Top Stories of Last Week

Regulatory

  • El Salvador President Nayib Bukele announced government bought 200 BTC before country’s Bitcoin Law making Bitcoin legal tender came into effect. Goods, services, and even taxes can now be paid using Bitcoin.
  • Panama Congressman Gabriel Silva introduced a bill to regulate use of cryptocurrencies, seeking to make Panama a “country compatible with the digital economy, blockchain, crypto assets and internet.” Proposal states individuals or legal entities may freely agree to use cryptocurrency as means of payment for civil or commercial operation not prohibited by legal system.
  • SEC reportedly investigating developer of Uniswap, according to Wall Street Journal. SEC is seeking information about how investors use exchange and how it is marketed.
  • Ukrainian Parliament adopted legislation regulating foreign and domestic cryptocurrency exchanges operating from within country. Draft law “On Virtual Assets” legally recognizes cryptocurrency in country for first time, and is based on existing standards developed by FATF.
  • SEC delayed ruling on VanEck’s bid for Bitcoin ETF for third time, giving itself until Nov. 14 to approve or reject “VanEck Bitcoin Trust.” SEC can only extend consideration period for prospective ETFs three times. Nov. 14 should yield final answer on where VanEck’s offering stands.

Project Development

  • Daily issuance of Ethereum went negative for first time since EIP-1559 upgrade, as daily net emission of ether was -333 on September 3, with amount of ETH burnt at 13,840, surpassing 13,507 ETH newly minted as block subsidies.

Institutional

  • Mastercard agreed to buy CipherTrace, a firm that scans blockchains for illicit transactions, in acquisition giving Mastercard ability to track over 900 cryptocurrencies. Details of acquisition were not disclosed. Earlier this year, Third Point Ventures led $27 million investment in CipherTrace, on heels of $100 million Series D that valued competing firm Chainalysis at $4.2 billion.
  • Private equity firm 10T raised $750 million from mix of public pension plans, endowments, foundations and family offices investing in mid-to-late-stage companies in digital asset ecosystem. $750 million figure is inclusive of earlier $200 million fund raised in February 2021.
  • BlackRock will join Axoni’s Veris blockchain network to manage equity swap trades, where parties can match and confirm trade terms upfront, and match and reconcile post-trade data after stock swap.
  • KB Asset Management, the investment arm of KB Financial Group, introduced Korea’s first blockchain-focused mutual fund. KB Global Digital Chain Economy fund will invest in three main areas: companies that make hardware required to support blockchain activities, software companies providing blockchain-based services, and companies that use blockchain technology within business.
  • German asset manager Union Investment revealed plan to include Bitcoin in few of its investment funds. Executive at asset management firm told Bloomberg News that they will consider to add Bitcoin to investment funds available to private investors, with maximum exposure of 2% of total assets for each fund.
  • Invesco Mutual Fund filed with SEC of India to launch mutual fund that invests in blockchain companies. Mutual fund primarily invests in units of Invesco’s Elwood Global Blockchain UCITS ETF.
  • NYDIG partnering with MVB Bank and Victor Technologies to integrate Bitcoin into MVB’s Banking-as-a-service solutions. MVB Bank works with over 50 fintech, payments and gaming clients through banking and payment solutions.

Exchanges

  • Binance announced elimination of SGD trading pairs and payment options and removing app from iOS and Android marketplaces used by Singapore residents amid warnings from regulators that company may have violated payments laws. 
  • Binance.US announced it hired Brian Shroder as president of exchange and also made him board member. Shroder was formerly strategist and business development executive at Ant Group.
  • FTX launched minting platform for NFTs on its U.S. version. Stephen Curry has also been signed as FTX global ambassador. As part of deal, Curry will receive equity stake in FTX.

Fundraising

  • CoinSwitch Kuber reportedly in talks over new fundraising round that would value Indian crypto exchange at $2 billion. CoinSwitch Kuber has allegedly been in talks with Andreessen Horowitz and Coinbase in recent weeks, and deal is thought to be worth over $100 million, which may be finalized by end of month.
  • Trader Joe, a DeFi protocol on Avalanche blockchain, raised $5 million in token sale led by DeFiance Capital, GBV Capital, and Mechanism Capital. 
  • Parcel, a crypto startup based in India, raised $2.5 million in seed funding to build treasury management protocol for DAOs. Dragonfly Capital led round, with Scalar Capital, A Capital, Compound, Consensys, 6th Man Ventures also participating.
  • Blockchain infrastructure protocol SubQuery raised $9 million in funding aiming to enhance data aggregation for Polkadot and Kusama ecosystems. Series A round co-led by Arrington Capital, Stratos Technologies, and Digital Currency Group.
  • Cross-chain interoperability and liquidity transfer protocol deBridge secured $5.5 million in seed funding round led by ParaFi Capital. Participation also came from Animoca Brands, Huobi Ventures, Lemniscap, and Crypto.com Capital.
  • Priority transaction network Eden raised $17.4 million in seed funding round led by Multicoin Capital. Participation also came from Jump Capital, Alameda Research, Wintermute, GSR and Defiance Capital.
  • Cere Network, developer of blockchain-based customer relations management system, raised $31 million in funding round led by investment platform Republic and Polygon.

Defi / NFT

  • Collection of 101 Bored Ape Yacht Club NFTs sold for $24.4 million at Sotheby’s auction. Figure implies average price of $241,515 per ape NFT and exceeded Sotheby’s initial estimate for total collection of $12 to $18 million.
  • Bug in OpenSea accidentally destroyed at least 42 NFTs, worth minimum of $100,000. Lead developer of Ethereum Name Service Nick Johnson pointed out when he transferred an ENS name, it went to burn address which can no longer be moved again.
  • Harmony Foundation allocating more than $300 million in network’s ONE token over next four years to attract projects. Initiative aims to support 10,000 startups with bounties, grants and programs. Company will allocate $180 mil over next year with $50 mil going to 100 DAOs. Additional $30 mil going to partner orgs. 

Things to Watch This Week

  • Coinbase / Uniswap SEC Battle
    • This week, we’ll be watching for any further details of the investigation into Uniswap’s operations by the SEC as well as their response to Coinbase’s allegations that a lawsuit was threatened should Coinbase pursue their plans of offering a yield product called “Lend.” In this particular case, the significance is even larger as it not only affects Coinbase, but also companies that already offer existing lending products such as Celsius, Gemini, Blockfi, and Nexo in addition to the several lending platforms that are found in Defi. As the U.S. continues its hostile approach towards crypto, it will be important to monitor both of these situations as well as the year-long battle between Ripple and the SEC. As more cases are brought against crypto companies worldwide, it is becoming apparent that the legitimate projects that have a chance at fighting back will need to work together somewhat to demand a fair set of consistent rules determining how the industry can move forward in their markets. We’ll be watching this week to see if any developments occur that give us a clearer picture of how these events will unfold. 
  • Arbitrum Usage Increase
    • Arbitrum, the Layer-2 network on Ethereum, is beginning to see significant growth and will be a situation to keep an eye on throughout the week. The total value locked in Arbitrum has jumped by nearly $2 billion in just one weekend, as TVL increased from $238 million on Friday to $2.2 billion as of time of writing. Not only is the network dominating the layer-2 competition, accounting for more than 70% of all value locked in layer-2 solutions, but it is also occurring as capital is flowing out of layer-1 competitors, with Solana, Fantom, and Harmony experiencing 7-day TVL decreases of 58%, 36%, and 62%, respectively. This is also occurring with a lack of quality projects to be found on Arbitrum yet, as most tier 1 platforms have yet to deploy on the Arbitrum network. If this week brings news of legitimate projects beginning to migrate over to Arbitrum, it could spell a quick end to the layer-1 value propositions of speed and cheaper fees and throw momentum back onto the side of Ethereum in the race for Defi superiority. 
    • Laura Shin@laurashin
      Wasn’t expecting to see this is as the top news story in the NYT this morning:

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      Brian Armstrong@brian_armstrong
      1/ Some really sketchy behavior coming out of the SEC recently. Story time…

      2/ Millions of crypto holders have been earning yield on their assets over the last few years. It makes sense, if you want to lend out your funds, you can earn a return. Everyone seems happy.

      3/ A bunch of great companies in crypto have been offering versions of this for years. Coinbase came out recently and said we would be launching our own version.

      4/ We were planning to go live in a few weeks, so we reached out to the SEC to give them a friendly heads up and briefing

      5/ They responded by telling us this lend feature is a security. Ok – seems strange, how can lending be a security? So we ask the SEC to help us understand and share their view. We always make an effort to work proactively with regulators, and keep an open mind.

      6/ They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.
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      Akash @Mangyek0
      A Short thread “Tuesday Crash; What Caused it?” Apart from September being a red month, trying to find out what caused the drop, I stumbled on to Exchange leverage ratio (ELR) metric by @cryptoquant_com (calculated by dividing Open Interest by

      #BTC reserves) #Bitcoin was seemingly overleveraged on April 17, reflected accordingly on ELR (@ 0.18) and we all know what happened after. On Sep 7, ELR was around 0.182 before the crash occurred, but what irks me is the July 27 peak on the ELR but no effect on price whatsoever.

      Usual suspects for the crash: – The funding rate was relatively low on Sep 6, 7, nowhere near the April 17 levels. – Spot exchange mean inflows showed no anomalies either.
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      Sam Trabucco@AlamedaTrabucco
      Today was the first time I’ve been woken up because the market was moving in a while — it’s the biggest move we’ve seen in months! What happened? A thread about history.

      They say that those who do not learn from history are doomed to repeat it. Who remembers what earlier this year? When crypto rallied a ton to $65k pretty quickly, futures were at high premia, and open interest of all the important contracts was up? Here it is:

      And what about May? When crypto had recovered some to $50k or so — again with high premia and OI — but then it dipped a bit? Right.

      The set-up is the same every time: – futures are at really high premia -> this suggests aggressive buying – OIs going up -> this suggests the buyers are opening positions – number go up -> this means there’s *net* buying
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      Ryan Selkis @twobitidiot
      1/ The SEC isn’t protecting investors, or promoting fair, efficient, & safe domestic crypto markets with their intimidation tactics. Their approach has been so poor it’s indistinguishable from an active effort to *hurt* American retail investors, which looks increasingly likely.

      2/ There is a reasonable political explanation for all this weird behavior. Gensler *actually* wants to be Treasury Secretary. Taking a hard line on crypto and coordinating a few headline-grabbing moves under the guise of “consumer protection” will earn political points.

      3/ My bet? Gensler himself or someone from his inner circle leaked the “SEC investigates Uniswap” story. An “investigation” is *not* an enforcement action. It’s not news. Unless it’s leaked by the right source. Then it’s a good political stunt that looks busy.

      4/ strong arm the big US crypto exchange = political points with Elizabeth Warren who can harp on the consumer protection issues = news coverage (do you see any other regulators making the NYT/WSJ so frequently?) = delay access to new crypto products that might be popular!

      5/ Crypto’s critics in DC *cannot* win their arguments on merit and it shows. + Fastest growing sector of US tech + Financial Internet that keeps the US dominant in finance and USD strong + User Owned Economy that promotes financial inclusion Why block it?!

      6/ It’s increasingly looking like a personal political power grab by SEC leadership. Not something done with the best interests of investors in mind. They hate that the returns have been phenomenal because it will make them look like taxi medallion operators for cracking down.

      7/ I’d like to assume positive intent, but I have not and will not. Brian’s thread is more evidence that supports my suspicions that this is a more sinister and increasingly thinly veiled attack on crypto by the American financial regulators.

      vitalik.eth@VitalikButerin
      We need to move NFTs onto the layer 2 ecosystem to cut fees. However, doing that *right* requires good cross-rollup portability standards, so the ecosystem can avoid getting locked into one particular L2. I make a cross-rollup portability proposal here:
      ethresear.ch/t/cross-rollup…
      Yassine Elmandjra@yassineARK
      The supply held by long-term BTC holders has officially hit an all-time high. Long-term holders are now in control of ~13 million BTC, up 20% since Bitcoin’s price topped in April.
      John Street Capital@JohnStCapital
      A lot of parallels drawn b/w $SOL today & $ETH when it crossed $100. ETH found PMF w/ ICOs & for those who “missed” $BTC. SOL is finding PMF w/ DeFi NFT’s & for those that missed ETH or remain ideologically flexible SOL much smaller % of BTC & total cap than ETH was w/ > utility

      Deribit Insights@DeribitInsights
      1) Large BTC Call sale blocks preceded the sell-off yesterday, but these & a slight Put Skew firming were only indicators of a local high, they did not signal the 20% crash that followed. IV spiked, but orderly mkt. Conspicuous extreme funding reset. Option flow since indecisive.

      2) Call sales in Sep10 expiry were consistent with unwinding longs in 52-54k strikes x1k. In fact, a purchase of 500 Sep17 54k Calls at almost the exact same premium of the Call sales perhaps suggests a premium roll. Reduced exposure, but consistent with local top reorganization.

      Image

      3) Implied Vol has been elevated relative to Realized vol, as noted in my last thread in BTC+ETH. But while sometimes this is an anticipatory signal to a large move, this disparity has been evident for some time and due to large ATM Call buying, and likely demand/supply related.
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      QCP Capital@QCPCapital
      1/ In our last update (02 Sep 21), we indicated potential downside risk from the negative risk reversals (puts more expensive than calls indicating downside nervousness). These levels worsened as we broke above the 52k level in BTC. This was strange behaviour for a bullish market

      2/ At the same time, ETH futures open interest was reaching all time high levels (levels we saw prior to the May-Jun 21 crash. Both the risk reversals and high OI proved to be accurate forward indicators for an overstretched market

      Image

      3/ And sure enough, after failing at the key 61.8% 52k resistance , BTC nosedived yesterday (-19.1% at the low of 42,831 low). The move has taken major Alts & ETHBTC back to the parabolic support level.
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      Dmitriy Berenzon@dberenzon
      1/ Fun fact: there are around 100 public blockchains and *over 40* bridge projects today (!) I’ve written a piece explaining why bridges are important, how they are designed, who is building them, and what the future landscape might look like.
      medium.com/1kxnetwork/blo…

      2/ Interoperability unlocks innovation. Bridges enable: – Greater productivity and utility for existing cryptoassets – Greater product capabilities for existing protocols – New features and use cases for users and developers
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      Wu Blockchain@WuBlockchain
      NFT popularity is decreasing. OpenSea shows that in the past 24h, Loot transaction volume -45.69%, CryptoPunks -90.81%, Bored Ape -14.58%. The floor price of CryptoPunks has fallen to 86.5 ETH, which was higher than 140 ETH before.

      OpenSea’s daily trading volume is showing a downward trend. The single-day trading volume on September 8 was below 100 million for the first time since August 21. Compared with the peak trading volume on August 29, it has dropped by about 3/4.

      nic carter@nic__carter
      Dispatch from bitmain mining conf in Miami:
      – mining CEOs expect US to wield 30-50% of HR by EOY 2022
      – energy majors + sovereigns joining the game
      – immersion mining getting a new look
      – Texas is world capital of mining
      – flared gas is real
      – mining as grid stabilizer is real
      – everyone going public. huge listing to watch out for: coresci/blockcap
      – low cost of capital via public markets driving boom in US mining
      – immersion cooling makes hotter/humid geos newly viable
      – mining council has critical mass and is gaining traction
      – virtually every miner procuring renewables, RECs, or offsets
      – miners aggressively pursuing sustainable energy
      – miners aware of regulatory issues and are investing in govt affairs
      – new HR ATH coming soon just based on declared mining purchases
      ecoinometrics@ecoinometrics
      1/ Here is a breakdown of who is hodling #Bitcoin:  
      ETF-like products hold 4.1% of the supply.  
      Private companies hold 1.6% of the supply.  
      Government entities hold 1.2% of the supply.  
      Public companies hold 0.9% of the supply. (h/t to @BTCtreasuries for the data)

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