Top Stories of Last Week

Regulatory

  • U.S. Senate did not adopt bipartisan compromise on crypto tax provision in $1 trillion infrastructure bill vote. U.S. Senators Cynthia Lummis and Pat Toomey announced compromise was supported by Democrats, Republicans and Treasury Department when introducing amendment, saying it would exempt crypto transaction validators from broadened definition of “broker.” However, U.S. Sen. Richard Shelby filed objection after attempting to attach his amendment to increase military spending. Senate passed original bill to House of Representatives after 69-30 vote, which is expected to take up issue in autumn. Unclear how much leeway House will have to modify bill.
  • DBS Vickers, the brokerage arm of DBS, received in-principle approval from Monetary Authority of Singapore under Payment Services Act to provide digital payment token services.
  • Bank of Jamaica minted first batch of CBDC, totaling roughly US$1.5 million, which will be issued to deposit-taking institutions and authorized payment service providers as part of pilot program that ends in December.
  • Commercium Financial has been granted special purpose depository institution bank charter in Wyoming to handle digital assets.

Project Development

  • Circle said it intends to become “a full-reserve national commercial bank.” If approved, proposed digital currency bank would operate under supervision of Federal Reserve, U.S. Treasury, Office of the Comptroller of the Currency and FDIC.
  • Tether released assurance report conducted by Moore Cayman, a Cayman Islands-based auditor, on June 30 that provides breakdown of company’s consolidated assets, with total backing of $62.7 billion.
  • Wormhole, a communication bridge between Solana and other DeFi networks, began supporting inter-blockchain message transfers with its mainnet launch. Wormhole supports Terra, Ethereum and Binance Smart Chain at launch.

Institutional

  • AMC Entertainment Holdings will begin accepting Bitcoin payments for tickets and concessions by end of year, according to CEO Adam Aron. AMC did not specify what technology it would use to process payments, but did mention they will also begin accepting Apple Pay and Google Pay payments by end of 2021.
  • Neuberger Berman has given its $164 million commodities-focused mutual fund “Neuberger Berman Commodity Strategy Fund” go-ahead to invest indirectly in Bitcoin and ETH, adding crypto derivatives, Bitcoin trusts and ETFs to list of permissible investment strategies.
  • Samsung Electronics reportedly going to be part of South Korea’s CBDC pilot project, participating in Bank of Korea’s pilot program with focus on remittances and plans to test functionality of BOK’s CBDC pilot with Galaxy smartphones.
  • Standard Chartered set to offer crypto brokerage services to institutional investors in Ireland through Zodia Custody service.

Exchanges

  • Brian Brooks announced resignation as Binance.US CEO after just four months, citing “differences over strategic direction” between him and colleagues.
  • Coinbase VP of Capital Markets Brett Redfearn is out after just four months, as reports allege a strategy shift leading Coinbase to “shift its priorities away from digital-asset securities” and towards “prioritizing DeFi.” Also posted $1.9 billion in transaction revenue in second quarter, according to Q2 earnings report. Lastly, reportedly working with PNC Bank on undisclosed crypto project. 
  • BitMEX announced it had reached settlement on civil charges with CFTC and FinCEN. BitMEX will pay $100 million penalty to resolve charges.
  • FTX.US reportedly intends to offer cryptocurrency derivative trading in less than year, either by launching its own service or by acquiring company, according to FTX.US President Brett Harrison.

Fundraising

  • FalconX, a cryptocurrency trading desk, raised $210 million series C funding round led in part by Tiger Global. Firm now valued at $3.75 billion, and also received backing from Altimeter Capital, Sapphire Ventures and B Capital Group.
  • Indian crypto exchange CoinDCX raised 6.70 billion rupees (US$90 million) from investors in funding round that achieved valuation of $1 billion. Round led by B Capital Group, and included Coinbase, Polychain, Block.one, and Jump Capital.
  • Crypto tax software firm TaxBit raised $130 million Series B that valued startup at $1.33 billion. IVP and Insight Partners led round, with participation from Tiger Global, Paradigm and other VCs who joined in Series A.
  • Upgrade raised $105 million in Series E funding round that takes firm’s valuation to $3.325 billion and was led by Koch Disruptive Technologies with contributions from BRV and Ventura Capital.
  • Mango Markets, a decentralized exchange on Solana blockchain, raised $70 million in token sale  after investors sent over $500 million in USDC into cross-margin trading platform’s sale for share of 500 million MNGO tokens.
  • Nakji Network, an indexing protocol for organizing blockchain data, raised $8.8 million in funding round secured via SAFT sale. Animoca Brands, CMS Holdings, Primitive Ventures, One Block, Panony, and others backed round.
  • Blockchain privacy firm Horizen Labs closed $7 million seed funding round led by Kenetic Capital, and also included Digital Currency Group, Liberty City, Sound Ventures, Deribit, Artist Capital, Deus and LionTree.
  • Helium, a decentralized telecommunications network, conducted $111 million token sale led by Andreessen Horowitz, with participation from Ribbit Capital, 10T Holdings, Alameda Research and Multicoin Capital.
  • Bitwave, a crypto accounting software provider, raised $7.25 million in seed funding round led by Blockchain Capital, and included Nascent, Nima Capital and Arca.
  • Dune Analytics raised $8 million in Series A round led by Union Square Ventures with participation from Redpoint Ventures.
  • Tally, a platform that builds governance infrastructure for DAOs, announced it raised $6 million in funding round led by Blockchain Capital and Placeholder. In addition, approximately 25% of funding came from DAOs including The LAO, MetaCartel Ventures and Fire Eyes DAO.

Defi / NFT

  • DeFi platform Poly Network was attacked, with hacker draining roughly $600 million in USDC, WBTC, ETH, and SHIB. Hack was allegedly due to potential bug in Poly’s signing process that may have been used to sign message. Hacker began returning funds and embedding messages to transactions to communicate after allegations surfaced that identity had been revealed via missteps in token transfers to centralized exchange. Eventually returned almost all of stolen funds amid project saying actions constituted “white hat behavior.”
  • NASCAR agreed to partner with Zed Run to release NASCAR-branded digital horses on blockchain-based racing platform. Two parties still finalizing details, which could include venue and broadcast activations for Zed Run, as well as potential future appearances of team, driver and track IP in Zed Run’s digital universe.

Things to Watch This Week

  • Traditional Markets and Macroeconomic Factors 
    • A relatively event-less period in crypto for the remainder of this month is making it difficult to see any major influences that could move markets, as many have remarked that slow summers typically present in traditional markets have crept into crypto due to the influx of institutional participants now involved. However, it also means that crypto markets will be even more affected by topics like inflation, unemployment numbers, and the inevitable tapering by the Federal Reserve that many are expecting. This week alone will bring us inflation data from the UK (8/18), EU (8/18) and Japan (8/20) as well as the build-up to the Federal Reserve’s Jackson Hole Economic Policy Symposium (8/26). Adding the curveball of the delta virus’ spread throughout the world affecting supply chains and growth numbers, and we have a situation rife with uncertainty for any new story to suddenly catch fire and take markets in whichever direction it dictates. Nevertheless, recent events surrounding infrastructure bill votes, record hacks, and increased scrutiny from regulators worldwide have not been able to halt the recovery we’re seeing in the price of cryptocurrencies, but it will be important to monitor both traditional and crypto market news this week to see if any unforeseen circumstances arise.       
  • Eth Burns
    • A data point that many in the industry are acutely focused on lately is the Ethereum “burn,” where base fees paid to transact on the blockchain are removed from the market. It was an anticipated piece of the recent London upgrade to Ethereum, and it seems to be delivering on its promise. As of this writing, over 51,000 Eth has been burned in just under two weeks, representing over $168 million along with reducing the net issuance of new ether by an estimated 35%. If this pace is maintained, the discussions of “deflationary” Ethereum will grow louder, as we’ve already witnessed Goldman Sachs and JP Morgan express bullish opinions in recent research notes to clients. We’ll be keeping a close eye on these developments throughout the week.  
    • Vijay Boyapati@real_vijay
      1/ Many members of the US Congress do not seem to recognize the direction of the political winds. There are over 20 million Americans with a financial stake in the success of the nascent industry being built around #Bitcoin. 10 years ago there were almost zero such people.

      2/ The infrastructure bill was crafted in the hope of shearing this new economy to finance a ballooning budget proposed by the Biden administration. Instead the language of the bill would skin the industry. You may shear a sheep many times, but skin him only once.

      3/ 4 years from now there will likely be 50 to 100 million Americans with a stake in #Bitcoin. This is a bipartisan demographic that will not forget the damage being done to this nascent industry by the Biden administration, nor the Senators doing their bidding in the Senate.

      4/ There is still hope for the Senate to remove the dangerously ill-advised language from the infrastructure bill, but the hour is late and hope is dwindling. All rests on whether @chuckschumer allows for a vote on amendments to fix the bill and whether Senators vote for the fix.

      5/ There is only one credible fix and it is the Lummis-Wyden-Toomey amendment. Contact your Senators and let them know your support for them is contingent on getting this amendment passed.

      Jerry Brito@jerrybrito
      1/ The bad news is that the amendment did not receive unanimous consent, so it will not make it into the bill. The good news is we’re not giving up. Next stop is the House where we can try to get a whole new amendment from scratch that can address all our concerns.

      2/ For example, if all that’s needed is to make sure that centralized exchanges are brokers for tax reporting purposes, there shouldn’t be a need for any new expanded definition of broker at all. Just add “digital assets” to what’s already covered in the code—nothing else.
      READ MORE

      Tether@Tether_to
      Tether has always been fully backed and the assurance opinion made available today confirms it once again, and puts Tether ahead of the industry on transparency.
      tether.to/latest-assuran…

      tedtalksmacro@tedtalksmacro
      Max-pain is touted a meme in $CRYPTO, although there may be an edge in monitoring it 3-4 days out from the month-end expiry.
      Red lines = day of month-end option expiry
      White lines = Max pain price (month-end option expiry day)
      twitter.com/MisialekBrad/s…

      #BTC max pain for the August month-end contract is $40,000 USD twitter.com/tedtalksmacro/…

      Sam Trabucco@AlamedaTrabucco
      The crypto market has been very active this week — and that makes sense, considering all that’s been going on in the U.S. What’s actually happening though — and why? A thread about efficient markets.

      U.S. government has cared about crypto on and off, but last week felt like a bit of a boiling point. Gensler (SEC chair) started talking about it last week — one of the topics he addressed was Bitcoin ETFs, and look at the GBTC premium — hit from -6% to -12% or so on 8/3.

      Image

      And BTC got hit by his comments, too. There were very plausibly other things going on, of course, but these comments — in addition to the first the market heard of the infrastructure bill amendments — drove the market down last week.

      And then, just like we always do, we saw the markets recover some right away. Prices just ALWAYS over-react to news, regardless of what it is — we saw it with Elon, we saw it with China, we’ve seen it before from U.S. news, and we saw it here.

      We see this every time, partially because of our usual friend liquidations. When organic price action occurs, it triggers *some* liquidations in the same direction, amounting to (in this case) more net selling than anyone “wanted” to do, and so there’s some reversion.

      But we also see it, I think, because the crypto trading markets are immature and just not efficient. The big firms which would arb this stuff away in traditional finance aren’t yet, and so we’re able to stay in these paradigms where news is CONSISTENTLY over-bought or -sold.
      READ MORE

      Willy Woo@woonomic
      Ethereum supply shock well and truly at all time highs. Looks like the market overpriced it in May but is probably underpricing it July / August.
      Image

      Switching to an oscillator view of this, it’s moving out of its no-brainer buy zone with the latest rally. But importantly, despite short term technicals being quite warm, it’s far from over-bought on fundamentals.

      Image

      On-chain data by @glassnode. Note: the latest supply burn from EIP-1559 is not accounted for in Glassnode data. But it should not impact these metrics just yet (~0.01% impact on this indicator for now). Glassnode will be rolling in EIP-1559 burn data soon.

      lowstrife@lowstrife
      We now have apes slinging 30, 40, 50m orders on FTX so here is a chronological history of BTC futures Degen Dens in crypto:
      796: 2014 – 2014
      Okcoin: 2014-2017
      Bitmex: 2017-2019
      Huobi: 2019-2020
      Bybit: 2020 – 2020
      Binance: 2020-2021
      FTX: 2021 –

      I think Sam has finally captured the attention of the apes in this space. And because FTX doesn’t have the $10m order limit that Bitmex did, we get to see the full size these degenerates are trading which we haven’t seen since Okcoin Top Holder days.

      Also, who the fuck just decides yeah let’s let $50m rip? Do you even TWAP? Or even know what limit orders are?

      Tascha@RealNatashaChe
      Some think b/c China is ahead of US in having a central bank digital currency, therefore Chinese central bank is smart & Fed is dumb. Not true. The two countries face very different calculations (1/8)
      twitter.com/RyanSAdams/sta…
      READ MORE

      God-like Natural Number Creator Person (TM, R)@kelvinfichter
      Ok here’s how the Poly Network hack actually worked. If I’m reading the contracts correctly, it’s pretty genius.

      Poly has this contract called the “EthCrossChainManager”. It’s basically a privileged contract that has the right to trigger messages from another chain. It’s a pretty standard thing for cross-chain projects.

      There’s this function verifyHeaderAndExecuteTx that anyone can call to execute a cross-chain transaction. Basically it (1) verifies that the block header is correct by checking signatures (seems the other chain was a poa sidechain or something) and… (cont. in the next tweet)
      READ MORE

      Pegbit @0xPegbit
      Just mind blown by the @SHOYU_NFT Teaser. The implementation of the metaverse concept alone, just knocks every other competitor out of the park imo. I think what makes it sweeter is the attention toward simpler items. $SUSHI

      1. For instance, the platform is designed on a black and white palette, so that most of the attention is garnered towards the actual art pieces.

      2. Not a traditional listing on Shoyu. It has aimed for a design first and experimental design concept, which is bravo. Really looking forward to play with it and see how responsive it is on different devices.
      READ MORE

      Jim Bianco@biancoresearch
      The infrastructure bill’s bad crypto regulations risks turning cryptos into banks. Not good! Below are the 10 sectors of the S&P 500, Highlighted are financials (orange) and banks (blue). Since LTCM in 1998, they have been last in returns! en.wikipedia.org/wiki/Long-Term… 1/4

      Same chart as above since the Global Financial Crisis in 2008. Again financials and banks are the worst possible investments. But now energy (green), after its epic collapse the last few years, joins the bottom of the return list. en.wikipedia.org/wiki/Financial… 2/4

      Finally, since the Wells Fargo scandal in 2016, banks, financials and energy again are the worst possible investments. en.wikipedia.org/wiki/Wells_Far… Wells surviving could be bad for banks. Criminal activity on this scale needed to be punished. It really was not. 3/4

      This is crypto’s future should regulation turn them into banks. Entities that crush world economies, employ thousands to steal from millions, and constantly disappoint investors with horrible returns. Why willingly do this to new promising technologies? 4/4

      The Jiho@Jihoz_Axie

      Mason Nystrom@masonnystrom
      The Nonfungible Token (#NFT) landscape has evolved from a small ecosystem of collectors and enthusiasts to an emerging multichain ecosystem at the forefront of culture and technology. A Thread of The NFT Stack 

      Explore the Emerging #NFT Landscape: messari.io/article/the-nf…
      READ MORE

      Chris Dixon  @cdixon
      1/ Topic: Going from Web 2 to Web 3 – “Your take rate is my opportunity”

      5/ Today this trend continues as Web 3 startups begin to eat into the margins of Web 2 incumbents. The higher the take rate, the more vulnerable the incumbent.

      6/ The video games industry does about $120B/year in sales, a significant portion of which is virtual goods. Most video games have 100% take rates.

      7/ Web 3 (aka crypto) games reduce the take rate dramatically. For example, Axie Infinity has generated over $1B in gross sales in the past year, most of which has gone back to users.

      8/ In most video games, some people pay to get ahead and other people work to get ahead. The difference in Web 3 is that the economy is peer to peer: players fund other players, not just the game developers.

      9/ Today there are over 8 million musicians on streaming services, yet less than 15,000 musicians (less that 0.2%) make more than $50K/year. That’s because the vast majority of the revenue is kept by the streaming services and music labels.

      10/ With NFTs, musicians keep over 90% of sales. By cutting out layers of intermediaries, musicians can credibly support themselves with just a thousand true fans: cdixon.org/2021/02/27/nft…

      11/ Social media platforms like Twitter, Instagram, and TikTok have take rates of 100% — they don’t share any revenue at all with creators! That’s been great for them but bad for users.

      12/ In contrast, Web 3 social platforms like Rally, Mirror, and BitClout have effective take rates well below 10%. Most of the value is sent back to users and creators.

      13/ Web 2 platforms depend entirely on creators for content, yet give only scraps back. This is not sustainable. Web 2’s take rate is Web 3’s opportunity.

      James Seyffart@JSeyff
      Probably wont be the last of these Bitcoin ETF filings this week. Everyone looking to launch a 40 act #Bitcoin futures product now… Here’s the current list of filings
      twitter.com/EricBalchunas/…

      This makes for 20 crypto specific ETF filings this year in the US. 17 to hold #Bitcoin, 2 #Ethereum and 1 for a basket of cryptos. These filings are from 16 different potential issuers. If you include Bitwise and Grayscale you have ATLEAST 18 potential bitcoin/crypto ETF issuers

      There’s also 2 active bitcoin futures mutual funds already, 2 more mutual funds that have filed. Throw in an $SBTC ETF from Simplify that holds 10% of its portfolio in $GBTC too