Crypto Roundup for March 17, 2023
By djKUPO | Blockchain in Paradise
Tether Becomes Unlikely Crypto Winner in Banking Crisis (WSJ)
"Turmoil in the dollar-backed cryptocurrency world has helped tether, the largest stablecoin, to increase its lead. So far this year, tether’s market cap has risen 10% to $73 billion while that of its chief rival, USD Coin, fell by more than 11% to $39 billion, according to CoinMarketCap data. Binance USD has fallen by almost half to just over $8 billion. Traders are relying on tether more than ever now that Circle Internet Financial’s USD Coin has broken from its peg and New York regulators have shut down new U.S. issuance of the world’s third-largest stablecoin, Binance USD."
Arbitrum to Airdrop New Token and Transition to DAO (CoinDesk)
"Arbitrum, the biggest player in Ethereum’s layer 2 scaling landscape, is finally getting a token. The Arbitrum Foundation said on Thursday that ARB, Arbritrum’s new token, will be airdropped to community members on Thursday, March 23. According to the Arbitrum Foundation, ARB will mark Arbitrum’s official transition into a decentralized autonomous organization (DAO), meaning ARB holders will be able to vote on key decisions governing Arbitrum One and Arbitrum Nova – networks that allow users to transact on the Ethereum blockchain with greater speeds and lower fees."
U.S. Regulator Eyes Friday Bids for SVB, Signature Bank (Reuters)
"Regulators at the U.S. Federal Deposit Insurance Corp (FDIC) have asked banks interested in acquiring failed lenders Silicon Valley Bank and Signature Bank to submit bids by March 17, people familiar with the matter said on Wednesday. The new auctions show how the FDIC is making a concerted effort to return the lenders to the private sector after regulators took over Silicon Valley Bank (SVB) last Friday and Signature Bank (SBNY.O) on Sunday, during a weekend of turmoil that has reverberated through the global financial system."
Blackrock’s Fink Says Tokenization of Asset Classes Could Drive Efficiencies in Capital Markets (The Block)
"Larry Fink's annual letter to BlackRock shareholders once again included his thoughts on digital assets, with the chief executive surprisingly optimistic about the space in light of recent events. Beyond the media's "obsession" with bitcoin and the collapse of FTX, there are several areas of interest to BlackRock, Fink wrote on Wednesday. Advances in digital payments across emerging markets, how this contrasts with developed markets, and the promise of tokenization were among the topics addressed."
Blockchain Association Seeks Documents on Crypto ‘De-banking’ From FDIC, Fed (The Block)
"The Blockchain Association, one of the largest crypto lobbying groups, is investigating what it says is the potential “de-banking of crypto firms” following the failure of three banks over the past month. The group sent Freedom of Information Act requests to the Federal Deposit Insurance Corporation, the Federal Reserve and the Office of the Comptroller of the Currency, asking for documents and communications regarding the issue. “We see smoke that indicates a fire – the FOIA requests are intended to uncover the truth behind the potential de-banking of crypto firms in the U.S., including learning more about possible account closures of law-abiding crypto businesses," Kristin Smith, the group's CEO, said in an emailed statement."
Sam Altman’s Worldcoin Signs Outsourcing Deal to Ramp up Production of Iris-Scanning Orbs (The Block)
"Worldcoin, the identity-focused crypto project co-created by OpenAI CEO Sam Altman, has signed a deal with contract manufacturer Jabil as it ramps up production of its controversial eyeball-scanning orbs. Worldcoin is working with the Florida-based global manufacturing giant to outsource production of the portable, iris-scanning devices that were first unveiled in 2021, according to two people familiar with the matter. Through a contractual relationship with a German unit of Jabil, Worldcoin can now produce 400 orbs a month, the people said. One year ago, it had just 30 orbs in circulation, according to a Bloomberg report at the time. A spokesperson for Jabil declined to comment."
Fidelity Crypto Quietly Went Live, Giving Millions of Retail Customers Access to Bitcoin, Ether (The Block)
"Fidelity Digital Assets quietly opened access to Fidelity Crypto for the masses recently. Millions of users can now trade bitcoin and ether commission-free on the platform. The app was previously restricted to a waitlist, with users given access on a rolling basis. Fidelity Crypto is open to new and existing customers — first-time customers must create a Fidelity Brokerage account during the setup process. The service is not available in all states. Bitcoin and ether are the two assets users can trade right now, and trading is commission-free. The firm will charge a spread of no more than 1%. Withdrawals haven't yet been enabled on the platform."
Gensler Suggests Proof-Of-Stake Tokens Are Securities (The Block)
"Securities and Exchange Commission Chair Gary Gensler suggested to reporters on Wednesday that tokens using staking protocols could be considered securities under U.S. law. "The investing public is investing anticipating a return, anticipating something on these tokens, whether they're proof-of-stake tokens, where they're also looking to get returns on those proof-of-stake tokens and getting 2%, 4%, 18% returns," Gensler said. "Whatever they're promoting and putting into a protocol, and locking up their tokens in a protocol, a protocol that's often a small group of entrepreneurs and developers are developing, I would just suggest that each of these token operators ... seek to come into compliance, and the same with the intermediaries.”"
Crypto Exchange Coinbase Ties Up With StanChart in Singapore for Free Transfers (Bloomberg)
"Coinbase Global Inc. has joined with Standard Chartered in Singapore to provide its users an option to move funds between any lender and the cryptocurrency exchange at a time when banking options for digital token service providers are dwindling. Under the arrangement, Coinbase users can transfer Singapore dollars to and from the platform via any local bank in the country for free, Coinbase said in a statement Wednesday. Standard Chartered will offer that connection to on- and off-ramp their money, Hassan Ahmed, country director for Coinbase Singapore, said in an interview."
Signature Bank’s Prospective Buyers Must Agree to Give Up All Crypto Business (CoinDesk)
Signature Bank is on the market after being shuttered by New York state regulators on Sunday, but any potential buyer reportedly has to agree to a major caveat: no crypto. Reuters first reported the development on Wednesday evening, citing people familiar with the matter. The Federal Deposit Insurance Corp. said bids for the bank must be submitted by Friday, the report said. The New York-based bank’s weekend closure came two days after the collapse of another bank, California-based Silicon Valley Bank, and less than a week after the voluntary closure of another California-based bank, Silvergate Bank. All three of the now-defunct banks were considered crypto-friendly financial institutions.
Brian Brooks: U.S. Government Using Crisis to Choke Off Crypto Access to Banks (CoinDesk)
"“It's pretty clear there has been a decision across the bank regulatory agencies in this [Biden] administration that crypto is inherently risky and needs to be extricated from the banking system," Brian Brooks, the former acting head of the Office of the Comptroller of the Currency (OCC), told CoinDesk TV’s “First Mover” on Wednesday. Last week, Silvergate Bank, a California firm that catered to crypto companies, said it would “voluntarily liquidate” and shut down. Days later, tech startup-focused firm Silicon Valley Bank (SVB), which had some crypto clients, was closed by the California Department of Financial Protection and Innovation, which said the bank had “inadequate liquidity and insolvency.”"
EU Parliament’s Smart Contract Plans Limit Standard-Setting Promise, EU Commissioner Says (CoinDesk)
"Controversial European Union rules requiring a kill switch for certain smart contracts may limit the vital ability to set standards for the sector, the European Commission’s Thierry Breton told reporters on Tuesday. His comments imply that provisions voted on by lawmakers earlier that day no longer meet the objectives set out in a 2022 Commission legal proposal known as the Data Act. “We need to harmonize basic requirements for these smart contracts” to ensure interoperability, legal certainty and large scale deployment, said Breton, the commission’s lead official responsible for internal market laws, including for the digital sector. “When we made this proposal we intended to mandate standardization organizations to develop these.”"
Signature Bank Faced Criminal Probe Ahead of Firm’s Collapse (Bloomberg)
"US prosecutors were investigating Signature Bank’s work with crypto clients before regulators suddenly seized the lender this past weekend, according to people familiar with the matter. Justice Department investigators in Washington and Manhattan were examining whether the New York bank took sufficient steps to detect potential money laundering by clients — such as scrutinizing people opening accounts and monitoring transactions for signs of criminality, the people said. The Securities and Exchange Commission also was taking a look, two people said, asking not to be named because the inquiries are confidential."
Coinbase Is Adding DeFi Apps Uniswap and Aave to Its Base Blockchain (CoinDesk)
"Coinbase (COIN) is busy bringing decentralized-finance applications Uniswap and Aave to Base, the U.S.-listed exchange’s layer 2 network that was launched last month. Coinbase’s Base layer 2 network is built using the Ethereum-scaling protocol Optimism and uses Ethereum’s native cryptocurrency ETH for fees on the network. “Coinbase is in the process of recruiting a bunch of protocols to Base. Uniswap and Aave are two of those,” a person familiar with the situation said. Uniswap will probably appear on Base within a couple of months, the person added."
Sam Altman’s Worldcoin Unveils World ID Protocol and SDK (The Block)
"Worldcoin, the project intent on scanning people’s eyeballs to prove they are indeed people, unveiled its World ID protocol and software development kit today. Both Worldcoin and its lead software contributor, Tools For Humanity, were co-created by Sam Altman — who is also CEO of ChatGPT creator OpenAI, the smash-hit generative chatbot. The proliferation of AI and generative software have, according to Worldcoin, rendered the issue of online identity that much thornier."
Staked ETH Withdrawals Being Processed on Ethereum Goerli Testnet Ahead of Shanghai Fork (CoinDesk)
"The final dress rehearsal for Ethereum’s upcoming Shanghai upgrade, more accurately known as “Shapella,” occurred Tuesday on the Goerli test network (testnet). The test simulated staked ether (ETH) withdrawals, bringing the highly anticipated upgrade closer to its final step: activating live on the mainnet blockchain sometime next month. The upgrade was triggered at epoch 162304 at 10:26 UTC, however the epoch has not yet finalized at the time of writing, due to low validator participation rates. Under normal participation conditions, the epoch would have finalized at 10:38 UTC (6:38 p.m. ET)."
Justice Department Probes Collapse of Do Kwon’s TerraUSD Stablecoin (WSJ)
"The Justice Department is investigating last year’s collapse of the TerraUSD stablecoin, adding the risk of U.S. criminal charges to the pressure on its creator, South Korean crypto entrepreneur Do Kwon, people familiar with the matter said. The Federal Bureau of Investigation and the Southern District of New York have questioned former team members of Mr. Kwon’s company, Terraform Labs Pte. Ltd., in recent weeks and sought to interview others, the people said. The FBI and SDNY are both parts of the Justice Department, and SDNY often takes the lead in high-profile prosecutions of financial crimes."
CFTC Names Executives From Circle, TRM, Fireblocks Among Others to New Tech Advisory Group (CoinDesk)
"The Commodity Futures Trading Commission (CFTC) said former White House official Carole House would be the new chair, and blockchain analysis company TRM Labs' Ari Redbord as the vice chair, of the regulator's Technology Advisory Committee. The CFTC published a list of its members to the newly constituted committee on Monday, according to "sponsor" Commissioner Christy Goldsmith Romero, who took office last March."
Euler Finance Flash-Loan Attacked for an Estimated $197 Million (The Block)
"Lending protocol Euler Finance was hit by a flash-loan attack, resulting in a loss of $197 million, according to security firms BlockSec and PeckShield. The attack occurred at 4:50 am ET, allowing the perpetrator to borrow large amounts of funds and drain them from the protocol. They drained $136 million of staked ether (stETH), $34 million of USDC, $19 million of wrapped bitcoin (WBTC) and $8.7 million of DAI, BlockSec noted in a document. Euler Labs, the developer of the protocol, said it was working with security professionals and law enforcement and will release more information later."
CoinMarketCap Acquisition of CoinDesk ‘On Hold’ (Blockworks)
"CoinDesk, a leading crypto news and events company and a core component of the Digital Currency Group (DCG) empire, has been an acquisition target for Binance Capital Management (BCM) in recent weeks, according to sources with direct knowledge of the matter. BCM, registered in the British Virgin Islands, has been exploring ways to buy the company through its CoinMarketCap subsidiary, a Delaware corporation. Those talks are said to be on hold at the moment. CEO Kevin Worth confirmed that the outlet was for sale in January, although it was widely-known that DCG was shopping CoinDesk after the parent company’s well-documented travails with Genesis and its lending arm, which sought bankruptcy protection earlier this year."
Meta Announces Plans to Stop Working on NFTs (The Block)
"Meta is ditching its pursuit of NFTs as the company looks to prioritize, according to Stephane Kasriel, head of commerce and financial technologies at Meta. "Some product news: across the company, we're looking closely at what we prioritize to increase our focus. We’re winding down digital collectibles (NFTs) for now to focus on other ways to support creators, people, and businesses," Kasriel wrote in a Twitter thread. Meta previously said NFTs could help expand the creator economy. Instagram announced plans for a Polygon-supported NFT marketplace as recently as November."
Circle to ‘Cover Any Shortfall’ in USDC Reserves, Sparking Stablecoin Rally (CoinDesk)
"Circle Internet Financial said Saturday it will “cover any shortfall” in the assets backing its stablecoin USDC in the event it does not receive the entirety of a $3.3 billion cash reserve it was holding at Silicon Valley Bank. In a blog post, Circle said it “will stand behind USDC and cover any shortfall using corporate resources, involving external capital if necessary.” The pledge came as crypto traders fretted over the value of USDC, a stablecoin meant to be pegged to the U.S. dollar but which fell in value after Silicon Valley Bank’s collapse. Circle was holding $3.3 billion of USDC’s cash backing at Silicon Valley Bank when the FDIC seized the bank’s assets on Friday."
Circle’s USDC Stablecoin Breaks Peg With $3.3 Billion Stuck at Silicon Valley Bank (WSJ)
"A major cryptocurrency operated by Circle Internet Financial Ltd. meant to mimic the value of the U.S. dollar dropped sharply after the company said it had $3.3 billion tied up in the collapsed Silicon Valley Bank. USD Coin fell below 87 cents on Saturday morning, according to data from CoinDesk. The virtual currency, known as a stablecoin, is designed to trade exactly at $1. It is backed by real U.S. dollars and short-term government debt, and sits at the heart of cryptocurrency trading."
Brevan Howard Continues Digital-Asset Push With Crypto Fund Takeover (Bloomberg)
"Brevan Howard Asset Management is taking over a long-short hedge fund run by Dragonfly Capital, a crypto investment firm, in the latest sign of its push into digital assets. The Jersey, Channel Islands-based firm that has some $30 billion in assets under management has entered into an agreement to assume an actively-managed Dragonfly fund, according to people familiar with the matter who asked not be named because they weren’t authorized to share information about the transaction."
Coinbase Halts Conversion Feature Between U.S. Dollars and USDC (The Block)
"Coinbase said Friday evening that it halted support for conversions between U.S. dollars and stablecoin USDC. "We are temporarily pausing USDC:USD conversions over the weekend while banks are closed," the firm said in a tweet. "During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours." The firm typically offers traders a feature that allows them to seamlessly exchange USD for USDC. Coinbase plans to restart the feature on Monday."
MakerDAO Launches Emergency Proposal to Limit USDC Exposure (The Block)
"MakerDAO’s risk unit issued an emergency proposal to its governance community following the depegging of the USDC stablecoin after the collapse of Silicon Valley Bank. Maker is the DeFi lending protocol that issues the decentralized stablecoin DAI. Being 54.5% backed by USDC, DAI has also been caught up in USDC’s depegging event and is currently trading at $0.93. The risk unit proposed several urgent changes to limit Maker’s exposure to potentially impaired stablecoins and other risky collateral while maintaining sufficient liquidity to sustain DAI’s peg and ensure the Maker Protocol can process potential liquidations of crypto-collateralized vaults."
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