Top Stories of Last Week

Regulatory

  • Washington Post’s Jeff Stein reported White House formally supporting amendment by Senators Mark Warner and Rob Portman to infrastructure bill proposing amendment to exclude proof-of-mining and sellers of hardware and software wallets from bill. However, amendment’s wording suggests crypto developers and proof-of-stake validators would still be subject to expanded reporting and taxation, as opposed to broader list of exemptions by rival amendment proposed by Senators Cynthia Lummis, Pat Toomey, and Ron Wyden.
  • Independent Reserve, an Australian cryptocurrency exchange, received in principle approval from Monetary Authority of Singapore to operate digital payment token services. One of first virtual asset service providers to receive in-principle approval for payment institution license in Singapore.
  • SEC Chairman Gary Gensler said he believes vast majority of crypto tokens and ICOs violate U.S. securities laws during speech at Aspen Security Forum. Gensler also reiterated comments that stock tokens and “stable value tokens backed by securities” qualify as securities in his view.
  • People’s Bank of China published conclusions of progress on monetary policy in first half and next steps for remainder of 2021, saying it will keep applying high regulatory pressure on crypto trading and platform industry.
  • Kentucky Department of Financial Institutions became fifth state regulator to claim BlockFi’s interest service violates state securities laws, and ordered crypto lender to stop opening new accounts.
  • Ukrainian President Volodymyr Zelensky signed into law bill called On Payment Services that allows country’s central bank to issue CBDC.
  • Central Bank of Venezuela will launch CBDC on Oct 1. alongside monetary redenomination that will cut six zeros from currency.

Project Development

  • Ethereum’s latest hard fork upgrade “London” officially activated on network at Block 12,965,000. Fork marked rollout of five new Ethereum Improvement Proposals: 1559, 3554, 3529, 3198 and 3541, code upgrades that improve Ethereum network’s user experience, value proposition and more. 
  • Bakkt and Quiznos partnering on pilot program that will enable customers at sandwich chain’s in Denver to use Bitcoin as payment. Program will launch in mid-August.

Institutional

  • JPMorgan Chase reportedly pitching private bank clients on in-house Bitcoin fund for first time this week. Passively managed fund offered in partnership with NYDIG.
  • GoldenTree Asset Management allegedly has been adding Bitcoin to balance sheet, according to The Street citing two unnamed sources.
  • French asset manager Melanion Capital won regulatory approval to launch ETF tracking price of Bitcoin for investors across European Union.
  • Wealthfront began integrating crypto-related offerings into robo-advisory offerings, starting with Grayscale Bitcoin Trust and Grayscale Ethereum Trust.
  • Swisscom to launch Chainlink oracle node to provide data for DeFi, becoming second telecom company to enter DeFi after Deutsche Telekom agreed to become data provider to Chainlink.

Exchanges

  • FTX inked seven-year deal with Riot Games for rights to display branding during seasonal tournament of League of Legends, where logo will be displayed during League Championship Series.
  • Coinbase agreed to acquire Zabo, a startup that lets financial companies give customers bird’s-eye view of crypto investments.
  • Cryptocurrency broker Voyager Digital agreed to buy crypto payment company Coinify in deal valued at $84 million in stock and cash. Coinify investors will be issued 5.1 million Voyager shares and $15 million in cash.
  • Blockchain engineering firm Certus One has been acquired by quantitative trading company Jump Trading for an undisclosed amount.
  • Binance will allow users to make crypto payments on Shopify and other networks thanks to partnership with Alchemy Pay. 

Fundraising

  • Matrixport, a crypto financial services platform, announced close of Series C fundraise of $100 million at more than $1 billion valuation. Round backed by DST Global, C Ventures, and CE Innovation Capital, and also included Tiger Global, Polychain, and Dragonfly.
  • RIT Capital Partners co-led $8.8 million pre-Series A funding round alongside Liberty City Ventures into Aspen Digital, which aims to offer digital asset management to institutional and sophisticated investors.
  • Digital art platform MakersPlace raised $30 million in Series A funding round led by Pantera Capital and Bessemer Venture Partners. Other investors included Uncork Capital, Draper Dragon Digital Assets, 9Yards Capital, Coinbase Ventures, Sony Music Entertainment and Eminem.
  • Messari closed $21 million Series A funding round led by Point72 Ventures, their first completed investment in crypto space. Other investors include Underscore VC, Alameda Capital, Blockchain Ventures, CMS Holdings, Gemini Frontier Fund, Kraken Ventures and Nascent.
  • TrustToken raised $12.5 million in new funding round led by Blocktower Capital, Andreessen Horowitz and Alameda Research.

Mining

  • Marathon Digital Holdings agreed to buy $120.7 million of Bitcoin mining machines from Bitmain via contract for 30,000 Antminer S19J Pro machines. Shipment of machines will occur in first half of next year.
  • Stronghold Digital Mining, a cryptocurrency mining company, purchased a second power plant in Pennsylvania and said it was “currently in negotiations” to acquire a third facility in the state. Panther Creek plant bought after Stronghold raised approximately $74 million in lease financing to fund acquisition.
  • Hive Blockchain ordered 4,000 mining machines from Canaan, to be completed in two tranches by end of September.
  • Fidelity Investments acquired 7.4% stake in Marathon Digital Holdings for about $20 million, spread across four index-based funds, including Fidelity Extended Market Index Fund, Fidelity Nasdaq Composite Index Fund, Fidelity Total Market Index Fund and Fidelity Series Total Market Index Fund.

Things to Watch This Week

  • U.S. Infrastructure Bill Senate Vote 
    • Recent updates to the Senate vote Sunday evening EST shows that the Senate voted 68-29 to end debate and that the Senate has to wait until Tuesday to do a final vote. Several experts have stated that “they might still amend the bill before then,” including Senator Cynthia Lummis who said positive conversations have been had in regards to amendments to the bill. The current version of the crypto reporting provision in the bill would broaden the definition of a “broker” to any entity within the cryptocurrency industry that facilitates the transfer of digital currencies for another person. Opponents of the provision have said that it would force miners, hardware and software developers to track transactions of individuals who are not direct customers. Although some are still hoping that the appropriate amendments can be made, the current version proposed by Sen. Warner and Portman would be quite disastrous for U.S. tax compliance consequences and could cause unintended ripple effects throughout the cryptocurrency industry should it pass, and thus this will certainly be the topic that dominates conversations throughout this week. It will be important to monitor the status of this final vote and any indications out of the Senate meetings tomorrow to see what proposals are being considered. 
  • Valkyrie Digital Assets Bitcoin ETF Decision Deadline
    • With the Infrastructure Bill capturing the attention of most regulatory bodies in the U.S. currently, the conversations surrounding a Bitcoin ETF have been somewhat set aside as of late. Nevertheless, it will be important to keep an eye on the upcoming deadline for the Valkyrie Digital Assets Bitcoin ETF this week, as statements made by SEC Chair Gary Gensler, who publicly and comprehensively detailed this thoughts on digital assets last week, could have hinted at an indication of what might come. While he expressed criticism of several areas of crypto, like unregistered securities masquerading as tokens and the role of DeFi platforms, he noted that he would be partial to ETFs based on Bitcoin futures traded on the CME, which Valkyrie’s CIO Steven McClurg stated will “direct our conversations and our product road map.” Additionally, the Portman-Warner amendments for the Infrastructure Bill specifically made exemptions for proof-of-work mining and projects, which can be taken as a sign that special recognition could take place for Bitcoin in the near future. Thus, it will be important to interpret what is said in regards to the decision on the Valkyrie Digital Assets ETF proposal this week.
    • Jake Chervinsky@jchervinsky
      1/  Here’s the deal with the US infrastructure bill: A new provision has been added that expands the Tax Code’s definition of “broker” to capture nearly everyone in crypto, including non-custodial actors like miners, forcing them all to KYC users. This is not a drill

      2/ The bill expands the definition of a “broker” to include “any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.” Earlier drafts said “even if non-custodial” & explicitly included DEX & P2P markets.

      3/ This definition is so broad, it could apply to nearly every economic actor in the US crypto industry, if read literally. That includes PoW miners & PoS validators, since “providing a service to effectuate transfers of digital assets for consideration” seems to fit both.

      4/ It might include a huge range of DeFi market participants too, like DEX LPs, liquidators, protocol governors, etc. Depending what “for consideration” means, it might also extend to non-economic actors like node operators or wallet developers. The scope here could be massive.

      5/ The Tax Code requires brokers to comply with IRS reporting requirements. Most importantly, they have to give Form 1099s to their customers & file them with the IRS too. To fill out Form 1099s, brokers have to collect customer data including name, address, phone number, etc.

      6/ This means brokers have to KYC customers to comply with IRS reporting requirements. As a result, the provision functions as a surveillance mandate, just like the one Sec. Mnuchin proposed in the final days of the Trump administration. As before, this is a very bad idea.
      READ MORE

      Michael Tant@MichaelTant3
      Full update on Three Arrows Capital NFT buying spree: Over the last couple days they’ve spent thousands of ETH on predominantly @artblocks_io pieces and Cryptopunks. The buying has happened from two walletss and the NFTs are being consolidated and kept in a 3rd wallet.

      About 1hr ago they withdrew 2600 ETH from the biggest wallet and have begun consolidating their NFT’s into one wallet single wallet, 0x2e6. You can see the transfer history on opensea here: 0x2e675eeae4…’s account | OpenSea

      Since 3AC ramped up its buying, floor prices of these projects have skyrocketed: Punk floor from 22 ETH to 34 ETH Autoglyph floor went from 120 ETH to 385 ETH Fidenza Floor went from 19 ETH to 37 ETH Ringer floor from 17 to 35 ETH Eternal Pump floor from 65 ETH to 250 ETH

      It’s not just 3AC though that did this. Arguably the person that made 3AC and others FOMO into these pieces is the legend VVD, @Vince_Van_Dough. He was market buying Artblocks before it was cool and contributed meaningfully to the floors moving up on these projects.
      READ MORE

      Travis Kling@Travis_Kling
      The manner in which #Bitcoin arrives at its price every day is a dynamic landscape. Micro market structure shifts happen constantly, while macro market structure shifts happen a few times a year. We’re experiencing a big one right now, courtesy of China. A couple thoughts-
      READ MORE

      Byzantine General@ByzGeneral
      I’m actually not sure whether a break-down or break-out would be more bullish. Capital in crypto flows like this:
      > BTC start rallying, lays the path for the bull
      > ETH goes
      > Big caps
      > Mid caps
      > Smol caps (BTC starts bleeding here)
      > Garbage
      > Rug pull

      So if ETH/BTC breaks down here then maybe it’s BTC season and we start a new cycle, which potentially means the start of a new monster rally.

      Linda Xie@ljxie
      More people are going to start renting CryptoPunks to display as their profile pic for social signaling. Found out cryptopunk.rent exists where owners can sign a transaction giving the borrower rights to display the CryptoPunk as their avatar for a fixed number of days

      I haven’t had this much controversy from a tweet in a while  Many people are now buying a CryptoPunk in part to use as their pfp for social signaling. They chose not to copy the image. Some people want to do the same but can’t afford it. So I think a rental market will exist

      Tascha @RealNatashaChe
      The US is in big trouble with twin deficits & high debt. But few realize that a Fed-issued digital USD token can change the fate of America. How? Grab a coffee  & read on

      Contrary to common beliefs, America’s biggest export is not tech, not Hollywood… It’s the USD. USD is the biggest money network in the world—used for 40-50% of global trade settlement and int’l credits.

      With reserve currency status, USD allows America to get away with murder w/ its monetary policy, and run up debt to levels disastrous for other countries.

      Since the end of Bretton Woods, US has run a trade deficit every year. But that’s only counting the trade balance other than the “export” of USD.
      READ MORE

      Jay_OKEX_CEO@JayHao8
      The weekly NFT trading volume surpasses $300m. The daily trading volume @opensea is more than 650 times than its average for 2020. CEXes are launching their own premium NFT platforms. The NFT play-to-earn game trend is unstoppable. NFT & gaming summer.
      twitter.com/TheBlock__/sta…

      Katherine Wu@katherineykwu
      Gensler really went live today to give us all a huge “fuck you” In all seriousness though- this is the most aggressive and hostile stance re US crypto regulation to date from the SEC- magnitudes more than anything before. Working through this speech rn to give a breakdown soon

      DISCLAIMER THIS IS NOT LEGAL ADVICE Instead of writing a 3,000-word article, I decided to just read through his speech in real-time and *talk through* my process and thoughts as I read and taking you all through from beginning to end. 7 part video clip coming up:
      READ MORE

      SpartanBlack@SpartanBlack_1
      0/ While the market frets about what the latest SEC comments hold for crypto, there is more at stake than just token prices. The rules that Gensler implements in the coming months will literally determine who wins the technology war of the next 2-3 decades.

      1/ China has laid its cards and shown its discomfort with decentralized crypto networks and assets and all the good and bad associated with this emerging technology and asset class.

      2/ The US is about to take the most significant steps in years from a regulatory standpoint. While Gensler is charged with investor protection and will enforce higher standards on the asset class, he has also demanded sensible regulation from Congress.

      3/ This comment illuminates his thinking: “Speed limits and traffic lights provided public safety but also helped cars become mainstream. It’s only with bringing things inside—and sort of clearly within our public policy goals—that a technology has a chance of broader adoption”.

      4/ Europe seems to be open-minded with Switzerland probably the most progressive from a regulatory standpoint. England needs to be on the frontfoot if it wants to remain a relevant global financial center in the coming decades.

      5/ The rest of Asia is mixed bag. Korea already has a regulatory framework. Japan is taking a more hands-off approach. Singapore and Hong Kong is taking an active interest and will likely take cues from the SEC.

      6/ India’s RBI is taking an anti-crypto approach but there are strong voices in the community and the supreme court that is stopping it from going down the same path as China.

      7/ One thing is clear: everyone will be watching the SEC closely and what they do will influence how regulators around the world view crypto.

      Hans HODL@hansthered
      Wow, watch this video if you want to understand the depth and breadth of the CCP’s intentions for the Digital Renminbi. Posted by State-Controlled Media. Thread below  
      facebook.com/ChinaGlobalTVN…

      Some highlights
      1. Won’t require internet to use
      2. Doesn’t require a bank account to use
      3. Provides real-time data to be used in monetary policy
      4. Reduced trade settlement times
      5. Belt & Road partners will no longer need to settle in a 3rd party (USD) currency
      6. Cross-border payment systems have been weaponized by the USA.
      7. Digital Yuan provides digital alternative
      8. Blocks foreign interference in the economy
      9. Stands by itself and does not need the US Dollar
      10. Expands engagement with global trade partners
      11. Helps reform global economic governance

      Is this starting to make sense yet? We’re at war, and not just the US (denote by the blonde-haired buffoon in the videos) versus China, but there’s also a currency war going on. Which currency will dictate the future of global commerce? This. Is. Why. We. Need. Bitcoin.

      croissant @CroissantEth
      I have seen a countless number of people underestimating the effects of EIP-1559 and it’s changes to the network However, I am here to argue that it has the ability to fundamentally transform the view of $ETH as an asset class Let’s take a deeper look…

      In order to fully understand how EIP-1559 works, we have to first take a brief look at the current tx fee model today Transactions work in what is known as a “first price auction.” Because $ETH miners are scanning the network for the most profitable transactions…

      it is usually the highest bidder (i.e a high volume trader on a DEX) who gets their transaction included in the block Whenever a highly anticipated token or #NFT releases, this problem becomes magnified leaving many users out of the next block because of the sudden gas fee spike

      Then combine this with wallets like MetaMask, that allow users to manually set their own gas price, and you’ll start to see that thousands of traders are bidding up the gas prices arbitrarily high against one another But this is where EIP-1559 comes in…
      READ MORE

      Jerry Brito@jerrybrito
      Wow. Sen. Warner and Portman are proposing a last minute amendment competing with the Wyden-Lummis-Toomey amendment. It is a disastrous. It only excludes proof-of-work mining. And it does nothing for software devs. Ridiculous! Here is all it excludes:
      Image
      If this passes this is the U.S. Congress picking winners and losers.
      Senators need to vote YES on Wyden-Lummis-Toomey, vote NO on Warner-Portman.
       

      SBF@SBF_FTX
      1) There’s a bill in the Senate right now about tax reporting and crypto. What does it say, and what impact would it have?

      2) Well, the first thing worth noting: there are a few different versions of it floating around, as various people have suggested amendments for it. Let’s start with the original phrasing.

      3) The bill, originally, would create tax reporting requirements for “any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.” They would have to send reports on US users’ activity to the IRS.

      4) The goal, roughly, is to get crypto exchanges* to send info to the IRS so it knows if an American made money trading crypto and can tax it. *I’m using ‘exchange’ here in the crypto sense, as a full-stack product; the equivalent in other industries here is really the broker.

      5) Let me start by saying that, as the owner of a US crypto exchange that servers Americans (ftx.us), I think it’s totally reasonable to apply this to trades on FTX US. Crypto taxes are sometimes underreported, and we’re happy to work with regulators on this.

      6) (There are some potential hairy issues around deposits/withdrawals that complicate tax basis reporting; more on that later.) There are some trickier issues here around non-US exchanges–does this apply to them? Let’s put that aside for now.

      7) The really messy part comes when you look at DeFi. This language applies to any person who: a) provides services “effectuating transfers of digital assets” b) gets paid for it Who does that apply to?

      8) Well, certainly FTX US, and Coinbase. But…. how about an ETH miner? They mine a block, include 3rd party transactions, and add it to the blockchain. That block might contain a trade on a DEX between 2 parties. Is the ETH miner “effectuating a transfer of digital assets”?
      READ MORE