Bob Lee, the chief product officer for MobileCoin, former chief technology officer for Square and the creator of the popular mobile payment service Cash App, died after being stabbed in San Francisco on Tuesday. Despite the efforts of first responders who found Lee in the early AM hours on Tuesday and the medical personnel at the local hospital, Lee succumbed to his injuries. No arrests have been made at this time and the police have said the incident is under active investigation as a homicide. They have called for any witnesses to come forward to assist with their investigation.
DOGE days of Spring - Dogecoin (DOGE) price surged 36.5% on Monday to hit a high of $0.105 after the logo for the top meme coin replaced the Twitter blue bird logo for many users in what has been called a belated April Fool’s Day prank by Elon Musk. The tribute to the DOGE community came two days after Musk asked a U.S. judge to dismiss a $258 billion lawsuit filed by investors that alleged the Twitter owner was operating a pyramid scheme in his promotion of Dogecoin. The appearance of the DOGE logo drew mixed reactions from the crypto community, with some appreciating the move which falls in line with Musk’s sense of humor, while others saw it as a way for Musk to distract from the ongoing Twitter Blue controversy.
Paxempty - The rough year for peer-to-peer Bitcoin marketplaces continues as Paxful announced on Tuesday that it would be suspending its operations due to a variety of reasons, including regulatory challenges and a loss of key personnel. Paxful CEO Ray Youssef announced the suspension and said that the team is “not sure if it will come back.” In a bid to diminish any concerns about insolvency, Youssef reassured Paxful users that customer funds are all accounted for and that the Paxful Wallet will remain up for customers to retrieve their funds for an extended period of time.
And in the world of crypto adoption by banks…
Operation Facilitate - PostFinance, a retail bank fully owned by the Swiss government and one of Switzerland's largest retail banks, has announced a new partnership with Sygnum, the world’s first digital asset bank, to offer its customers access to a range of regulated digital asset banking services via Sygnum's B2B banking platform. Through the partnership, PostFinance will be able to offer bank-grade digital asset products and services to its customers, meaning they will be able to buy, store and sell several top-ranking cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH). Along with providing access to a range of cryptocurrencies, the partnership also offers bank users access to revenue-generating services such as staking on an ongoing basis.
Stable-Dol - BTG Pactual, the largest investment bank in Latin America, has announced the launch of its first stablecoin, BTG Dol, which is designed to maintain a 1:1 parity with the U.S. dollar and facilitate interactions between the traditional financial system and the growing digital economy. The new stablecoin was launched through Mynt, BTG Pactual’s crypto platform, and will be custodied by BTG Pactual. The bank will provide the security framework for BTG Dol, including due diligence, money laundering prevention, and compliance processes, and has also guaranteed the backing of the stablecoin and will manage its reserves. BTG Pacutal customers can now purchase the stablecoin through the BTG Pactual investment platform and on the Mynt app, with the minimum investment starting at R$100.
Climate awareness meets crypto - Crédit Agricole CIB, the corporate and investment banking arm of Credit Agricole Group, has partnered with Swedish bank SEB to develop “so|bond,” a sustainable and open platform for digital bonds built on blockchain technology. The new platform is designed to enable issuers in capital markets to issue digital bonds directly onto a blockchain network, helping to improve efficiency and enable real-time data synchronization across participants. The underlying blockchain network uses a “Proof of Climate awaReness” consensus mechanism to help participants minimize their environmental impact.
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OpenSea Launches Platform Geared Toward ‘Pro’ NFT Collectors
Ditch the dollar movement grows as Moscow calls for the creation of a common BRICS currency
ISSUE #37
31 Mar 2023
Market Overview
Regulators and law enforcement officials had a busy week with crypto-related developments as Operation Chokepoint 2.0 remains in full effect while several of last year’s most prominent figureheads, Sam Bankman-Fried and Do Kwon, have seen their luck fade and the reality of justice begin to set in.
Late last week, TerraForm Labs founder Do Kwon – who was a fugitive on the run with a red notice issued by Interpol – finally ran out of luck as he was arrested at an Airport in Montenegro trying to board a plane with falsified passports. A battle is now underway by authorities in the U.S., South Korea and Montenegro as to who gets first dibs at Kwon, and when he could be extradited to face numerous charges related to the collapse of Terra/Luna.
Sam Bankman-Fried’s 2023 went from bad to worse as the Justice Department introduced a new charge to go along with the 12 that had already been revealed. A new superseding indictment filed on Tuesday alleges that SBF and other parties at FTX and Alameda used $40 million in Alameda funds to pay off officials in the Chinese government so they would release funds belonging to Alameda that were held on Chinese exchanges. SBF also had the terms of his bail modified so that he can only access a cell phone with basic calling and texting privileges and his internet use has been significantly limited and will be continuously monitored.
Bitcoin kicked off the week with a dip to $26,685 after the U.S. Commodity Futures Trading Commission (CFTC) revealed a lawsuit against Binance for illegally providing services to U.S. citizens, among other allegations. The top crypto traded sideways near support at $27,000 for a couple of days, before bulls managed to reestablish support above $28,000 on Thursday. There was no clear reason behind the rally, and many crypto traders remain hesitant to adopt a more bullish stance as long as BTC trades below $30,000.
At the time of writing, the total cryptocurrency market cap stands at $1.175 trillion, a decrease of 0.9% over the past week. The DeFi market cap currently stands at $55.5 billion with a 24-hour trading volume of $5.17 billion, which is 10.1% of the total crypto market volume.
Crypto News
Mystery NFT purchase - The rumors that Amazon is working on launching its own non-fungible token (NFT) marketplace received further validation after a CoinDesk employee received an email telling him that his order had been completed and his digital token is now in his gallery. This simple email was packed full of details, including the fact that Amazon will be supporting NFT technology, has a dedicated support team to help answer any questions, and will be allowing users to sign up as NFT creators and re-sellers. CoinDesk reported that the employee had not purchased any NFTs from Amazon and did not have any prior knowledge of the platform’s plans to integrate NFTs, so it's a mystery as to why he received this email in the first place.
Institutional crypto - Nasdaq Inc., the firm behind the Nasdaq stock market, has revealed that it plans to launch a custody service for digital assets by the end of the second quarter, giving hope to many crypto proponents who see it as a move by larger firms to step in and fill the void left by smaller crypto-supporting banks that have experienced difficulties. Nasdaq has applied with the New York Department of Financial Services for a limited-purpose trust company charter, which would oversee the new business that was originally announced in September. Ira Auerbach, senior vice president and head of Nasdaq Digital Assets, has said that the global exchange group is working to get all the necessary technical infrastructure and regulatory approvals in place so that it can launch its services in the near future.
Fed security - After having $3.3 billion of its USDC cash reserves temporarily inaccessible due to the collapse of Silicon Valley Bank (SVB), Circle has called for its cash reserves to be held with the Federal Reserve to help avoid such mishaps in the future. Amid the worry that USDC would go the route of TerraUSD and collapse, the stablecoin lost its peg as crypto traders dumped it en masse, at one point hitting a low of $0.82 on some exchanges. While USDC has since regained its peg and remains fully backed, Circle would prefer to have its cash reserves held directly by the Fed so as to avoid another SVB-type situation. All of the cash reserves are currently being held at one of the 30 globally systemically important banks (GSIB).
And in the world of government enforcement…
Last call for crypto services - Crypto-related businesses that had funds at the now-defunct Signature Bank have been given until April 5 to remove their funds and find another banking institution. Failure to do so will result in having their accounts closed by the Federal Deposit Insurance Corporation (FDIC), which will then mail a check covering any remaining balance. The FDIC is also looking to sell Signet, the real-time payments network for crypto companies once operated by Signature Bank. Signet has been under FDIC receivership since New York Community Bankcorp (NYCB) purchased the majority of Signature’s deposits and some of its loans earlier in March. It was widely reported at the time that the NYCB deal excluded roughly $4 billion in deposits from Signature’s digital-assets banking business, validating earlier reports that terminating crypto-related dealings was a contingency of Signature’s purchase.
Anon limited - Lawmakers in the European Parliament voted on Tuesday in favor of new anti-money laundering (AML) and terrorist financing regulations which seek to impose a $1,000 cap on transactions coming from unverified crypto wallets. If passed, the law will require entities such as banks, asset managers, real and virtual estate agents and high-level professional football clubs to verify their customers’ identity, what they own and who controls the company. The transaction limit is part of the EU’s overhaul of its AML regulations. As part of the overhaul, the Parliament also voted to create a new European Union Anti-Money Laundering Agency, the AMLA, which has been granted supervisory and investigative powers to ensure compliance with AML/CFT requirements.
Taking on the head honcho - Binance and its CEO Changpeng Zhao (CZ) have been sued by the U.S. Commodity Futures Trading Commission (CFTC) for allegedly breaking trading and derivatives rules and serving clients in the U.S. after it was instructed not to. The lawsuit was filed on Monday in a federal court in Chicago, with the CFTC accusing Binance of neglecting its obligations by not properly registering with the regulator. The CFTC has been investigating the exchange since 2021 on allegations that it has allowed U.S. residents to use the exchange to buy and sell crypto derivatives. Current laws require any entity offering such services to U.S. citizens to register with the CFTC. CZ has pushed back against the allegations made in the suit and said that the exchange looks forward to finding an amicable solution to the current situation.
Related news
U.S. and South Korea seek Do Kwon's extradition, but Montenegro charges come first
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Bankman-Fried accused of bribing one or more Chinese officials with $40 million
Euler Exploiter Says ‘Sorry,’ Returns Stolen $177M
Elon Musk, Steve Wozniak Urge OpenAI to Halt ChatGPT Upgrades
ISSUE #36
24 Mar 2023
Market Overview
The crypto banking collapse has now been overshadowed by a systemic banking contagion as multiple financial institutions, including Credit Suisse, the second-largest bank in Switzerland, have either been bought out or are in dire straits as depositors seek a safe haven to store their wealth.
Last week’s moves by the U.S. government to put a halt to the bank crisis initiated by Silicon Valley Bank helped to calm the fears of many U.S. investors, but not before the contagion spread to Europe, resulting in a consolidation of Switzerland’s two largest banks. The country’s largest bank, UBS, finalized a deal to buy its distressed competitor for $3 billion Swiss Francs ($3.25 billion), a steal of a deal as the purchase price was 60% below what Credit Suisse was worth at the close of markets last Friday.
While the Federal Deposit Insurance Corporation (FDIC) denied reports that it made the purchase of Signature Bank’s assets contingent upon ceasing any crypto operations, it was announced on Monday that the bank’s deposits and loans have been sold to Flagstar Bank, a subsidiary of New York Community Bankcorp, but that its crypto-related deposits were not included as part of the deal. The FDIC said it “will provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses.”
South Korean police stated that cryptocurrency fugitive Do Kwon was arrested in Montenegro on Friday after picking up a suspect using a false name and fake documents. Do Kwon, the man behind the $40bn Luna crash, faces charges of securities fraud, wire fraud, commodities fraud and conspiracy. Officials are working on repatriating him to South Korea to be prosecuted.
After hitting a low of $24,777 last Friday, Bitcoin (BTC) steadily climbed in price throughout the week, hitting a high of $29,100 on Wednesday afternoon before an announcement from Federal Reserve Chair Jerome Powell sent a whipsaw wave across global financial markets. Despite falling in line with expectations, the 25 basis point hike and dovish comments from the central bank head sent markets plunging, with BTC briefly falling to a low of $26,781 before being bid back above support at $28,300.
At the time of writing, the total cryptocurrency market cap stands at $1.186 trillion, an increase of 8.43% over the past week. The DeFi market cap currently stands at $58.2 billion with a 24-hour trading volume of $4.35 billion, which is 7.81% of the total crypto market volume.
Crypto News
PS-NFT - Sony Interactive Entertainment, the Japanese entertainment giant and maker of the PlayStation gaming console, recently filed a patent application showing plans to integrate non-fungible tokens (NFT) into its gaming consoles. The patent – which was originally filed in September but only recently published to prevent Sony’s rivals from copying the idea before it was fully ready – allows for the transferring of digital assets between various devices and even other gaming platforms, such as Microsoft’s Xbox. In the text contained within the patent, Sony highlights the benefits that blockchain technology offers and notes that NTFs could represent artwork or an in-game asset, such as a character or weapon, but notes that “current systems are technologically inadequate for the owner to use the asset across different games and/or platforms.”
SWIFT workaround - As the world’s embroiled in a banking crisis, Xapo Bank, a leading Bitcoin custodian, has become the first licensed bank in the world to integrate the payment rails for Circle’s USDC stablecoin as an alternative to SWIFT. The private bank collaborated with Circle to complete the integration and is promising a 1:1 conversion rate from USDC to USD. All USDC deposits held at the bank will automatically be converted to USD, which means that depositors will be able to receive a 4.1% annual interest rate return on their deposits. While it's not protected by FDIC insurance, Xapo Bank is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), which guarantees its members’ USD deposits up to $100,000 USD equivalent. It also differs from traditional banks in that it doesn’t issue loans, and therefore does not rely on fractional reserve banking as its core business model to make money.
Europe, here Circle comes! - In other news from Circle, as the U.S. government develops a more aggressive stance towards crypto firms, the stablecoin issuer has announced that it is looking to expand its operations to France and has applied to become a licensed Electronic Money Institution and a registered Digital Asset Service Provider (DASP) under the country’s strict financial regulations. Aside from USDC, Circle also issues a euro-based stablecoin, the Euro Coin (EUROC), and it is now looking to deepen its ties with the region by establishing a European base of operations. If Circle succeeds in gaining full approval from the Autorité des Marchés Financiers (AMF), it would become the first company to receive full authorization under the DASP regulations.
And in the World of Government Actions…
Digital dollar roadblock - Ron DeSantis, the Republican Governor of Florida who is expected to enter the 2024 Presidential race, has called for a ban on the creation of a central bank digital currency (CBDC) in the United States, also referred to as the digital dollar. At a press conference, DeSantis claimed that the creation of a digital dollar would grant “more power” to the government and give it “a direct view of all consumer activities. The presidential hopeful cited concerns over rising inflation in the U.S., increasing interest rates, and the recent pressure on banks as examples of how government policies have directly had a negative effect on U.S. consumers. The governor has introduced a new legislative proposal in Florida that is looking to protect consumers and businesses by “Expressly prohibiting the use of a federally adopted Central Bank Digital Currency as money within Florida’s Uniform Commercial Code (UCC).
NFTaxes - The U.S. Treasury Department and Internal Revenue Service (IRS) have issued new guidance on non-fungible tokens (NFTs) and are asking for feedback on their plan to tax them as a collectible under the current tax law. There have been numerous accusations of rampant wash trading and money laundering occurring via NFT markets, leading the industry to become a point of focus for global regulators looking to clamp down on illegal activities. U.S. regulators appear to be particularly concerned about the purchase of NFTs in retirement accounts and the dangers they pose to the long-term financial health of retirees. Until a clear regulatory framework is established in regard to NFTs, the IRS will use a “look-through analysis” to determine when an NFT is treated as a collectible.
Crypto bad, FedNow good - The Biden Administration released the latest “Economic Report of the President” on Monday, and for the first time, the report contained a dedicated section on digital assets – but had nothing positive to say about decentralized cryptocurrencies. After listing some of the benefits often claimed by crypto proponents - such as improving payment systems and increasing financial inclusion – the report said that “so far, crypto assets have brought none of these benefits,” while the “costs generated by several of their aspects are not only substantial but are also being accrued in the present.” Instead of a system based on cryptocurrencies, the government is recommending the use of the forthcoming FedNow payment system and eventually, the digital dollar.
Related News
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Tron Founder Justin Sun Sued by U.S. SEC on Securities, Market Manipulation Charges
Telegram Announces USDT Stablecoin Payments on Tron Network
ConsenSys' MetaMask Institutional to add staking marketplace
Signature Bank's assets, minus the crypto, are now owned by Flagstar Bank
ISSUE #36
24 Mar 2023
Market Overview
The crypto banking collapse has now been overshadowed by a systemic banking contagion as multiple financial institutions, including Credit Suisse, the second-largest bank in Switzerland, have either been bought out or are in dire straits as depositors seek a safe haven to store their wealth.
Last week’s moves by the U.S. government to put a halt to the bank crisis initiated by Silicon Valley Bank helped to calm the fears of many U.S. investors, but not before the contagion spread to Europe, resulting in a consolidation of Switzerland’s two largest banks. The country’s largest bank, UBS, finalized a deal to buy its distressed competitor for $3 billion Swiss Francs ($3.25 billion), a steal of a deal as the purchase price was 60% below what Credit Suisse was worth at the close of markets last Friday.
While the Federal Deposit Insurance Corporation (FDIC) denied reports that it made the purchase of Signature Bank’s assets contingent upon ceasing any crypto operations, it was announced on Monday that the bank’s deposits and loans have been sold to Flagstar Bank, a subsidiary of New York Community Bankcorp, but that its crypto-related deposits were not included as part of the deal. The FDIC said it “will provide these deposits directly to customers whose accounts are associated with the digital-asset banking businesses.”
South Korean police stated that cryptocurrency fugitive Do Kwon was arrested in Montenegro on Friday after picking up a suspect using a false name and fake documents. Do Kwon, the man behind the $40bn Luna crash, faces charges of securities fraud, wire fraud, commodities fraud and conspiracy. Officials are working on repatriating him to South Korea to be prosecuted.
After hitting a low of $24,777 last Friday, Bitcoin (BTC) steadily climbed in price throughout the week, hitting a high of $29,100 on Wednesday afternoon before an announcement from Federal Reserve Chair Jerome Powell sent a whipsaw wave across global financial markets. Despite falling in line with expectations, the 25 basis point hike and dovish comments from the central bank head sent markets plunging, with BTC briefly falling to a low of $26,781 before being bid back above support at $28,300.
At the time of writing, the total cryptocurrency market cap stands at $1.186 trillion, an increase of 8.43% over the past week. The DeFi market cap currently stands at $58.2 billion with a 24-hour trading volume of $4.35 billion, which is 7.81% of the total crypto market volume.
Crypto News
PS-NFT - Sony Interactive Entertainment, the Japanese entertainment giant and maker of the PlayStation gaming console, recently filed a patent application showing plans to integrate non-fungible tokens (NFT) into its gaming consoles. The patent – which was originally filed in September but only recently published to prevent Sony’s rivals from copying the idea before it was fully ready – allows for the transferring of digital assets between various devices and even other gaming platforms, such as Microsoft’s Xbox. In the text contained within the patent, Sony highlights the benefits that blockchain technology offers and notes that NTFs could represent artwork or an in-game asset, such as a character or weapon, but notes that “current systems are technologically inadequate for the owner to use the asset across different games and/or platforms.”
SWIFT workaround - As the world’s embroiled in a banking crisis, Xapo Bank, a leading Bitcoin custodian, has become the first licensed bank in the world to integrate the payment rails for Circle’s USDC stablecoin as an alternative to SWIFT. The private bank collaborated with Circle to complete the integration and is promising a 1:1 conversion rate from USDC to USD. All USDC deposits held at the bank will automatically be converted to USD, which means that depositors will be able to receive a 4.1% annual interest rate return on their deposits. While it's not protected by FDIC insurance, Xapo Bank is a member of the Gibraltar Deposit Guarantee Scheme (GDGS), which guarantees its members’ USD deposits up to $100,000 USD equivalent. It also differs from traditional banks in that it doesn’t issue loans, and therefore does not rely on fractional reserve banking as its core business model to make money.
Europe, here Circle comes! - In other news from Circle, as the U.S. government develops a more aggressive stance towards crypto firms, the stablecoin issuer has announced that it is looking to expand its operations to France and has applied to become a licensed Electronic Money Institution and a registered Digital Asset Service Provider (DASP) under the country’s strict financial regulations. Aside from USDC, Circle also issues a euro-based stablecoin, the Euro Coin (EUROC), and it is now looking to deepen its ties with the region by establishing a European base of operations. If Circle succeeds in gaining full approval from the Autorité des Marchés Financiers (AMF), it would become the first company to receive full authorization under the DASP regulations.
And in the World of Government Actions…
Digital dollar roadblock - Ron DeSantis, the Republican Governor of Florida who is expected to enter the 2024 Presidential race, has called for a ban on the creation of a central bank digital currency (CBDC) in the United States, also referred to as the digital dollar. At a press conference, DeSantis claimed that the creation of a digital dollar would grant “more power” to the government and give it “a direct view of all consumer activities. The presidential hopeful cited concerns over rising inflation in the U.S., increasing interest rates, and the recent pressure on banks as examples of how government policies have directly had a negative effect on U.S. consumers. The governor has introduced a new legislative proposal in Florida that is looking to protect consumers and businesses by “Expressly prohibiting the use of a federally adopted Central Bank Digital Currency as money within Florida’s Uniform Commercial Code (UCC).
NFTaxes - The U.S. Treasury Department and Internal Revenue Service (IRS) have issued new guidance on non-fungible tokens (NFTs) and are asking for feedback on their plan to tax them as a collectible under the current tax law. There have been numerous accusations of rampant wash trading and money laundering occurring via NFT markets, leading the industry to become a point of focus for global regulators looking to clamp down on illegal activities. U.S. regulators appear to be particularly concerned about the purchase of NFTs in retirement accounts and the dangers they pose to the long-term financial health of retirees. Until a clear regulatory framework is established in regard to NFTs, the IRS will use a “look-through analysis” to determine when an NFT is treated as a collectible.
Crypto bad, FedNow good - The Biden Administration released the latest “Economic Report of the President” on Monday, and for the first time, the report contained a dedicated section on digital assets – but had nothing positive to say about decentralized cryptocurrencies. After listing some of the benefits often claimed by crypto proponents - such as improving payment systems and increasing financial inclusion – the report said that “so far, crypto assets have brought none of these benefits,” while the “costs generated by several of their aspects are not only substantial but are also being accrued in the present.” Instead of a system based on cryptocurrencies, the government is recommending the use of the forthcoming FedNow payment system and eventually, the digital dollar.
Related News
National cash shortage forces Nigerians to use the eNaira for payments
Coinbase could face SEC enforcement action for 'potential violations of securities law'
Tron Founder Justin Sun Sued by U.S. SEC on Securities, Market Manipulation Charges
Telegram Announces USDT Stablecoin Payments on Tron Network
ConsenSys' MetaMask Institutional to add staking marketplace
Signature Bank's assets, minus the crypto, are now owned by Flagstar Bank