Top Stories of Last Week

Regulatory

  • Financial Action Task Force released draft guidance clarifying wording on decentralized exchanges, along with “oblique reference” to NFTs. For DeFi platforms, FATF said its standards may not apply to underlying technology, but entities involved with DApp such as owners or operators may now be considered VASPs. Also, specific reference towards NFTs was given in definition of “assets that are fungible,” which was replaced by “assets that are convertible and interchangeable.” Comment period has been opened until April 20.
  • South Korea’s anti-money laundering safeguards for cryptocurrency businesses went into effect March 25th. Registered VASPs must file suspicious transaction reports with FSC, subject themselves to compliance inspections and verify customers’ identities. Crypto firms have six-month grace period to register with FSC before facing sanctions for non-compliance beginning in late September.
  • Canada Revenue Agency prevailed in court battle for access to customer data held by Coinsquare after federal judge’s order that Coinsquare must hand over detailed information on Canadian customers, their crypto trading activity and identifying information to CRA. Coinsquare must disclose information on estimated 5% to 10% of its 400,000 customers to CRA.
  • Indian government amending current legislation to require companies to disclose cryptocurrency holdings in financial statements. Announcement from Government of India Ministry of Corporate Affairs says new rules will apply to all Indian companies as of April 1, requiring them to detail profits or losses on crypto transactions.

Institutional

  • Robinhood Markets L.L.C. confidentially filed with SEC for initial public offering, according to Bloomberg report. Robinhood could go public as soon as late in second quarter but timing could change. Company selected Nasdaq as venue for listing but hasn’t set terms for offering yet.
  • Fidelity affiliate is seeking to offer Bitcoin ETF after filing with SEC for approval of “Wise Origin Bitcoin Trust.” Fund would track performance of Fidelity’s bitcoin index, with Peter Jubber, managing director of Fidelity Digital Funds, serving as president of trust.
  • Goldman Sachs filed with SEC to offer notes linked to performance of ETF that may have exposure to crypto. Goldman said it plans on offering $15.7 million of “autocallable contingent coupon ETF-linked notes due 2026.” Payout on notes would be dependent on performance of ARK Innovation ETF. ETF may also have exposure to cryptocurrency indirectly through investment in grantor trust.
  • First Trust Advisors and SkyBridge Capital filed S-1 with SEC to be able to offer “First Trust SkyBridge Bitcoin ETF Trust.” First Advisor would serve as advisor with SkyBridge serving as sub-advisor, and shares would trade on NYSE Arca.
  • Cboe Global Markets Inc. reportedly looking to return to cryptocurrency by introducing more products and possibly re-listing Bitcoin futures, according to CEO Ed Tilly, saying exchange has not “given up” on Bitcoin futures. Cboe listed Bitcoin futures in 2017 but ended offering two years later.
  • Brazil Securities and Exchange Commission approved blockchain investment firm QR Capital’s bitcoin ETF, which will trade on Sao Paulo-based B3 exchange. Fund will trade under ticker QBTC11, with CME Group index as reference of bitcoin futures contracts.
  • Alan Howard reportedly fourth-largest shareholder in digital asset manager CoinShares. According to CoinShares investor relations site, a company owned by Alan Howard, AH (St Helier) Ltd, owns 5,484,580 shares, or 8.24% of issued share capital. Prior to listing, Howard was hidden investor but now that CoinShares has gone public its prospectus reveals information about shareholders.

Exchanges

  • Coinbase’s public offering has been shifted to April after plan for March listing “slipped,” according to Bloomberg report. No reason was given for delay, but Bloomberg noted SEC has been reviewing exchange’s plan for direct listing. Also reported that Coinbase will pay $6.5 million in settlement with CFTC over allegations exchange “self-traded” digital assets. According to consent order published by regulator, Coinbase self-traded a small amount of cryptocurrency between 2015 and 2018 through two automated trading programs. A now-former employee of exchange also allegedly wash traded litecoin around that time period as well. Coinbase appears to have disclosed investigation’s existence in Form S-1.
  • FTX reached agreement with Miami-Dade County on 19-year partnership worth $135 million to name Miami Heat’s home stadium FTX Arena. Exchange is set to become first member of crypto industry to secure NBA naming rights, pending approval from Miami-Dade County Board of County Commissioners.
  • OKEx and MXC announced partnering with Solana Foundation to provide $40 million into strategic investment funds to bootstrap development on Solana network. OKEx will make investment through newly founded Block Dream Fund. Exchanges will receive equity in form of tokens for investments.

Fundraising

  • Blockchain.com raised $300 million in funding round valuing company at $5.2 billion. Investment led by DST Global, Lightspeed Venture Partners and VY Capital, and comes a month after $120 million was raised in a round led by Google Ventures that valued company at $3 billion.
  • StarkWare Industries, which provides scaling and security solutions for Ethereum, announced $75 million Series B fundraise led by Paradigm, which previously led StarkWare’s $30 million fundraise in 2018. Previous investors, including Sequoia, Founders Fund, and Pantera participated in round alongside new investors Three Arrows and Alameda Research.
  • Digital asset data provider Lukka announced $53 million Series D fundraise led by George Soros’ fund. Lukka currently serves more than 200 active cryptocurrency funds and provides digital asset data to both traditional and cryptocurrency firms. Lukka has raised nearly $75 million in past year from Soros, S&P Global, CPA.com and State Street.
  • Avanti raised $37 million from Coinbase Ventures, Binance.US, Morgan Creek Digital, Slow Ventures and University of Wyoming Foundation, among others. Avanti said it will put funds toward meeting regulatory capital requirements and further invest in engineering team. Avanti is preparing to launch later this year, with final pre-launch task being clearance to bank with Federal Reserve.
  • Bitcoin rewards company Lolli raised $5 million in Series A round from Serena Williams’ Serena Ventures, Alexis Ohanian’s Seven Seven Six and Night Media, Casey Neistat, and more after raising a $3 mil seed round previously led by PathFinder, with participation from DCG, Michelle Phan and Ashton Kutcher.

Defi/NFT

  • Uniswap announced Uniswap v3 expected to launch on mainnet May 5. Uniswap is eyeing integration soon after with Ethereum throughput booster Optimism, with new version promising “up to 4,000 times capital efficiency relative to Uniswap v2.” New version also allows different pools to be created with different fees and will include change to licensing of new version.
  • Crypto.com will launch NFT platform featuring content from likes of Snoop Dogg, Lionel Ritchie and Boy George. Platform will be invite-only and will feature collaborations between mainstream and digital artists.

Things to Watch This Week

  • FinCEN Crypto Wallet Rule Follow-up
    • This week will bring us the end of the deadline for comments to the December FinCEN Crypto Wallet Rule proposal put forth by former Treasury Secretary Steven Mnuchin that was delayed by an outpouring of backlash when it seemed possible it would be pushed through before the end of his term. With the standard 60 day period coming to an end, it will be important to keep an eye out for any indications on what route FinCEN plans to take now that all parties have had a sufficient amount of time to respond. Along with the FATF’s recent change in the draft guidelines towards VASPs, NFTs, and Defi in general, it seems imminent that we’ll be receiving some indication on a stance that will be taken by the U.S. government. Although the possibility that this resolution could bode well for crypto as regulatory clarity would be seen as a positive sign, it most definitely will bring with it more volatility in crypto markets and thus should be monitored carefully throughout the week.    
  • Ethereum EIP-3368 Counterproposal
    • Another situation to keep an eye on this week will be the fall-out of the EIP-1559 counterproposal known as EIP-3368. Miners proposed EIP-3368, which would increase miners’ rewards to 3 ETH per block with a decaying rate of return bringing rewards down to 1 ETH over two years, as a way to find a middle ground to prepare for the inevitable switch to Eth 2.0. However, with their proposal being denied the possibility of being included in the London Hard Fork in July, it will be important to watch for whether some miners will continue through with their “show of force” on April 1, where miners proposed to collect their hashrate on Ethermine for 51 hours. This type of action will potentially shake the confidence of the Ethereum community, and must be watched closely to see what the reaction of Eth developers and projects will do in response. 
    • Qiao Wang@QwQiao
      How do we get to $100T market cap? $20T BTC that replaces and expands gold $20T DeFi that replaces and expands the financial sector $20T Web3 apps that replace and expand Web2 $40T securitization of “real-world” assets and contracts, notably real estate, bonds, and derivatives

      Gold, financial sector, and Web2 companies each are priced at $10T currently. Not unreasonable for a better alternative to come in and expand the TAM. Securitization to fill the remaining $40T. It may get a lot bigger or may not happen for decades though.

      Mable Jiang @Mable_Jiang
      0/ In the past I wrote a few thoughts about the NFT space. Over time my thoughts evolved. Compared to 6 months ago, I had developed some new understanding about NFT as a new form of value storage and transmission. Here’s a thread :

      1/ Instead of being defined as a general category, NFT should be discussed in relation to a specific medium.

      2/ In the near term, we shall see (and have seen) NFT marketplaces evolve from the generalized purpose platforms that offer everything from in-game assets to arts, into the more focused platforms that offer NFTs in a specific type of medium (image / video, music, text, etc.,).

      3/ It is easier for the real world IPs to gain traction for their NFTs (i.e. better product market fit now), because they can skip the process of forming new *consensus*. Tokenizing existing IPs is a crucial step in driving mainstream NFT adoption from the non-crypto world
      READ MORE

      Wu Blockchain@WuBlockchain
      Jiang Zhuoer, one of China’s big miners, told WuBlockchain that according to the latest multiple model studies, the fastest will be September 2021 and the slowest June 2022 will turn from a bull to a bear market.

      Previously, several Chinese blockchain company CEOs told WuBlockchain that they believed that this autumn might start to turn into a bear. The reason was the economic recovery after the popularization of the vaccine and the beginning of a shift in US monetary policy.

      However, there are also opinions that if more traditional large institutions buy Bitcoin and Ethereum, the bull market may continue for a longer period of time, or even the next round of halving.

      But at present, after Tesla purchased 1.5 billion U.S. dollars in Bitcoin and Meitu purchased 90 million U.S. dollars in Bitcoin and Ethereum, there are no other large listed companies in North America and Asia to follow up.

      Peter Van Valkenburgh@valkenburgh
      There’s new FATF draft guidance for crypto, and its not good.
      coincenter.org/a-quick-analys…

      Keep in mind that FATF is not a democratic body, not created by treaty, and nothing that FATF issues is immediately binding on anyone. FATF member states must (if they wish) implement the so-called recommendations into law for any policy to actually change.

      The last time FATF issued this guidance was 2019 and we thought they did a pretty good job, largely mirroring the “independent control” standard Coin Center has long advocated and FinCEN has adopted.

      The updated guidance would reverse much of what is good about existing AML policy toward crypto. 3 big issues stand out: Surveillance Obligations for noncustodial entities, Restrictions on p2p and private transactions, & Customer counterparty identification (yes, again).
      READ MORE

      Z@SplitCapital
      1/ As we enter the final week of Q1 2021, it’s imperative to recap the prior quarter and note the incredible growth. (Thread) $BTC

      2/ In the macro lens, $BTC has struck hard in the wake of a new wave of institutional investors buying BTC. In just 3 months, BTC has put in a near 100% gain on top of its previous quarter. In the same time period, other macro assets have barely been able to hold their value.
      READ MORE

      Ray Dalio@RayDalio
      I’ve seen a lot of bubbles in my time and I have studied even more in history, so I know what I mean by a bubble and I systemized it into a “bubble indicator” that I monitor to help give me perspective on each market. (1/2)

      What I mean by a bubble is an unsustainably high price, and how I measure it is with the following six measures. If you’re interested in learning more, you can read my thoughts on the topic here:
      linkedin.com/pulse/we-stock…

      Elon Musk  @elonmusk
      You can now buy a Tesla with Bitcoin

      Tesla is using only internal & open source software & operates Bitcoin nodes directly. Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency.

      Qiao Wang @QwQiao
      I’m still trying to form a well-balanced view on Uniswap V3. Some current thoughts below. Might change my mind later. V3 is probably going to be great for Uniswap. Why?

      As many have pointed out, V3 is more similar to a CLOB than V2. I’ve long maintained the view that CLOB is the end game. It gives market-makers more flexibility.

      AMMs are short term bandaids. But they are really useful bandaids. They are great for bootstrapping the initial retail user base and liquidity. When you have no liquidity, it’s hard to bring professional market makers onboard. It’s a chicken egg problem. AMMs solve this.

      But once you have this critical mass of liquidity, your platform becomes more interesting for professional market makers. This is the time to modify your product to better suit their needs. CLOB does that. It gives MMs flexibility and create more sophisticated strategies.

      This allows professional MMs to create and maintain an edge over the non-sophisticated passive MMs. This is great for overall liquidity, but the flip side is it no longer “democratizes” the game of liquidity provision. Retail are now at a disadvantage.

      But I’m not here to opine on the democratization of finance. Just pointing out a fact. This game was never “fair” to begin with. If you want to grow liquidity, you need to bring on professionals, and to bring on pros, you need to create a game where they can have an edge.

      Willy Woo@woonomic
      Some bearish scares over whales selling down, here’s more complete picture. Chart: BTC held by dolphin/shark/whales (100-10k BTC) Whales becoming dophin/sharks, new buyers coming in, cohort is still accumulating, they usually sell in the middle of the bull run. Still bullish.

      This is a new species of whale; hedge funds. Likely selling down for end of quarter rebalancing after such a good run from $10k BTC last year. Doesn’t look like the typical OGs selling (which they do on every bull season rally). The coins being sold lately are relatively young.

      Bitcoin addresses are forensically clustered into wallets held by individual participants before extracting this view. Beware that looking at just raw address balances, which I’ve seen posted elsewhere can be misleading.

      Matthew Ballensweig@MattBallen4791
      1/ Crypto rate markets, like most markets, aren’t static. @BlockFi cutting rates is just a supply/demand lever. There is simply too much $BTC supply in search of yield relative to institutional demand for that BTC.

      2/ BTC borrow demand is a function of the risk adjusted return opportunities in the market and right now they are limited.

      3/ The public shares vs private placement arbs are backwards, futures markets are in heavy contango, such that taking a view on a steepening curve wouldn’t make a ton of sense and those who went short basis haven’t had to add too much support to cover the short leg of this trade.
      READ MORE

      Coopahtroopa  @Cooopahtroopa
      Where do NFTs capture value? One word – curation
      My first tokenized essay – $VALUE – is now live on @viamirror  
      coopahtroopa.mirror.xyz/A16NP2XXi9RdHp…

      NFTs move seamlessly between marketplaces and applications. Here’s a look at some of the key players that exist today.