Electric Capital appoints two new general partners

https://www.theblock.co/post/232909/electric-capital-appoints-two-new-general-partners?utm_source=rss&utm_medium=rss

Crypto venture investment firm Electric Capital appointed two new general partners.

The firm — which has backed a wide range of crypto projects and companies, including dYdX, Kraken, and Bitwise — announced the promotions of Ken Deeter and Maria Shen to the role of general partners on Thursday.

Engineers by background, Shen and Deeter join Avichal Garg, a former product management director at Facebook, and Curtis Spencer, previously an engineer at Facebook, to the upper echelon of the firm.

The changes come amid a slowdown in venture capital activity in the crypto market and a broader slump in token prices.

Still, Electric is long-term bullish on the space — specifically, the role of engineers building out new use cases. The promotion reflects Electric’s focus on hiring engineering talent to lead investments in web3.

“Engineering capability and technical contributions are essential to helping founders succeed on these new open platforms,” the firm said in a statement to The Block. “VCs will need expertise in areas such as liquidity provisioning, governance, code security, designing novel token mechanisms, and more.”

Deeter previously spent the last 20 years building teams at companies like VMare and Facebook. He currently leads the firm’s liquidity provisioning and governance initiatives, while Maria invests in companies in the non-fungible token space and is the brainchild behind the firm’s annual Developer report.

In March 2022, Electric Capital closed a billion raise for a fund to invest in tokens and back crypto startups. It joined a handful of other venture firms that raised billion-dollar-plus funds, including a16z and Paradigm.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Cumberland halts filecoin trading, citing ‘regulatory environment’

https://www.theblock.co/post/232746/cumberland-halts-filecoin-trading-citing-regulatory-environment

Crypto trading firm Cumberland will halt trading in the token used by the decentralized storage platform Filecoin with its over-the-counter counterparties, the firm said in an alert sent to clients on Tuesday that was reviewed by The Block.

The measure becomes effective on June 1 at 4 p.m. UTC, with the company saying that “all FIL trades entered into before that time will be settled in accordance with the usual procedures under the Master Purchase Agreement.”

The firm attributed the decision to halt OTC trading in the cryptocurrency to a precaution taken because of the “regulatory environment.” It didn’t immediately respond to a request for further comment.

Filecoin was trading down 2.7% at $4.68 with a market capitalization of just under $2 billion on Wednesday, according to CoinMarketCap.

Cumberland’s specific concerns around the trading of filecoin were not immediately made known, but the move comes at a time of increased regulatory scrutiny over crypto market participants in the U.S. and a pullback from a number of the firm’s competitors.

Earlier this month, Grayscale Investments said it received a letter from U.S. Securities and Exchange Commission asking it to withdraw the registration of a trust that would invest in filecoin because the regulator had determined the asset meets the definition of a security.

Crypto exchange volumes plummet to lowest monthly level since 2020

https://www.theblock.co/post/232689/crypto-exchange-volumes-plummet-to-lowest-monthly-level-since-2020

The crypto market doldrums have resulted in one of the most inactive months in digital asset trading in years.

Monthly cryptocurrency exchange volumes are on track to hit their lowest monthly level since October 2020, with spot volumes across major trading venues just under $424 billion in May. That’s a far cry from May 2022 and May 2021, which saw monthly volumes of $1.4 trillion and $4.25 trillion, respectively, according to The Block’s data dashboard.

The torpid trading activity in digital assets has been well-documented, with the trend underpinned by a retreat of large trading firms from the market as well as a shift to decentralized trading venues.

Volatility is another factor, institutional trading venue LMAX said in a newsletter on Wednesday, noting that its own volumes had “cooled off.”

“Volatility has been trending lower in correction mode after peaking out at a yearly high in March,” the exchange said. “We’re looking at average daily ranges in bitcoin and ether of $818 and $57 respectively.”

Cryptocurrencies dip as US debt ceiling worries grip global markets

https://www.theblock.co/post/231949/cryptocurrencies-dip-as-us-debt-ceiling-worries-grip-global-markets

Cryptocurrency prices were trading lower early Wednesday morning alongside global equities as debt ceiling negotiations in the U.S. continue to drag on and fears of a possible default grip markets.

The price of bitcoin was trading down 1.86% at $26,713 per coin, while ether was trading down 2.14%.

European stocks were also trading lower, with the Stoxx 600 Index trading down 1.66% at 7:13 am EDT. Meanwhile, China’s benchmark CSI 300 Index ended the day down 1.38%.

While House Speaker Kevin McCarthy reported a “productive” meeting with President Biden on negotiations to raise the debt ceiling and avoid default, it’s not clear to the market if any progress has been made that brings the two sides closer to finalizing a deal. The U.S. faces possible default in early June — a scenario that Treasury Secretary Janet Yellen described to lawmakers has “highly likely.”

As for crypto, bitcoin has held up better than most assets, as noted by trading firm QCP in a note released Wednesday.

QCP added that the debt ceiling is “front and centre of all narratives” currently shaping crypto markets.

“We believe that the disconnect between BTC holding up vs. other comparable markets, is due to investors having learnt from the recent banking crisis that BTC is the best high-beta hedge against a ‘no-deal’ scenario here,” the firm said.

“Although our medium-term bias is for higher BTC, on a deal scenario — we think BTC could quickly sync back with what other macro markets are implying.”

“On a ‘no-deal’ scenario however, we will easily take out the year’s highs,” it concluded.

USDT makes bear market comeback with total supply nearing all-time high

https://www.theblock.co/post/231873/usdt-makes-bear-market-comeback

It’s been a sleepy period for the crypto market, but one player is doing just about as well as it did during the go-go days of the most recent bull cycle.

Stablecoin issuer Tether saw supply of its flagship dollar-pegged coin reach $83.5 billion on Monday, according to data from The Block. That’s just below the record high of $84.1 billion reached on May 10, 2022.

Tether’s comeback has occurred against the back drop of a somnolent market that’s under pressure from macro headwinds and regulatory uncertainty in the U.S. Amid declining trading activity and lower crypto prices, the supply of rival USDC has declined from nearly $47 billion to $27.8 billion.

As for what’s behind USDT’s rise? According to data provider Kaiko, it doesn’t appear to be tied to an increase in trading volumes.

“The data doesn’t show any notable increase in USDT market share (as measured by trade volume) relative to other stablecoins over the past few months, in large part due to Binance’s promotion of TUSD as an alternative to BUSD,” the firm said.

The firm added that the increase in USDT supply could be tied to offshore trading among market making firms and whales.

Here’s Kaiko:

“Why are so many USDT issued on Tron when the network has minimal DeFi activity and several major exchanges such as Coinbase do not support it? Offshore exchanges like Binance and OKX possess the largest USDT balances on Tron, which suggests market makers and whales prefer this network for its low transaction fees.”

Crypto traders flock to DEXes amid memecoin mania

https://www.theblock.co/post/231675/crypto-traders-flock-to-dexes-amid-memecoin-mania

Crypto exchanges have been under pressure recently, with a broader liquidity slump and pull back from large trading firms pulling back from the market.

But the volume slump that’s plagued venues like Coinbase and Binance has not befallen their decentralized counterparts to the same extent. Indeed, whilst the seven day moving average for centralized crypto exchanges hit their lowest level of the year this week, decentralized exchange volumes are on track this month to come in at the same level as April.

Meanwhile, The Block’s DEX to CEX ratio — which tracks the volumes of decentralized exchanges relative to centralized venues — is at an all-time high, hitting over 20% for the first time.

Traders flocking to DEXes

One Crypto Twitter personality, @BasedKarbon, points to memecoin mania to explain the switch in preference toward DEXes.

“The limited number of market participants went back to DEX trading amid Memecoin mania,” he noted in a direct message to The Block.

Indeed, centralized exchanges were slow to list memecoins like Pepe. Coinbase, for instance, still does not support trading in the token, while Binance took several weeks to list the crypto after it became a market zeitgeist. But traders didn’t wait around for these listings, having already turned to DEXes — with Pepe volumes on Ethereum-based DEXes surging above $600 million on May 5.

Some centralized exchanges are, however, trying to get in on the memecoin action. Justin Sun, owner of Poloniex and and advisor to Huobi, told The Block that his teams are quickly listing as many memecoins as possible.

“The memecoin narrative has contributed a lot of the revenue on Huobi Exchange,” Sun said. “The top ten tokens, at least four of them are the most tradable assets on Huobi, like four of them are our memecoins.” Sun has also said he plans to start trading memecoins in his personal wallet — although it’s hard to see among all the random tokens being sent there by onlookers.

With reporting from David Quinton.

DCG misses $630 million payment due earlier this month, says Gemini

https://www.theblock.co/post/231656/dcg-misses-630-million-payment-due-earlier-this-month-says-gemini

Digital Currency Group missed a $630 million payment it was meant to shell out to its subsidiary Genesis Global Capital earlier this month, according to a May 19 update to clients shared by crypto exchange Gemini.

A creditor to Barry Silbert’s DCG, Gemini said that it is currently working with Genesis and other creditor groups to provide forbearance to DCG to avoid a default.

DCG — one of the several victims of the credit crisis that swept crypto in 2022 — has been in negotiations with creditors of Genesis Capital, which filed for bankruptcy protection in January. Gemini, which lent customer funds to Genesis as part of its retail high-yield Earn program, has threatened to file a lawsuit against Silbert and DCG.

In total, DCG’s Genesis owes Gemini $900 million. At the beginning of May, Gemini said that DCG was at risk of default if a $630 million debt payment was not made to Genesis’s bankruptcy estate

In Gemini’s latest update, the firm says that if a deal can’t be reached then it will work with Genesis to “to suggest terms for an amended plan of reorganization that could be advanced without DCG’s consensual participation.”

Gemini filed a motion with the bankruptcy court to propose a new reorganization plan which would not require the approval of DCG.

As per DCG’s last update, the firm is currently in discussions with “capital providers for growth capital and to refinance its outstanding inter company obligations with Genesis.”

The US government is one of the largest bitcoin whales. What does that mean for the crypto market?

https://www.theblock.co/post/231563/the-us-government-is-one-of-the-largest-bitcoin-whales-what-does-that-mean-for-the-crypto-market?utm_source=rss&utm_medium=rss

These days, the ranks of so-called bitcoin whales — major holders like Michael Saylor’s MicroStrategy and Binance boss Changpeng Zhao — include the U.S. government.

The government presently possesses over 50,000 BTC, which it seized during an investigation into a years-old theft from the now-defunct dark market Silk Road. These holdings have since become the subject of intense scrutiny and chain-watching for any signs of life or movement.

Still, while it’s clear that MicroStrategy and other whales are by all appearances keen to “hodl” their bitcoins, the market intentions of the U.S. government — and the overall impact their position has on the market — is less clear.

That level of uncertainty has been cause for concern before. Last month, a data labeling issue on a chain-sleuthing platform mistakenly signaled that funds held by the U.S. government were on the move. Those revelations turned out to be untrue, but for a time, the market treated them as gospel.

These days, such matters — and the potential for legitimate movements — are the subject of chatter among trading desks.

“Players have begun to monitor for the appearance of various statistically robust indicators of ‘authentic’ selling, and they have likewise started to observe and estimate the timing and nature of the execution, and how to respond to it in kind,” noted Gordan Grant, co-head of trading at Genesis Trading.

Indeed, relative to market participants across the space, the U.S. government is perhaps viewed as the most important.

“Owing to the degree of transparency on-chain, there is a far greater ability to monitor the movements of these concentrated holdings than there would be for other state actors who, even if at all comparable in size, are not nearly as observable,” Grant added. “Hence, in terms of magnitude, psychological import, and quantitative precision, the US government’s actions with bitcoin will remain extremely closely watched.”

The sheer size of the U.S. government’s holdings makes it an anxiety-inducing “bogeyman” given the prospect that — in the interest of the U.S. dollar dominance — federal officials could sell off its holdings en mass to tank the market. But in Gordan’s view, the government has been more tactical.

“The timing and tempo of futures sales may help determine if this is more than a ghoulish fascination of the broader market – such as one with a specific intent to create price effects or provide liquidity into an unbalanced market, as some EM central banks do,” he explained.

Such prospective sales may also offer a new business opportunity for startups keen to get a piece of the action.

Two people familiar with the situation have told The Block that the U.S. government uses Coinbase to sell its bitcoin, and other industry firms are interested in drawing away some of that business. Coinbase declined to comment when reached.

Crypto exchange volumes sink after Jump, Jane Street pull back

https://www.theblock.co/post/231284/crypto-exchange-volumes-sink?utm_source=rss&utm_medium=rss

Not even pepe mania can provide relief for beleaguered crypto exchange volumes.

Daily trading volumes are lower across the board as crypto finds itself stuck in a relatively sleepy market. The Block’s data dashboard indicates that the 7-day-moving average for crypto exchange volumes has hit its lowest level since the beginning of the year, clocking in at $12.84 billion on May 17 — down steeply from March’s peak of over $46 billion.

The decline in trading volumes has been underpinned by a surge in bitcoin’s dominance in the market, which currently stands at about 45%. That’s an increase from a low of 37.5% at the beginning of the year.

Volatility has also compressed, with the Bitcoin Volatility Index (BVIN) declining from 96 on April 14 to 58.5 on May 17.

Jump and Jane Street get the jitters

The decline in volumes follows news that major trading firms are scaling back their activity in the market. On May 9, Bloomberg reported that Jump and Jane Street have pulled back from crypto trading because of regulatory uncertainty in the U.S. Jane Street, for its part, is scaling back globally, according to the report.

“Options implied volatility is extremely compressed, falling to around 40% for both BTC and ETH, which is the lowest we have seen in many years,” said Jason Atkins, head of business development and partnerships at Auros.

“Far from being a reflection of maturation and stability, this fall in implied volatility is largely the combined result of the abrupt reduction in the number of large, sophisticated market participants and the increased hurdles to fiat on/off-ramps, leading to significantly lower volumes and higher volatility across all major coins.”

Still, the decline in the number of market participants presents an opportunity for players sticking around.

“For participants that remain, the inefficiencies created by the retreat of some of the larger players might offer more opportunities to fill the vacuum, which is a small silver lining amidst the drastic reduction in volumes and heightened volatility,” Atkins added.

‘Happy days’: Crypto Twitter hopes UK’s gambling designation means no capital gains tax

https://www.theblock.co/post/231169/crypto-gambling-capital-gains-tax?utm_source=rss&utm_medium=rss

There are few phrases that strike fear into the heart of a crypto punter as much as “capital gains tax.”

So when the UK House of Commons Treasury Committee released a report today arguing that trading in assets like bitcoin and ether should be regulated like gambling, traders in the space were quick to point out, gleefully, that such a designation would see them protected from capital gains levies.

“So zero taxes on gains? Yasss,” responded one Crypto Twitter lurker to the news.

“Good thing gambling winnings not taxed in the UK,” commented another named Mellow Yellow.

Those were just two of dozens of responses to the report, and they’re not wrong. In the UK, gambling income is not taxed, according to tax expert Nimesh Shah, chief executive of tax and accounting advisory Blick Rothenberg. “From a tax perspective: happy days for anyone invested in crypto because it is completely exempt from a tax perspective,” he said.

The regulation of cryptocurrencies as gambling instruments, in the committee’s view, would protect retail investors from its volatility and the risks associated with scams and illegal activity. The report echoes the view of financial services lobbying groups in the country that have come out against a potential plan by the UK government that would bring crypto-assets within the regulatory framework of traditional finance.

Unwanted tax bills

But such a move could also protect crypto fans from unwanted tax bills — at least on paper. To be clear, the committee doesn’t make policy — it simply scrutinizes legislation and makes suggestions.

“Profits are not taxed and losses are not deductible,” Shah said. “If the Select Committee pushes this as gambling then the Treasury should kiss goodbye any tax benefits from people investing in cryptocurrency.”

Industry lobby group CryptoUK raised a similar point in a statement following the release of the committee report, asking “Does the Government really wish to exclude tens of millions of pounds in tax income from gains made by the buying and selling of unbacked crypto assets?”

CryptoUK stands with a long list of crypto market participants that have spoken out against the select committee’s recommendation. While the potential tax benefits appeal to mom-and-pop traders, the impact on the industry’s reputation could set it back years.

“We fundamentally disagree with the Treasury Select Committee’s conclusion that crypto-assets have no intrinsic value,” commented Blair Halliday, Kraken’s UK managing director. “It’s regrettable the committee does not support the opportunity the UK has to be a true global leader in our rapidly developing industry.”

Gambling designation could hurt the UK

Daniel Howitt, CEO of crypto tax calculation service, Recap, noted in an email to The Block that regulated retail crypto trading as gambling could set back the UK as a digital asset and blockchain epicenter.

Whilst serving as finance minister, current prime minister Rishi Sunak proposed a number of measures to turn the UK in a hub for crypto, earning him a spot on CoinDesk’s most influential list for 2022.

“This is not a signal to the world that we understand the potential of the asset class,” Howitt said. “We now look disjointed with the potential for divergent regulatory approaches between government departments, including a crypto-advocating Prime Minister — it could derail these ambitions.”

UK Treasury Committee says retail crypto trading should be regulated as gambling in new report

https://www.theblock.co/post/231063/uk-treasury-committee-retail-crypto-trading-regulated-gambling?utm_source=rss&utm_medium=rss

Retail crypto trading is more akin to betting on sport than investing and should be regulated as such, according to a new report released by the UK House of Common’s Treasury Committee.

The report, put together by a group of bipartisan parliamentarians, argues that even bluechip crypto-assets like bitcoin and ether “have no intrinsic value and serve no useful social purpose” and therefore should be regulated by the government as gambling instruments.

The release of the report Wednesday follows a February update from His Majesty’s Treasury in which the government outlined its plans to “robustly regulate cryptoasset activities.” More recently, lobbyists representing traditional finance firms warned that the UK’s plans to regulate cryptocurrencies would legitimize a market fraught with risks.

The Treasury Committee shares the same concern, noting in the report that the volatility of cryptocurrencies poses serious risk to retail punters.

“The Committee is also concerned that regulating consumer crypto trading as a financial service – as proposed by the Government – will create a ‘halo’ effect, leading consumers to believe this activity is safe and protected, when it is not,” according to a summary of the findings.

Trade association CryptoUK disagrees

CryptoUK, a trade association that represents the crypto industry, strongly disagreed with the report’s gambling characterization.

“We are both concerned and disappointed by these claims which are unhelpful, false, fundamentally flawed and unsubstantiated,” said Ian Taylor, Board Advisor at CryptoUK. “The statement fails to reflect the true nature, purpose and potential of the crypto industry.”

The House of Commons Committee group concedes that the underlying blockchain technology — not crypto itself — may bring some benefits to the financial-services sector.

“With no intrinsic value, huge price volatility and no discernible social good, consumer trading of cryptocurrencies like Bitcoin more closely resembles gambling than a financial service, and should be regulated as such,” commented Harriet Baldwin, the chair of the Treasury Committee.

Coinbase is a ‘hold’ amid ‘too much regulatory risk,’ says Berenberg

https://www.theblock.co/post/231101/coinbase-is-a-hold-amid-too-much-regulatory-risk-says-berenberg?utm_source=rss&utm_medium=rss

Coinbase’s recent regulatory woes make its stock a ‘hold,’ according to analysts at Berenberg Capital Markets.

The firm, which initiated coverage in the crypto-linked equity, kicked off its coverage of the stock with a price target of $55 per share. Coinbase closed at around $57.90 a share. Shares are up about 70% year-to-date.

Berenberg’s neutral view on the stock stems from the regulatory environment for crypto in recent months and, specifically, rising tensions between Coinbase and the SEC which present “too much regulatory risk.”

For its part, Coinbase sued the SEC less than a year after it requested the agency for regulatory clarity. The SEC, in turn, argued that the commission is under no obligation to issue new regulations and Coinbase has no standing to sue the agency.

The battle—and Chairman Gary Gensler’s view that most cryptocurrencies are securities—could spell trouble for COIN bulls.

“Investors should believe the SEC when it says it views all crypto tokens other than bitcoin as unregistered securities,” Berenburg’s Mark Palmer noted. “As such, all platforms that facilitate trading of those tokens in the U.S. are vulnerable to being hit with enforcement actions that would potentially impact large swaths of their business activities.”

Revenue risk

The firm estimates that about 37% of Coinbase trading fee revenue comes from non bitcoin assets, which could have exposure to regulatory risk.

Palmer, an equity analyst veteran, joined Berenberg recently from BTIG, where he covered fintech and crypto.

The analyst noted that Coinbase is positioned to “outlast the ‘crypto winter,'” pointing to “better-than-expected Q123 print that it posted on May 4 and its $5.3bn of available cash resources as of March 31.”

“However, we also believe investors should be focusing on whether the company would have the ability to successfully pivot its business model and geographic focus if it were forced to curtail or cease a large portion of its activities in the U.S. as a result of an SEC enforcement action that appears likely to occur soon.”

FTX didn’t have to fail, says Sam Bankman-Fried book author

https://www.theblock.co/post/229918/sam-bankman-fried-book-author

Episode 45 of Season 5 of The Scoop was recorded with The Block’s Frank Chaparro and Nathan Crooks, and Axios reporter Brady Dale.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Please send feedback and revision requests to podcast@theblock.co.

In this episode, veteran crypto journalist Brady Dale unpacks his new book, SBF: How The FTX Bankruptcy Unwound Crypto’s Very Bad Good Guy.

The book explores Bankman-Fried’s worldview and his quest to make FTX the number one crypto exchange in the world, no matter the cost.

Despite FTX’s bankruptcy last year, Dale believes the exchange was not necessarily doomed to fail and that Bankman-Fried’s need for absolute control was a critical factor.

This episode is brought to you by our sponsor CleanSpark.

About CleanSpark

CleanSpark (NASDAQ: CLSK) is America’s Bitcoin Miner™. Visit cleanspark.com/theblock to learn more about the CleanSpark way.

No more spreadsheets: Crypto startup says it has a solution for the global supply chain

https://www.theblock.co/post/229506/no-more-spreadsheets-crypto-startup-says-it-has-a-solution-for-the-global-supply-chain

Throw out your spreadsheets and PDFs. A new startup in the crypto space is looking to reshape the financial underpinning of the global supply chain with stablecoin USDC.

OpenTrade, which announced a $1.5 million fundraise on Thursday, provides stablecoin rails it says will help companies move money faster and more affordably. Investors include Sino Global Capital along with Circle Ventures, Kronos Research and others.

Today, large manufacturers like automakers rely on a network of banks and non-bank entities to pay suppliers, make payroll and move funds around. Much of that activity can move to stablecoin rails, the firm said.

“When you combine composable DeFi infrastructure with payment stablecoin, the results can truly be game changing,” the firm said in a blog. “For one, we can begin to move trillions of dollars of trade and supply chain finance off of spread sheets and PDFs and into programmable internet native formers. In doing so, we can make them transferable, peer-to-peer, in real time.”

The fundraise comes after the lowest quarter for blockchain funding in two years, from a high of more than $12 billion in the first quarter of 2022 to $2.7 billion last quarter, according to The Block Research.

Five Sigma

OpenTrade was founded in February by Dave Sutter and Jeff Handler, former employees of Centre, the consortium that manages USDC. Prior to Centre, the duo operated in the sleepy trade finance space, which is responsible for the financial pipes and plumbing that makes commerce and trade function.

The firm has already clinched one major client, a supplier in the port services industry, which it claims could move $750 million in the next year. The firm, which historically has required its own clients to pay out a full invoice upfront, will now borrow from OpenTrade’s sister company, Five Sigma, the full amount of its client invoice to allow them to pay as they go.

“It leverages Circle accounts so if they don’t want to be stuck with USDC it instantly coverts to dollars in your account,” he said.

Five Sigma was spun out of AGFE, a London-based firm with more than $3 billion in assets under management, and manages $700 million in assets and is run by Michele Bisceglia, who previously was a partner at AGFE. Steve White, another former AGFE partner is an advisor.

Coinbase launches international perps exchange — starting with 5x leverage

https://www.theblock.co/post/229021/coinbase-launches-perps-exchange?utm_source=rss&utm_medium=rss

Crypto exchange Coinbase is officially entering the crypto perps market.

The firm, which has made headlines in recent weeks for its brouhahas with U.S. regulators and its plans to set up shop overseas, said Tuesday that it would enable international users to trade so-called perpetual futures out of Bermuda through a new platform.

Dubbed Coinbase International Exchange, the platform touts a robust trading experience delivered in partnership with a number of external market makers ready to provide liquidity, as well as a liquidation framework that “meets rigorous compliance standards,” according to marketing materials shared with The Block.

“Coinbase International Exchange will enable institutional users based in eligible jurisdictions outside of the U.S., to trade perpetual futures,” the firm said. “Perpetual futures accounted for nearly 75% of global crypto trading volume in 2022, creating highly-liquid markets and offering traders additional versatility in their trading strategies.”

Coinbase plans to start business with bitcoin and ether derivatives “with additional listings to come in the future,” a spokeswoman said. Initially, it will offer traders 5x leverage.

Shaky stateside regulatory environment

As The Block previously reported, the firm has long been eyeing the build out of an offshore derivatives business to compete with behemoths like OKX and Binance. It was a business in which now defunct crypto exchange FTX had secured a large market share.

Coinbase isn’t alone. Rival Gemini recently announced that it would offer derivatives trading to customers across 30 jurisdictions.

The push by Coinbase and Gemini reflect the opportunity for firms to capitalize on the gap left by their fallen rival FTX, while also illustrating the uncertain regulatory environment stateside.

Coinbase recently escalated its own tussle with the Securities and Exchange Commission through the threat of a lawsuit following the agency’s issuance of a Wells Notice against the firm in March.

The firm announced last month that it would operate its new international exchange under Bermuda’s regulatory framework.

OPNX hit with reprimand from Dubai regulator

https://www.theblock.co/post/229047/opnx-dubai-regulator-reprimand?utm_source=rss&utm_medium=rss

Dubai’s digital assets regulator issued a formal reprimand to the co-founders of bankrupt crypto investment firm Three Arrows Capital, according to a statement.

The Middle Eastern country’s so-called Virtual Assets Regulatory Authority said Kyle Davies and Su Zhu’s latest venture, OPNX, is operating without the requisite licenses, adding that it is investigating the firm “to access further corrective measures that may be required.”

“VARA became aware of OPNX soliciting, and collecting personal data from the public to participate in its new (to be launched) exchange,” the agency added. “Through social media platforms, OPNX had been engaged in marketing the exchange without establishing warranted restrictions for residents of Dubai/UAE.”

Bloomberg earlier reported the news.

OPNX’s claims platform

Davies and Zhu — former classmates — launched OPNX last month out of crypto trading platform Coinflex, which was founded by Mark Lamb. The firm, which offers traders a platform to trade bankruptcy claims, is led by Lamb’s wife Leslie Lamb, who told Bloomberg that the firm is operating above board.

“At no point in time have UAE customers been able to open an account on OPNX,” Leslie Lamb said in a WhatsApp message to Bloomberg.

Zhu told Bloomberg that he and Davies are not involved in day-to-day operations.

Inside a16z’s evolving strategy to win crypto deals with code instead of cash

https://www.theblock.co/post/227476/a16zs-strategy-crypto?utm_source=rss&utm_medium=rss

A16z doesn’t want to just dole out money anymore.

The venture capital firm is one of the most well-pocketed and deeply-connect venture firms on Market Street, but its crypto division now wants potential portfolio companies to focus on its ability to ship open-source code.

The firm — which has raised billions to deploy into the spine-tinglingly volatile market for protocols and cryptocurrencies — on Wednesday revealed its latest open-source project, Magi, a new rollup client for Optimism (OP). Optimism is a Layer 2 blockchain that aims to make Ethereum faster and more scalable.

It follows other recent software initiatives released by a16z crypto’s team of engineers, which has also shipped tooling to improve security in Ethereum smart contracts and functionality in auctions.

“Our team’s goal is genuinely to see [crypto] develop faster, more safely, and more decentralized,” the firm’s Chief Technology Officer Eddie Lazzarin said in a phone interview with The Block. “If that doesn’t happen then we don’t succeed.”

A16z — a firm that has also raked in on the success of centralized companies like Facebook that crypto is attempting to disrupt — is of course also in the business of making money. In Lazzarin’s view, contributing to software tooling that can be utilized by builders in crypto translates into new investment opportunities that would not otherwise be possible.

“If we are really technically capable and we can demonstrate to the space that, then projects will want to work with us,” Lazzarin said.

The roll-out of Magi, which effectively improves upon the existing infrastructure of an Optimism node, has already opened the doors to more deal-flow, according to Lazzarin.

“Magi is written in Rust,” he said, referring to the popular coding language. Working with an Optimism node that is written in Rust makes it more flexible for developers to work with and run deeper analytics on Ethereum.

A16z is not alone

Venture firms are uniquely positioned to contribute to these kind of software developments because it’s a difficult endeavor from which to profit, and they’re already rolling in it. Rivals VCs like Paradigm and Jump make similar types of software contributions that are billed as public good initiatives.

Some of the firm’s existing portfolio companies are already set to use Magi. Coinbase, according to Lazzarin, which will leverage Magi-powered nodes for its layer-two network, base.

“The feedback we’re getting is blowing up; they want to contribute to Magi and use it for MEV research because of the performance characteristics,” he said.

“Generally, we get entrepreneurs pitching us because they see these tools and they can materialize stuff with us. We just hired someone two days ago because he was using our tools in creative ways.”

Crypto transparency: Fractal raises $6 million to reshape market structure after FTX, 3AC

https://www.theblock.co/post/226652/crypto-transparency-fractal-raises-6-million-to-reshape-market-structure-after-ftx-3ac

“They sent us the term sheet a week after FTX blew up.”

Aya Kantorovich — a crypto markets wonk — is talking about her new startup Fractal, which in her opinion could have prevented many of the capital market blunders that plagued the scabrous industry in 2022.

Hack VC said it sent the term sheet to Fractal on November 18, seven days after FTX filed for bankruptcy, and amid increasing institutional investor interest in on-chain finance.

The new company, which announced a $6 million fundraise on Monday, is building out a platform that facilitates more transparent clearing and settlement in digital assets, stripping out the opaqueness that led to the levered deal-making that precipitated the collapse of firms like Three Arrows Capital and FTX.

“Fractal was incubated out of LedgerPrime while Alex was still there and I was a client of FalconX,” she said, referring to Alex Elkrief, a former LedgerPrime engineer and co-CEO of Fractal alongside Kantorovich.

LedgerPrime, a hedge fund, was acquired by FTX in 2021 and turned into a family office before the bankruptcy. Kantorovich and Elkrief married in July and Kantorovich joined the Fractal team on April 1.

Limited collateral

With Fractal, clients will be able to monitor their positions in real time with counter-parties to reduce counterparty risk. In theory, that means that a counter-party can’t trade using the same collateral with multiple counter-parties.

Collateral for borrowing will be limited to crypto blue-chip coins to avoid the wrong-sided liquidity issues that counter-parties face with Alameda, which borrowed against their holdings in their native token FTT.

“A trade with counterparty A and counterparty B doesn’t necessarily affect the rest of their counterparties because they all have segregated accounts and you have to post collateral with each account,” Kantorovich said. “If someone deposits $10 million with a counter-party and that shows up in a dashboard, you can see it is not being rehypothecated.”

Transparency

Fractal’s not alone in its mission. Longtime crypto markets executive Michael Moro joined an upstart derivatives exchange called Ankex as CEO after stepping down from beleaguered lending and trading firm Genesis Global Capital.

“Having come from Genesis and seen the events of 2022 unfold, I’m acutely aware of the importance of empowering traders to operate on trustless platforms while retaining full control of their assets at all times,” Moro said at the time.

To be sure, institutional traders also crave under-collateralized loans because they are more capital efficient.

“It is challenging to cross collateralize on-chain yield bearing assets, OTC bilateral agreements in a cost efficient way. Fractal solves this by putting it on-chain, which is transparent, and efficient for both sides of the transaction. QCP Capital is pleased to support such a solution that improves capital efficiency and catalyzes the progression of DeFi,” said Stan Low, head of investments, QCP Capital.

QCP invested alongside 6th Man Ventures, Archetype. Blizzard and CMT Digital. Other investors include Golden Tree Asset Management, CoinShares and Spartan Group.

Bitcoin’s Lightning Network is hard to use. PayPal’s ex-president has a solution, and a replacement for SEN & Signet

https://www.theblock.co/post/225538/bitcoins-lightning-network-paypal?utm_source=rss&utm_medium=rss

If you can’t beat ’em, join ’em.

That’s the underpinning philosophy of former PayPal President David Marcus’s approach to the cryptocurrency market, and his new startup Lightspark, after a tumultuous career in the space that included an attempt by Facebook to launch its own digital coin.

“We’re very focused on rails and not assets,” Marcus, who most recently led Facebook’s payments division, Novi, said in an interview with The Block. “We learned this through all of our last adventures,” the Paris-born entrepreneur said with a mischievous grin, alluding to his much-publicized attempt to launch Meta’s Libra (later called Diem) before it was squashed by stateside regulators.

His new startup — which revealed its product suite on Tuesday — is building on top of the Bitcoin network, specifically a Layer-2 protocol known as the Lightning Network. In Marcus’s view, building out the requisite tools to make the Lightning network easier to use is a better path than relying on alternative blockchains because of Bitcoin’s relative size and more secure regulatory footing.

Lightspark raised about $173 million last year at a valuation of almost $1 billion at the time, according to a person familiar with the matter who declined to be named.

Lightspark’s platform overhauls the process by which market participants connect to Lightning, which requires users to establish peer-to-peer payment channels off-chain. The firm emerged from stealth in May when it announced a fundraise with backing from a16z Crypto, Paradigm, Coatue and Matrix Partners.

Lightning Woes

Despite being heralded by proponents as a way to scale Bitcoin and support cheaper and faster payments through the cryptocurrency network, Lightning has failed to gain much traction relative to the broader market.

The network’s capacity currently sits at $158 million, which – when compared to DeFi protocols — would rank 53rd in terms total value locked. Much of Lightning’s potential is being held back by the clunky and time-consuming process of node management and engaging with the Lightning Network, Marcus said.

“It was a lot like the early days of the internet,” said co-founder James Everingham, who most recently worked as vice president of engineering for Novi. “I wanted to run a web server I had to go find code, download it, build it, tweak it to get it to work with my specific server.”

“This seemed to be very similar. I finally was able to download the code: it took me a week to tweak it to get it to work on my system.”

Lighspark’s products allow users to integrate their platform to support instant bitcoin transactions on the Lightning network. Specifically, it removes the need for Lightning node operators to manually find equilibrium, or balance, between inbound transactions and outbound transactions.

“I have to do all this manual stuff which is pretty far beyond what a small business or someone that wants to connect to Lightning would do,” Everingham said.

Lightspark leverages artificial intelligence to predict where liquidity is concentrated on Lightning to automated the channel balancing process.

Muneeb Ali, CEO of Trust Machines, which enables Bitcoin applications, said this will help smaller companies who want to support Lightning payments do so without building out large technical teams.

“Effectively with a solution like this many independent players (imagine 100s of retail stores) can start giving more reliable payments to their end customers without hiring their own teams to manage ‘enterprise grade lightning’ like Strike or Cash App had to,” he said.

Capital Markets

While it might be some time before most people will be able to buy coffee from their local barista through the Lightning Network, Lightspark’s platform could provide a solution for crypto’s hobbled capital markets. In the wake of the blow-up of Signature Bank and Silvergate, high-speed traders lost a hub by which instant 24/7 transactions could be executed through a trusted party. Those players could theoretically move their activity to the Lightning, with the help of Lightspark.

“This is real time net settlement, right, and it is definitely 24/7,” Marcus said. “Plus it is this thing that no one entity or person controls.”

“This is solving a lot of problems for a lot of players,” he said. “The current climate of crypto being very difficult right now makes us feel quite good that we built on bitcoin and not on anything else frankly.”

a16z unveils new crypto index that shows adoption outpacing price performance

https://www.theblock.co/post/225539/a16z-state-of-crypto-index?utm_source=rss&utm_medium=rss

a16z Crypto, the web3 investment arm of Andreessen Horowitz, unveiled its new “State of Crypto” index, which paints a rosier picture of the nascent market than most price charts offer.

The venture investor, which has backed companies and projects such as dYdX, LazerZero and Dapper Labs, released the new index alongside its similarly named State of Crypto report.

The index factors in several so-called adoption and innovation parameters, including the number of active developers, mentions of crypto in academic research, and volumes across decentralized exchange venues. It doesn’t include more unsavory data points like bankruptcies, blockchain hacks, or regulatory enforcement actions.

While the price of bitcoin is down some 55% off its highs clocked in during 2021, a16z’s index declined by 25%. Looking at specific parameters, the number of active developers has declined by 25% from all-time highs, while the number of transactions across blockchains declined from 1.3 billion to around 1.17 billion—a decline of just 10%.

Source: a16z crypto

To be clear, not all parameters hold steady, with the number of wallet users and volumes across decentralized exchanges down sharply from last year.

Still, a16z — which has a vested interest in making the crypto market appear robust — is attempting to illustrate the dichotomy between market cycles and product cycles, according to the firm’s chief technology officer Eddy Lazzarin.

“Speculative cycles work differently than product cycles,” Lazzarin said in an interview.”If there is a product cycle and compounding tech progress then you should be able to see data that underpins that reality.”

Lazzarin pointed to the “radical acceleration” of Ethereum scaling solutions and zero-knowledge systems, the cryptographic tools that verify information without revealing the information’s exact nature.

“We’re seeing decades-in-the-making work on ‘zero knowledge’ systems advance at a staggering pace, unlocking blockchain scalability and a new category of privacy-protecting applications,” a16z noted in press materials.

Source: a16z crypto

Bitcoin flirts with $30,000, ether nears $2,000 as crypto beats lagging equities

https://www.theblock.co/post/225607/bitcoin-flirts-with-30000-ether-nears-2000-as-crypto-beats-lagging-equities?utm_source=rss&utm_medium=rss

Crypto markets trekked higher late Monday with bitcoin trading up more than 4.6% over the last 24 hours to near $30,000, according to data from CoinGecko.

Bitcoin approached the psychologically important $30,000 level while ether pushed above $1,900 for the first time since August. Monday’s gains add to a broader rally in cryptocurrencies that began at the beginning of the year, underpinned by a wide-range of bank runs that called into question the resiliency of centralized banking options. Since the beginning of the year, bitcoin has gained 79%, while ether has picked up 59%.

On Wall Street, Monday’s trading session was a mixed bag with U.S. stock indexes paring losses as investors digested a new employment report. Traders are also expecting a week of new data on the earnings and banking earnings front. The S&P 500 and Nasdaq Composite were little changed on the day.

As for crypto markets, investors have focused in on Ethereum’s so-called Shanghai upgrade, which is slated to go into effect April 12. It has been viewed as a relatively bearish event as it would allow users to unlock staked ether and finally be able to sell into the open market.

Framework’s Vance Spencer — a large holder of ether — noted that crypto might finally be de-coupling from broader macro.

“We are going up because everyone larped as a macro economist for a full year while simultaneously forgetting to allocate to the asset class they spend 12 hours a day commenting on via crypto Twitter, and now they are panicking,” he said.

Rich Rosenblum, co-founder and president of GSR, the crypto market maker, attributed bitcoin’s rise to interest rate hikes that “are no longer as viable as an option now that we are seeing the unexpected consequences of them, i.e. the bank runs.”

“If forced to keep rates low, it could cause inflation to become unhinged, the ultimate bitcoin bull case,” he added. Rosenblum also pointed to a desire for “de-dollarization” — suggesting that countries are buying gold and bitcoin as a means to gain independence from the U.S.

“On the world stage of sovereigns, a few billion dollars is small, but it can have a large impact on crypto, especially during a time of crimped liquidity,” he said.

3AC founders open crypto exchange OPNX after bankrupting their first effort

https://www.theblock.co/post/224781/su-zhu-opnx-launches-token-giveaway?utm_source=rss&utm_medium=rss

Su Zhu and Kyle Davies’ crypto exchange OPNX is open for business.

The firm announced to its community members Tuesday the venue’s launch as well as a giveaway of its native token FLEX as a "token of our appreciation."

"Many of you may know that FLEX will power OPNX as the native ecosystem token. As a token of our appreciation, we have included eligible waitlisted users in our FLEX coin giveaway (i.e no action is needed from your side)," the note reads.

FLEX appears to have a market capitalization of $256 million, but is thinly traded with just $796,000 in volumes changing hands over the last 24-hours, according to CoinMarketCap.

OPNX is the brainchild of the sullied hedge fund investors behind now bankrupt Three Arrows Capital, which was among the most notable victims of crypto’s 2022 credit crisis. The former classmates teamed up with Coinflex CEO Mark Lamb to launch the venture via a rebranding of the erstwhile derivatives venue. The exchange intends to support trading in bankruptcy claims tied to failed exchanges, like Sam Bankman-Fried’s now bankrupt FTX. Lambs’ wife, Leslie Lamb, is the firm’s chief executive officer.

Courts in Seychelles approved the firm’s restructuring plans on in March, after which Coinflex rebranded to OPNX. Coinflex’s original restructuring proposal included no mention of OPNX or plans to rebrand.

According to the memo sent out Tuesday, OPNX is not available in a number of regions, including the U.S., Canada, and several African countries.

Zhu told the Wall Street Journal in February that the Dubai-based venture raised about $25 million in funding for the new venture.

Former Genesis CEO Moro joins upstart cryptocurrency derivatives exchange

https://www.theblock.co/post/224765/former-genesis-ceo-cryptocurency-derivatives-exchange?utm_source=rss&utm_medium=rss

Longtime crypto markets executive Michael Moro joined an upstart derivatives exchange as chief executive more than eight months after stepping down from his post at beleaguered lending and trading firm Genesis Global Capital.

Moro—who joined Genesis in 2015 following a career on Wall Street that included SecondMarket and Citigroup—will begin building out a team for the new firm, called Ankex.

Billed as a so-called hybrid crypto exchange, the platform will offer the trappings of both a centralized derivatives exchange as well as that of a decentralized exchange. It was incubated by crypto trading infrastructure company Qredo.

The non-custodial exchange will allow users to self-custody their funds while supporting the same level of low latency, deep liquidity trading, Qredo’s Josh Goodbody said in a statement.

"Having come from Genesis and seen the events of 2022 unfold, I’m acutely aware of the importance of empowering traders to operate on trustless platforms while retaining full control of their assets at all times," Moro said in a press release. Moro stepped down from his role as CEO of Genesis in August.

Genesis Global Capital filed for bankruptcy in January after the firm failed in a bid to raise cash for its troubled lending unit.

"By leveraging our combined strengths and driving a culture of excellence, we can ensure that traders are able to operate without the risk of losing access to their assets to circumstances beyond their control," Moro said.

The crypto derivatives market is shaping up to become more competitive in the wake of FTX’s meltdown, with Coinbase and Gemini both eyeing their own offshore options. Elsewhere, former hedge fund duo (and former Genesis counter-party) Kyle Davies and Su Zhu have teamed up with former CoinFlex founder Mark Lamb to launch a venue that supports trading in bankruptcy claims of defunct crypto firms.

Since the start of the year, crypto derivatives markets have seen a surge in activity with bitcoin futures volumes topping $1.3 trillion last month. Binance commands the majority of those volumes, as per The Block’s data dashboard.

In an interview with The Block, Moro said that the company would soon seek funding via a seed raise as it expands out its team.

Binance denies Changpeng Zhao ‘CZ’ faces Interpol Red Notice: Spokesperson

https://www.theblock.co/post/224683/binance-denies-changpeng-zhao-cz-faces-interpol-red-notice-spokesperson?utm_source=rss&utm_medium=rss

Binance denied rumors that its chief executive officer Changpeng “CZ” Zhao faces a Red Notice request issued by The International Criminal Police Organization to locate and arrest the crypto founder.

“This rumor is not true,” the spokesperson said in an emailed statement to The Block.

The rumor, which was magnified by crypto Twitter personality ‘Cobie,’ triggered a drop in the price of Binance’s BNB token as well as the broader market. In a tweet, Cobie shared a sequence of numbers and letters encrypted using the SHA-256 hash function, as reported by CoinDesk.

Binance has found itself in the crosshairs of U.S. regulators, with the Commodities Futures Trading Commission announcing last month its own civil enforcement action against the exchange. The complaint charges CZ and Binance with violating the Commodity Exchange Act and other CFTC regulations.

A Red Notice is a request to law enforcement worldwide to locate and arrest a person pending extradition, surrender or similar legal action.

Binance would never ‘trade against users to their detriment,’ top exec says

https://www.theblock.co/post/223217/binance-trade-against-users-patrick-hillmann?utm_source=rss&utm_medium=rss

Binance said it’s not trading aggressively against its clients after a complaint by the U.S. Commodities Futures Trading Commission alleged the exchange violated compliance rules.

A Monday complaint against the largest crypto exchange and its CEO, Changpeng Zhao, sent ripples through the crypto market — with the CFTC accusing Binance of violating laws "designed to prevent and detect money laundering and terrorism financing."

“For years, Binance knew they were violating CFTC rules, working actively to both keep the money flowing and avoid compliance," commented CFTC Chairman Rostin Behnam.

The exchange — known for its itinerant nature, historically jumping from jurisdiction to jurisdiction — holds regulatory licenses in France, Italy and Abu Dhabi, among others.

As for the complaint, it alleges that Zhao is connected to more than 300 separate Binance accounts that "have engaged in proprietary activity on the Binance platform." It adds that Binance has not disclosed in its terms of service that it is trading on its own market.

‘Hunted user stops’

In response to a whimsical tweet about crypto exchange’s market-making operations, Binance chief strategy officer Patrick Hillmann suggested its internal trading was above board, noting that "unlike other exchanges, Binance does not, nor ever has, hunted user stops or liquidation prices." He added: "Any trades made are primarily algorithmic for market stability purposes or to reduce slippage."

Hillmann also said that Binance does not aggressively trade against its users — a "huge difference" with the operations of now-bankrupt Alameda Research.

Fidelity is building out a crypto and token research team

https://www.theblock.co/post/223190/fidelity-hiring-crypto-token-research-team?utm_source=rss&utm_medium=rss

Asset management giant Fidelity is building out its crypto research chops, hiring for a lead for its crypto and token research development team.

The newly created role would be a senior position that would join its existing quantitative research and investments technology team in its asset management business, as per a job advert posted to LinkedIn.

"They will work on data and technical frameworks for the evaluation of tokens, and the associated blockchain protocols, that form the basis of the rapidly evolving Crypto and DeFi economy," the firm noted in the ad.

Fidelity is no stranger to the crypto market, having a stood up an institutional trading and execution services team since 2018. The firm also recently opened up bitcoin and ether trading to its retail brokerage clients. It plans to expand the offering by allowing clients to move coins on and off its platform.

As for the new crypto research role, the position will report into the vice president of quant development and will "partner with other Fidelity business and technology leaders to identify and define strategic priorities based on an understanding of business value needs."

Fidelity is one of the largest financial-services companies in the world, offering a wide range of services including 401k products, brokerage services as well as indexing. The firm’s quantitative and technology staff use data to build out various investment strategies for client portfolios.

Cathie Wood’s Ark continues its Coinbase and Block buying spree

https://www.theblock.co/post/223196/ark-coinbase-block-buying-spree-cathie-wood

Cathie Wood’s Ark Invest continued its Coinbase and Block buying spree, scooping up tens of thousands of shares in the tech growth names on Monday.

The firm — which is known for its technology stock exchange-traded funds — purchased a further 32,378 shares in crypto exchange Coinbase for the Ark Innovation ETF (ARKK) after acquiring more than 182,000 shares on Friday. It also purchased 5,347 Coinbase shares for its Next Generation Internet ETF (ARKW).

The firm’s Fintech Innovation (ARKF) fund, meanwhile, purchased 18,555 shares in Jack Dorsey’s Block, following a purchase of more than 288,000 shares across three of its funds on Friday.

Ark’s trading activity indicates Wood’s unwavering conviction in two names that have faced negative headlines in recent weeks. Coinbase received a Wells notice from the Securities and Exchange Commission over its listing practices and staking service, the company revealed last week. That development could put the exchange’s business model into question, as Needham analyst John Todaro recently noted.

As for Block, the payments firm faces a litany of accusations from short seller Hindenburg Research, which claims the its flagship product Cash App — which supports bitcoin buys — lacked proper compliance controls, inflated its user numbers and facilitated crime. Block is exploring legal action against Hindenburg and described their report as "factually inaccurate and misleading."

US banks collapse

Ark’s recent buys shouldn’t come as a surprise given Wood’s conviction on crypto in the wake of the meltdown of several community banks in the U.S., including the likes of Silvergate and Silicon Valley Bank.

"It was fascinating to see bitcoin and other crypto assets appreciate as regional bank stocks imploded… just like gold," Wood noted in a recent video interview.

"Coinbase has been prepared, they’ve been preparing for this," she said referring to Coinbase’s brouhaha with the SEC. "In the interim I think this becomes a national election issue."

UK government cancels plans to launch NFT

https://www.theblock.co/post/223181/uk-government-nft-canceled-royal-mint

The UK’s Treasury canceled plans to launch a non-fungible token that were part of a broader bid to make the nation a more appealing hub for crypto innovation.

The move — initially proposed by then Chancellor of the Exchequer and current prime minister Rishi Sunak — was announced in the spring of 2022 by the UK’s Royal Mint. At the time, the British government was also making moves to bring so-called stablecoins within a regulatory framework to be used as a recognized form of payment.

In a written response to questions posted to the UK parliament’s website on Monday, Treasury minister Andrew Griffith said the Royal Mint is "not proceeding with the launch of a Non-Fungible Token at this time but will keep this proposal under review."

Disney nixes its metaverse team: WSJ

https://www.theblock.co/post/223175/disney-has-nixed-its-metaverse-team-wsj

The Walt Disney Company has nixed its metaverse team as part of a wider round of layoffs, according to a report by the Wall Street Journal citing people familiar with the situation.

The mass media conglomerate cut a small team of about 50 people developing strategies in the metaverse — a catchall phrase referring to blockchain-enabled virtual worlds — as part of a broader restructuring to reduce headcount by approximately 7,000 people.

As reported by The Block in February 2022, Disney hired Mike White to lead its metaverse efforts. At the time, a memo penned by CEO Bob Chapek noted that the former Apollo Group CTO would be tasked with connecting the company’s "physical and digital worlds."

"This is a very top-of-mind thing for us because we are continuing over time to augment our skills and the types of people that we attract into The Walt Disney Company to reflect the aggressive and ambitious technology agenda that we have," said Chapek at the time.

White will remain at the company, according to the Journal’s report, though it is not yet clear what his role will be.

Coinbase, Variant-backed startup ushers in crypto security Renaissance

https://www.theblock.co/post/221669/coinbase-variant-backed-startup-ushers-in-crypto-security-renaissance?utm_source=rss&utm_medium=rss

A once sleepy corner of the crypto market is seeing a surge in interest: crypto security and custody.

Safeguarding digital assets — which are known for being swiped in hacks or lost into the ether — has always been a priority for crypto investors, but a new wave of entrepreneurs is offering solutions with more flexibility in securing and managing private keys.

Turnkey, which revealed a $7.5 million seed fundraise on Tuesday, provides the latest example, with a team of former Coinbase Custody execs offering a platform to provide a foundation for a crypto industry in which trillions of on-chain transactions occur, rather than a world where investors simply lock up their assets.

The firm has backing from Sequoia with Variant, Coinbase and Dragonfly also investing in the round.

"The use-cases of 2018-2020 were buy and hold," noted TurnKey co-founder Sam McIngvale, former CEO of Coinbase Custody. "That all changed with DeFi Summer and NFTs."

"Many, many many more transactions, and more complex transactions are becoming the norm," he said.

Investors have taken notice with a flurry of new deals cropping up in the market for custody, including so-called non-custodial MPC solutions. DeFi wallet Fordefi recently nabbed its SOC II.

"For crypto institutions, which are still the bulk of the buyers, like foundations, VCs, trading firms, etc — there’s a lot of solutions trying to push non-custodial or MPC solutions as a safer way to manage risk and minimize counterparty blowup risk," said Meltem Demirors of Coinshares.

It shows the de-coupling of securing and safeguarding assets with the traditional business of an exchange, said Haseeb Qureshi of Dragonfly.

Turnkey is aiming itself as a developer-first tool that allows users to "generate hundreds of wallets and sign thousands of transactions across any chain, all with flexible, programmable permissions to ensure you only sign what you want."

Commenting on the deal, Alfred Lin, a partner at Sequoia Capital, said: "We believe Turnkey is building the right foundational infrastructure that could help onboard the next million crypto developers.”