US House Committee publishes draft stablecoin bill, Bhutan’s sovereign investment arm invests in crypto, Sui announces token launch mechanics, Ondo unveils stablecoin alternative backed by money-market funds, Bain’s Elements of Value Pyramid applied to NFTs, and SEC proposes to require crypto DeFi exchanges to register with the regulator. Meanwhile, DWF Labs raises concerns over its opaque investment practices.
Terraform Labs Launches Mirror’s Anchor Protocol on Ethereum (3 minute read)
Terraform Labs has launched the Mirror protocol’s Anchor platform on Ethereum, following its success on Terra’s blockchain. The Anchor protocol allows users to earn interest on stablecoin deposits, without requiring them to be loaned out. The platform also enables users to receive staking rewards for maintaining the system, creating a more sustainable source of income. Anchor Protocol’s Ethereum deployment is currently in beta testing and can be accessed via a permissionless frontend. Once the system is fully deployed, users will be able to convert assets such as ETH and stablecoins into yield-bearing tokens, providing another avenue for earning passive income in the Ethereum ecosystem.
Opinion: How Crypto is Disrupting the Art World (5 minute read)
Crypto is disrupting the art world, as it does many industries, by providing new opportunities for artists and collectors to trade and monetize their works. Blockchain technology enables artists to prove ownership of their creations, while tokenization allows works to be divided into shares, creating new investment opportunities. NFTs have exploded in popularity, with some pieces selling for millions of dollars, and fractional ownership platforms are gaining traction. Crypto-based art sales have also increased the accessibility of art to the wider public, removing barriers such as high transaction fees and the need for intermediaries. As the market matures, it will be interesting to see how the relationship between the traditional art world and crypto art evolves.
Blockchain funding in Africa
Blockchain venture funding in Africa experienced an almost 430% increase in 2022 compared to the previous year, reaching $474M, according to a report by CV VC and Standard Bank. This growth surpassed all other regions, making Africa the only region with growth in triple-digit percentage. Seychelles and South Africa combined accounted for 81.2% of the total funds raised, with blockchain startups in Africa previously raising the smallest share of global venture funding. This increase in funding is expected to accelerate blockchain adoption in the developing region, assisting startups in building more innovative projects. The bankrupt crypto exchange FTX is reportedly seeking a relaunch with the help of Tribe Capital. The San Francisco-based venture capital firm is preparing to lead a $250M fundraising campaign to revive the exchange, including $100M financing from Tribe itself and its limited partners. FTX’s attorney recently revealed that the company recovered over $7.3B of crypto assets in cash and liquid, and a possible restart would require a significant amount of capital. If the proposal becomes successful, the exchange will be relaunched under the name FTX. Kraken’s Irish subsidiary, Payward Europe Solutions, has been authorized by Ireland’s central bank to operate as a virtual asset service provider in the country ahead of the European Union’s (EU) new crypto regulation, the Markets in Crypto Assets (MiCA). Kraken’s registration in Ireland is its demonstration of following Europe’s most robust standards and its commitment to increasing crypto adoption in Europe.
Kraken is still going
Kraken has been expanding its operations in Europe, with the opening of its new European headquarters in Dublin in 2021, which currently employs over 400 people. The exchange has also been active in the crypto regulatory space, having submitted comments on proposed crypto regulations in several European countries, including the UK and Germany.
The Markets in Crypto Assets (MiCA) regulation is set to introduce comprehensive rules for the crypto industry in the EU, including requirements for authorization and supervision of crypto service providers, rules for custody and asset segregation, and consumer protection measures. The regulation aims to provide legal certainty for businesses and consumers in the crypto space, as well as to promote innovation and competitiveness in the European market.
The authorization of Kraken’s Irish subsidiary comes at a crucial time for the exchange, as it positions itself to comply with the upcoming regulations. It also strengthens the exchange’s presence in Europe, where it faces stiff competition from other major players such as Binance and Coinbase.
Overall, the recent developments in the crypto space, including the surge in funding for blockchain startups in Africa, the proposed relaunch of bankrupt exchange FTX, Russia’s draft law allowing certain institutions to use crypto for international trade, and Kraken’s authorization as a virtual asset service provider in Ireland, highlight the ongoing growth and evolution of the crypto industry, as well as the need for clear and comprehensive regulatory frameworks to support its development.
GOP Lawmakers Challenge SEC’s Approach to Crypto Oversight
The world of cryptocurrency has been in the spotlight lately due to its increasing popularity and growing market capitalization. However, this newfound popularity has also brought with it regulatory challenges. One such challenge is the lack of clarity around how digital assets should be regulated, and the role of the Securities and Exchange Commission (SEC) in overseeing the crypto market.
Recently, the SEC has come under fire from Republican lawmakers who are questioning the agency’s approach to regulating digital assets. During a hearing before the House Financial Services Committee, SEC Chairman Gary Gensler found himself in the hot seat as Republican committee members criticized the SEC’s handling of crypto and accused him of incompetence.
In a letter sent before the hearing, Republican lawmakers argued that the SEC’s national securities exchange framework is ill-fitting for digital assets, and that the agency has failed to provide clarity on which digital assets may be considered securities. They also expressed concern that the SEC’s approach to regulating digital assets could harm innovation in the crypto industry.
Gensler, in his prepared remarks, emphasized the importance of compliance with securities laws and argued that most crypto tokens are considered securities. He also emphasized the need for investor protection, stating that real people’s life savings are at risk.
However, Republican committee members were not satisfied with Gensler’s response. They grilled him on the SEC’s handling of crypto, accusing him of rushing the rulemaking process and lacking rigor or evidence bases. Chairman Patrick McHenry also confronted Gensler on the contradictory guidance surrounding Ethereum (ETH), asking whether it is a commodity or a security. Gensler did not provide a clear answer, leading to further confrontations between the two.
Other representatives questioned Gensler on actions the SEC has taken that would prevent banks from being able to custody digital assets. They also expressed surprise that the SEC seemed unaware of certain operational aspects of major crypto platforms, such as FTX.
The hearing highlighted the ongoing debate over how digital assets should be regulated and the role of the SEC in overseeing the crypto market. While Gensler emphasized the need for compliance with securities laws and investor protection, Republican lawmakers argued that the SEC’s approach could harm innovation and stifle growth in the crypto industry. The debate is likely to continue as regulators grapple with the rapidly evolving crypto landscape.
Coinbase CEO Brian Armstrong has revealed that the company is preparing for a possible lawsuit with the US Securities and Exchange Commission (SEC). The cryptocurrency exchange received a Wells notice from the regulator last month, indicating potential enforcement action is due. Armstrong expressed disappointment and revealed that Coinbase hadn’t received any clear details from the SEC on the alleged violations. The CEO said that Coinbase is ready to face the SEC in a long legal dispute if necessary. Armstrong slammed the SEC for not providing enough clarity for crypto businesses, saying that the regulator was neglecting its duty and leaving the market in the dark.
Meanwhile, validators on the Ethereum blockchain who are looking to unstake their ETH are having to wait 17 days, following the Shapella upgrade. The upgrade allows for partial or full withdrawals of staked ETH. However, the process of unstaking requires a 25-minute wait before joining the exit queue, which currently lasts 11.7 days. After this phase, a withdrawal delay of around 27 hours occurs, and finally, after another 4.25 days, withdrawals are processed and deposited. Those processing partial withdrawals experience shorter delays, of around 4.27 days, and these are automatically deposited into validator addresses.
Finally, decentralized exchanges (DEXs) are experiencing a rise in average monthly volumes, compared to centralized exchanges, according to the latest CCData Outlook Report. In Q1 2023, average monthly crypto exchange volumes dropped by 16.8% compared to 2022, with the top 8 exchanges accounting for 70.5% of total volumes. Binance’s market share rose from 33.2% in January 2022 to 50.3% in March 2023. Despite the yearly volume decrease, centralized exchanges saw a 23.2% increase in monthly volumes compared to Q4 2022. DEXs experienced a 27.6% increase in average monthly volumes from Q4 2022 to Q1 2023.
