Top Stories of Last Week

Regulatory

  • U.S. Office of the Comptroller of the Currency published guidance clarifying national banks can provide services to stablecoin issuers in U.S., providing first detailed national guide on how cryptocurrencies backed by fiat currencies should be treated under law. OCC wants federally regulated banks to feel comfortable providing services to stablecoin issuers, explaining that while banks should conduct due diligence and assess risks of banking stablecoin issuers, stablecoins are experiencing robust demand from banking institutions that need to be met.
  • Legislation introduced by Chairman of National Republican Congressional Committee Rep. Tom Emmer would amend existing securities laws to exclude tokens from definition of a security, aiming to clarify that investment contract assets or digital tokens sold as part of securities offering are separate and distinct commodities, not securities. Bill would allow companies in compliance with securities registration requirements or have qualified for exemption to distribute assets to public without additional regulatory uncertainty.
  • Additionally, Congressman Michael Conaway introduced new bill called Digital Commodity Exchange Act (DCEA) that, if passed, would offer way for Commodity Futures Trading Commission to regulate U.S.-based crypto exchanges. Bill outlines regulatory requirements for Digital Commodity Exchanges. If passed, voluntary regulatory framework would create opt-in pathway to regulate U.S. cryptocurrency exchanges under new, national-level framework.
  • European Commission proposed legislation that laid out plans to create comprehensive framework for digital assets to turn cryptocurrencies into regulated financial instrument. Known as “Regulation on Markets in Crypto Assets,” MiCA will provide clarity on what constitutes a crypto asset, as well as definitions for token subcategories. Also, it will provide rules on digital asset custody and capital requirements, while stipulating what relationship between token issuer and token holder will be. Framework will be applicable in all 27 member states, giving regulated crypto companies passporting rights across entire bloc.
  • Leaked documents from U.S. Financial Crimes Enforcement Network included information about BNY Mellon wiring over $137 million in funds linked to crypto Ponzi scheme OneCoin. Bank said transactions came from entities linked to OneCoin, a crypto scheme that raised total of $4 billion from investors. Additionally, the institution which had  most suspicious activity reports with FinCEN was Mayzus Financial Services, allegedly a fiat intermediary of Bitcoin exchange BTC-e, which was allegedly involved in moving funds from Mt. Gox hack.
  • Venezuela legalized crypto mining industry, but stated all mining activities must be carried out through official National Digital Mining Pool, with those who operate outside it to face penalties.. Decree states that any local entity wishing to mine cryptos must apply for license, be listed on government register and keep mining-related records for 10 years. Manufacturers of mining equipment or mining data centers will also be able to apply for special license, and importing and manufacturing of mining equipment will be supervised by authorities.
  • Chamber of Digital Commerce, a blockchain advocacy group, announced former acting White House chief of staff Mick Mulvaney has joined group’s board of advisors. Blockchain advocacy group also said Visa, Goldman Sachs and Six Digital Exchange have joined group as executive committee members. 

Project Development

  • Paul Brodsky, a former partner at Pantera Capital, has left to launch PostModern Partners, a hedge fund aimed at volatility plays across cryptocurrencies and traditional assets. Fund will launch in 2021 with a focus on high-risk, high-return blockchain investment opportunities.
  • Andreessen Horowitz’s LSV Fund I, L.P. received antitrust clearance from U.S. Federal Trade Commission for a transaction involving Coinbase. However, it is unclear whether approval is for fund’s previously disclosed purchase of shares in exchange or for new purchase. a16z most recently participated in Coinbase’s $300 million Series E in October 2018.
  • Brazilian fund manager Hashdex inked deal with Nasdaq to launch world’s first crypto asset ETF on Bermuda Stock Exchange. Stock exchange announced it approved ‘Hashdex Nasdaq Crypto Index,’ and fund expected to be live and trading by end of year. 
  • Avalanche announced launch of mainnet, paving way for blockchain to facilitate 4,500 transactions per second. Ava Labs is entity responsible for building Avalanche blockchain and Emin Gün Sirer, ranked 52nd on Cointelegraph’s list of top 100 people in crypto and blockchain, serves as Ava Labs’ CEO. Notably, Avalanche tallied $42 million in funding from its July 15 public asset offering.

Exchanges

  • Gemini announced it is expanding into United Kingdom after being awarded EMI license by U.K.’s Financial Conduct Authority. Users will be able to trade and store crypto, with GBP added as funding currency. U.K. residents will also be able to make GBP crypto purchases with debit card or make GBP deposits to fund account using wire transfers, Faster Payments and CHAPS.
  • Bithumb reportedly looking for buyer once again at price tag of at least 500 billion won (~$430 million) and up to 700 billion won (~$604 million), with Samjong KPMG said to be in charge of sale. Some foreign financial investors and domestic private equity funds are reportedly interested in buying Bithumb, but complicated process expected due to recent police investigations involving exchange.

Mining

  • Bitfarms Ltd. will lease 2,000 WhatsMiner M31S rigs from BlockFills as Bitcoin network’s difficulty rate increases. Bitfarms’ new equipment will add 360 petahashes of mining power by end of October, with the lease, set to last 24 months, coming with 9.5% interest rate as well as purchase option. Pair also signed non-binding letter of intent for up to 7,000 additional miners.

Fundraising

  • APY.Finance, a DeFi yield aggregator, announced it has completed $3.6M seed funding round from Arrington XRP Capital, Alameda Research, Cluster Capital and CoinGecko. APY.Finance is building an automated investment service platform that will allow users to earn yields across a variety of DeFi products. APY.Finance said it’s targeting mid-October for full-scale rollout of platform.
  • Startup formerly known as Nebulous raised $3 million funding round led by Paradigm with participation from Bain Capital Ventures, Bessemer Venture Partners, A.Capital, Collaborative Fund, Dragonfly Capital Partners, Hack VC, INBlockchain, First Star Ventures and others. Startup also rebranded, as Skynet Labs, to focus on promoting application hosting platform, which uses token-fueled Sia network.
  • Data firm Dune Analytics raised $2 million in seed round led by Dragonfly Capital and which also included Multicoin Capital, Coinbase Ventures, Digital Currency Group, Compound’s Calvin Liu, Matteo Leibowitz of Uniswap, Aave founder Stani Kulechov, and Yearn creator Andre Cronje.
  • Climate-change startup Nori closed $4 million funding round which included Placeholder, North Island Ventures and Tenacious Ventures, as well as “a large, unnamed agribusiness.” Startup aims to build blockchain-based market for carbon credits that will start by paying farmers to remove CO2 from atmosphere.

Defi

  • Group of anonymous Uniswap users trying to unite small holders of UNI governance token to deal with potential problems in automated market maker’s governance. Initiative called UNI Innamorare (UNII) is asking UNI holders to claim UNII tokens in order to form party within UNI community that can counter power of founding team and investors.

Things to Watch This Week

  • Ethereum 2.0 Spadina Testnet
    • Spadina testnet has been scheduled for genesis on September 29 at 12 pm UTC, allowing Ethereum community to send deposits, launch beacon nodes, and handle other Eth 2.0 operations. Testnet will last just three days and will run parallel with Medalla. ETH 2.0 is expected to go live later this year or early next year with its phase-zero launch, so we’ll be keeping an eye on the progress of this dress rehearsal throughout the week.
  • Kucoin Hack
    • KuCoin issued a statement over the weekend that it detected large withdrawals of bitcoin and ethereum tokens to an unknown wallet. It was stated that one or more hackers obtained private keys to the exchange’s hot wallets, and over $150 million of the exchange’s funds had been compromised. KuCoin is investigating the hack with international law enforcement and stolen customer money will be “covered completely” by an insurance fund, according to KuCoin CEO Johnny Lyu. Additionally, Tether froze a combined $33 million worth of USDT suspected to be part of the funds stolen in the hack, while a number of people tracking the stolen funds noted that the hacker began moving a large amount of ERC20 tokens to Uniswap on Sunday. Monitoring the fall out of this situation will be key as events unfold throughout the week. 
    • glassnode@glassnode
      ETH supply on centralized exchanges vs. ETH supply in smart contracts

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      Ryan Sean Adams – rsa.eth @RyanSAdams
      Banked ETH losing to bankless ETH. This is insanely bullish for decentralization.

      PlanB@100trillionUSD
      #bitcoin mining: difficulty op +20% after halving .. like clockwork
      Andreas @aantonop
      A lot of people who are into cryptocurrencies will see this FinCen leak as vindication and proof that banks are money launderers. But, this will be used against cryptocurrencies… 1/

      See the correct analysis of this news is that AML/CTF and KYC don’t work. They will never work because they try to control the *tool* not the *criminal act*. It’s not the money that is illicit, it’s the use of that money to commit crimes. 2/

      I’ve talked about this extensively. Not only is the use of money as a crime-control mechanism ineffective, it has terrible consequences that increase poverty for billions by creating economic exclusion. So it’s not just useless, it is “Worse than Useless” 3/

      But despite this obvious truth, nothing is going to change. In fact, this report will be used to *increase* the use of controls and surveillance. In govt if something doesn’t work, you do MORE of it. So this will result in stricter AML/CTF rules. 5/

      Then of course, the need and value of open financial systems based on open, private, and uncensorable cryptocurrencies will increase dramatically. When all the money in the world has been deliberately broken to serve this unachievable goal, the only money that works is crypto 9/

      More and more people will need to use cryptocurrency in order to participate in the global economy, because control-currency doesn’t work as money. A medium of exchange can’t also work as a medium of control. They break money to stop crime, even though it is a futile effort 10/

      That makes crypto-currency a systemic threat, not to the economic nature of national money, but to the control and surveillance system of geopolitical money. Math money doesn’t play politics, which makes it automatically “rogue” money. 11/

      Open and private crypto-currencies won’t comply with these regulations, because they CAN’T comply without breaking every feature and capability they have. If some try to comply they will have to compete against gov-crypto and facebook-crypto (they will lose) 12/

      This FinCen leak is worthy of our ridicule because it reveals the hypocrisy of those who argue that crypto-currency is for money launderers. Banking *is* money laundering on a massive scale. But the solution is not to tighten controls on money. That won’t work 15/

      The solution is to stop trying to use money (a tool) to fight crime (human nature). But if you think the hypocrites will back down and adopt sensible systems and laws that enable human trade and economic inclusion, you are wrong. They will double down with even more control

      BitMEX Research  @BitMEXResearch
      Battle of the dexes We examine the 7 year history of decentralised exchanges, including a look at @CounterpartyXCP We consider why these early attempts failed & how they evolved into @UniswapProtocol, with its clever mechanism for inducing liquidity

      blog.bitmex.com/battle-of-the-…

      The defi excitement is driven by unsustainable price bubbles & aggressive token issuance schedules, fuelling demand. Underneath this frenzy & layers of complexity, there could be something real. Non-custodial, leveraged, quasi decentralised trading, is too compelling to ignore.

      Elias Simos@eliasimos
      I don’t know who needs to hear this, but since July 2020: – $BTC net outflows from #CeFi: ~$2B – $BTC net inflows onto #DeFi: ~$1.9B Even as prices have retraced more recently, BTC on Ethereum has grown another 10%. This is a big structural shift.

      DonAlt @CryptoDonAlt
      The monthly is at support, the weekly is at support, the daily is at support, funding is negative and people are telling me it’s not too late to short ETH after a 10% downmove. Gotta say, I’m a little bit worried my bear brothers are biting off more than they can chew.

      I’m not saying “It’ll go up for sure” I’m just saying the chart presents the first clean buying opportunity in a while. If that doesn’t play out and we dump we’ll talk again in the $8k’s. If I was forced to make a bet right now, I’d bet on support instead of FOMOing short.

      Su Zhu @zhusu
      when yield farming started, APRs were higher due to risk / unaudited as it matures, i expect sustainable yields to be below CeFi yields due to tax. will likely be a better place for leverage users than suppliers DeFi pull factor needs to be more sturdily built than “1k% APRs”

      governance tokens are cute but as the mkt matures it will start expecting cash flows; if these disappoint, expect a re-rating of all gov tokens much lower some of these are highly centralized still; expect the mkt to realize they cannot outvote the incumbents (digix 2.0)

      many tokens have benefited from being used in pool1 collateral, essentially staking; this hybrid airdrop effect works until it doesnt tokenomics changes thus far have been able to produce pumps; if this falters, expect a re-rating much lower

      i remain longterm bullish on DeFi and the premium projects in the space continue to build and innovate, and newcomers who genuinely take the time to think and add value will find ample design space

      Matt Luongo @mhluongo
      1/ Big day. After 3 months of testing, tweaking, and auditing, we’ve launched tBTC rc.1 on mainnet. I expect it will be the final release candidate for tBTC. #bitcoin #ethereum 

      2/ As far as I know, this release is the first permissionless, censorship-resistant Bitcoin bridge on Ethereum. Anyone can mint $tBTC by connecting to the Bitcoin and Ethereum chains, and no one can censor transactions or redemptions. dapp.tbtc.network

      11/ Our first incentive program will launch with @NexusMutal$NXM holders that stake to provide cover for tBTC minters will be rewarded by KEEP, weekly. This program means any depositor will be able to buy cover for their deposits through the Nexus Mutual dApp.
      READ MORE

      glassnode@glassnode
      The number of #Bitcoin addresses depositing funds to exchanges has doubled since the beginning of the year. Currently, around 100k unique addresses send $BTC to exchanges each day. Last time we saw these levels was during the peak bull market of 2017.

      Chase Wright@mysticryuujin
      1/ Why I won’t be staking ETH at launch, a thread… #Ethereum #eth2 Like many of you, I am excited for ETH2, the Beacon Chain, Phase 0, and everything that will come after. I have participated in Onyx, Witti, Altona, and Medalla test networks. I tried Prysm and Lighthouse.

      3/ I’ve pretty much done it all when it comes to getting familiar with the clients, how to run them, how to configure them, etc. However, I will not be participating in the genesis, and I will not be staking ETH. Why? Well, a few reasons really.

      4/ First we have the fact that the average Medalla validator is still in the red. We all know that everyone is in the red due to a bug in a single client, and the bug was fix…yay? What happens when/if a similar bug happens on mainnet? What’s the response?

      5/ Because the Medalla response to do fuck all is an unacceptable response. None of the teams have demonstrated their ability to “fix” a situation like this. To this date there hasn’t been a single successful fork of an ETH2 beacon chain.

      6/ This is something that the ETH2 teams seem to be proud of as well. Their response to questions like this is “Let’s get it out the door and worry about forks later.” Excuse me?

      7/ No. You want to come into a production network with potentially hundreds of millions of dollars day one with pristine, audited code, only to figure out how to deal with forks later? No thanks. The DAO Part 2 will happen, it’s not a matter of if but when.
      READ MORE