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- India's Crypto Future: What Lies Ahead? 🇮🇳🔮
India's Crypto Future: What Lies Ahead? 🇮🇳🔮
PLUS: Texas blockchain group advocates crypto regulations. Fireblocks introduces non-custodial wallet service.
Manan Vora
September 12, 2023
Snapshot Web3
September 12, 2023
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Regulatory and Legal News
India's Economic Affairs Secretary, Ajay Seth, stated that India will decide its stance on cryptocurrency in the coming months. The decision will be based on careful consideration of recommendations from the recent G20 summit on crypto regulation. India aims to establish its own comprehensive crypto regulations after consulting with global and domestic stakeholders. Discussions will focus on implementing the framework efficiently, acknowledging the challenge of unilaterally banning crypto when other countries are not.
Sam Bankman-Fried's trial on seven criminal charges is approaching, and both his defense team and the DOJ have proposed jury questions. These aim to identify jurors familiar with him, crypto, and his philanthropic motives. The DOJ emphasized the jury's role as fact-finders. Bankman-Fried's defense continues to seek his temporary release for better defense preparation. His bail was revoked due to witness tampering attempts, and jury selection for this complex case may take several days.
Major crypto firms, including a16z crypto, Coinbase, Ledger, and others, have formed the "Crypto Freedom Alliance of Texas" to advocate for clear regulations on digital assets in the state. They aim to educate stakeholders on the value of Web3 in Texas and address legal issues, particularly concerning DAOs. Additionally, they'll advocate for crypto-friendly tax and banking laws. Texas is already a significant hub for crypto mining.
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Innovation and Launches
Seamless Protocol, a fork of Aave v3 on Base, introduces non-custodial liquidity markets. It allows smart contracts to seamlessly connect liquidity pools with borrowing strategies, enabling undercollateralized borrowing on-chain. This approach is seen as a more efficient fit for DeFi compared to on-chain identity systems, emphasizing trust in code.
Fireblocks, a crypto custody firm, is launching a non-custodial wallet service for fintech and corporate clients like Revolut and Nubank. This gives users full control over their assets, addressing concerns after recent crypto firm failures. Fireblocks' technology enhances security and recovery options. This move also enables easier access to DeFi and Web3 applications. It shifts custodial responsibilities to users, opening up opportunities in these areas. Fireblocks currently secures over 130 million wallets for major companies including BNY Mellon and BNP Paribas.
A debate has reemerged in the Bitcoin community over a six-year-old proposal, BIP-300, which suggests adding "sidechains" to the network. These separate blockchains on top of Bitcoin could allow for various functionalities. A core developer recently rewrote the proposal's code and proposed its integration into Bitcoin's codebase. Some argue it could bring in new users, while others express concerns about potential scams. Additionally, a developer claimed to have found an alternative method to achieve BIP-300's goal without requiring a soft fork of the blockchain. Critics emphasize the need for substantive engineering arguments in favor of the proposal.
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Funding
Bitget, a crypto trading platform, has established a $100 million fund called the EmpowerX Fund. This fund will be used to support the growth of its ecosystem by investing in exchanges, data analytics firms, and media organizations. Bitget aims to expand its services to include investment, research, decentralized finance (DeFi), media, and more. The company anticipates changes in regulations and the growth of layer-2 blockchain networks and DeFi technologies, which will impact how centralized exchanges operate. This move is part of Bitget's strategy to diversify its services and seize merger and acquisition opportunities.
Global venture funding has dropped by almost half compared to last year, with remaining capital flowing into AI funds due to crypto industry instability. Factors like higher interest rates and supply chain shortages have contributed to the decline. The crypto industry has experienced a decline in deals and funding, impacted by high-profile failures like FTX. In contrast, AI projects are securing substantial VC rounds. Despite current challenges, optimism remains for the crypto industry's future, anticipating revitalization from lower interest rates, globalized crypto regulations, and greater traditional finance involvement in crypto.
Game studio Pahdo Labs has secured a $15 million Series A funding round led by a16z, with participation from Pear VC, BoxGroup, Long Journey Ventures, Neo, and Global Founders Capital. Pahdo Labs specializes in creating the anime RPG Halcyon Zero and a user-generated content platform. They're set to launch Halcyon Zero on PC, with plans for cross-play functionality on platforms like iOS and Switch.
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Scams and Hacks
Thai authorities have arrested five individuals, including four from China and one from Laos, in connection with a fraudulent cryptocurrency investment scheme that scammed over 3,200 local investors out of $27 million. The suspects are charged with colluding in transnational crime, public fraud, and money laundering. The investigation was launched after affected investors reported losses from investments made through bchgloballtd.com. The Anti-Money Laundering office in Thailand has confiscated 585 million Thai baht worth of personal property from the accused.
Vitalik Buterin confirmed that his recent Twitter hack was due to a SIM-swap attack. The Ethereum co-founder explained that the hacker manipulated T-Mobile to take control of his phone number, allowing access to his account. He advised removing phone numbers from Twitter accounts and enabling two-factor authentication (2FA) for added security. A SIM-swap attack involves hackers gaining control of a victim's mobile number to access accounts protected by 2FA. T-Mobile has been involved in similar attacks in the past.
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Interesting Reads
Former PayPal executive David Marcus, co-founder of Bitcoin Lightning-focused payment service Lightspark, believes Bitcoin's Lightning Network could modernize global payments, moving them away from outdated methods. He highlighted the lack of a universal protocol for online money transfers and suggested that Bitcoin Lightning could address this challenge, enabling seamless and cost-effective cross-border payments. Marcus anticipates that Bitcoin Lightning will primarily be used for international transfers rather than everyday purchases.
The U.S. Commodity Futures Trading Commission (CFTC) recently sued DeFi companies for offering financial products to U.S. individuals without proper registration. This has raised uncertainty about DeFi's future in the U.S. Some experts suggest DeFi might face challenges due to regulatory requirements. While some regulators propose a regulatory sandbox for DeFi, others question the basis for sanctions. Compliance with regulatory paperwork remains a key issue.
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Quick Links
SEC Chair Gary Gensler reiterates worries about crypto industry's adherence to securities laws. He believes most crypto tokens fall under investment contract criteria, subjecting them to such laws. Gensler plans to discuss recent enforcement actions and proposed rules on custody and exchange definitions for crypto platforms. However, he won't comment on ongoing litigation, including cases against Coinbase and Binance.
FTX's estate, managing its bankruptcy, holds $1.16 billion in Solana (SOL) and $560 million in Bitcoin (BTC) as of August 31, 2023, along with $200 million in Bahamian real estate. SOL represents 16% of its market cap. FTX's crypto portfolio includes BTC, ETH, APT, USDT, XRP, BIT, STG, WBTC, WETH, and $529 million in securities. They also have venture investments totaling $4.5 billion and over 1,000 illiquid crypto assets.
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Miscellaneous
Coinbase Cloud and Kiln have introduced partial Ethereum (ETH) staking, eliminating the previous 32 ETH minimum requirement. This integration allows users with any amount of ETH to earn staking rewards, benefiting the majority of wallets that hold less than 32 ETH. This development aims to increase individual participation in securing the Ethereum network and earning rewards. The service is initially available through Coinbase Wallet.
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Resource of the Day
As the digital landscape evolves with rising customer acquisition costs and the retirement of third-party cookies, Web3's user-owned digital wallets emerge as a solution. These wallets enable direct, private, and multi-dimensional interactions between brands and users, fostering long-term engagement. They empower users, enhance transparency, and offer personalized brand experiences. Embracing open and non-custodial wallets allows brands to build narratives around privacy and direct engagement, redefining trust and loyalty in the digital era.
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The information provided in this newsletter is for informational purposes only and should not be interpreted as investment advice, endorsement, or recommendation. Cryptocurrency investments carry significant risk due to their volatility. You should consider your financial situation, investment goals, and risk tolerance before making any investments. We strongly recommend consulting a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.
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