Snapshot Web3

November 8, 2023

👨‍⚖️

Regulatory and Legal News

US CFPB proposes supervising digital app providers, including crypto wallets

The United States Consumer Financial Protection Bureau (CFPB) has proposed a rule to expand its supervision to large non-bank digital wallet and app providers, including companies like PayPal, Apple, Amazon, Google, and Meta, which handle over 5 million transactions annually. This move is part of a broader effort by the agency to extend its oversight beyond traditional banking institutions. CFPB director Rohit Chopra emphasized that this rule aims to address regulatory arbitrage in consumer finance markets, particularly in the realm of digital apps, which have as many users as credit and debit cards but lack certain protections like deposit insurance and privacy guarantees. The proposal primarily targets retail transactions carried out from crypto wallets, excluding crypto trading activities.

Dubai's regulator VARA shows how authorities, market can work in tandem — vice chair

The Virtual Assets Regulatory Authority (VARA) in Dubai has emerged as an early leader in comprehensive crypto asset regulations, aiming to establish the emirate as a hub for virtual assets and related services. VARA's regulatory framework, released in February, covers virtual asset service providers (VASPs) and includes both compulsory and activity-specific rulebooks. Deepa Raja Carbon, Managing Director and Vice Chair at VARA, highlights the authority's success in its collaborative and agile approach, which involved consulting stakeholders, legislators, and the public. This strategy, she argues, has allowed VARA to set a precedent for effective cooperation between regulators and the market, ultimately fostering a robust and responsive regulatory environment. The goal is to position Dubai as a prominent destination for digital asset businesses in the Middle East and Asia.

Kenyan lawmakers ask local Blockchain Association to come up with crypto bill

Kenya's Blockchain Association has been asked by lawmakers to draft a regulatory bill for virtual asset service providers, potentially making Kenya the first country where industry representatives shape crypto regulations. The move comes after Kenya introduced a financial act in September 2023 requiring crypto exchanges to withhold 3% of digital asset transfers. The Blockchain Association aims to demystify cryptocurrency trade through public education. Additionally, Kenyan authorities recommended shutting down the controversial Worldcoin digital ID crypto project due to concerns over personal data harvesting.

🚀

Innovation and Launches

Stablecoin issuer Circle weighing up 2024 public launch

Stablecoin issuer Circle is reportedly considering an initial public offering (IPO) in early 2024, according to sources cited by Bloomberg. While Circle had initially planned to go public through a $4.5 billion merger in July 2021, that deal fell through. The company has expressed a longstanding interest in becoming a U.S.-listed public company. However, there is no certainty that these recent deliberations will lead to a public listing. Circle, valued at $9 billion in February 2022, saw its stablecoin, USDC, experience a market cap decline from $55.9 billion in June 2022 to $24.6 billion. The company has received investments from financial firms like BlackRock, Fidelity Management, Goldman Sachs, General Catalyst Partners, and Marshall Wace.

Ex-Cantor execs launch crypto lending platform in expectation of Bitcoin ETFs

Ex-executives from Cantor Fitzgerald have launched Tokenet, a crypto lending platform, in anticipation of potential approval for a spot Bitcoin ETF in the U.S. Tokenet aims to serve institutional clients by offering digital asset borrowing and lending services, along with risk management tools. Backed by various crypto firms, the platform enters a growing market for crypto lending, with companies like Coinbase and Binance also expanding in this space. The launch aligns with optimism for a spot Bitcoin ETF approval. If approved, platforms like Tokenet could benefit from increased institutional demand for borrowing Bitcoin.

♾️

NFT, Gaming and Metaverse

How agencies can play a role in NFT and digital collectable creation

Agencies are poised to play a crucial role in the NFT and digital collectibles space. With their established connections and large audiences, they can introduce NFTs to a wider public. NFTs also offer a deeper level of fan engagement, and agencies can use them to create exclusive experiences. Additionally, NFTs provide valuable insights into audience interests. To navigate NFT partnerships successfully, parties should focus on education, clear expectations, staying updated, and shared values. Overall, agencies have the potential to lead their clients through the evolving NFT landscape and shape the future of digital ownership and connection.

💰

Funding

Vietnamese Web3 coalition Ninety Eight launches $25M ecosystem fund

Vietnamese Web3 coalition Ninety Eight, known for Coin98 DeFi ecosystem, has established a $25 million fund to support Web3 startups in Asia. The fund offers financial and strategic assistance, along with access to the firm's Viction blockchain infrastructure. It also introduces a native token, C98, initially designed as a wallet token, allowing users to manage crypto assets and interact with decentralized applications. The fund's management will be handled by Arche Fund, a venture arm within the Ninety Eight ecosystem. This initiative follows the June launch of the Vietnam Future Fund, aimed at supporting local Web3 startups. Vietnam leads in global crypto adoption, but there's a shortage of blockchain education and projects in the country.

📚

Interesting Reads

Bitcoin supply held by long-term holders hits all-time high

Bitcoin's available supply has hit an all-time low, indicating an accumulation phase, according to Glassnode data. Long-term holders, particularly smaller entities, are increasing their holdings and have acquired 92% of the newly mined Bitcoin. Long-term holders now outnumber short-term holders, which hasn't happened since July 2023. This accumulation, combined with a decrease in short-term supply, is contributing to a tighter available Bitcoin supply, potentially supporting its price above $34,000. Confidence in Bitcoin is growing across all investor groups, suggesting positive sentiment in the market.

👨‍🎓

Resource of the Day

The Alameda gap and crypto liquidity crisis explained

The collapse of FTX, a major cryptocurrency exchange, in November 2022 was caused by a liquidity crisis due to mismanagement of customer funds and risky trading practices by its sister company, Alameda Research. This led to a sharp drop in cryptocurrency prices, a loss of liquidity, and a crisis of confidence in the industry. FTX filed for bankruptcy, revealing a debt of over $3 billion and an inability to locate approximately $8.9 billion worth of customer assets. CEO Sam Bankman-Fried was arrested and found guilty of seven charges related to fraud and conspiracy. The incident prompted increased regulation, transparency, and audits in the cryptocurrency industry to protect investors. It also highlighted the importance of conducting thorough research before engaging in cryptocurrency exchange activities.

🌐

Miscellaneous

Wintermute claims NEAR backed out of $11M stablecoin redemption deal

Wintermute founder and CEO, Evgeny Gaevoy, alleges that the NEAR Foundation and Aurora reneged on a commitment to convert $11 million worth of USN stablecoins. Gaevoy claims that NEAR refused to facilitate the sale of $11.2 million worth of USN for FTX, despite an alleged agreement. Wintermute executed the transaction based on the understanding that they could redeem USN to Tether on a one-to-one basis. However, NEAR reportedly did not honor this commitment, and after two and a half months, Wintermute had not received any USDT. Gaevoy stated that they received a final offer of 20% of the $11 million and threatened legal action if the matter was not resolved. NEAR Foundation and Aurora have not yet responded to the allegations.

Coinbase beefs up its global advisory council with 4 national security experts

Coinbase has bolstered its Global Advisory Council with four national security experts to help assess the impact of regulatory uncertainty in the United States. The new members include Mark Esper, former U.S. Secretary of Defense, Stephanie Murphy, a former congressperson and national security expert, Frances Townsend, former homeland security adviser to President George W. Bush, and David Urban, ex-managing director of BRG Group. They will join other council members, including former U.S. legislators Patrick Toomey, Tim Ryan, and Sean Patrick Maloney. The council was established in May and focuses on asset management and regulation, with bipartisan representation. The goal of the new appointments is to analyze the consequences of regulatory uncertainty for crypto in the U.S.

Liked the newsletter? Share it with your network.

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.