PLUS: Goldman Sachs to offer clients bitcoin!
With Bitcoin hovering just below $60k and Ethereum sitting just under $2k, it looks like April could be another bullish month in the crypto industry. In lieu of a typical introduction summarizing the week’s news, I am going to embed a tweet from the @Unchained_pod, the new Twitter handle for all Unchained content. Click the link to find the Unchained March Recap, which highlights the three biggest trends in crypto during last month and, of course, give the Unchained Twitter account a follow!
On Unchained, three lawyers dive into the sticky legal issues around NFTs. What exactly do you get when you buy an NFT? What terms of service do the various platforms offer? And who has the right to mint an NFT? On Unconfirmed, Dave Jevans of Cipher Trace (disclosure: a previous sponsor) unpacks the proposed FATF rules around DeFi, which could radically change how DeFi functions — requiring dexes to follow the same compliance rules as centralized exchanges.
Listen to the Latest Episode of Unchained
Olta Andoni, fintech and IP Attorney at Zlatkin Wong and adjunct professor at Chicago-Kent College of Law, Tonya Evans, visiting Full Professor of Law at Penn State Dickinson Law School and host of the podcast Tech Intersect, and Stuart Levi, co-head of the Intellectual Property and Technology practice at Skadden Arps and coordinator of the firm’s Blockchain and Digital Asset practice, break down the legal issues surrounding NFTs.
Listen to the Latest Episode of Unconfirmed
Dave Jevans, CEO of Cipher Trace, talks about what the new draft guidance from the FATF (Financial Action Task Force) means for DeFi, NFTs, and crypto in general.
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This Week’s Crypto News…
The highly anticipated Coinbase direct listing is scheduled for April 14th, as reported by Bloomberg and later confirmed by the exchange via tweet. The company will trade under the ticker COIN on the Nasdaq.
It’s one thing for a company to embrace the positive PR of adopting crypto. It’s a much bigger thing for a massive financial services network to actually use a public blockchain to settle transactions. Visa has begun settling USDC transactions directly on the Ethereum blockchain via a trial partnership with payment platform Crypto.com [which, disclosure is a sponsor of my podcasts] and Anchorage, a digital asset bank. Previously, Crypto.com Visa card owners would have to convert cryptocurrency holdings to fiat before making a purchase, adding an extra step and cost for businesses. Reuters reported that Visa completed its first transaction this month, with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.
PayPal announced that customers would be able to use crypto holdings to pay at its 29 million merchants in the coming months. Users who hold bitcoin, ether, bitcoin cash, and litecoin can now convert to fiat at checkout and make payments, marking the “first time you can seamlessly use cryptocurrencies in the same way as a credit or a debit card inside your PayPal wallet,” CEO Dan Schulman told Reuters. However, the merchants will receive fiat, as PayPal will convert the crypto before handing it over.
Goldman Sachs plans to offer its private wealth management clients exposure to bitcoin and other digital assets sometime in the next three months. Mary Rich, the soon-to-be-announced global head of Goldman’s private wealth management division, said Goldman would look to ultimately offer a “full spectrum” of crypto investment vehicles, be it “physical bitcoin, derivatives, or traditional investment.” As reported by CNN, Rich said consumer demand drove the bank’s decision to jump into crypto. She specifically cited contingents of clients who “are looking to this asset as a hedge against inflation” and “feel like we’re sitting at the dawn of a new Internet.” Goldman is the second large U.S. bank to offer clients access to crypto after Morgan Stanley announced a similar plan in mid-March — with the caveat being that, to invest, Goldman clients must hold a minimum of $25 million at Goldman. At Morgan Stanley, the minimum is $2 million.
Speaking of Morgan Stanley, the investment bank said in a Thursday regulatory filing that 12 of its institutional funds might gain exposure to bitcoin through cash-settled futures or the Grayscale Bitcoin Trust. Each fund, the filing suggests, could allocate up to 25% of its assets to bitcoin exposure.
Rick Rieder, CEO of the $8.7 trillion asset manager BlackRock, hinted that the investment giant was beginning to “dabble” in bitcoin back in February. On Wednesday, a regulatory filing confirmed the asset manager’s involvement in the bitcoin space by way of CME futures contracts. The $6.5 million investment was small, representing just .03% of BlackRock’s Global Allocation Fund, but it is still a step in the direction of CeFi’s acceptance of cryptocurrency.
It appears the recent NFT boom, which has featured a JPEG selling for $69 million in ETH and burned paintings rising from the ashes in digital form, is being taken seriously by the wider world. This week saw five notable investments in the NFT space:
- Web3 accelerator and metaverse builder Outlier Ventures announced a $350 million round of funding at a $2.5 billion valuation from the “likes of Mark Cuban and Gary V. [Vaynerchuk].” The announcement was made via a tweet by CEO Jamie Burke (a recent Unchained guest).
- Dapper Labs, the company behind NBA Top Shot and CryptoKitties, secured $305 million in private funding from an eye-popping group of NBA stars, including Michael Jordan and Kevin Durant, along with a slew of strategic partners headlined by a16z. In perhaps the most unexpected words ever written/spoken in this recap, you can find the whole report on ESPN.com.
- Blockchain development firm Enjin has raised $18.9 million in funding with plans to build its upcoming blockchain network, Efinity, on Polkadot. Efinity will be a purpose-built NFT blockchain that aims to resolve the high gas fees associated with Ethereum without the centralization of Dapper Labs’ Flow blockchain.
- NFT marketplace SuperRare announced a $9 million funding round on Tuesday, led by Velvet Sea Ventures and Mark Cuban, who will be an upcoming guest on Unchained. SuperRare plans to use the fundraising to add social elements to the platform.
- Zora, a SuperRare competitor, also completed a funding round this week, raising $8 million in equity sales with five investors, whose identities remain unknown, participating.
The Securities and Exchange Commission is charging LBRY, a decentralized publishing platform, for allegedly selling unregistered securities. The charges stem from the LBRY team selling tokens as investment contracts before the project was developed to raise money — with the assumption, the tokens’ value would go up. The SEC is seeking a permanent injunction against LBRY from selling further tokens along with a disgorgement of the $11 million it received in the alleged securities sale.
LBRY CEO Jeremy Kauffman, in a statement shared with Decrypt, said, “The SEC complaint against LBRY reflects an outdated view of the economy that stifles innovation, accessibility, and creativity… Under the overreaching standard set by the SEC complaint, most blockchain tokens would be deemed securities, leaving uncertainty and confusion in the industry.”
Gabriel Shapiro, partner at BSV Law, agreed, adding that “The SEC is not helping the crypto industry figure out a way to comply with securities law” and that to continue suing blockchain creators is “now inexcusable, unethical, and violates core American jurisprudential principles of predictability and economic freedom.”
Between Wyoming, led by blockchain wonder-women Caitlin Long, CEO of Avanti Bank, and Senator Cynthia Lummis, and Miami, directed by Mayor Francis Suarez, the race to become the crypto safe-haven in the U.S. has begun. (In case you missed them, both Long and Mayor Suarez have been recent guests on this show.) This week, two more states joined the fray. The Iowa House of Representatives unanimously approved legislation that would permit the use of distributed ledger technology and smart contracts when providing records of transactions. In Texas, Governor Greg Abbot tweeted his support for a recent crypto law proposal that aims to adapt existing laws to the world of digital assets, recommending that “Texas should lead on this like we did with a gold depository.”
While positive news for the industry, Long pointed out a “gaping hole” in the Texas crypto proposal that would create a “lien mess” — meaning a mess around potential liens on bitcoin — if passed (click here for more information on liens). Long recommends that Texas follow Wyoming’s suit and amend the bill’s language to better map how “bitcoin lending actually works,” so that the passage of bitcoin receives the same blank slate as cash after each transaction, rather than lenders retaining the right to any bitcoin issued as debt.
In an assurance report delivered by Moore Cayman, a Cayman Islands-based accounting firm, Tether purports to show that its stablecoin is fully backed. While the report does not delve into how Tether’s reserves are held, it appears that — as of February 28th –Tether’s assets amounted to $35.3 billion and its liabilities equaled $35.2 billion. The attestation is the first third-party verification of Tether’s reserves since 2018. Tether plans to issue another attestation for the month of March, after which it will move to quarterly reports going forward. These attestations are separate from the disclosures intended for the New York Attorney General’s Office regarding the recent Bitfinex settlement. USDT is currently the largest stablecoin in the world, sitting at roughly $40 billion, making it the fourth-largest token by market cap.
Saturday Night Live added to the long list of head-scratching NFT headlines in a skit last weekend that included Kate McKinnon dressed up as Janet Yellen, Pete Davidson singing in a Robin costume, Morpheus orange-pilling a national audience, and a janitor — Good Will Hunting Style — perfectly explaining what an NFT is while rapping. If you haven’t seen it yet, I would highly recommend it.
In a well-designed April Fools joke, the Teletubbies, yes, the children’s show, announced its own cryptocurrency on Thursday. To mine the TubbyCoin, all you have to do is share the Big Hugs! token on social media, accompanied by the hashtag #TubbyCoin. As part of the initial coin offering, the company will make a $5,000 donation to the charity Kids Help Phone…
While the coin turned out to be a marketing ploy, I have to commend the Teletubbies for their crypto-native announcement of an announcement and execution of the almost-believable whitepaper.