Ben Strack

<div id="highlights-block_619d3220a8632" class="highlights">
 <ul>
 <li>Morningstar Analyst Bobby Blue says Grayscale should allow investors to trade in their discounted shares for the amount of bitcoin in the trust that the shares represent while firm waits to convert its bitcoin trust to an ETF</li>
 <li>GBTC has returned 42% in 2021, as of Oct. 29, according to Morningstar data, which is less than half of bitcoin’s 95% return</li>
 </ul>
 
</div>



An ETF that directly invests in bitcoin is what investors want and deserve, Grayscale Investments CEO Michael Sonnenshein said.



The comments come after Morningstar Analyst Bobby Blue wrote in a November 22 <a href="https://www.morningstar.com/articles/1068472/the-problems-with-the-worlds-biggest-bitcoin-fund?utm_medium=referral&amp;utm_campaign=linkshare&amp;utm_source=link" target="_blank" rel="noreferrer noopener">research note</a> that Grayscale should institute a redemption program for its flagship bitcoin offering that has traded at a discount for a majority of the year.



<a href="https://grayscale.com/products/grayscale-bitcoin-trust/" target="_blank" rel="noreferrer noopener">The Grayscale Bitcoin Trust (GBTC)</a> launched in 2013 and had $37.2 billion assets under management on Tuesday. Similar to a closed-end fund, GBTC is a grantor trust that invests directly and exclusively in bitcoin.&nbsp;



The fund’s trust structure leads to persistent deviations between the price investors pay for shares and the actual value of those shares, Blue explained.



“There’s a lot more shares that investors want to sell than there is demand for it right now,” Blue told Blockworks. “There are other, cheaper, more efficient options available to investors and as those continue to proliferate, they’re going to look at this 2% expense ratio product and just say it’s just not doing it for me anymore.”



GBTC’s cost and limitations as a trust have led to substantial differences between the returns of the product and the returns of bitcoin itself. The offering has returned 42% in 2021, as of October 29, according to Morningstar data, which is less than half of bitcoin’s 95% return.



<h3>Bitcoin investors looking elsewhere</h3>



GBTC shares began trading at a discount to their net asset value in February, which was the month Canadian fund group Purpose Investments launched the world’s first bitcoin ETF on the Toronto Stock Exchange, Blue said.



The management fee of Purpose Investments’ product is half of that of GBTC, and the ETF gathered more than $1 billion in assets in its first month of trading.&nbsp;&nbsp;



In an ETF, market makers are able to create and redeem shares to keep the net asset value in line with the price, Blue explained. The only entity able to create and remove shares from the market is Grayscale, which it does through private placements and redemptions that are only available periodically to accredited investors.



While the US Securities and Exchange Commission (SEC) has not yet approved a spot bitcoin ETF in the US, it has recently allowed ETFs that invest in bitcoin futures contracts to come to market.&nbsp;



The ProShares Bitcoin Strategy (BITO) <a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/" target="_blank" rel="noreferrer noopener">launched on October 19</a> and the Valkyrie Bitcoin Strategy ETF (BTF) <a href="https://cms.blockworks.co/valkyries-btf-trades-10m-in-first-5-minutes/" target="_blank" rel="noreferrer noopener">came to market</a> three days later. <a href="https://cms.blockworks.co/vanecks-bitcoin-futures-etf-set-to-launch-tuesday/" target="_blank" rel="noreferrer noopener">A similar offering</a> by fund manager VanEck and <a href="https://cms.blockworks.co/global-x-offers-different-type-of-bitcoin-futures-etf/" target="_blank" rel="noreferrer noopener">a product by Global X</a> that invests in bitcoin futures and the equity securities of blockchain companies became available to US investors earlier this month.&nbsp;&nbsp;



“Grayscale was able to harvest a lot of assets being the first mover and the only mover for a number of years, but that’s starting to break down,” Blue said.



<h3>What’s the fix?</h3>



A Grayscale spokesperson told Blockworks in an email that an ETF is the most efficient way to resolve any discrepancy between the firm’s products’ share price and the net asset value.



Sonnenshein responded to a Morningstar post on Tuesday that shared Blue’s research note, alluding to Grayscale voluntarily <a href="https://www.globenewswire.com/news-release/2021/09/10/2295185/0/en/Grayscale-Investments-Doubles-Its-Suite-of-SEC-Reporting-Investment-Products.html" target="_blank" rel="noreferrer noopener">making its products SEC reporting companies</a> and the firm’s <a href="https://cms.blockworks.co/grayscale-poaches-alerian-ceo-to-lead-crypto-etf-push/" target="_blank" rel="noreferrer noopener">hiring of David LaValle</a> as its global head of ETFs in August.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">✔️Launch 1st &amp; largest publicly-traded <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> fund ✔️Voluntarily become SEC reporting ✔️Hire Global Head of ETFs ✔️Partner w/ <a href="https://twitter.com/BNYMellon?ref_src=twsrc%5Etfw">@BNYMellon</a> &amp; <a href="https://twitter.com/NYSE?ref_src=twsrc%5Etfw">@NYSE</a> ✔️Advocate for Bitcoin Spot ETF An ETF is what our investors want, and what we believe they deserve. <a href="https://twitter.com/search?q=%24GBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$GBTC</a> <a href="https://t.co/Z7lr3E38Po">https://t.co/Z7lr3E38Po</a>&mdash; Sonnenshein (@Sonnenshein) <a href="https://twitter.com/Sonnenshein/status/1463187582070706185?ref_src=twsrc%5Etfw">November 23, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“An ETF is what our investors want, and what we believe they deserve,” Sonnenshein wrote.



Grayscale officially <a href="https://cms.blockworks.co/grayscale-files-to-convert-its-bitcoin-trust-into-an-etf/" target="_blank" rel="noreferrer noopener">filed to convert GBTC to an ETF</a> on October 19, the same day that BITO launched. Such a conversion would lift the current price discount and propel shares higher toward the net asset value, Blue said.&nbsp;



But it remains unclear when the SEC could approve an ETF that invests directly in bitcoin. <a href="https://cms.blockworks.co/sec-rejects-vanecks-proposed-spot-bitcoin-etf/" target="_blank" rel="noreferrer noopener">The agency denied</a> VanEck’s proposal for a spot bitcoin ETF on November 12, just before its 240-day review period of the planned product expired.



“In the meantime, investors’ best hope is for Grayscale to institute a redemption program,” Blue wrote in the note.



<blockquote class="wp-block-quote">“Its failure to do so to this point explains the trust’s current dilemma, though the firm may be reluctant to pull that lever until there’s more clarity around a spot ETF.”</blockquote>



Grayscale had previously offered a redemption program but closed it in 2016 after the SEC charged it with violating a regulation preventing the firm from repurchasing shares at the same time that it is offering shares through private placements, Blue noted. But Grayscale is currently not offering new shares.



The firm’s parent company, Digital Currency Group, last month authorized the purchase of up to a total of $1 billion worth of shares of GBTC, increasing its prior authorization of buying up to $750 million.&nbsp;



The timing, amount and value of share purchases will depend on levels of cash available, price and market conditions, the firm said in a statement at the time. The authorization may be expanded, modified or discontinued at any time.



“Repurchasing shares at the market price indeed creates demand for the shares, which typically helps narrow the spread,” Blue explained. “But the trust’s massive size is a hindrance, and thus far the repurchases haven’t made a visible dent.”



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Grayscale’s Michael Sonnenshein: A Bitcoin ETF Is What Investors Deserve

Bitcoin’s price is approaching the average buy-in the largest public holder of bitcoin paid for its massive BTC stash.



Business intelligence firm MicroStrategy held 132,500 bitcoins, as of Dec. 31. The original cost basis for the <a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a> pile was nearly $4 billion, reflecting an average cost per bitcoin of about $30,137. 



The price of <a href="https://blockworks.co/tag/bitcoin" target="_blank" rel="noreferrer noopener">bitcoin</a> was about $28,200 at 3 pm ET Monday, up roughly 26% from a week ago.



<a href="https://blockworks.co/tag/microstrategy" target="_blank" rel="noreferrer noopener">MicroStrategy</a>’s net loss was $250 million during the fourth quarter of 2022, the company reported in February. Its digital asset impairment charges — which comes into play if the market value of bitcoin decreases below its market-adjusted purchase value — were $198 million during the quarter.



Executives said on an earnings call last month that the firm planned to continue its longtime strategy of buying and holding bitcoin on its balance sheet.



Dan Weiskopf — a co-portfolio manager of the Amplify Transformational Data Sharing ETF (BLOK) — told Blockworks that bitcoin’s price is more relevant to traders than to MicroStrategy co-founder <a href="https://blockworks.co/tag/michael-saylor" target="_blank" rel="noreferrer noopener">Michael Saylor</a>.



Saylor has made it clear his company will be a strategic longterm bitcoin owner.



“Some investors may mark the moment when MicroStrategy’s 132,500 BTC is at a breakeven level; I don’t think Saylor ever thought that was not a high probability,” Weiskopf told Blockworks. “In fact, I am confident for him it is a short-term mark and only the beginning for what he expects bitcoin will accomplish.”



A MicroStrategy spokesperson did not immediately return a request for comment.&nbsp;



<a href="https://blockworks.co/news/microstrategy-buys-the-bitcoin-dip-draws-criticism-from-analysts">Analysts have been critical of the company</a> in the past about its buying and holding strategy amid market volatility.&nbsp;&nbsp;



Edward Moya, a senior market analyst for foreign exchange company OANDA, said last June that MicroStrategy “has failed to capitalize on the way up and find protection when things got ugly,” adding that the company has been “reckless with their portfolio management.”



The company’s unrealized losses when bitcoin dropped to below $16,000 in November, MicroStrategy’s totaled nearly $2 billion.&nbsp;



<h2>New bull indicator&nbsp;</h2>



Bitcoin’s rally of late has closed that unrealized gap.



“Microstrategy has survived a crypto ice age and now has an opportunity to take advantage of growing interest in DeFi and all the other crypto protocols with better growth potential,” Moya told Blockworks Monday. “With no true bitcoin ETF coming, Microstrategy is still positioned to attract new investors.”



MicroStrategy’s stock price was $261.50 at 3 pm ET Monday — up about 80% year to date, but down roughly 2% on the day. 



Weiskopf said the latest bitcoin price gains have been caused in part by the broadening of BTC use cases — such as <a href="https://blockworks.co/news/new-bitcoin-ordinals-marketplace">bitcoin ordinals</a> — that could spur MicroStrategy to buy even more of the asset.&nbsp;



Marcus Sotiriou, a market analyst at GlobalBlock, said in a research note that bitcoin reaching $28,000 over the weekend signals the start of a new bull trend.&nbsp;



“The recent closures of US banking giants have acted as a catalyst for bitcoin’s price increase,” Sotiriou wrote. “The drawbacks of the banking system are a key proponent for decentralized assets such as bitcoin.”



Morningstar senior research analyst Madeline Hume said MicroStrategy has vowed to add to its bitcoin position while cash flows are in excess of working capital— and while equity raises are feasible.&nbsp;



MicroStrategy’s working capital is negative, Hume said, suggesting additional purchases are unlikely in the short term.



“Across the capital markets, liquidity raises have ground to a halt given the jittery macro environment,” she told Blockworks. “Any additional tactical moves, including a liquidation of some portion of the bitcoin holdings, would depend on the firm’s ability to finance its activities in other ways, including the firm’s ability to borrow.”



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MicroStrategy Nearly Even on Bitcoin Buys After Latest Rally

Bessie Liu

Ordinals infrastructure is taking shape, with multiple marketplaces now servicing the budding Bitcoin digital collectible community.



Gamma.io is the latest, having built its presence by supporting creation and auctions for NFTs issued on Stacks, the smart contract layer for Bitcoin.



The platform now supports <a href="https://blockworks.co/tag/ordinals" target="_blank" rel="noreferrer noopener">Ordinals</a> auctions in the same vein as Ethereum NFT marketplace <a href="https://blockworks.co/tag/opensea" target="_blank" rel="noreferrer noopener">OpenSea</a>, allowing users to trade inscribed satoshis peer-to-peer. (Stacks NFTs are a separate concept to Bitcoin-native Ordinals.)



Gamma also launched a “no-code” Ordinals creation tool last month, allowing users to upload and inscribe any image to the Bitcoin blockchain. The firm says it has assisted production of more than 30,000 inscriptions to date, making up almost 10% of all Ordinals on the network.



&#8220;As Ordinals become the bright spot in this crypto winter, our trustless Bitcoin ordinals marketplace showcases our commitment to an exceptional Web3-native experience,&#8221; Jamil Dhanani, founder and CEO of Gamma, said in a statement.&nbsp;



Currently, Gamma allows access to only Stacks NFTs and Ordinals, but not Ethereum NFTs. However, Ethereum wallets can be connected to a single profile, enabling users to showcase NFTs across the three networks.



Stacks NFTs can be purchased with the network’s native token, STX, while Ordinals can be bought with bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>).



<h2>What are Bitcoin Ordinals</h2>



Casey Rodarmor wanted to <a href="https://twitter.com/rodarmor/status/1619520557934059521?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1619520557934059521%7Ctwgr%5E40fa2a2936070d9aecda805f93c7d8eba4a4ec98%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fwww.coindesk.com%2Fconsensus-magazine%2F2023%2F02%2F23%2Fcasey-rodarmor-why-i-developed-the-ordinals-bitcoin-nft-project-coindesk%2F" target="_blank" rel="noreferrer noopener">make Bitcoin fun again</a>. 



Following the Taproot upgrade in 2021, he <a href="https://blockworks.co/news/cant-ignore-bitcoin-nfts" target="_blank" rel="noreferrer noopener">identified</a> a way to store text, images, SVGs and HTML to be stored individually on the Bitcoin blockchain using a numbering scheme for satoshis — the smallest denomination of bitcoin.



Using an accounting-like method, individual satoshis were made non-fungible once they were able to be differentiated in a closed-off system, making them uniquely identifiable.&nbsp;



Many in the industry are excited about this new development, with Stacks co-founder Muneeb Ali saying: “Ordinals came out of nowhere and at the right time that has ignited interest in the Bitcoin builders culture again.”



“Overall, that is a very healthy thing for Bitcoin,” Muneeb said. “So many people who forgot about Bitcoin because they wanted to play with NFTs and other types of experimental things, they&#8217;re now booting up Bitcoin nodes and reconnecting with Bitcoin.”



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/XdDYTpa9OjNMF_oG6v8nOq691SFNF7ymi-gNow9UJCI9pu_P9kRL0fbbtRpZKUP4-7JXrY4xowJKF0AV7zL81CqZjc_c-JEGxTLlfBupvmO4yiX4KkXNU5yb2HMQYF7Dltf-JrnWHmLGZ-CZqFi3Ddc" alt=""/><figcaption class="wp-element-caption">“Ordinals Sock Monster” is one of the first Bitcoin-bound collections to hit Gamma</figcaption></figure>



This sentiment is shared by Nick Sainato, Gamma co-founder, who told Blockworks that “as the most secure, decentralized and trusted settlement layer available, Bitcoin is the logical choice for creators to utilize for art, open-source code, historical and cultural artifacts, important documents, and more.”



“Though other innovative ways of using Ordinals remain to be discovered, we are committed, as we have been for the last 18 months, to providing accessible tools and a platform for everyone to discover the potential of Bitcoin,” Sainato said.



Gamma’s Ordinals marketplace will not be the first in the market. ORDX and Ordswap were the first two trustless marketplaces to have launched in the space. Other marketplaces such as scarce.city also exist.



These marketplaces all have relatively similar functionality, allowing its users to buy and sell inscriptions. Ordswap also acts as an Ordinals wallet so that no external wallets need to be connected to the site to execute transactions.



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NFT Marketplaces Battle for Bitcoin Ordinals Mindshare

Casey Wagner

The SEC’s current agenda may be too packed to pass important regulatory guidelines, in crypto or other areas of securities policy, Commissioner Hester Peirce said Monday.&nbsp;



“Gensler has a tremendous amount of energy, and I think that&#8217;s reflected in a very busy regulatory agenda for the commission,” <a href="https://blockworks.co/tag/hester-peirce" target="_blank" rel="noreferrer noopener">Peirce</a> said during a discussion with Florida International University law students.



“I do have grave concerns about the number of things we&#8217;re trying to do at the same time,” she said.&nbsp;



In terms of recent enforcement actions from the SEC, <a href="https://blockworks.co/news/sec-under-gensler-crypto-power-grab-effective-protection">which many industry advocates argue has slowed progress</a> by targeting companies that are unable to go to court and set a precedent, Peirce said the agency may be putting the cart before the horse.&nbsp;



“There is a more efficient way to do this,” she added. “If we think that there&#8217;s a problem in the industry, we need to deal with it through regulation, and then enforcement should follow the regulation.”&nbsp;



Before issuing an enforcement action or agreeing to a settlement, regulators might be better off opening the discussion up to public forums to create policy, Peirce said.



“Repeatedly, I have dissented from settlements in this space because I think what we&#8217;re trying to do is we&#8217;re trying to set the law through these settlements,” the <a href="https://blockworks.co/tag/sec" target="_blank" rel="noreferrer noopener">SEC</a> commissioner added. “Why not — for each of these major topics, where we see there to be some sort of securities angle — why not spell that out in some sort of preliminary written documents?” 



In terms of what is next for crypto policy, Peirce said the industry and regulators need to start thinking critically about digital asset use cases. Trading is only one aspect of crypto, she said.&nbsp;



“But trading can&#8217;t be the only thing that crypto is about, and I think critics rightly have pointed to that,” Peirce said. “So ‘listen to your critics’ is another lesson that I think is important for the industry.”&nbsp;



It’s difficult to put crypto into the current regulatory framework we have for traditional financial markets, Peirce said, but agencies should be encouraged to move faster in order to protect investors and promote innovation.&nbsp;



“Some people in the regulatory world are perfectly fine with having innovation in crypto move away from the United States because they don&#8217;t think that there&#8217;s anything positive that&#8217;s going to come out of it,” Peirce said. “I tend to be of a different mindset.”



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SEC’s Peirce: Gensler Is Trying To Do Too Much Too Fast

A subsidiary of the New York Community Bankcorp, Inc. has entered an agreement to purchase Signature Bank, the Federal Deposit Insurance Corporation (FDIC) said in a press release on Sunday.



The latest deal includes all $38.4 billion in Signature’s assets and $12.9 billion in loans, which were purchased at a significant discount of $2.7 billion.&nbsp;



What’s not included in the acquisition is approximately $60 billion in loans — which will remain under the receivership of the FDIC until later distribution — and $4 billion in deposits from Signature’s cryptocurrency business.&nbsp;



All <a href="https://blockworks.co/tag/signature" target="_blank" rel="noreferrer noopener">Signature</a> customers with cryptocurrency-related deposits with Signature bank will receive their funds directly from the <a href="https://blockworks.co/tag/fdic" target="_blank" rel="noreferrer noopener">FDIC</a>. 



The 40 branches of Signature Bank will operate during normal business hours under the subsidiary Flagstar Bank, starting today.



Signature Bank was the third bank to close its doors this month, <a href="https://blockworks.co/news/banking-sector-versus-defi">following the collapse of Silicon Valley Bank and Silvergate Bank</a>.&nbsp;



Unlike the other two banks, however, Signature bank <a href="https://blockworks.co/news/crypto-regulation-policy-law">was shut down by New York state regulators</a>, ostensibly, to protect the US banking system, although not due to insolvency.



Its closure has drawn concern across the broader cryptocurrency industry, as it was one of the few traditional financial institutions that recognized cryptoassets.&nbsp;



A CoinGecko <a href="https://www.coingecko.com/research/publications/svb-signature-bank-crypto-exposure" target="_blank" rel="noreferrer noopener">report</a> shows that the crypto company which has had the most exposure to the bank failures is <a href="https://blockworks.co/tag/circle" target="_blank" rel="noreferrer noopener">Circle</a> — the issuer of the <a href="https://blockworks.co/tag/usdc" target="_blank" rel="noreferrer noopener">USDC</a> stablecoin.



Circle announced last week that it was accelerating the onboarding of a <a href="https://blockworks.co/news/new-circle-bank-after-usdc-depeg">new banking partner</a>, Cross River Bank.



Paxos, Coinbase, BlockFi also have material exposure to the shuttered bank. Paxos reported $250 million held at Signature, while Coinbase had $240 million with Signature Bank, and BlockFi noted $227 million in assets were affected.



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New York Community Bank Will Acquire Signature — But Not Crypto Holdings

Sebastian Sinclair

Microsoft is reportedly working on an Ethereum-based Web3 wallet for its flagship browser, allowing users to send and receive digital assets and NFTs.&nbsp;



The wallet is currently in a limited testing phase and is not yet available to the public, IT media outlet <a href="https://www.bleepingcomputer.com/news/microsoft/microsoft-is-testing-a-built-in-crypto-wallet-in-microsoft-edge/" target="_blank" rel="noreferrer noopener">Bleeping Computer</a> reported Friday.



First reported by Microsoft sleuth <a href="https://twitter.com/thebookisclosed/status/1636759487829917698?s=20" target="_blank" rel="noreferrer noopener">Albacore</a>, who shared screenshots of the wallet on Twitter, Microsoft is asking “testers” via its Edge browser to put up their own assets.



“We encourage you to test our first Web3 wallet and provide candid feedback along the journey,” Microsoft said in one of the <a href="https://twitter.com/thebookisclosed/status/1636759487829917698/photo/2" target="_blank" rel="noreferrer noopener">screenshots</a>. “As the first testers, you have the unique opportunity to shape our foray into cryptocurrencies and NFTs.”



The wallet is non-custodial, meaning users are in control of their funds and the tech giant will not have access to their passwords or recovery keys. The wallet generates an Ethereum address that allows users to receive funds through the Ethereum network.&nbsp;



Users can also manage multiple Ethereum accounts and choose between the built-in Edge wallet or an extension.



Microsoft has partnered with Consensys to make available a <a href="https://twitter.com/thebookisclosed/status/1636761695216451588/photo/3" target="_blank" rel="noreferrer noopener">swap feature</a> supporting ETH, DAI, UNI, USDC, and USDT, according to Bleeping Computer.&nbsp;



Microsoft and Consensys did not immediately respond to requests for comment.



It remains to be seen if Microsoft will add support for other digital assets in the future.



According to Albacore, the wallet may launch soon.



“It ended up being less complex than I anticipated, which is also why I think that a launch might not be far away,” he told Blockworks.



According to the <a href="https://twitter.com/thebookisclosed/status/1636759748207845378/photo/3" target="_blank" rel="noreferrer noopener">screenshots</a>, the beta version of the wallet also features a news section to keep track of industry developments, which includes the ability to connect to decentralized apps.



Simon Kertonegoro, who previously helped usher in the implementation of a collaborative program between Microsoft and Enjin known as Azure Heroes, told Blockworks the tech giant’s Web3 wallet was a “savvy play” as it sought to “gain an upper hand” against rival Google Chrome.



“This would be amazing for us as users too, we&#8217;ll no longer need to input our credit card information every time we make a payment,” the founder of MyMetaverse said.



While the Edge crypto wallet is still in the testing phase, it could be a significant development for Microsoft, as it allows users to easily send and receive crypto without installing additional extensions or apps.&nbsp;



The move signals a pivot from its previous Web3 endeavors; Microsoft <a href="https://blockworks.co/news/microsoft-culls-metaverse-team">axed its metaverse unit</a> in February, just four months after it had created a team tasked with building industrial networks.



Jane Ma, co-founder of zkLend, a layer-2 money-market protocol built on StarkNet, told Blockworks the emergence of Web3 technologies has spurred a growing trend of Web2 infrastructure companies looking to explore ways to integrate these decentralized solutions into their platforms.



“Microsoft&#8217;s prototype crypto wallet for its Edge browser is a prime example of this trend, as it aims to simplify the onboarding process for new users,” Ma said. “With a massive user base of over 200 million, Microsoft Edge&#8217;s approach of providing a ready-made, packaged solution within its browser would break down technical barriers,” she said.



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Microsoft Edge Testing Built-In Ethereum Crypto Wallet, Screenshots Show

Shalini Nagarajan

In Taiwan, the top financial watchdog is set to become the main oversight body for the local crypto industry, in what would mark a first for East Asia.



Financial Supervisory Commission (FSC) chairman Huang Tien-mu said in parliament Monday that initially only crypto payments and transactions will come under his agency’s ambit, Reuters reported. 



The FSC regulates securities markets, insurance providers and the banking sector. The only key rule for crypto, for now, is that domestic platforms are meant to comply with anti-money laundering rules. 



Huang <a href="https://www.reuters.com/technology/taiwan-financial-regulator-says-will-oversee-crypto-currencies-2023-03-20/" target="_blank" rel="noreferrer noopener">reportedly</a> said it’s too early to debate forming separate legislation especially for crypto. He&#8217;s also yet to discuss details around self-regulation and other aspects of the crypto industry with governmental departments. 



The official appointment of the FSC is expected to be made by the end of March, per <a href="https://www.bloomberg.com/news/articles/2023-03-20/taiwan-s-fsc-set-to-be-named-as-main-crypto-regulatory-body" target="_blank" rel="noreferrer noopener">Bloomberg</a>, which cited a person familiar with the matter. 



Non-fungible tokens (NFTs) won’t fall under the FSC’s purview and could instead be assigned to another department, such as the IT-focused Digital Affairs Ministry. Stablecoins could have an association with the central bank.



While crypto has been outright banned in nearby mainland China since 2021, Taiwan instead introduced anti-money laundering laws for crypto services providers in July of that year.&nbsp;



One year later, some 24 crypto firms registered under Taiwan’s Money Laundering Control Act including MaiCoin, BitoPro and XREX.



In the first half of 2022, crypto trading volumes in Taiwan <a href="https://restofworld.org/2023/taiwan-asia-crypto-capital/" target="_blank" rel="noreferrer noopener">shot up</a> more than 30%. Its biggest crypto exchange MaiCoin saw over $20 million in daily trading volume (for scale, Coinbase currently processes about $2 billion per day, according to CoinGecko).



Taiwan moving to formally regulate crypto payments comes after a chaotic year for cryptocurrencies, earmarked by crypto exchange FTX filing for bankruptcy in November, having failed to handle an $8-billion-plus influx of user withdrawals.&nbsp;



Regulators around the world have called for more scrutiny of crypto exchanges and warned investors of risks associated with digital assets.



The securities watchdog <a href="https://blockworks.co/news/taiwan-bans-crypto-purchases-using-credit-cards" target="_blank" rel="noreferrer noopener">banned</a> digital asset transactions via credit cards in July, asking the banking industry not to grant “merchant status” to crypto service providers.



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Taiwan Securities Watchdog Will Regulate Crypto — But Not NFTs

As central banks continue to struggle with economic uncertainty amid concerns of hyperinflation, investors are turning to digital assets to protect their wealth.



Bellwether bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) climbed to its highest level in nine months, just above $28,400, on Sunday — representing a 69% increase on a year-to-date basis.



Price action is being driven by spot buys which is positive for the health of the trend, with the market yet to see froth and euphoria in capital allocation, Kurt Grumelart, a trader at Zerocap told Blockworks.



“The majority of this flow is hedge funds and other large market players positioning themselves in anticipation of a flight to safety more so than the actual flight to safety itself.”



Despite this, a comparison to global markets over the last two weeks shows that bitcoin is being actively considered as a risk hedge alongside and, potentially, instead of gold by serious players, Grumelart added.



By comparison, traditional markets have fared much worse, impressing long time crypto market watchers.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">WHY IT&#39;S DIFFERENT THIS TIME During the Covid crisis, did bitcoin have its moment? Not really, it nuked harder than anything instead of acting as a safe haven—and then traded like a junk risk stock on steroids, mooning at the same time as dogecoin and monkey jpegs. During the… <a href="https://t.co/L9t6clLudF">https://t.co/L9t6clLudF</a> <a href="https://t.co/CZZ9eMtMFG">pic.twitter.com/CZZ9eMtMFG</a>&mdash; Eric Wall 🧙‍♂️ Taproot Wizard #2 (@ercwl) <a href="https://twitter.com/ercwl/status/1637573829642862595?ref_src=twsrc%5Etfw">March 19, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The Dow Jones Industrial Average, which measures the performance of stocks listed on the New York Stock Exchange (NYSE) and the Nasdaq, is down about 3.8% for the year.



US oil, as reflected by the West Texas Intermediate (WTI) crude oil index, has also performed poorly, posting a more than 13% loss over the same period. Meanwhile, gold — often considered a hedge against inflation and market uncertainty — is up around 9% year-to-date.



Bitcoin’s recent outperformance can be attributed to a number of factors, including the narrative of store-of-value, which has returned to prominence despite its past inability to perform that role in practice.



Grumelart pointed to bitcoin’s storied origins in the 2008 financial crisis, as a tool to combat negligence within the existing financial system, and said the current economic climate marked “a perfect storm” for bitcoin to prove its worth.



That climate is the culmination of a series of spectacular bank failures in the US and abroad which threatened to boil over this month, prompting regulators to step in and provide a backstop for depositors.



After the <a href="https://blockworks.co/news/silicon-valley-bank-meltdown-has-little-to-do-with-crypto">collapse of Silicon Valley Bank</a> and the <a href="https://blockworks.co/news/fdic-sells-signature-bank">FDIC shut down of Signature Bank</a>, First Republic Bank was also propped up by a private sector rescue and banks drew on nearly $12 billion of loans from the US Federal Reserve’s <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312a.htm" target="_blank" rel="noreferrer noopener">new emergency lending program</a>.



And on Sundsy, Swiss banking giant Credit Suisse was saved from collapse by a takeover from rival UBS in a <a href="https://www.ft.com/content/9fe40e6a-f01f-4205-b885-7771d305721e">$3.25 billion deal</a>.



<h2>Short-term liquidity boost is bitcoin’s gain</h2>



In total, nearly <a href="https://twitter.com/LynAldenContact/status/1636470293068644358?s=20" target="_blank" rel="noreferrer noopener">$300 billion</a> has been supplied via expansion of the US Federal Reserve’s balance sheet, including of a record <a href="https://www.marketwatch.com/story/fed-balance-sheet-balloons-by-almost-300-billion-after-svb-failure-and-effort-to-stop-bank-runs-f58cd3d8" target="_blank" rel="noreferrer noopener">$153 billion drawn</a> from the Fed’s discount window. 



All eyes are now locked on the outcome of the next FOMC meeting on Wednesday where the Fed will decide either to scale back its campaign of increased rate hikes, designed to combat inflation, or continue business as usual which has contributed to the breaking of the US retail banking sector.



“A number of central banks are stuck between a rock and a hard place, they simply cannot afford to let the banking sector collapse,” Grumelart said. “While the liquidity spike is positive for all assets, the implications of the action just taken are still unknown.”



The <a href="https://blockworks.co/news/stocks-and-crypto-correlation-shows-signs-of-weakening">correlation between bitcoin and equities</a> has been largely influenced by the perception the crypto industry, until the recent crisis, served as a risk-on indicator that was closely connected to the economic performance and monetary policies of the US and global markets.



While financial companies have been struggling, the <a href="https://www.barrons.com/articles/bank-crisis-apple-google-tech-stocks-fd937612" target="_blank" rel="noreferrer noopener">tech sector has been resilient</a>, with the Nasdaq Composite up over 4% and the Technology Select Sector SPDR Fund up about 17% for the year.



Tesla and Nvidia, up 67% and 79% YTD respectively, have their own unique drivers that have propelled their prices in recent months, Grumelart said. High-beta risk assets are primarily affected by <a href="https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.pr230319~744758829c.en.html" target="_blank" rel="noreferrer noopener">market liquidity</a> and risk appetite, leading to periods of correlation. 



Although many risk assets have seen short-term gains, should economic conditions continue to deteriorate, high-growth equities are expected to suffer. But Grumelart is looking for bitcoin to decouple from Big Tech and follow commodities instead.



“If inflation reaches a double peak, it is likely that most high-performing assets, with the exception of commodities and bitcoin, will reverse most of their gains for the year,” he said. &#8220;The world should be glad that we have bitcoin as an option to protect our wealth in moments like this.&#8221;



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Bitcoin Price Gains Momentum as ‘Store of Value’ Amidst Banking Turmoil

One of the quietest weeks crypto funding has passed following the failure of prominent US startup bank Silicon Valley Bank (SVB).&nbsp;



This week, only $37 million was given to startups in the space, significantly less compared to the previous week, where an estimated <a href="https://blockworks.co/news/crypto-funding-continues">$254 million</a> was handed to crypto startups.



Only six companies managed to land funding this week, with a majority of them in the gaming space. Here are the highlights:



<h2>DRESSX</h2>



LA-based digital fashion tech company DRESSX has landed a $15 million Series A led by Greenfield. Other investors participating in the round include Slow Ventures, Warner Music, the Artemis Fund and Red Dao.



The company launched in August 2020 and has worked with Decentraland and Ready Player Me to sell digital garments for gamer avatars. They have also worked with external marketplaces such as Roblox, Zepeto and Meta.



“There is a huge design space and a new paradigm emerging around the question, what we are wearing within the metaverse,” Jascha Samadi, founding partner at Greenfield, said. “As we spend more and more time in virtual environments, this will equally translate beyond the physical sphere and NFTs and blockchain technology will enable true digital ownership to elevate one’s identity.”



<h2>Metacade</h2>



Play-to-earn gaming platform Metacade has successfully secured $10 million in a token-presale round.



The token will list on Bitmart and decentralized exchange Uniswap after the presale concludes on March 30.



The initial raise target was set for <a href="https://metacade.co/en/announcements/lowering-our-raise-to-16-m" target="_blank" rel="noreferrer noopener">$20 million</a>, but the company has since reduced the limit to $16.4 million.



“A lot of money rushed out of the market after FTX collapsed and the past year overall, and it seems that we are able to access resources cheaper than we believed possible beforehand,” the company said in a <a href="https://metacade.co/en/announcements/lowering-our-raise-to-16-m" target="_blank" rel="noreferrer noopener">blog post</a>. “We do believe that we can deliver the project in full, with a buffer remaining, for $16.385m rather than the $20m initially anticipated.”



<h2>TeleportDAO</h2>



TeleportDAO, a decentralized infrastructure organization designed to build cross-chain applications, has secured $2.5 million in a seed round of financing from AppWorks and DefinanceX.



The DAO is designing infrastructure that can move any data — such as messages, contract calls and assets — between blockchains in a trustless manner. It is in the process of integrating with platforms, wallets and lending applications and is in the process of creating a decentralized marketplace for Ordinals.



“Blockchains bridges need to become at least as secure as their underlying chains. Multisig and validator-based bridges do not offer such security,” Niusha Moshrefi, CEO of TeleportDAO, said in a statement. “The primary focus in TeleportDAO is to build such secure bridges using light-client technology.”



<h2>Other notable raises:</h2>



<ul>
<li>Web3 gaming studio, Jungle landed $6 million in a seed round led by Bitkraft VC and Framework Ventures.</li>



<li>Soul Wallet secured $3 million in a party round where investors such as Struck Crypto, Game7DAO, NGC Ventures and Dispersion Capital.&nbsp;</li>



<li>Crypto wallet infrastructure Capsule received a $500,000 investment from a16z.</li>
</ul>



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Funding Roundup: All Quiet On the Web3 Front

Yves La Rose

We&#8217;re not even three months into 2023 and we’ve already had the first major instance of contagion in the crypto industry. The collapse of Silicon Valley Bank (SVB), New York lender Signature Bank, and crypto-friendly bank Silvergate sent shockwaves through the financial world over the past week as investors, regulators and customers scrambled to get their ducks in a row (and in the case of the latter, desperately withdraw deposits).&nbsp;



These banking disasters, just like FTX’s collapse last year, shine a spotlight once more on the counterparty risk inherent not just in the banking system — but in any centralized financial system at all. And although the US government stepped in to assure depositors they would be able to recover their capital, the imbroglio saw top stablecoin USD Coin (USDC) depeg, at one stage dropping to just 87 cents as contagion fears spread. The world’s fifth largest cryptocurrency is owned by Circle, which had $3.3 billion deposited at the doomed SVB.



<h2>An eye-opening near miss</h2>



Although USDC has thankfully since regained its dollar peg, it would be foolish to breathe a sigh of relief and take an “all’s well that ends well” outlook going forward. It is deeply troubling that the collapse of a fiat bank could rock a top five digital asset to this extent. It’s even more troubling that 33% of the cash reserves backing USDC were held at a bank with a $1.8 billion hole in its balance sheet. The initial fears of contagion were clearly not without foundation either: Multiple stablecoins, including DAI and FRAX, use USD Coin as collateral and also lost their peg as a result.



As in the aftermath of FTX, Three Arrows, Terra and Celsius last year, crypto investors have received yet another warning shot. The mantra “Be your own bank” has been repeated ad nauseam, but perhaps the message will finally hit home for the wilfully blind in 2023. In this case, of course, it was fiat banks tanking and Uncle Sam that made them whole — but the significance for crypto cannot be ignored.



Some of the main problems with “crypto” right now are the points of friction between the traditional financial system and the parallel digital assets exchanges and tokens systems. These pain points stand out most in terms of how traditional firms are regulated versus this newer breed of financial instruments.



Circle isn’t the only crypto bellwether that keeps reserves in fiat banks like SVB, whose deposits expanded significantly during the pandemic while tech stocks boomed. Crypto-friendly bank Silvergate, meanwhile, was one of comparatively few regulated financial firms that provided banking services to a swath of crypto companies and platforms.



In the not too distant past, banks wouldn’t touch crypto companies with a barge pole. That’s no longer necessarily the case, with regulators having forced the crypto industry to bend the knee to operate and establish partnerships that could bridge both worlds. But if you cast your mind back far enough, you’ll recall that crypto only bloomed into being because the bright minds pushing it forward were deeply cynical about the traditional system itself. It was broken, they said, and decentralization was the answer.



Bitcoin was introduced to the world right after the 2008 financial crash, and fifteen years later, we’re witnessing anew the failure of reserve banking and a debt-based system. Effectively, we’re paying the bill for a decade of partying and profligacy with no accountability thanks to 0% interest rates. Alas, the bill must be settled eventually.



<h2>Where do we go now?</h2>



Certainly, Circle’s close call has highlighted the very real possibility of fiat banking failures impacting not just any singular token involved, but the crypto industry at large. While it’s tempting to think this reality then emphasizes the value of a decentralized stablecoin like DAI, as mentioned, DAI is partly backed by a basket of stables including USDC itself.



This is not a rallying cry for the industry’s power brokers to abandon the traditional banking world en masse. Rather, it is an acknowledgement that we remain very dependent on TradFi, and particularly its rails, to do business. Perhaps it was naive to think this was not the case, but it is eye-opening nonetheless.



The world viewed USDC as one of the safest stablecoins, and since it did regain its peg in just a few days, it’s just about managed to preserve that reputation. But make no mistake, what happened was a near miss, and it almost caused a catastrophic cascade of instability across all markets. And this catastrophic cascade would not and could not have been blamed on any “crypto problem” — it would have been due to the collapse of a fully regulated, 40-year-old bank.



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‘Be Your Own Bank’ Mantra More Relevant Than Ever

Following the wind down of Silvergate, Silicon Valley Bank and Signature Bank, various theories have circled that these events were <a href="https://blockworks.co/news/operation-choke-point-2-0">a targeted attack</a> by an anti-crypto factions of the US government.



Former US Rep. Barney Frank <a href="https://www.cnbc.com/2023/03/13/signature-bank-third-biggest-bank-failure-in-us-history.html" target="_blank" rel="noreferrer noopener">claimed</a> the regulatory takeover of Signature was intended to send a message to US banks to steer clear from crypto businesses.



However, the New York Department of Financial Services disputed this, saying its possession of Signature Bank had <a href="https://blockworks.co/news/signature-possession-nothing-to-do-with-crypto">nothing to do</a> with its crypto dealings.&nbsp;



Turmoil in the banking sector last weekend saw regulators close Signature, which signaled the end of one of the crypto industry’s key banking partners.&nbsp;



But some crypto companies are reportedly turning to big banks like JPMorgan, HSBC and Deutsche Bank. New York Magazine’s <a href="https://nymag.com/intelligencer/2023/03/crypto-companies-are-asking-jamie-dimon-to-hold-their-money.html" target="_blank" rel="noreferrer noopener">Intelligencer</a> reported Thursday that <a href="https://blockworks.co/tag/jpmorgan" target="_blank" rel="noreferrer noopener">JPMorgan</a>, one of the largest Wall Street banks, is opening new accounts for crypto firms including venture capital funds and Web3 infrastructure start-ups.&nbsp;



And while the bank is not turning down business from crypto clients whose funds lie with the three failed banks, it’s also not pursuing them. Instead, it is being selective about the businesses to partners with and steering away from those that issue their own digital tokens.



Chris Burniske, co-founder of crypto-focused VC firm Placeholder, told the outlet that the collapse of smaller peers represents an opportunity for big banks to grow their own business lines. A spokesperson at another crypto VC said no big-name banks had refused partnering with them.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Though Operation Chokepoint is important to be aware of, crypto has more banking options than just SVB, Silvergate, and Signature.&mdash; Chris Burniske (@cburniske) <a href="https://twitter.com/cburniske/status/1635359181262962689?ref_src=twsrc%5Etfw">March 13, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Aside from JPMorgan, <a href="https://blockworks.co/tag/citi" target="_blank" rel="noreferrer noopener">Citi</a> is said to be another big bank that has been receptive to crypto clients.&nbsp;



These companies see the potential for growth and innovation in the crypto industry, despite the challenges that come from being associated with it. “These banks understand that they can&#8217;t ignore the crypto market and its potential to disrupt the traditional financial industry,” said Simon Schaber, chief business development officer at Spool.



Crypto companies need banks for two reasons, in his view. First, banks provide crucial infrastructure for financial transactions, including custody and settlement services. Second, banks bring a level of legitimacy and credibility to the crypto industry that can help attract more mainstream investors.



JPMorgan declined to comment. Citi and <a href="https://blockworks.co/tag/hsbc" target="_blank" rel="noreferrer noopener">HSBC</a> didn’t return a request for comment by press time.



But in recent months, regulators cranked up <a href="https://www.wsj.com/articles/federal-reserve-fdic-and-occ-warn-banks-about-cryptocurrency-risks-11672783296?mod=article_inline" target="_blank" rel="noreferrer noopener">warnings</a> against the crypto industry after FTX’s implosion. The Federal Reserve, Federal Deposit Insurance Corp and Office of the Comptroller of the Currency listed fraud and scams, market volatility and legal uncertainty within the industry among concerns.



And now crypto companies are left struggling to find banking partners. Circle revealed this week that it would <a href="https://blockworks.co/news/new-circle-bank-after-usdc-depeg">partner</a> with New Jersey-based Cross River Bank to produce and redeem its stablecoin USDC, and said it would expand ties with BNY Mellon.



Mercury Bank <a href="https://twitter.com/mercury/status/1634689874467987457" target="_blank" rel="noreferrer noopener">said</a> it already onboarded double its usual number of customers last weekend, “getting as many SVB customers live as possible.”



Meanwhile, the crypto community has also been compiling <a href="https://twitter.com/MapleLeafCap/status/1635089242337714178" target="_blank" rel="noreferrer noopener">lists</a> of banks that could be open to partnering with small crypto firms.&nbsp;



Crypto ventures are still companies at the end of the day, and most, if not all, still have services to pay that require fiat and traditional banking partners, according to Chris Bradbury, CEO at DeFi platform Oasis.



“Financial institutions recognize that, regardless of how many crypto companies fail, cryptocurrencies themselves are here to stay,” he told Blockworks. “To attract the new younger audience, banks must find a way to incorporate crypto services into their operations. They understand that those who do not provide their customers with numerous options will fail in the end.”



CoinDesk <a href="https://www.coindesk.com/business/2023/03/14/santander-hsbc-deutsche-and-others-still-willing-to-serve-crypto-clients-after-banking-failures-dcg-says/" target="_blank" rel="noreferrer noopener">reported</a> Tuesday that its parent firm, Digital Currency Group, was looking to find new banking partners for its subsidiaries, and discovered that Santander, HSBC, Deutsche Bank, BankProv, Bridge Bank, Mercury, Multis and Series Financial are ready to tie up with crypto firms.



None of the big banks are openly declaring their willingness in associating with crypto, but there could be several more that are quietly onboarding new clients.



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JPMorgan, Citi, HSBC Still Welcome Crypto Clients

Linda Jeng

Before I began working in the crypto sector, I was a banking regulator. I am struck by this string of bank crises and how some believe crypto is to blame. The evidence, by contrast, points to a more fundamental culpability besides crypto.



Ultimately, much of what we are seeing with these crises is an artifact of a structural change in the system. At some level, uninsured deposits will always bear a run risk; and as uninsured deposits increase across the system, the system in turn will face a greater run risk. Add a rising interest rate environment to this, and you pour gasoline on the fire.&nbsp;



And looking towards Silicon Valley, or, more narrowly, crypto, as the root of the problem is looking in the wrong place.



The narrative conflating SVB with crypto woes is dangerously misleading. Unlike Silvergate, SVB was not a crypto-focused bank, it was a technology and healthcare-focused bank. Why is SVB failing on the heels of Silvergate’s wind down? Did Silvergate’s collapse cause SVB’s failure? Or was it simply correlation, though perhaps with some shared underlying causes?



<h2>Concentration risk brought down crypto-friendly banks Silvergate and Signature</h2>



At the first crypto startup where I worked, we struggled to find banking partners even though we were funded by well-known VCs (and indeed, by the co-founder of Microsoft). At that time, which was four years ago, there were only three or four crypto-friendly banks out of the over 4,000 banks in the US — and SVB was not one of them.&nbsp;



Instead of distributing exposure risk to the crypto sector across the US banking system, the risk was concentrated in these few banks because other banks were not willing to bank crypto companies. This concentration risk was not unknown. I wrote about it in my research paper back in 2021. Due to the lack of regulatory certainty and passive supervisory encouragement to de-risk (aka, to not bank crypto), most banks did not want to incur the additional scrutiny. Fast forward to last year, and we still see the same environment of regulatory uncertainty along with the same three or four crypto-friendly banks. This huge concentration risk was not created by industry; regulators had a heavy hand.



Fast forward again to today, none of these crypto-friendly banks are available anymore to bank crypto. Two of these crypto-friendly banks have failed, and the other one or two banks have de-risked. While we have seen deposits from crypto now going toward large and regional US banks, it’s not clear if this will be short-term support or long-term commitment. And if crypto firm deposits go offshore or to shadow banking, this will pose a worrying vision for the digital future of the US.



<h2>Deposits shot up across the banking system</h2>



Bank deposits shot up across the entire US banking system during the pandemic —&nbsp;not just banks heavily engaged with crypto companies



According to a Fed research paper published last year, deposits at US domestic commercial banks expanded dramatically when the Covid-19 pandemic began. Total deposits rose by more than 35 percent between the end of 2019 and the fourth quarter of 2021 to around $18 trillion.&nbsp;



It had been a considerable time since the US witnessed such a dramatic increase in deposits. Intuition might suggest that greater savings, i.e. the consumer acting prudentially in a crisis, is maybe a good thing. As with most things, the answer is: It depends.



The FDIC was created by FDR in 1933 to address the most severe banking crisis in US history by insuring bank deposits. I was working on the Hill when Congress raised the FDIC coverage from $100,000 to $250,000 per depositor and per insured bank, during the 2008 global financial crisis. It helped to stem the tide of bank runs by retail depositors, but even then I wondered how it would possibly mitigate the risk of bank runs by corporate depositors.&nbsp;



Companies must meet payroll, receive payments and make payments. Businesses generally keep a cash buffer of three to six months’ worth of operating expenses, which can easily exceed $250,000 — even for startup companies. These large corporate deposit accounts can go down quickly. Bank runs are no longer caused just by retail depositors, but by regular companies, VCs and startups. Silicon Valley Bank (SVB) experienced a $42 billion bank run in less than 24 hours.



According to Business Insider, its survey of 15 US banks found over $1 trillion of uninsured deposits. Signature Bank had 90% uninsured deposits, SVB had 88%, and even Citigroup, a global systemically-important bank, has 85%.



These numbers reveal a general and increasing financial stability risk in the US financial system. Yet in its most recent Financial Stability Report from 2022, the Fed did not call out this structural vulnerability.&nbsp;&nbsp;



I’m also seeing a narrative in the media that if SVB had been subject to full capital and liquidity rules, there would not have been a bank run. Whether SVB should have been subject to these rules is a separate question, but it’s unclear to me whether any bank — no matter how well capitalized and well-managed — can withstand a $42 billion outflow in a single day.



In the end, bank deposits are simply contract claims the depositor has with the bank. The Fed, along with the Treasury and the FDIC, took the unprecedented step of insuring ALL deposits at SVB and Signature Bank. Many of us in both the tech and crypto sector breathed a sigh of relief and gratitude for the government’s action, but we will not know how this unusual move will impact moral hazard in the financial system in the long run. Former FDIC head Sheila Bair recently commented that the uninsured depositors, the companies and high net worth individuals should be the ones exerting market discipline by more closely examining their banks of choice. But how can they do that when material information about the bank, including supervisory exam findings, is confidential?&nbsp;&nbsp;



<h2>Poor management of interest rate risk tanked SVB</h2>



Banks generally fail due to credit risk from borrowing short and lending long. But SVB failed due to interest rate risk, which is a more unusual phenomenon. Supervisory bank exams by regulators cover several risk “stripes,” including interest rate risk (IRR). As described above, SVB (like other banks in a low interest rate environment) purchased longer-dated Treasury securities in search of higher net interest margins (NIMs). What SVB did not foresee was the accelerated rate with which its tech company customers would begin to use up their store of deposits that they had raised during fatter years.



SVB simply forgot the fundamentals of IRR management. For almost a decade — from 2008 to 2017 — the US experienced not only low interest rates, but near-zero interest rates. SVB is definitely not the only bank to have grown used to the low interest rate environment. Banks across the US financial system are sitting on $620 billion in unrealized losses (assets that have decreased in price but have not been sold).



But even if SVB and other US banks may have forgotten how to manage IRR, the Fed and state supervisors (note: SVB’s main regulators were the San Francisco Fed and California’s DFPI) should not have forgotten. IRR supervisory reviews should have flagged this weakness in the safety and soundness of SVB, especially because disclosures show that risk clearly became a skyrocketing concern for the SVB board.



US policymakers and industry should leverage lessons learned to address the structural vulnerabilities that have cracked through. The unprecedented move to protect all deposits at SVB and Signature will have consequences on the US banking industry to be discussed another day, and it’s certainly time for a refresher of fundamentals in bank risk management for both the US banking industry and regulators.



But most importantly, regulators should encourage US banks to bank all sectors in order to reduce exposure risk —&nbsp;from crypto to tech to housing and beyond.



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<div class="is-layout-flex wp-container-2 wp-block-columns">
<div class="is-layout-flow wp-block-column" style="flex-basis:100%"><div class="wp-block-post-author-biography">Linda Jeng worked at the Fed where she chaired the Basel Committee’s working group on open banking. She has spent most of her career working on financial stability and reg reform, including the Financial Stability Board in Basel working on international standards addressing Too-Big-to-Fail, the U.S. Senate drafting the Dodd-Frank Act, and the U.S. Treasury Department on the international implementation of G20-led reforms.</div></div>
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Don’t Blame Crypto for Your Banking Problems

David Canellis

The number of Bitcoin transactions waiting to be confirmed by the network reached its highest point since Terra imploded last week — a sign of renewed interest in the premiere blockchain.



On the afternoon of Mar. 9, nearly 81,000 transactions briefly sat in Bitcoin’s “<a href="https://www.blockworksresearch.com/glossary#mempool" target="_blank" rel="noreferrer noopener">mempool</a>” — a data structure that stores valid transactions yet to be added to the blockchain.&nbsp;



That was just 1,000 shy of last year’s peak on May 13, as algorithmic stablecoin <a href="https://blockworks.co/price/ust" target="_blank" rel="noreferrer noopener">UST</a> was crashing to zero, and 66% more than the 48,000 sitting unconfirmed in mid-November following FTX’s sudden implosion.



Mempool spikes like these can occur when there is a surge in network usage, although a sudden drop in mining power can have the same effect.



Only so much transactional data can fit into each Bitcoin block (averaging to around 2,000 transactions). When there’s an excess, users must wait for their transactions to flow through the mempool.



Users can incentivize miners to process their transactions first with higher fees. So when the mempool really fills up, miners may opt to only process transactions with more bitcoin attached — or even set a minimum fee — leaving those with smaller fees to wait.



When this happens, the mempool is often left with a large amount of unconfirmed, low-fee transactions. So, higher fees are considered one of the primary causes of mempool surges; fees rise along with demand for blockspace.



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/W731mXv74cBqE8x4_txfg9SltGJ_IN_rBY49sKSyb45F7tOiGmplpQfQftetUjM4o9rbUH-pvj1BmmClfLx2fg9hdkWhbpLsX_-5jQ8Ncj5riD36vepCLDv-lgjgzo7rEdGD0PfsFAyghk0PLe2L2Ds" alt=""/><figcaption class="wp-element-caption">Unconfirmed transaction count hit record highs beyond 256,000 in Dec. 2017, when BTC hit $20,000 for the first time (<a href="https://jochen-hoenicke.de/queue/#BTC,all,count" target="_blank" rel="noreferrer noopener">source</a>)</figcaption></figure>



Oftentimes, mempools spike when service providers consolidate transactions that have occurred off-chain all at once, Bitcoin developer Rene Pickhardt told Blockworks.&nbsp;



These consolidations would be somewhat easy to spot in the mempool — lots of transactions added all at once with rather small fees.



<h2>Bitcoin transaction fees still low compared to the bull run</h2>



But why did the Bitcoin mempool spike last week?



Ho Chan Chung, head of marketing at analysis platform CryptoQuant, pointed Blockworks to a jump in trading volumes across spot and perpetuals markets for both bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) and ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>) as USDC fell below $0.90 on Mar. 11.&nbsp;



The mempool could have reflected those transactions attempting to be settled on-chain.



But unconfirmed transactions peaked about 30 hours before top-two <a href="https://blockworks.co/news/circle-stand-behind-usdc">stablecoin USDC depegged from the US dollar</a>, an event which spilled over to a number of other stablecoins, including <a href="https://blockworks.co/price/dai" target="_blank" rel="noreferrer noopener">DAI</a>.&nbsp;



The number of unconfirmed transactions also quickly subsided, before <a href="https://blockworks.co/price/usdc">USDC</a> briefly sank to all-time lows.



<figure class="wp-block-image"><img decoding="async" src="https://lh3.googleusercontent.com/kYyNXL1D2Bi41-g16c5YCRO20zKs9B9A63UVhlZoQ8iIP-8OfX-_a6G8vRNMUi-NRkCcG9U_jPqCnAy2Y0-wNtkyGI1_ioQAivJBIVAEFI1bPFACgN6eJ0sUPgyhpCPM1ZBqSzN7AkzlsY_rCVuBRgQ" alt=""/><figcaption class="wp-element-caption">Unconfirmed transactions built up and then subsided… before building up again over the past few days</figcaption></figure>



If the surge were related, it would mean a large number of stablecoin holders all traded their tokens for bitcoin in the lead up to Silicon Valley Bank’s failure on Mar. 10, anticipating negative impacts on the wider crypto ecosystem. Service providers would’ve then had to consolidate those transactions on-chain, perhaps all at once.



It’s hypothetically possible. (Ethereum also saw a slight rise in unconfirmed transactions around the depeg, during the event, rather than in the days leading up to it). But pseudonymous Bitcoin developer 0xB10C wasn’t convinced.&nbsp;



“Generally, I don&#8217;t think it&#8217;s related to the depeg if that was 30 hours later,” they told Blockworks. “It seems like someone broadcast many blocks of transactions around that time at a lowish fee rate of 2 sat/vB.”&nbsp;



Those might have been consolidations, and “combined with the normal intraday activity and some larger Ordinal inscription transactions that are frequent currently, this did probably caused feerate estimators in wallets to suggest a higher fee rate,” 0xB10C said.



Right now, Bitcoin users can get a transaction processed in around 29 minutes for 22 sat/vB ($0.825), according to mempool.space. Those in a hurry can pay around 48 sat/vB ($1.78) to have miners add their transactions in the next block (processed in 10 minutes) — far less than the <a href="https://ycharts.com/indicators/bitcoin_average_transaction_fee" target="_blank" rel="noreferrer noopener">average</a> during the heat of the last bull market, when it hit more than $60 per transaction.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This night, someone added over fifty blocks of transactions to the 2-3 ṩ/vB band. The default mempool is fully booked again. While it seems to contain a lot of Inscriptions, there are also some large consolidation transactions (or changeless payments).<a href="https://twitter.com/hashtag/mempoolreport?src=hash&amp;ref_src=twsrc%5Etfw">#mempoolreport</a> <a href="https://t.co/wwDngGLIO8">pic.twitter.com/wwDngGLIO8</a>&mdash; Murch (@murchandamus) <a href="https://twitter.com/murchandamus/status/1633544944659865607?ref_src=twsrc%5Etfw">March 8, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">A similar occurrence happened earlier, on Mar. 8, which kickstarted the mempool surge</figcaption></figure>



(NB: There is no global “Bitcoin mempool.” Every node has their own mempool with their own data set, although they can be quite similar, 0xB10C said.)



<h2>How much Bitcoin mempool is too much mempool?</h2>



Colin Harper, head of research and content at Bitcoin mining pool Luxor, agreed that Ordinal inscriptions are a significant driver of transaction fees right now.



“Bitcoin price volatility typically increases transaction volume and I believe we&#8217;re seeing that now as well, but if it weren&#8217;t for inscriptions taking up so much for blockspace, fees would be lower than they are right now,” Harper said.



There are currently about 52,600 unconfirmed Bitcoin transactions. Mempool weight (the size of the data contained in the mempool) is around 222 vMB. Bitcoin Core’s default maximum mempool limit is 300MB.



All this begs the question: At what point does this become a problem?&nbsp;



“Once the mempool data structure (transactions and a bit of overhead per transactions) reaches 300 MB of system memory, low feerate transactions aren&#8217;t accepted anymore and some might also be dropped,” 0xB10C said.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh6.googleusercontent.com/bijQ2NMa70hekwByfq4v_I21V9_1JZpYhR9IYaLCBgvdv7zkVoLyRDALO8MhlT5yhXZXj0wmJyOS00jhriUbum-LxxX-mcubVK-cUJo_Rj8dHciySgRipG4eQL_XLEFD_h1zjz3JuLj1ucQ1OWbon8A" alt=""/><figcaption class="wp-element-caption">Ordinals have been popular, but they still contribute a minute portion of Bitcoin mining revenue</figcaption></figure>



Not all node operators use the 300MB default, though. Some set higher limits to avoid dropping low feerate transactions. With this in mind, it’s not exactly true that the Bitcoin network is “congested” when the mempool fills up — transactions will still be processed, it’s just that they may be more expensive.



That’s not necessarily a bad thing, either, according to Jeff Yew, founder of digital asset manager Monochrome.



“Like the layered banking settlement and payments infrastructure, the increased demand and ultimately cost for base-layer bitcoin settlements is a good thing,” Yew said.&nbsp;



“It further strengthens the security of the network, while encouraging the development and use of second-layer solutions, such as the Lightning Network, for day-to-day payments.”



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Bitcoin Mempool Surges Point to New Life for World’s First Blockchain

Ava Labs hired Justin Kim and Roi Hirata to lead its businesses in South Korea and Japan, respectively, in new roles created as part of the Avalanche blockchain developer’s push into the Asia Pacific region.&nbsp;



Kim was previously an investment banker at Korea Development Bank for more than 13 years.&nbsp;



“As Korea is home to multinational conglomerates, leading gaming companies and highly crypto-native demographics, we have so many opportunities on the horizon,” Kim said in a statement.&nbsp;



Hirata previously founded two startups and was working in an advocate role with Chainlink Labs in the Japan and Singapore regions until January.



He joins as Japan’s number of on-chain transactions doubled year over year from July 2021 to June 2022 relative to the previous year, according to Chainalysis.



Ari Redbord, head of legal and government affairs for blockchain intelligence firm TRM Labs, was named vice chair of the Commodity Futures Trading Commission’s (CFTC) Technology Advisory Committee.



The new committee is tasked with taking on issues at the intersection of technology, law, policy and finance. Redbord will give opening remarks in the decentralized finance section of the committee’s inaugural meeting on March 22.



<a href="https://www.linkedin.com/in/ari-redbord/" target="_blank" rel="noreferrer noopener">Redbord</a> was assistant United States Attorney for the District of Columbia at the Department of Justice from 2008 to 2019, according to his LinkedIn profile. He went on to become senior advisor to the under secretary for terrorism and financial intelligence at the US Department of the Treasury.&nbsp;



“Contributing to conversations that serve to develop crypto-related regulatory standards and encourage a more open financial system while thwarting bad actors and illicit activity is our primary focus,” he said in a statement.



The announcement came as TRM Labs added <a href="https://www.linkedin.com/in/chrisbrummerlaw/" target="_blank" rel="noreferrer noopener">Chris Brummer</a> as a senior adviser.&nbsp;



Brummer, a Georgetown law professor with a focus on how policy makers and industry can build regulatory frameworks for DeFi and blockchain-based technologies, is set to help the company find ways to make finance more inclusive.



TRM Labs’ new senior adviser is an advisory council member for blockchain, crypto and digital currencies at PayPal. He is also a senior adviser at crypto-focused investment firm Paradigm, as well as a board member of K2 Integrity and Fannie Mae.



<h2>Execs formerly at Crypto.com, Coinbase move to exchange</h2>



Crypto platform Okcoin has appointed new leaders as part of global expansion efforts.&nbsp;



The company hired <a href="https://www.linkedin.com/in/erald-ghoos-55024a9/" target="_blank" rel="noreferrer noopener">Erald Ghoos</a> as general manager of Okcoin Europe and <a href="https://www.linkedin.com/in/drenold/" target="_blank" rel="noreferrer noopener">David Renold</a> as CEO of OKG Payments, the company’s Ireland-based affiliate.



Ghoos previously was chief operating officer and chief compliance officer at Crypto.com — a dual-role he was in from 2017 to 2020. He started his career at AXA Bank Europe as an engineer and then program manager.



Renold formerly held leadership roles at Coinbase, including operations lead of e-money up until last month. The executive also spent about 20 years at UBS, ending his tenure there in 2018 as head of international payments and cash management.



Blockchain firm Enjinstarter hired <a href="https://www.linkedin.com/in/vasseh/" target="_blank" rel="noreferrer noopener">Vasseh Ahmed</a> as a managing director for the Middle East and North Africa region.&nbsp;



Founded in 2021, the Singapore-based company has launched more than 50 Web3 projects. It now seeks to add more, with a focus on complementing the UAE’s focus on impact and sustainability initiatives, the company said.



Up until January, Ahmed worked as head of digitization strategy at Dubai-based digital bank Zand.



<a href="https://www.linkedin.com/in/tsivarev/" target="_blank" rel="noreferrer noopener">Anthony Tsivarev</a> joined the TON Foundation as director of developer relations.&nbsp;



He joins the foundation from <a href="http://fslabs.io/" target="_blank" rel="noreferrer noopener">First Stage Labs</a>, a venture builder for TON-based projects. Tsivarev is set to lead the development of the TON ecosystem across DeFi, dApps and social applications.



Blockchain analytics firm Crystal appointed Jordan Alexander as its new associate director of product.



The Amsterdam-based company builds products that look to streamline crypto compliance operations and aid investigations into financial crime. Alexander’s hire signals the firm’s effort to enter the US market, according to the company.



Alexander was previously a product lead at cybersecurity software company Avast, where he designed solutions to identify and combat security threats.



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Crypto Hiring: Avalanche Developer Adds Execs Amid Asia-Pacific Push

Everyone has something to say about crypto policy. But so far, no one has managed to pass any laws.&nbsp;



As crypto companies continue to plead for regulatory clarity, the only thing that seems truly clear is that federal agencies and elected officials are not on the same page.



Now industry members are questioning if they are even trying.&nbsp;



Congress, the Federal Reserve, the Treasury, the Securities and Exchange Commission, and the Commodity Futures Trading Commission — to name a few parties involved in the conversation — all have different things to say about crypto. Even regulators within the same agency are taking opposing sides.&nbsp;



The central bank and the Treasury are questioning the role of a central bank digital currency, while the SEC and CFTC are having a turf war over Ethereum tokens, and Congress has yet to get a single crypto bill out of committee.&nbsp;



In the past 18 months, President Biden issued an executive order, Congress held hearings, the SEC issued enforcement actions, crypto companies sued the SEC, the Fed started researching CBDCs and bills have made their debuts on the House and Senate floors.



But tangible policy is nowhere to be found.



“There needs to be a very clear direction from the very top of the administration about what the position is on crypto right now,” said John Rizzo, senior vice president of public affairs at Clyde Group and former senior spokesperson at the Treasury. Rizzo, appointed under the Biden administration, also worked on the Hill for Sen. Chuck Schumer (D-NY) and former Sen. Bob Casey (D-PA).&nbsp;



<h2>The Congressional docket</h2>



Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., co-sponsored the Responsible Financial Innovation Act, first introduced to the Senate in June 2022. With midterm elections and an unfortunate lack of committee interest, the bill stalled. A revamped version of the <a href="https://www.gillibrand.senate.gov/news/press/release/-lummis-gillibrand-introduce-landmark-legislation-to-create-regulatory-framework-for-digital-assets/">proposed law</a> will land on Senate desks in mid-April, <a href="https://blockworks.co/news/gillibrand-lummis-revamped-crypto-bill">Lummis said earlier this month</a>, but it will face headwinds.



Sens. Lummis and Gillibrand need committee chairs, ideally those from finance and banking, to take an interest in the bill, and the odds are not in their favor. Lummis is a minority member of the Senate Banking, Housing and Urban Affairs committee, which is led by crypto-skeptic Sherrod Brown, D-Ohio.&nbsp;



Crypto investment vehicles are “speculative products run by reckless companies, we know that’s true,” Brown said during the committee’s <a href="https://blockworks.co/news/senate-banking-hearing-on-crypto-crash">February hearing</a> about the fallout of FTX.



“It would require, certainly, a change in approach for the Banking Committee to move forward with markup,” Lummis admitted during a panel discussion at the Milken Institute Future of Digital Assets Symposium in March.



Gillibrand is a senior member of the Senate Armed Services Committee, where crypto has never been a top priority.&nbsp;



While Sens. Lummis and Gillibrand tout bipartisan cooperation, Republicans and Democrats are undeniably at odds when it comes to crypto regulation at the national level, Rizzo said.&nbsp;



“The industry&#8217;s biggest problem right now is that it&#8217;s becoming a partisan issue in which Republicans are interested in it and Democrats view it as just another thing about Wall Street or finance that they don&#8217;t like,” Rizzo said. “That&#8217;s a really dangerous place to be.”&nbsp;



The new House Subcommittee on Digital Assets, Financial Technology, and Inclusion, under the House Financial Services Committee, could help make crypto a priority for lawmakers, but broad bipartisan support is a long way off, he added.&nbsp;



<h2>The SEC’s agenda&nbsp;</h2>



SEC Chairman Gary Gensler has made crypto a top priority for the agency in recent years. But opting primarily for a “regulation by enforcement” strategy has not earned him many friends in the industry, and many argue it’s an approach that has only slowed progress.&nbsp;



The SEC has brought actions against Ripple, Kraken, Nexo and BlockFi, to name a few. Ripple took their case to court while <a href="https://blockworks.co/news/kraken-settles-sec-crypto-staking-program">Kraken</a>, <a href="https://blockworks.co/news/nexo-axes-earn-calls-45m-fine-to-regulators-landmark-resolution">Nexo</a> and <a href="https://blockworks.co/news/crypto-lender-blockfi-to-pay-100m-in-fines-to-us-regulators">BlockFi</a> opted to settle. While generally accepted as the cheaper and faster option, settlements cannot set precedents.&nbsp;



Ripple’s multi-million dollar <a href="https://blockworks.co/news/sec-ripple-xrp-case-trial">lawsuit over its XRP token</a> has entered its third year. A summary judgment is expected sometime in 2023, but if the court does not rule in Ripple’s favor, it’s back to the drawing board for a lengthy appeal process.&nbsp;



Grayscale also moved forward in a suit against the SEC for <a href="https://blockworks.co/news/grayscale-appears-to-win-opening-sec">failing to approve a bitcoin ETF</a>. Oral arguments began this month in Washington, D.C. Donald Verrilli Jr., a former US solicitor general who <a href="https://blockworks.co/news/grayscale-investments-hires-ex-us-solicitor-general">Grayscale hired last year</a> as a legal strategist, reiterated that <a href="https://blockworks.co/news/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading">the SEC’s approval of ETFs</a> investing in CME-traded bitcoin futures, but not for proposed ETFs that invest in spot bitcoin directly, is discriminatory.



In 2022 alone, the SEC charged a total of 79 defendants or respondents in cryptocurrency enforcement actions, accounting for more than 60% of the agency’s total crypto-related actions since its first in 2013, according to <a href="https://www.cornerstone.com/insights/press-releases/sec-tightens-cryptocurrency-enforcement/">data</a> from Cornerstone Research.&nbsp;



“The SEC is engaged in a political campaign more so than an actual, genuine enforcement campaign,” Rizzo said. “They&#8217;ve taken a political view that they don&#8217;t like crypto and so they&#8217;re going to try to enforce it out of existence.”&nbsp;



Gensler has made his point clear: he sees all tokens aside from bitcoin as securities. It’s an opinion some legal experts say should <a href="https://blockworks.co/news/gensler-could-be-barred-from-crypto-actions">bar him from voting in future enforcement actions</a>. Regulators need to consider if Gensler is impermissibly tainted, Stuart Alderoty, chief legal officer at Ripple, said in response to Gensler’s comments.&nbsp;



“The credibility of the SEC as an agency… if they want to get back to a point where they are a fair and even-handed agency, and I think they&#8217;ve lost that narrative, the agency themselves should be asking these questions, fellow commissioners should be asking these questions,” Alderoty said.



<h2>Gensler at war</h2>



Even the SEC is not fully supportive of Gensler. <a href="https://blockworks.co/news/sec-commissioner-opposes-agency-again">SEC Commissioner Hester Peirce has been vocal</a> about the securities regulator’s <a href="https://www.sec.gov/news/press-release/2023-30">proposed custody rules</a>, claiming they harm investors by limiting access to crypto.



Underlying Gensler’s agenda is an apparent turf war between the SEC and CFTC, which has purview over commodity derivatives trading, like futures and swaps. The ongoing argument over token classification – security or commodity? – has made the jurisdictional lines blurry.&nbsp;



The CFTC, <a href="https://www.cftc.gov/PressRoom/PressReleases/7820-18">as supported by federal courts</a>, says Ether and stablecoins <a href="https://blockworks.co/news/ethereum-stablecoins-commodities-not-securities-cftc">are commodities</a>. The SEC, also with <a href="https://www.insideclassactions.com/2022/11/16/sec-wins-summary-judgment-determination-that-cryptocurrency-token-qualifies-as-a-security/">court support</a>, says most cryptos are securities.&nbsp;&nbsp;



“The two agencies work very collaboratively,” said ​​Valerie Szczepanik, director of the Strategic Hub for Innovation and Financial Technology (FinHub) office at the SEC, during a <a href="https://www.youtube.com/watch?v=DZdj3p1_13c">panel discussion</a> at the Digital Asset Summit in September. “From my perspective, the agencies really want to get it right. It’s all about investor protection and market integrity and our two agencies want to cover the landscape so those goals are achieved.”



Throughout the enforcement actions, criticism and inter-agency conflict, Gensler has maintained that the SEC’s top priority is protecting investors. The crypto <a href="https://blockworks.co/news/gensler-crypto-wild-west">industry is the “wild west”</a> he said during a <a href="https://twitter.com/USArmy/status/1613255714918612993?s=20">Twitter spaces</a> event with the US Army on responsible investing.&nbsp;



“Most of these 10 or 15,000 tokens will fail,” Gensler added. “That’s because venture capital fails, new startups fail —&nbsp; but also because history tells us that there’s not much room for micro currencies, meaning, you know, we have the US dollar and Europe has the euro and the like.”&nbsp;



<h2>Operation choke point 2.0?&nbsp;</h2>



After weeks of industry members insisting there is a coordinated effort to <a href="https://blockworks.co/news/operation-choke-point-2-0">isolate crypto from the banking system</a>, regulators became involved last week.&nbsp;



After weeks of uncertainty surrounding its stability after being faced with a flood of FTX-related withdrawals, Silvergate Bank announced plans to liquidate on March 9. Regulators then took possession of Silicon Valley Bank on March 10 and Signature Bank, what was known as the last man standing for crypto banking, went under FDIC control on March 12.&nbsp;



In a series of interviews Monday, former Rep. Barney Frank, who served as a Signature board member, said the bank’s struggles began during the FTX-fueled run. Frank headed the House Financial Services Committee during the 2008 financial crisis.



But, he <a href="https://www.bloomberg.com/news/articles/2023-03-13/barney-frank-sees-crypto-as-common-element-in-new-bank-failures?sref=QYWxDQ1o#xj4y7vzkg">said</a>, the NYDFS targeted Signature in an effort to make its opinions on crypto clear, although the FDIC has since clarified that buyers will be able to assume all assets and liabilities from Signature, <a href="https://blockworks.co/news/fdic-sells-signature-bank">including the crypto business</a>.



The New York Department of Financial Services opted to hand over control of Signature to the FDIC because of concerns over the bank’s business operations and its ability to meet client needs, a spokesperson told Fortune on Tuesday.



Despite New York regulators denying that crypto had any role in Signature’s downfall, the <a href="https://blockworks.co/news/who-will-bank-crypto">current banking crisis</a> could impact industry oversight and ensuing policy, experts say.&nbsp;



“There is a split in terms of who policymakers say is at fault, leading to a growing partisan divide,” said Ron Hammond, director of government relations at the Blockchain Association, an industry-supported lobbying outfit. “The fear among those in Congress is that this growing partisan push could trickle to other policy priorities of the banking committees that aren’t related to the current crisis. Stablecoins in particular come to mind.”



The closures are not the first hurdle for crypto’s access to banking services, though.&nbsp;



Wyoming-based crypto bank Custodia says there has been a concerted effort to keep crypto companies away from the banking system for years. The bank was denied membership to the Federal Reserve, based on concerns the central bank had regarding Custodia’s risk management practices.&nbsp;



“Custodia is surprised and disappointed by the Board’s action,” Caitlin Long, Custodia’s CEO, wrote in a statement. “Custodia offered a safe, federally regulated, solvent alternative to the reckless speculators and grifters of crypto that penetrated the U.S. banking system with disastrous results for some banks.”



Banking options for crypto banks have always been limited in the US, suggested Nic Carter, a long-time crypto supporter and venture capitalist in a <a href="https://www.piratewires.com/p/crypto-choke-point">blog post</a> last month. Signature, up until this week, would have been seen as a viable option, but the crypto-friendly bank had already begun distancing itself from the asset class.&nbsp;



Signature shrunk its crypto deposits by $13 billion from their previous peak in 2022.&nbsp;



“What began as a trickle is now a flood: the US government is using the banking sector to organize a sophisticated, widespread crackdown against the crypto industry,” Carter said.&nbsp;



With mounting regulatory pressure across the board, it’s hard to imagine banks, traditional or otherwise, putting in resources to establish new on and off ramps, said Cody Carbone, vice president of policy at the Chamber of Digital Commerce.&nbsp;



“[Bitfury CEO] Brian Brooks put it best…the point of a bank and banking regulation is not to keep risk out of the market, it is to provide a safe and secure place for those risks to be contained,” Carbone added. “My hope is that as public interest in crypto increases, so will bank activity to adhere to customer demands.”



The Fed’s stance continues to evolve, but it seems they are not interested in giving digital asset banks access. In a <a href="https://www.mayerbrown.com/en/perspectives-events/publications/2023/02/federal-reserve-issues-policy-statement-further-restricting-crypto-asset-activities-and-addressing-uninsured-state-member-banks">policy statement</a> issued in January the central bank restricted banks from certain crypto-related activities, even though an <a href="https://blockworks.co/news/crypto-poses-key-risks-to-banks-but-carry-on">earlier statement</a> was at pains not to discourage or prohibit dealings with crypto companies.&nbsp;



The statement also “broadens their authority to cover non-FDIC insured state-chartered banks (a reaction to Wyoming Special Purpose Depository Institutions (SPDIs) like Custodia, which can hold crypto alongside fiat for its banking customers),” Carter said.&nbsp;



Ring-fencing US crypto — separating it from banking rails — echoes the DOJ’s <a href="https://blockworks.co/news/operation-choke-point-2-0">Operation Choke Point</a> from the last decade, Carter added.&nbsp;



In 2013, the Department of Justice advanced a similar goal: to cut off “undesirable” business sectors from the banking system, like payday lenders with a reputation for enabling money laundering and fraud.



“Operation Choke Point has had a demonstrable chilling effect on commerce,” wrote Iain Murray, vice president for strategy and senior fellow at the Competitive Enterprise Institute in a <a href="https://www.cei.org/wp-content/uploads/2014/08/Iain-Murray-Operation-Choke-Point.pdf">report</a>. “Most such banks cannot afford the extra supervision that comes with a Choke Point subpoena. Thus, they often face no other choice but to drop payment processors and designated ‘high-risk’ clients altogether.”



A workaround some crypto firms are considering is to launch their own crypto banks, as Kraken is attempting. The issue at hand doesn’t change though, Carbone said; the Fed will still deny membership and master account access. Plus, he added, getting a banking license is no small feat.&nbsp;



<h2>State-level progress&nbsp;</h2>



As federal regulators struggle to get on the same page, local politicians have been busy. In state governments, the party lines are less clear on crypto, and with smaller legislatures and more homogenous populations, progress comes faster.&nbsp;



“We are so much more nimble at the state legislature and get along with our colleagues so much more than on a federal level,” Illinois state Representative Margaret Croke (D-12th district), said. “It’s funny because on the federal level for some reason we’ve gotten to this weird sentiment of ‘Republicans are pro-crypto’ and ‘Democrats are anti-crypto.’”&nbsp;



Fort Worth, Texas <a href="https://blockworks.co/news/fort-worth-becomes-first-city-to-mine-bitcoin">became the first city to run a public bitcoin mining operation</a> in April and Colorado now allows residents to pay state taxes in crypto. Efforts are underway in <a href="https://blockworks.co/news/to-make-bitcoin-legal-tender-in-ca-bitcoiners-may-have-to-rewrite-constitution">California</a> and <a href="https://blockworks.co/news/arizona-considers-making-bitcoin-legal-tender">Arizona</a> to make bitcoin legal tender, although legal experts are skeptical the plans will lead anywhere.&nbsp;



According to the Constitution, defining “legal tender” is not the domain of state lawmakers, said Preston Byrne, former partner at law firm Anderson Kill.



“The move is largely symbolic,” Byrne said. “The coinage clause of the Constitution means that the power to determine what is and isn’t legal tender in the United States is the exclusive province of Congress.”



<a href="https://blockworks.co/news/missouri-protects-crypto-mining">Missouri, Mississippi</a> and New York have all advanced bills surrounding cryptocurrency mining, with New York’s new law recently signed in by Governor Kathy Hochul. The proposals in Missouri and Mississippi focus on protecting individuals and businesses looking to mine while New York’s new law limits proof-of-work operations.&nbsp;



<h2>Regulation… but on whose terms?</h2>



States are limited in their power though, Byrne and other industry members point out. There are local differences when it comes to banking charters and taxes, but without clear federal direction, the regulatory environment is not going to improve.&nbsp;



“Congress has to try to find a way to reach consensus on crypto this year,” Rizzo said.&nbsp;



As for the industry leaders calling for clear guidelines? Rizzo says be careful what you wish for.&nbsp;



“Sometimes ‘we want regulation’ means ‘we want regulation on our terms,’” Rizzo said. “Every industry wants that; that’s the job of industry, to create and craft policies and promote policies that improve their bottom lines.”&nbsp;



The future of crypto – where in the world the industry is based, who has access, what products look like – rests in large part on what US regulators and legislators decide to do. Whatever Gary Gensler says, clarity is not a word that most industry participants would use to describe the current mess of interpretations, loopholes, proclamations and arbitrary statements.



Regardless of timing, though, crypto businesses should understand that some rules are going to change, and their operating procedures are going to have to adjust accordingly.

No Laws, No Policy, No Clarity: The Parlous State of Crypto Regulation

Swiss banks are exploring an alternative to private stablecoins in an effort to support the country’s economy in digital asset transaction settlements and payments execution.&nbsp;



The Swiss Bankers Association (SBA) revealed in a white paper it is researching the potential of a deposit token (DT) — a digital currency in the form of tokenized deposits based on distributed ledger technology.



“This kind of stablecoin, if carefully designed, would potentially allow for a wide range of new applications, reduce risks, increase efficiency, and open up whole new areas of business,” the group wrote in the report.&nbsp;



The SBA comprises about 260 member institutions, including banks, securities firms, financial market infrastructures and auditors.



Stablecoins for certain market participants — though inaccessible to the general public — already exist in Switzerland. SIX Digital Exchange and Sygnum, for example, both offer stablecoins backed by reserves for transactions on their own platforms within a closed ecosystem.&nbsp;



But private stablecoins are unlikely to gain broad acceptance because they lack the regulated nature of conventional money, the SBA <a href="https://www.swissbanking.ch/_Resources/Persistent/9/4/1/1/941178de59b98030206fc15ac8c99012f65df30b/SBA_The_Deposit_Token_EN_2023.pdf" target="_blank" rel="noreferrer noopener">argued</a>. “An alternative that guarantees the required reliability and enjoys sufficiently broad legitimation like conventional money is therefore needed.”



“The DT idea instead focuses on the need of many companies and households for a customized, digital Swiss franc that is issued by regulated and adequately supervised intermediaries,” SBA said.



<figure class="wp-block-image"><img decoding="async" src="https://lh5.googleusercontent.com/DIUFjr4deFIifkVuR5yoqpPoPUdPhGteP_hs_5z-icRxA5vHviLhAqdYUcC06zL6n39M-jmp1vq7TOROJ-PTCfvLtW6BMek7_mV71JYsb6uwNEXvBV9EYuAiMB7congYjDivUskMOYNQO2Qdh9BbkVU" alt=""/><figcaption class="wp-element-caption">The three different kinds of deposit token, per SBA</figcaption></figure>



A deposit token would allow for fully automated and simultaneous settlement of digital asset transactions — getting rid of the need to deposit collateral with the central clearing house.&nbsp;



The DT could serve to settle wallet-based retail payments in combination with smart contracts. It could also enable the direct transfer of ownership with no counterparty risk when a car is sold, for example, or facilitate large, infrequent batch payments between companies.



The best type of DT would be a “joint token,” the SBA said — for which a special-purpose vehicle jointly owned by participating commercial banks issues a single DT that is fully or partially backed by secure and highly liquid reserves. Such a token would also be able to accrue interest if held in a wallet with a bank, making it similar to conventional deposits.



The SBA noted that accessibility, interoperability and scalability would be key for deposit tokens, noting that implementation on a public layer-2 blockchain would best achieve those goals.&nbsp;



<h2>JPMorgan also into deposit tokens</h2>



The report comes after banking giant JPMorgan and consulting firm Oliver Wyman said in a joint <a href="https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2023/feb/oliver-wyman-jp--morgan-deposit-tokens-report-final.pdf" target="_blank" rel="noreferrer noopener">study</a> that <a href="https://blockworks.co/news/deposit-tokens-stablecoins-defi-jpmorgan">bank-issued deposit tokens are much safer than stablecoins</a> for major institutions looking to transfer value across chains.



The rise of decentralized finance (DeFi) protocols may also result in the creation of liquidity pools for deposit tokens, according to the report. These pools would be established by token holders who supply their deposits as liquidity on decentralized exchanges.



Larry Fink, CEO of asset management titan BlackRock, has said <a href="https://blockworks.co/news/blackrock-ceo-us-lagging-innovation-tokenization">the tokenization of assets is an attractive use case</a> for “driving efficiencies in capital markets, shortening value chains, and improving cost and access for investors.”



The world’s largest asset manager, with roughly $8 trillion under its control, continues to explore permissioned blockchains and the tokenization of stocks and bonds, according to Fink.



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Swiss Banks Agree With JPMorgan: Deposit Tokens Are a Way Into DeFi

Cryptocurrency investment management company Grayscale will extend its review period to determine whether or not it should acquire and sell proof-of-work Ethereum.



<a href="https://blockworks.co/tag/grayscale" target="_blank" rel="noreferrer noopener">Grayscale</a> was tasked on behalf of shareholders to determine whether it should purchase and sell the proof-of-work fork of <a href="https://blockworks.co/tag/ethereum" target="_blank" rel="noreferrer noopener">Ethereum</a> (ETHPoW) after the Merge.



Read more: <a href="http://blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/">Proof-of-Work vs. Proof-of-Stake: What’s the Difference?</a>



The initial review period needed to determine the utility and value of ETHPoW was expected to last less than 180 days. The company revealed on Thursday that it would extend this review period for an additional 180 days.



“The trading venues for the ETHPoW tokens have not yet been broadly established, and there is continued uncertainty both as to whether digital asset custodians will support the ETHPoW tokens and if trading markets with meaningful liquidity will develop,” the company said in a <a href="https://www.sec.gov/Archives/edgar/data/1725210/000095017023008527/ethe-ex99_1.htm" target="_blank" rel="noreferrer noopener">statement</a>.



Specifically, Grayscale noted that the value of the token is likely to fluctuate significantly for a period of time if digital asset custodians choose to support the token and a trading market develops.



“As a result of this uncertainty, as well as the potential for significant volatility in prices for the ETHPoW tokens, it is not possible to predict whether Grayscale, as agent, will be able to acquire the ETHPoW tokens or the value, if any, that Grayscale, as agent, will be able to realize from sales of the ETHPoW tokens,” the company said.&nbsp;



Following the Ethereum hard fork, which moved the network from proof-of-work to proof-of-stake, the price of ETHPoW soared to $51.45 and then plummeted. It is currently trading at $3.40, according to <a href="https://www.coingecko.com/en/coins/ethereumpow#:~:text=The%20price%20of%20EthereumPoW%20(ETHW,hour%20trading%20volume%20of%20%248%2C268%2C375." target="_blank" rel="noreferrer noopener">information</a> on CoinGecko.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13104723/embed#?secret=JwHp7ET3Yc" data-secret="JwHp7ET3Yc" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">ETHPoW has severely underperformed both ETH and Grayscale&#8217;s Ethereum Trust</figcaption></figure>



Read more: <a href="http://blockworks.co/ethereum-switches-to-proof-of-stake-after-7-years-of-work/">Ethereum Switches to Proof-of-stake After 7 Years of Work</a>



Ethereum proof-of-work enthusiast are still active on the chain. Recently noting in a <a href="https://twitter.com/ETHW_cn/status/1636596337037959168" target="_blank" rel="noreferrer noopener">tweet </a>that there had been “impressive NFT projects” emerging on the network.



Despite this, it noted that due to the lack of funding and coordinated efforts in the ecosystem, the proof-of-work chain has not yet been able to escape its infancy stage.&nbsp;



“​​If this situation continues to develop, developers, investors, and project parties may gradually lose confidence, and the entire ecosystem will gradually slip from existing NFT projects to a vacuum,” the network tweeted.&nbsp;



A proposal to develop a EthereumPoW ecosystem DAO is underway, with the goal of encouraging more user activity on the chain.



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Grayscale Still Deciding What To Do With ETHPoW

Ren Yu Kong

Goldfinch: A Strong Contender in On-Chain Private Credit Markets

Permissionless is the brainchild of Blockworks and Bankless. Over 5,500 people attended the inaugural event in 2022, making Permissionless the world’s largest DeFi conference.&nbsp;



What sets Permissionless apart? It’s a crypto native’s paradise, crafted specifically for both builders and investors who are dedicated to scaling the industry.&nbsp;



Permissionless is headed to Austin in 2023, and you know what they say… Everything is bigger in Texas.&nbsp;



Permissionless 2023 will feature the biggest names in Web3, a gargantuan exposition hall filled with the top brands in the space, an awe-inspiring NFT Gallery, inclusive, community-focused parties and events, metaverse experiences, and so much more.



See you in Paradise.

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Speakers

Erik Voorhees

Mary-Catherine (MC) Lader is the Chief Operating Officer of Uniswap Labs, a developer of foundational web3-based products and applications. In this role, she oversees the company’s growth efforts, strategic initiatives, and operations. Previously, she held various leadership roles at BlackRock, including as the Global Head of the firm’s digital sustainability business, Chief Operating Officer of the firm’s digital wealth business, and leader of the firm’s strategic fintech investments and blockchain activities. MC began her career as an investor in Goldman Sachs’ Special Situations Group. She received her J.D. and M.B.A. degrees at Harvard Law School and Harvard Business School, respectively, and her B.A. at Brown University.

Mary-Catherine Lader

Zaki Manian is a Co-Founder of Sommelier, the most powerful coprocessor yet for DeFi traders and Liquidity Providers. He’s also a Co-Founder of iqlusion, which provides infrastructure like a data center and a Cosmos validator for next-gen crypto technologies. Previously, Zaki helped build the Cosmos ecosystem, including launching the first public Cosmos testnet, and served as a director of Tendermint. Zaki has been a leading developer in the blockchain space since 2014, when he taught himself cryptography and began contributing to projects including Bitcoin, Ethereum, Zcash, and Tendermint. Having studied history of science at the University of Pennsylvania, Zaki’s skill sets in software engineering, programming, and computer science are largely self-taught.

Zaki Manian

Justin Drake

At Alluvial, Chief Growth Officer Mara Schmiedt focuses on advancing industry participation and adoption of Liquid Collective, seeking out world-class partnership opportunities, and overseeing Business Development, Sales, and other strategic functions. Mara recently joined Alluvial as Chief Growth Officer from Coinbase, where she served as the Head of Sales for Coinbase Cloud, the leading developer platform for blockchain-based infrastructure products and APIs. She expanded Cloud's staking business, supporting large-scale organizations, enterprises, and institutional investors. Prior to joining Coinbase, she managed Business Development at Bison Trails, a leading provider of blockchain-based infrastructure acquired by Coinbase in February 2021. Mara also served as Strategy Manager at ConsenSys, where she supported the strategic development of Codefi, the blockchain application suite for Web3 Commerce and Finance.



Mara is passionate about open-source technology and has published multiple research reports and papers on liquid staking, such as <a href="https://drive.google.com/file/d/13-s15SvCIUBukhSZiNkpd0sTff3izQ5G/view">The Internet Bond</a> and <a href="https://consensys.net/insights/eth-2-staking-ecosystem-report/">Ethereum 2.0 Staking Ecosystem Report</a>.&nbsp;



Additionally, she has led various industry initiatives, including leading the working group with the Ethereum Foundation that developed the Ethereum Launchpad and the first distributed validator technology (DVT) PoCs. Mara's deep experience in bringing technology and blockchain-based products and services to market — as well as her track record of building world-class business and sales organizations — bolsters Alluvial's support of Liquid Collective.

Mara Schmiedt

Stani Kulechov

Hasu

Christine is a Partner and Head of Digital Asset Strategy at Apollo Global Management, Inc. In this newly created position, Christine leads digital asset strategy across the firm, exploring more ways to apply blockchain technologies to Apollo’s business. She also plays a key role in Apollo’s strategy to invest in some of the most innovative digital asset companies and founders, with a specific focus on those transforming the financial services sector where Apollo can serve as a validator and enabler of new technologies. Previously, she was a Managing Director at J.P. Morgan and led its Blockchain/Crypto/Metaverse program through initiatives in digital assets, tokenized payments, internet of-things, decentralized identity, NFTs, and virtual worlds. She is a graduate of Brown University. Christine was named in Fortune’s The Ledger 40 Under 40 list of “the most impressive, young superstars transforming business at the leading edge of finance and technology.”

Christine Moy

Santiago Roel Santos (CryptoPunk #9159) is an investor focusing at the intersection of DeFi and the Web3 metaverse (NFTs/gaming). Most recently was a Partner at ParaFi Capital, one of the largest crypto funds specializing in DeFi. Prior to that, he was at Sageview Capital investing in Internet and software and, before that, at JP Morgan investment banking. Santiago began investing in crypto in 2012.

Santiago Roel Santos

Michael Anderson is the co-founder of Framework Ventures, one of earliest and largest VC firms to enter the “DeFi” or Decentralized Finance industry. With over $1B in AUM, the firm has since expanded into additional maturing verticals like blockchain gaming and social crypto. Prior to Framework, Michael and his co-founder Vance Spencer launched Hashletes, a digital collectible startup with official licensing from the NFL. Before entering crypto, Michael served as a product manager at both Snapchat and Dropbox, where he helped build out their monetization platforms.

Michael Anderson

Soona Amhaz is founder and GP of Volt Capital, a venture firm that focuses on pre-seed and seed companies in the digital assets space. Soona is also an advisor to On Deck, Forbes 30 under 30 in VC, and an alum from the University of Michigan School of Engineering.

Soona Amhaz

Colleen Sullivan is Co-Head of Ventures at Brevan Howard Digital. Prior to joining Brevan Howard Digital, Colleen co-founded and served as CEO of CMT Digital, where she was also a partner with the broader CMT Group and commenced activities in the crypto industry in 2013. Prior to starting CMT Digital, Colleen co-founded Sullivan Wolf Kailus, a boutique law firm that specializes in hedge fund, private equity, venture capital, digital assets, and other alternative investment products. Colleen also previously practiced law in the Investment Funds and Derivatives group at Sidley Austin LLP and, at age 25, co-founded a company called iOptions Group LLC, which developed hedging and monetization strategies for holders of employee stock options. Ms. Sullivan currently serves on the Advisory Board of the Chamber of Digital Commerce.

Colleen Sullivan

Tarun is an alumni of D. E. Shaw Research (DESRES), Vatic Labs, an HFT firm, and Cornell. He fell into the blockchain world in 2011, when he was working on ASICs at DESRES and observed Bitcoin ASIC mining rigs substantially delay DESRES’s ASIC production. He has spent the last seven years working on simulation-based R&amp;D at the intersection of high-performance computing and AI and is applying this knowledge to the blockchain ecosystem.

Tarun Chitra

Kevin Owocki is the founder of Gitcoin.co — Where builders &amp; funders come together to build the open web.  Gitcoin has delivered <a href="http://gitcoin.co/results">$50mm worth of value</a> to OSS devs in the last several years. He has a BS in Computer Science, 15 years of engineering leadership experience in Open Source Software and Web Startups. Kevin is a community organizer in the Boulder Colorado Tech Scene.

Kevin Owocki

Meltem Demirors is Chief Strategy Officer of CoinShares, a publicly listed investment firm that manages over five billion in digital assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem.



 An established veteran of digital asset investing, Meltem draws on her substantial experience and widespread influence to accelerate growth and acceptance of the asset class. Prior to joining CoinShares, Meltem helped build and grow Digital Currency Group, raising capital from the world’s largest corporations and managing a portfolio of 120 companies and 4 subsidiaries. Before she was bitten with the bitcoin bug, Meltem worked in the Oil &amp; Gas industry in trading, corporate treasury, and M&amp;A roles. 



Meltem has been recognized for her personal contributions to the industry and serves as an outspoken advocate. She is a founding member of the World Economic Forum Blockchain Council. Meltem teaches at her alma mater MIT as well as Oxford, and is passionate about privacy and civil rights.

Meltem Demirors

Vance is the co-founders of Framework Ventures, a thesis-driven venture capital firm whose team of technologists, researchers, and investors partner with founders and teams to build token-based networks and develop the requisite cryptoeconomics, governance, and community to scale.

Vance Spencer

Jim Bianco is President and Macro Strategist at Bianco Research, L.L.C. Since 1990 Jim’s commentaries have offered a unique perspective on the global economy and financial markets. Unencumbered by the biases of traditional Wall Street research, Jim has built a decades long reputation for objective, incisive commentary that challenges consensus thinking. In nearly 20 years at Bianco Research, Jim’s wide ranging commentaries have addressed monetary policy, the intersection of markets and politics, the role of government in the economy, fund flows and positioning in financial markets.



Jim appears regularly on CNBC, Bloomberg and Fox Business, and is often featured in the Wall Street Journal, Bloomberg News, Grants Interest Rate Observer, and MarketWatch. Prior to joining Arbor and Bianco Research, Jim was a Market Strategist in equity and fixed income research at UBS Securities and Equity Technical Analyst at First Boston and Shearson Lehman Brothers. He is a Chartered Market Technician (CMT) and a member of the Market Technicians Association (MTA). Jim has a Bachelor of Science degree in Finance from Marquette University (1984) and an MBA from Fordham University (1989).

Jim Bianco

Mr. Forman is the Founder and Managing Partner of ParaFi Capital. ParaFi is a leading investment firm focused on the blockchain and digital asset markets, and an early pioneer in decentralized finance (“DeFi”). ParaFi is one of the largest investors, users, and governance participants within the DeFi ecosystem, spanning the full network lifecycle from pre-launch to full decentralization. Mr. Forman serves as the Chief Investment Officer across the firm’s strategies, which include investing in public and private cryptoassets, systematic credit and market neutral DeFi strategies, and blockchain-focused venture capital and growth equity investing.



Prior to founding ParaFi in 2018, Mr. Forman spent 10 years at leading alternative investment managers, including KKR and TPG. While at KKR, Mr. Forman served as a Director in the Credit business, investing across a wide array of industry sectors and strategies, including distressed special situations, private credit, and opportunistic and liquid credit. Prior to KKR, Mr. Forman served as a Vice President with TPG’s former credit business, Sixth Street Partners, as one of the first investment professionals to join the platform, helping scale its private credit vehicle, TPG Specialty Lending, which listed publicly in 2014. Earlier in his career, Mr. Forman worked in private equity at Littlejohn &amp; Company and investment banking at Rothschild &amp; Co. Mr. Forman graduated with a B.A. in Philosophy, Politics and Economics, magna cum laude, from the University of Pennsylvania.

Ben Forman

Haseeb is a Managing Partner at Dragonfly. He was previously a partner at Metastable Capital, and has a background in software engineering at Airbnb and Earn.com (acquired by Coinbase).

Haseeb Qureshi

Vanessa Grellet is a Managing Partner at Aglaé Ventures. Vanessa is a Global Executive with over 20 years of expertise in the Financial Services and Tech industry. At Aglaé Ventures she manages the Web 3 focused fund. Prior to joining Aglae she has Head of Portfolio growth at CoinFund and Executive director at ConsenSys where she focused on driving adoption for Ethereum based products,  Strategic initiatives, Alliances and Channels.  She was involved in setting up the Enterprise Ethereum Alliance (EEA), the Accounting Blockchain Coalition (ABC) and the Blockchain for Social Impact Coalition (BSIC). Prior to ConsenSys she was a Strategy Executive at NYSE focused on investments and M&amp;A and a key member of PwC’s global wealth management team. Vanessa is a Founding Board member of AABC focused on Blockchain and Art, a member of the Advisory Council of ConsenSys, a Milken Institute Associate, a contributor to the  World Economic Forum Digital Future Council and part of <a href="https://cointelegraph.com/top-people-in-crypto-and-blockchain-2022/vanessa-grellet">Cointelegraph’s list of 100 most influential people for 2022</a>. Mrs. Grellet graduated Cum Laude from Law School (Paris II Assas) and Business School (HEC).

Vanessa Grellet

Mihailo Bjelic received his MSc in CS from the University of Belgrade. Prior to entering Web3/blockchain industry, he co-founded an AI/ML-powered platform for automotive industry and several other smaller startups and side projects. In 2017, he decided to join the Web3 movement full-time, primarily as a researcher interested in Ethereum scaling and multi-chain paradigms. In parallel with his work, he became one of the prominent Ethereum proponents and community members. In 2019, he started working on Polygon and conceptualized its architecture, vision and brand. In 2020, he joined hands with the Matic Network team and they have been working together on Polygon since then.

Mihailo Bjelic

Ben is a co-founder of Optimism, a leading Ethereum L2 ecosystem. He served as Chief Scientist before becoming a director at the Optimism Foundation. In his free time, he makes Ethereum-based parody songs under his stage name, Weird ETH Yankovic.

Ben Jones

Kristin is the CEO of the Blockchain Association, the Washington, D.C.-based trade association representing more than 100 of the industry’s leading companies. She also serves as a board member of the Filecoin Foundation for the Decentralized Web. Kristin serves as a liaison between policymakers and the cryptocurrency industry to assist in the creation of legislation and regulation that promotes the growth of the cryptocurrency ecosystem in the U.S. She is also a leading, public voice advocating for the cryptocurrency and blockchain industry through top-tier media interviews, op-eds and letters to the editor, and global speaking engagements. Kristin is a renowned voice for the industry, having been featured on Fortune’s 2020 40 under 40 list, CoinDesk’s 2021 50 people who defined the year in crypto, and CoinTelegraph’s 2022 top 100 Influencers in Crypto and Blockchain. Prior to leading the Blockchain Association, Kristin helped blockchain and technology companies achieve their public policy objectives in Washington. She served as a Senate and congressional aide on Capitol Hill for nearly ten years, much of which was spent focusing on technology policy.

Kristin Smith

Avichal is a successful entrepreneur with executive experience at Google and Facebook, which acquired his previous company. As an angel investor, Avichal has invested in 15 unicorns and 5 decacorns including Airtable, Boom Supersonic, Color Genomics, Cruise, Deel, Figma, Newfront Insurance, Notion, Nova Credit, Pulley, and others. He co-founded Electric Capital in 2018 and has grown it to one of the largest crypto venture firms globally. Electric is an investor in many of the leading web3 protocols and companies such as Bitwise, Bitnomial, dYdX, Frax, Kraken, Magic Eden, NEAR, and Solana.

Avichal Garg

Matt Hougan is one of the world’s leading experts on crypto, ETFs, and financial technology. He is Chief Investment Officer for Bitwise Asset Management, a pioneer in cryptoasset index funds with more than $1.2 billion in assets under management. He was previously CEO of ETF.com, where he helped build the world’s first ETF data and analytics system, the leading ETF media site, and the world’s largest ETF conference, Inside ETFs. Hougan is co-author of both “A Comprehensive Guide to Exchange-Traded Funds” and “Cryptoassets: The Guide to Bitcoin, Blockchain and Cryptocurrencies for Professional Investors” from the CFA Institute’s Research Foundation. He is a crypto columnist for Forbes, and a three-time member of the Barron’s ETF Roundtable.

Matt Hougan

Li Jin

Ethan is the co-founder of the Cosmos network and serves as the CEO of Informal Systems. Informal Systems is a member-driven worker’s cooperative building software that enables trustworthy relationships between protocols and people to flourish. Ethan also serves as the President of the Interchain Foundation which funds and coordinates development of public goods in the Cosmos ecosystem. Ethan sees local money systems as the basis for self-sufficient local economies to prosper. With a background in cell biology, neuroscience, mathematics, machine learning, and distributed systems, his goal is to build systems that encourage humans to work cooperatively through methods of self-organization. He is currently focused on blockchain technology as a means to bring greater political and economic sovereignty to local communities around the globe. Prior to Informal Systems, Ethan co-founded the Tendermint and Cosmos projects, and served as CTO of Tendermint Inc. Today, dozens of projects are adopting technology conceived in the original Cosmos whitepaper, including the Inter-Blockchain (IBC) Communication protocol – an industry-standard for permissionless communication between sovereign blockchains. Today, the Cosmos ecosystem continues to pioneer technological paradigms for building interoperable application-specific blockchains.

Ethan Buchman

Tyrone leads J.P. Morgan’s Blockchain team and is responsible for creating innovative Web3-focused products &amp; solutions for J.P. Morgan’s businesses and clients, and for engaging with the industry at large in order to provide a holistic blockchain strategy for the firm. Tyrone is also the Head of Onyx Digital Assets, a multi-asset tokenization platform that enables the exchange of value for various types of digital assets. Tyrone was previously a Senior Blockchain Product Manager in J.P. Morgan’s Blockchain Center of Excellence and was also the Head of Product for Quorum, an open-sourced Ethereum-based blockchain platform built for Enterprise use. Prior to moving into the blockchain industry in 2015, Tyrone was a software engineer within J.P. Morgan's Credit Markets business, and before that he spent several years in Product transformation, managing and delivering large strategic programs across various businesses within J.P. Morgan, across Front, Middle and Back Office risk and trading systems. Tyrone sits on the Board of Directors of The Enterprise Ethereum Alliance and The Hyperledger Foundation.

Tyrone Lobban

Rich is a Co-Founder and President of GSR and leads the group across strategic initiatives and growth. He began his career at Goldman Sachs where he spent 11 years between New York and London in commodities trading as a Managing Director and Global Head of Crude Oil and Derivatives Trading. Prior to joining GSR, he spent a few years on the buy-side, running energy trading teams at two New York-based hedge funds. Rich earned a bachelor’s degree in Mathematics from Columbia University.

Rich Rosenblum

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<h2>Why Sponsor Permissionless 2023?</h2>
If you’re serious about crypto, you have to be at Permissionless. Permissionless brings together DeFi builders, DAO participants, protocol developers, crypto companies, funds and institutions, and more. It’s a true crypto-native’s paradise, where you’ll have the opportunity to showcase your offerings and form lasting connections with the community.
We’ll work with your team to define the perfect sponsorship opportunity that best fits your needs and budget. Want to do something completely revolutionary? Our team can help design a bespoke package that brings your vision to life.
Get in touch with us at <a href="mailto:sales@blockworks.co">sales@blockworks.co</a>
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