Coinbase Armed for Legal Clash Over How Crypto Is Regulated (WSJ)
"Cryptocurrency firms are leaning on traditional financial products to attract customers to the flagging market. More decentralized finance companies have bought up Treasurys to sweeten yields on their blockchain-based financial services. Decentralized finance, known as DeFi, allows users to borrow, lend, earn interest and trade digital assets without a human intermediary. While upstart DeFi projects once promised investors double-digit or even triple-digit annualized returns at the peak of the bull market in 2021, yields offered by these peer-to-peer crypto platforms plunged after central bank rate increases dampened investor enthusiasm for speculative assets."
Crypto’s Cure for a Shrinking Customer Base: Buy Government Bonds (WSJ)
"Coinbase Global Inc. said Thursday it would fight the Securities and Exchange Commission over the agency’s claim that much of its business is illegal and try to convince a court that Wall Street regulators lack the authority to oversee cryptocurrency markets. The company outlined its legal strategy in a memorandum that formally responded to the SEC’s earlier notice of a potential enforcement action against the company. The memo, made public by Coinbase along with a video featuring its chief executive, underscores the company’s effort to generate political backing and public support for its confrontation with the SEC."
SEC Chairman Gensler Releases Another Video Dig at Crypto Industry (CoinDesk)
"U.S. Securities and Exchange Commission Chairman Gary Gensler took his crypto-critical message to the web again with a new investor-protection video Thursday, cautioning people about digital-assets businesses that are breaking securities laws. As the industry wrestles with enforcement actions and court challenges involving the SEC – a major topic at the Consensus 2023 event this week in Austin, Texas – the agency chief reiterated his long-standing position that crypto platforms are operating illegally."
An SEC Dissenter Says the Regulator Must Ease Off Crypto (Wired)
"Something needs to be done about crypto. In 2022, billions of dollars were lost to crypto bankruptcies and hundreds of millions more to hacks. The mess has spilled over into traditional finance, with the collapse of the two biggest crypto-friendly banks: Silvergate and Signature. And all the while, new scam tokens flood the market. In the US, regulators are arguing over not just what needs to be done, but who gets to do it, with the Securities and Exchange Commission (SEC) and Commodities and Futures Trading Commission (CFTC) sparring over who has jurisdiction over crypto. Under chair Gary Gensler, the SEC in particular has gone after the sector with new intensity since the implosion of crypto exchange FTX in November, launching or threatening enforcement actions against big-name crypto businesses, from Gemini and Genesis to Kraken and Coinbase."
Fugitive CEO Ordered to Pay $3.4 Billion in Record Fraud Case Involving Bitcoin (Bloomberg)
"A US judge ordered a South African executive to pay more than $3.4 billion in restitution and fines for a fraud scheme involving Bitcoin — the highest-ever civil monetary penalty in any US Commodity Futures Trading Commission case. Cornelius Johannes Steynberg, the founder and chief executive officer of Mirror Trading International Proprietary, committed fraud tied to retail foreign-currency transactions, among other violations, the agency said in a statement that announced the order by US District Judge Lee Yeakel."
Coinbase Offers a Fiery Response to the SEC’s Threat of Enforcement Action (CNBC)
"Crypto exchange Coinbase offered a fiery response on Thursday to last month’s Wells notice from the Securities and Exchange Commission, telling the federal regulator that an enforcement action against the crypto exchange would pose “major programmatic risks” to the SEC that would “fail on the merits.” “Coinbase does not list, clear, or effect trading in securities,” the company’s response said. The analysis SEC staffers did to justify an enforcement action “appears to rest on superficial and incorrect analogies to products and services offered by others,” Coinbase wrote in a blog post from chief legal officer Paul Grewal."
Tokenization Is 'Killer App' for TradFi: JPMorgan (CoinDesk)
"JPMorgan Chase (JPM), the largest U.S. bank in terms of assets, remains steadfast in its plan to "tokenize" traditional-financial assets, largely undeterred by the crypto bear market and regulatory uncertainty. The bank has processed almost $700 billion in transactions in short-term loans using its Onyx digital-assets platform, a permissioned version of the Ethereum blockchain, where customers can trade tokens that denote ownership rights to U.S. Treasurys as well as use blockchain bank accounts known as JPM Coin."
Robinhood Launches 'Connect' to Link Native Crypto Wallet to DeFi Apps (Decrypt)
"Robinhood has introduced Robinhood Connect, an update that will allow users of its crypto wallet to access their credentials and funds directly from decentralized finance (DeFi) protocols and applications—all without having to open the Robinhood app itself. The new feature will give users the flexibility to access funds in their Robinhood wallets directly from DeFi applications. Robinhood Connect, which developers will be able to embed in their apps, will make accessing DeFi more seamless for Robinhood users, the company said in a press release."
F.B.I. Searches Home of Top FTX Executive (NYT)
"The F.B.I. carried out a search on Thursday morning at the Potomac, Md., home of Ryan Salame, a former FTX executive who was a major campaign contributor to Republican political candidates, two people with knowledge of the matter said. Mr. Salame, who ran FTX’s Bahamian subsidiary, was part of the close circle of advisers around Sam Bankman-Fried, the cryptocurrency exchange’s founder, before the firm filed for bankruptcy in November."
Hong Kong to Local Banks: Play Nice With Crypto Firms (The Block)
"Regulators in Hong Kong are urging banks to provide much-needed services to crypto companies as part of a multi-faceted push to establish the city as an industry hub. The Hong Kong Monetary Authority said it expects that “regulated virtual asset service providers (VASPs) will be able to successfully apply for a bank account through a reasonable process,” in a blog post published April 27 and signed by Arthur Yuen, the watchdog’s deputy chief executive. In a circular sent later the same day, the HKMA said banks should support licensed crypto firms with “their legitimate need for bank accounts,” according to a Bloomberg report."
Grayscale CEO Expects Decision on Attempt to Overturn SEC's ETF Rejection by End of 3Q (CoinDesk)
"Grayscale expects to learn by the end of the third quarter whether it will be allowed to turn its $17.5 billion Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF), the asset manager’s CEO, Michael Sonnenshein, said Wednesday at CoinDesk’s Consensus 2023 conference. The Securities and Exchange Commission (SEC) last year turned down the asset manager's request to convert the biggest bitcoin (BTC) trust into an ETF. The conversion could help Grayscale eliminate the infamous discount for the product; GBTC's market value is far below the actual value of all the bitcoin it holds."
Franklin Templeton Expands Its OnChain US Government Money Fund to Polygon (The Block)
"Franklin Templeton, an investment management giant with about $1.4 trillion in assets under management, has expanded its OnChain U.S. Government Money Fund to the Polygon blockchain. Launched in 2021, the fund was first available on the Stellar blockchain. Polygon is the second blockchain the fund is supporting, a Franklin Templeton spokesperson told The Block, adding that more networks could be supported in the future. "Extending the reach of the Franklin OnChain U.S. Government Money Fund to Polygon enables the Fund to be further compatible with the rest of the digital ecosystem, specifically through an Ethereum-based blockchain," Roger Bayston, head of digital assets at Franklin Templeton, said in a statement. "This furthers our distribution reach through a Layer 2 (L2) blockchain that has a proven track record.”"
Circle Activates Protocol for Stablecoin Transfers Between Ethereum and Avalanche (The Block)
"Circle, the creator of the USD Coin stablecoin, released the Cross-Chain Transfer Protocol (CCTP) for Ethereum and Avalanche chains, enabling users to move their USDC stablecoin between the two blockchains. This protocol facilitates the transfer of USDC across different blockchain networks by burning native USDC on one chain and minting the same amount on another, making asset transfers possible, according to the official developer FAQ page."
Solana Wallet Phantom Goes Multichain, Expands to Ethereum and Polygon (The Block)
"Solana wallet Phantom is adding support for the Ethereum and Polygon blockchains on May 1 in its first step to go multichain. Phantom is an app and in-browser wallet extension that has always been focused on providing a clean user experience by showing NFTs within the wallet. It lets users swap and stake tokens within the wallet extension. Now that it's multichain, each user will see an Ethereum and Polygon address for each wallet address. They can see all their funds on the three networks in one place for each wallet. They will be able to make transactions from the wallet to either of the three blockchains depending on which asset they are moving — instead of having to change the network, which is how MetaMask works."
Galaxy Links Up With $821B Asset Manager as Part of Europe ETP Push (Blockworks)
"Galaxy Digital looks to bring ETPs to European investors via its new partner in the continent — a fund group with nearly $1 trillion in assets under management. The alliance looks to enhance Galaxy’s international distribution capabilities and extend its reach to what it considers to be a fast-growing region from a crypto lens, a company spokesperson told Blockworks. “There has been continued demand amongst European investors for institutional-grade products that will enable them to access crypto markets in a cost-effective, simplified fashion using their brokerage accounts,” the representative added. “While these products are being quickly developed at scale in the US market, they have unfortunately lagged in European markets.”"
Binance US Ends $1 Billion Deal to Buy Bankrupt Crypto Firm Voyager (Bloomberg)
"Binance.US terminated an agreement to purchase the bankrupt crypto broker Voyager Digital Holdings Ltd., less than a week after federal regulators dropped their efforts to halt the deal in court. The decision came after months of wrangling and the intervention of multiple federal and state regulators over the deal. In a statement, Binance.US said ‘the hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment impacting the entire American business community.’"
21Shares, Cathie Wood Revive Bitcoin ETF Bid After Price Rebound (Bloomberg)
"Crypto exchange-traded-products issuer 21Shares, in partnership with Cathie Wood’s ARK Investment Management, refiled an application for a spot-Bitcoin ETF, arguing that such a fund would offer US investors protections that currently don’t exist. The issuer is reviving a prior filing for the ARK 21Shares Bitcoin ETF, which would trade under the ticker ARKB and which would track Bitcoin’s price as measured by the S&P Bitcoin Index. The application comes amid entrenched resistance from US regulators against such funds. 21Shares initially filed for the product in 2021 and again last May, with both attempts among dozens of applications rejected by the US Securities and Exchange Commission."
Former Signature Bank Crypto Payments Chief, 4 of His Team Join Fortress Trust (CoinDesk)
"Joseph Seibert, formerly head of digital assets at Signature Bank, and four members of his Signet payments team have joined Fortress Trust, the Nevada-based chartered trust company with a focus on cryptocurrency and Web3. Signature Bank was shut down in March after depositors withdrew large sums of money following the collapse of Silicon Valley Bank (SVB). The popular Signet real-time payments platform, which Seibert oversaw, was launched in early 2019 and later integrated with digital asset custodian Fireblocks in 2020."
FTX Finalizes $50 Million Sale of LedgerX Crypto Derivatives Exchange (Decrypt)
"FTX bankruptcy lawyers agreed on Tuesday to sell LedgerX, the FTX-owned derivatives trading platform, to M7 Holdings. The interest purchase agreement is expected to fetch $50 million for debtors of the failed cryptocurrency exchange. Based in Akron, Ohio, M7 Holdings is an affiliate of Miami International Holdings, Inc., a global operator of financial exchanges and execution services. On April 4, the court held the auction of LedgerX, with M7 Holdings entering the winning bid."
US Crackdown to Blame for Fall in Value of USDC, Circle CEO Jeremy Allaire Says (The Block)
"Jeremy Allaire, CEO of Circle Internet Financial, blames the shrunken value of the company’s stablecoin, USD Coin, on regulatory challenges in the United States and concerns about its banking system. Allaire said investors’ desire to “de-risk out of the U.S.” is contributing to a fall in the market value of USDC during an interview on Bloomberg Television on Wednesday. USDC remains one of the crypto sector’s most relied-upon stablecoins, but close ties to the U.S. have seen it lose ground in key metrics lately. The Block Research’s data indicates that the total supply of USDC in the market has fallen by roughly $10 billion since the start of the year to its current level of just above $30 billion. Meanwhile, the supply of rival USDT has gained ground to reach a total supply of $82.5 billion."
Coinbase Takes Jab at SEC With Lawsuit Over Rule Petition (Bloomberg)
"Coinbase Global Inc., the largest US crypto trading platform, isn’t waiting for the SEC to make the first move in what is expected to be a prolonged legal battle between the two. The digital-asset firm asked a court Monday to compel the US Securities and Exchange Commission to respond to a rulemaking petition the company submitted last year. The company, in a lawsuit filed with a federal appellate court in Philadelphia, argued that the agency hasn’t been reasonable or prompt in providing a response."
Republicans’ Stablecoin Bill Draft Would Expand States’ Powers (Bloomberg)
"Republicans on the House Financial Services Committee unveiled their own version of a draft stablecoin bill that would provide for a narrower focus overall and a bigger role for state regulators than a prior proposal. The GOP document, released Monday, makes a number of changes to draft legislation that was released by the panel ahead of a subcommittee hearing last week. That earlier version, which was circulated internally among members in September, was a byproduct of bipartisan negotiations that stalled at the end of last year."
Terra Classic Is Not a Security, Korean Court Rules (The Block)
"Terra Classic (LUNC), the renamed native token of the Terra blockchain that dramatically imploded last year, is not a security, a Korean court has ruled. "It is difficult to see LUNC as a financial investment product regulated by The Capital Markets Act," the Seoul Southern District Court ruled again on Feb. 16, according to a report from local news outlet Ilyo Shinmun today. The court had earlier ruled it on Nov. 15, but both rulings have been only revealed today by the news outlet."
Binance Launches Liquid Staking Token, Joins Growing Market After Ethereum’s Latest Upgrade (The Block)
"Binance is rebranding its Ethereum staking product and introducing a liquid staking token less than two weeks after Ethereum's Shapella upgrade enabled staking withdrawals. The token, called Wrapped Beacon ETH (WBETH), will allow Binance users to participate in decentralized finance protocols off the exchange. Users will continue to acquire Ethereum staking rewards while doing so. From Thursday, users can wrap Beacon ETH (BETH) tokens to WBETH and unwrap WBETH to BETH tokens on the exchange's Ethereum staking page. There will be zero fees for the wrapping and unwrapping of these tokens."
Bybit Moves to Impose Mandatory KYC Rules for All Services (The Block)
"Crypto exchange Bybit will require know-your-customer checks on all its services starting next month. "Starting from 8 May, 2023, Identity Verification of at least Lv.1 will be mandatory for all Bybit products and services," the company said in a Monday announcement. "Existing users who have not completed Identity Verification as of 8 May, 2023 will only be allowed to close existing open positions or orders, return loans, or withdraw.”"
Gemini to Open a Crypto Derivatives Platform Outside the U.S. (CoinDesk)
"Gemini, the U.S.-based crypto exchange, revealed Friday it plans to open an offshore derivatives platform – a decision announced as the regulatory environment gets tougher in its home country. The first product at Gemini Foundation, as the new division is called, will be a perpetual bitcoin (BTC) contract denominated in Gemini dollars (GUSD), the company said, followed by a perpetual ether (ETH) contract also linked to GUSD. Unlike conventional derivatives, perpetuals don't have an expiration date."
DRW, Nascent, MIAX and Susquehanna All Deny Investment in 3AC’s OPNX (The Block)
"DRW and Nascent denied being an investor in OPNX after the exchange said on Twitter it invested alongside others. The crypto exchange founded by Su Zhu and Kyle Davies following the collapse of their hedge fund Three Arrows Capital (3AC) revealed a list of investors today, but multiple investors have now denied any involvement. “DRW is not an investor in OPNX, nor are any of its affiliates investors in OPNX," a spokesperson for the firm told The Block via email."
Old-School Rules Apply to New-School DeFi Exchanges (WSJ)
"Backers of so-called decentralized finance say their peer-to-peer cryptocurrency platforms eliminate both human intermediaries and the need for government oversight. Regulators’ response: Not so fast. Decentralized finance, or DeFi, platforms should already be following rules for stock exchanges, the Securities and Exchange Commission said last week in a 166-page supplement to an earlier rule proposal. DeFi platforms use algorithms known as smart contracts to match buyers and sellers of crypto tokens. Users typically store their funds in crypto wallets that they control—known as self-custody—rather than leaving them with a centralized exchange such as Coinbase Global Inc."
Ava Labs CEO Calls for Crypto Regulators Who Can Read and Audit Code (CoinDesk)
"The blockchain and cryptocurrency space cannot consider itself mature until the day its regulators are able to read and audit code, Ava Labs CEO and founder Emin Gün Sirer told attendees of the annual Cornell Blockchain conference. “Regulators are nowhere near that stage now,” Gün Sirer said at the Friday event on New York City’s Roosevelt Island. “They are busy doing other funny tricks.” Crypto, particularly in the U.S., is in the gunsights of regulators following the collapse of the FTX exchange and other calamities that befell the space in 2022. But even the most draconian of clampdowns will not crush crypto, said Gün Sirer, whose company developed the Avalanche (AVAX) layer-1 blockchain."
Do Kwon Says SEC Is Out of Bounds in Pursuing Crypto Fraud Suit (Bloomberg)
"Crypto entrepreneur Do Kwon’s lawyers say a US regulator’s lawsuit accusing him and Terraform Labs Pte of securities fraud is unfounded, in part, because the stable coin at issue is a currency, not a security. US law prohibits regulators 'from using federal securities law to assert jurisdiction over the digital assets in this case,' Kwon’s lawyers said Friday in a request to a judge to dismiss the lawsuit."
Aptos Introduces Delegated Staking to Increase Participation in Staking on Network (CoinDesk)
"Layer 1 blockchain Aptos has introduced a feature that aims to make staking on its network more accessible, according to a Thursday blog post. The new offering, delegated staking, allows users to earn staking rewards without running nodes themselves. It also lowers the amount of the blockchain’s native token, aptos (APT), needed to participate in staking. Now users will only need 11 APT, worth roughly $117 at publication time, to stake their tokens with the blockchain. “Delegated staking ensures that token holders continue to hold ownership of their APT in their own wallets, and do not have to resort to off-chain methods of funds aggregation,” the blog reads."