Crypto News Bites 2022/12/9
FOMC next Wed / Crypto payment providers report / Crypto PayPal in Luxembourg / SMBC soulbound tokens / Starbucks NFTs / US bill would require miners to report greenhouse emissions
Top News Summaries
FOMC next Wed
State of crypto payment providers report.
PayPal expands crypto to Luxemboug. Japan bank SMBC trialing Soulbound Tokens. Starbucks NFTs available to beta users.
US bill would force crypto miners to report greenhouse emissions. EU tax proposal targets firms globally. SEC wants firms to disclose crypto exposure.
More details, news and analysis below! Also follow me on Twitter!
Market Overview
Crypto markets follows equity markets higher after higher US jobless claims, as bad news is good news since it signals the economy cannot withstand another 75bps Fed hike. Reminder that FOMC is next Wed 14 Dec, markets are pricing in 77% chance of a 50bps hike after 4 consecutive 75bps hikes. November CPI comes out one day before, which hopefully will continue to be flat/come down.
Grayscale’s BTC trust GBTC hits an all time low 47% discount to spot BTC. Anybody trying to put on an arbitrage trade that will need to be pretty comfy sitting on it possibly forever, while paying fees on the short spot side.
Layer 2s
Layer 2s scaling solutions, which are built on top of layer 1s such as Ethereum and provides higher transaction speeds with lower fees, have seen continued increases in Total Value Locked (TVL), or funds locked into smart contracts. Arbitrum and Optimism saw a 3% and 1% gain in TVL over the past day when the top 20 chains saw declines, while over a 7 day period were the only ones with mid/high single digit percent gains as well. Outside of lower transaction fees, Aribtrum in particular have seen continued transaction volumes on speculation of users being given airdrops, or free coins when they finally launch their token.
Adoption
PayPal expands crypto services to Luxembourg. Yet another datapoint on crypto adoption.
Starbucks NFTs now available to beta testers, which is based on Polygon MATIC. Also launching a marketplace powered by Nifty Gateway in 2023. Will this bring in crypto adoption? As an example, Reddit’s NFT Avatars have more holders than the top bluechip NFT collections, with not a single mention of crypto or blockchain.
Japanese banking giant SMBC planning a trial of soulbound tokens (SBTs) for identity verification via a business partnership with HashPort Group. It will then test SBTs to prove behavior or claims about careers.
Not quite adoption (yet?) but NFT marketplace Magic Eden hires its first Chief Gaming Officer, who worked at mobile gaming firm Glu Mobile which was acquired by game developer Electronic Arts back in 2021 for $2.1b. This signals an expansion from art NFTs into gaming sector, which I always believed could bring in the next wave of crypto adoption.
Crypto Infrastructure
As mentioned in the past, investments in crypto infrastructure have been a focus of private equity the past few quarters. Crypto payment providers in particular are commonly seen as the direct beneficiary of crypto adoption. Blockdata report breaks down the areas providers are targeting into B2C, B2C, NFT, Web3 and remittance categories. Despite the fall in crypto prices, crypto payments acceptance has been on the rise. Have a read for a good overview.
Regulation
New US bill would require crypto miners to report greenhouse gas emissions. This could possibly help dispel misconceptions that crypto mining is a leading contributor to greenhouse gases, or force miners to become carbon neutral or even carbon negative. TeraWulf WULF 0.00%↑ focuses on carbon neutrality.
Hong Kong passes an amendment introducing a licensing regime for virtual asset service providers (VASPs), to commence 1 June 2023. Another datapoint showing HK is trying to reclaim the crypto hub status of Asia, which currently belongs to Singapore.
Any company offering crypto services to residents of EU will need to comply with EU tax reporting rules, regardless of where the company is based. The gap in expected and collected tax on taxable goods and services within the bloc was €93 billion ($98 billion) in 2020.
SEC wants firms to disclose if they have crypto exposure. This follows FTX’s collapse, and I guess that the disclosure requirement will show how big institutional adoption has already become.
Dark Side of Crypto
Yes we are still talking about FTX… All NFTs minted on FTX used a web2 API, and with FTX’s bankruptcy, the metadata for all their NFTs are broken and the links go to a restructuring website. Imagine your NFT looking like the below.
Speaking of your latest crypto villain, FTX founder SBF has been summoned to testify on Dec 14, when previously SBF claimed he would explain the situation only when he has “finished learning and reviewing what happened”. Senators having none of that now, saying they are prepared to issue a subpoena for his testimony. In separate news, prosecutors probing whether FTX manipulated prices of TerraUSD and Luna.
Crypto is a scam? Or more like centralized entities where users/investors have no control over are run by scammy people? Crypto hedge fund BKCoin fires co-founder Kang for misusing $12m investor funds. There is an ongoing Florida court case against Kang.
Nomad bridge, which was hacked $190m in Aug, is restarting their bridge. A bridge is a service where users can transfer their tokens from one blockchain to another, but has constantly been the target for the biggest hacks, with the top 4 hacks this year being Ronin, BNB Bridge, Wormhole & Nomad bridges.
Follow the Money
Web3 film platform Shibuya raised $6.9m funding from investors including a16z, Variant, Paris Hilton, Kevin Durant. Valuation at $50m. Shibuya is founded by digital artist Emily Yang, known as pplpleasr. First project is an anime short film called White Rabbit, and will be released in installments of 3-5min.
Bitcoin miner 360 Mining raises $2.25m funding from investors including Luxor, BT Growth. Plans to increase natural gas production and mining capacity.
Ongoing Trends
Bankruptcy of 2nd largest crypto exchange FTX causes contagion risks. How many funds & protocols have yet to announce their exposure? Learn to self-Custody!
Decentralization no longer just a tagline. Centralized to decentralized movement for remaining crypto traders & investors.
Global crypto adoption and increased regulation, launches of Centralized Bank Digital Currencies.
Bitcoin mining industry consolidation as margin squeezed on low BTC prices and higher costs (electricity, funding, hashrate difficulty etc).
Macro: US CPI peaking & potential slowing of Fed rate hikes / Russia Ukraine war may be thawing / China pivoting from zero-Covid policy
Tokens Mentioned Today
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