Morgan Chittum

<div id="highlights-block_610031a9209a7" class="highlights">
 <ul>
 <li>One way Pareto sets itself apart from competitors is through monthly liquidity.</li>
 <li>Pareto’s in-house developed product, Manifold, allows the fund to identify behavior happening across markets.</li>
 </ul>
 
</div>



As traditional financial and digital assets markets are slowly merging, Blockworks is taking a closer look at how fund managers are navigating the volatile market.



To find out how the five-person company, Pareto Technologies, is tackling the challenge, I talked to Junaid Ghauri, co-founder and chief investment officer. <a href="https://paretotechnologies.com/team" target="_blank" rel="noreferrer noopener">Pareto</a> is an investment firm that has a multi-strategy approach that combines quantitative trading with macro global trading.



Before serving as chief investment officer at Pareto, Ghauri was the chief technology officer for Mark Labs. In addition, he previously founded Emerta and worked for government agencies like NASA and The Institute of Photonic Sciences. He has a masters of science in computational and applied mathematics from Johns Hopkins University, and provides <a href="https://cms.blockworks.co/cryptos-and-equities-tumble-amid-virus-resurgence-markets-wrap/" target="_blank" rel="noreferrer noopener">comments</a> for Blockworks Markets Wraps.



Chittum: How would you describe Pareto’s investment strategy?



Ghauri: We basically have two products. It’s the same trading strategy but it’s based in two different assets — a USD-based product and a BTC-based product.



The USD product is an absolute return USD strategy. The strategy is the same for both. It’s basically statistical arbitrage&#8230; . We are looking for self similarity in the market so serial correlation or auto correlation. Once we are able to identify serial correlation and what we call periodicity in the market, that’s when we deploy our trend-based system in that market. Essentially, it profits off of that volatility and those types of swing trades.



The way to look at [the BTC based-product] is that it’s an alpha strategy so it outperforms BTC. But really we see it as an absolute return bitcoin strategy. If the investor already has bitcoin exposure, our target is to return it in bitcoin for them. [There’s monthly liquidity, paid out in a way similar to what Celcius or Blockfi offers with their savings accounts], but you can say it’s higher risk as well since it’s being actively traded.



Chittum: What type of investors are you targeting then? What’s something that attracts those investors to your fund?



Ghauri: Not everyone is sold on bitcoin even to this day. You have a lot of folks who are naysayers — the bears of the market and such. There’s a pretty large subset of individuals and institutions who want to get in on the action with crypto, but don’t want to hold a large crypto position. They see the volatility and they understand that [it’s] profitable, but they would rather settle over US dollars [without] having the immense volatility.



Chittum: What are your portfolio parameters?



Ghauri: We maintain a relatively large cash position at this stage. … Even when the market is hustling and bustling, we still have at least a 50%, sometimes a 60% cash position. As far as I know, we have a larger cash position than most managers. Sixty percent is where we tend to keep it, even when we are heavily risked from our standpoint, we don’t have more than 40% or 50% exposure to the markets.



Chittum: How does Pareto set itself apart from its competitors?



Ghauri: From a structural standpoint, we set ourselves apart by having monthly liquidity. I don’t think it’s very common to have monthly liquidity for funds like ours. A lot of times it’s quarterly.



We actually predicate our risk-on [and] risk-off patterns on the basis of where we are in the month. For example, we tend to go heavily risk-on earlier in the month. Simply because that&#8217;s a good time for us to trade. As the month starts to wind down, we want to have a predictable range in returns…. By the time we reach the last 20 days of the month, we take extremely conservative positions [so] that there’s a very high likelihood of a win versus a loss. It’s sort of the cherry on top relative to what we already returned.



Another way would be having the ability to select your based asset…. Managers tend to commit one way or the other. You’ll have long/short bitcoin strategies that only target bitcoin alpha, then you’ll have absolute arbitrage strategies. We have both of those.



Chittum: How does Pareto pull value from market behavior and analytics?



Ghauri: Bitcoin, and really just the whole crypto market, is extremely correlated. Whatever bitcoin does, everything tends to follow. On varying time scales and with the proper tools, you can start to see how the correction of different alt-coins and bitcoins change overtime.



We developed a tool [called Manifold] that allows us to have a really good eye on the sensitivity analysis part of things. We can very quickly identify when there is synchronous correlation behavior happening across the markets. Based on that [behavior], we want to diversify.



Just to give you a practical example, when bitcoin drew down about 60% a few months ago, we were only down about 2.6% at the time…. We did this largely going back to our cash position but also going through assets that weren’t correlated. We’ve been able to maintain minimal variance fairly well across most market conditions.

How Pareto Invests in the Volatile Digital Asset Market

Sebastian Sinclair

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. 



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. 



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>. 



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 currently 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

Ben Strack

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

Casey Wagner

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

Bessie Liu

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

Shalini Nagarajan

Cryptocurrency exchange Bitfinex’s derivatives platform has expanded its offerings to provide perpetual contracts for three popular commodity instruments.&nbsp;



Customers of the platform will now be allowed to trade commodities that are otherwise found on traditional financial exchanges. Usually these commodities are restricted to regular trading hours, but these will be available to trade on Bitfinex Derivatives around-the-clock using Tether (<a href="https://blockworks.co/price/usdt" target="_blank" rel="noreferrer noopener">USDT</a>).



UK crude oil, palladium and platinum are the three commodities that will be available on the platform. UK crude oil is used for refinement into diesel fuel and gasoline. It also serves as the benchmark for the light oil market in Europe, Africa and the Middle East.



Palladium is mainly used in manufacturing processes, including in uses for dentistry and jewelry. It primarily comes from the US, Russia, South Africa and Canada. Platinum too can be made into jewelry, but it can also be used for computer hard disks and in chemotherapy drugs used to treat cancer. Like any commodity, their prices are influenced by demand.



The launch of these three global commodities will add to Bitfinex’s more than 60 crypto perpetuals, including Tether gold perpetuals and silver perpetuals. They went live on the platform on March 15, and offer users up to 100x leverage, settled in USDT tokens, meaning traders have the option to execute trades much larger than their initial margin.&nbsp;



Founded in 2021, <a href="https://blockworks.co/tag/bitfinex" target="_blank" rel="noreferrer noopener">Bitfinex</a> offers almost 200 different tokens and 400 unique spot trading pairs. Its latest move appears to be a novel one, as it isn’t common for crypto exchanges to offer global commodity indexes to trade. 



“We anticipate great interest in these products, particularly among funds and professional investors seeking to take directional positions or to hedge risk,” Paolo Ardoino, chief technology officer at Bitfinex Derivatives, said in a statement.&nbsp;



The commodities will trade similarly to other crypto perpetuals. Both transactions and funding will be settled in USDT, and margin collateral will be denominated in USDT.



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Bitfinex Offers Crypto Crude Oil Swaps With Up To 100x Tether Leverage

Playboy Group was forced to write off nearly $5 million on ether that it accepted as payment for its NFTs.



In a Thursday <a href="https://www.sec.gov/Archives/edgar/data/1803914/000180391423000017/ply-20221231.htm" target="_blank" rel="noreferrer noopener">filing</a>, the media and lifestyle brand said it has held <a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a> received for sales of its Rabbitar NFTs, which were released in the fourth quarter of 2021.&nbsp;



Their value has gone down since then, however. As of the end of last year, the carrying value of Playboy’s digital assets fell to about $300,000, down 95% from $6.8 million at the end of the previous year, resulting in impairment charges on its balance sheet.



Overall, the company filed impairment charges worth $4.9 million on its crypto for the 2022 financial year, up from 2021’s $1 million paper losses.



Other companies to have recorded impairment charges on their crypto holdings include <a href="https://blockworks.co/tag/microstrategy" target="_blank" rel="noreferrer noopener">MicroStrategy</a> and Jack Dorsey&#8217;s fintech firm <a href="https://blockworks.co/tag/block" target="_blank" rel="noreferrer noopener">Block</a> (formerly Square).



Playboy released 11,953 unique 3D rabbit characters as NFTs as a tribute to its founding year 1953. Playboy said the NFTs were created by its Web3 innovation team, which partnered with Possible Studios and art studio WENEW.



OpenSea records 2,798 ETH ($4.9 million) in total volume with around 5,400 unique holders. The current floor price is 0.0703 ETH ($122).



Playboy said it accounts for digital assets as indefinite-lived intangible assets. This means Playboy must record their value as the lowest observable fair value within a reporting period.&nbsp;



“Therefore, negative swings in the market price of [ether] could have a material impact on our earnings and on the carrying value of our digital assets,” the firm said.&nbsp;



“Positive swings in the market price of Ethereum are not reflected in the carrying value of our digital assets and impact earnings only when the [ether] is sold at a gain.”



<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/13102019/embed#?secret=kDzEdZk1oB" data-secret="kDzEdZk1oB" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div></figure>



Ether is down 38% in the last year, but is up nearly 44% in the year-to-date period, according to <a href="https://www.blockworksresearch.com/" target="_blank" rel="noreferrer noopener">Blockworks Research</a>.



Playboy separately warned in the filing that the long-term adoption of digital assets is unpredictable. But it expects to continue commercial activities that involve digital assets and cryptocurrencies.&nbsp;



“If we fail to explore and commercialize these new technologies and apply them innovatively to keep our products and services competitive, we may not experience significant growth of our business,“ Playboy said.



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Playboy Held All ETH Earned From NFTs — But It Cost Them $5M

The recent wave of bank closures across the US has highlighted the vulnerability of the traditional banking system, prompting crypto industry experts to advocate for decentralized financial infrastructure as a more secure and reliable alternative.



Cracks across international banking sectors are being papered over by regulators hellbent on preserving the status quo, Blockworks was told.



Rob Alcorn, CEO and co-founder of DeFi credit marketplace Clearpool, argues that while some of the closed banks had significant connections to digital assets, the primary factors contributing to their failures were monetary and prudential policy decisions that impacted liquidity and market structure.



“In the short term, there will be additional headwinds for some crypto market participants to access USD-based banking services,” he said. “But the knock-on effects will continue to have more of an impact on centralized institutions than on decentralized protocols.”



Silicon Valley Bank’s demise has all but <a href="https://abcnews.go.com/Politics/trump-era-rollback-bank-rules-after-silicon-valley/story?id=97852603">reignited the focus</a> on financial institutional reforms that were wound back during the presidency of Donald Trump in 2018 — namely the Dodd-Frank Act.



The act was passed by Congress in 2010 as a response to the severe economic downturn caused by the bank-induced Great Financial Crisis two years earlier.



Part of the act was to classify banks with more than $50 billion in assets as “too big to fail,” making them subject to heightened prudential standards such as stress tests, capital planning, and liquidity requirements.



This provision, in turn, gave the US Federal Reserve greater regulatory power over banks, even those it did not directly supervise.&nbsp;



However, the Dodd-Frank Act faced resistance from the financial industry, which viewed the regulations as excessive and aimed primarily at the largest banks.&nbsp;



As a result, Congress passed a law under the Trump administration that eased some of the Dodd-Frank rules for smaller and mid-tier banks, after years of political pressure.



<h2>Blame games and finger pointing</h2>



Abroad, conditions are also beginning to fracture.



Following a recent sell-off of Credit Suisse stock and credit default swaps, regulators have issued a statement affirming the bank meets the higher capital and liquidity requirements for <a href="https://www.afr.com/chanticleer/pure-panic-at-credit-suisse-is-now-everyone-s-problem-20230316-p5csjy">systemically important banks</a>.&nbsp;



They have also pledged to provide liquidity to the bank if necessary, a move that was largely derided during the 2008 financial crises among politically and financially motivated activists.



Proponents are now <a href="https://www.nytimes.com/2023/03/11/technology/silicon-valley-bank-crypto-investing.html">pointing fingers</a> at digital assets as the catalyst for the failure of Signature Silvergate and Silicon Valley Bank, leading to a <a href="https://blockworks.co/news/uks-natwest-paysafe-distance-from-crypto-as-banks-roil">blame game</a> amongst regulators, crypto enthusiasts and market participants.



Alessio Quaglini, the CEO and co-founder of Hex Trust, told Blockworks the hostility towards crypto is less relevant than the failure of the overall banking system.&nbsp;



“Compared to traditional finance, counterparty risk is far more transparent with decentralized finance and it’s events like these that make investors realize there is an alternative,” he said.



Bitcoin was designed for this exact moment and has performed as intended during times of fiat instability via its decentralized nature, the co-founder added.



Decentralization is a fundamental aspect of crypto finance that provides several key benefits, according to industry experts.



It’s supposed to mean there exists no central authority or single point of control that can manipulate or censor transactions.



In the ideal, decentralization is meant to create a more resilient defense against attacks while making it less vulnerable to corruption. It is often harder to implement in practice, as hacks and exploits targeting multi-sig wallets and price oracles across various protocols in recent years can attest.



Another important aspect of decentralization is its allowance for greater privacy and security.&nbsp;



Since there is no central database of user information or transaction history, it becomes more difficult for malicious actors to gain access to sensitive information, or so the argument goes.



Decentralization also promotes innovation and competition by allowing for a level playing field where anyone can participate and contribute to the development of the system.&nbsp;



<h2>Building the necessary rails</h2>



In order to fully realize the benefits of decentralization, appropriate infrastructure is essential. This includes secure and reliable networks, decentralized storage and computing resources, and user-friendly interfaces that enable people to interact with the system easily and safely.&nbsp;



Setting up appropriate infrastructure is useful because it helps to ensure that the system is secure, efficient, and accessible to everyone, the industry experts said.



It also helps to foster trust and confidence in the system, which is crucial for widespread adoption and acceptance.&nbsp;



Ultimately, building the right infrastructure is key to realizing the full potential of crypto finance and creating a more decentralized, universal and equitable financial system, they said.



Hamilton Keats, CEO, and co-founder of Krayon, also sees the recent banking crisis as a sign that the traditional financial system is weakening.&nbsp;



Keats points to the Federal Reserve&#8217;s decision to raise rates too quickly in an attempt to combat inflation as a key factor contributing to the crisis.



“Yes, SVB’s failure to hedge its duration risk was a catastrophic failure in risk management, but they’re not the only bank at risk, and we’re now seeing rumblings throughout the sector,” he said.



Conversely, blockchain-based payment infrastructure and decentralized monetary systems have been working effectively to build investor confidence, abstracting away from the manual interventions of the existing banking systems and providing risk visibility, Keats added.



“Whilst the effects of this recent crisis are likely to be short-term, we’ll likely see a move towards the crypto asset ecosystem over the longer term, where on-chain transparency brings trust.”



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Banking Sector Stumbles Are Boon For DeFi

Though liquidity in the US Treasury market has fallen amid stresses across the banking sector, stablecoin issuers say they are just fine.&nbsp;



Bid-ask spreads on two-, 10- and 30-year US government bonds jumped to the highest level in at least in six months, Bloomberg <a href="https://www.bloomberg.com/news/articles/2023-03-15/treasuries-liquidity-dwindles-as-svb-crisis-muddies-fed-outlook" target="_blank" rel="noreferrer noopener">reported</a> Tuesday.



A bid-ask spread is the amount by which the ask price exceeds the bid price for an asset in the market, representing the transaction cost.



Data from Quantitative Brokers shows liquidity in the market for 10-year Treasury futures has been less than half the levels recorded before the collapse of Silicon Valley Bank collapse, the Wall Street Journal <a href="https://www.wsj.com/livecoverage/stock-market-news-today-03-15-2023/card/what-s-behind-the-crazy-moves-in-the-bond-market--XSx2gX8CHTQjdeOLCTNP?mod=article_inline" target="_blank" rel="noreferrer noopener">reported</a> Wednesday. 



But stablecoin issuers are more protected from a decrease of liquidity in Treasury bonds due to their higher allocation of reserves invested in short-dated Treasuries securities, such as <a href="https://www.investopedia.com/terms/t/treasurybill.asp" target="_blank" rel="noreferrer noopener">Treasury Bills</a>, according to Conor Ryder, research analyst at market data provider Kaiko.



Most top stablecoins work to have an amount of fiat currency or other similarly liquid assets — such as US Treasurys — equal to stablecoins issued. These are generally maintained by third-party partners.



Such entities allocate only a small portion of reserves toward longer-term government bonds, he added.



An accountant <a href="https://www.circle.com/hubfs/USDCAttestationReports/2023%20USDC_Circle%20Examination%20Report%20January%202023.pdf" target="_blank" rel="noreferrer noopener">report</a> for Circle — published in January by Deloitte — shows the majority of its $32.4 billion bond portfolio is invested in bonds with a maturity date less than three months away, Ryder noted.



“Tradfi has been quick to criticize stablecoin issuers in the past, and sometimes rightly so,” he told Blockworks. “But here Circle in particular has shown good liquidity risk management, keeping the majority of reserves in short dated securities that could be sold for minimal loss.”&nbsp;



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



Meanwhile, a Tether representative said the company holds “a strong, conservative, and liquid portfolio” that includes cash, cash equivalents and US Treasuries with a very short-term duration.



Tether’s stablecoin, USDT, has a market capitalization of roughly $75 billion — behind only bitcoin and ether.&nbsp;



“We have also developed a set of risk metrics and risk measurement processes, which allows the Tether investment and financial teams to evaluate the risk of the portfolio at any point in time,” the representative added.&nbsp;



Sebastien Derivaux, MakerDAO&#8217;s asset-liability lead, told Blockworks in an email that if there was “a run” on its stablecoin, DAI, it has “ample liquidity in its Peg Stability Module (PSM) — a type of vault that allows users to swap a given collateral type directly for DAI at a fixed rate — to meet initial demand.&nbsp;



It would then sell its Treasuries to meet redemptions in such a scenario, which he noted would take a few days due to what he called “TradFi slowness.”



MakerDAO is <a href="https://blockworks.co/news/makerdao-more-us-treasury-bond-investments">looking to increase its investments in US Treasuries and bonds</a> to $1.25 billion in a proposal made by community member Allan Pedersen earlier this month.&nbsp;



“The bonds are really short term, so there is no significant price impact due to the fluctuation of rates,” Derivaux said. “In any case, we have a surplus buffer [and] excess capital, covering any shortfall if that should happen during the sales.”



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Treasury Markets Are Drying Up, But Stablecoin Issuers Say They’re Still Liquid

Digital assets have been found to move in cyclical patterns based on volatility, leading to larger outsized returns.



An exhaustive study conducted by researchers at risk management and trading platform The Risk Protocol (TRP) found bellwether bitcoin <a href="https://www.blockworksresearch.com/glossary#volatility">volatility</a> differed significantly depending on the time of day.



Measuring in Coordinated Universal Time (UTC), TRP said hours two and 15 through 18 were found to be the most volatile, <a href="https://riskprotocol.io/" target="_blank" rel="noreferrer noopener">the</a><a href="https://riskprotocol.io/#research" target="_blank" rel="noreferrer noopener"> </a><a href="https://riskprotocol.io/" target="_blank" rel="noreferrer noopener">study</a>, titled “The Nature of the Beast,” indicated.



Put differently, by analyzing the average absolute return and absolute return standard deviation, it was revealed that crypto tends to move most during the 9 am start of the day across Asia and the US.



Volatility can be described as the degree of variation of a financial instrument&#8217;s price over time, and can manifest in either positive or negative moves.



It is often measured by the standard deviation of an asset’s returns over a certain period. In other words, the higher the volatility, the more the price of the asset fluctuates, which implies a greater risk for investors.



Volatility across Asia typically lasts for between five and six hours before dropping to its lowest point as parts of Europe approached late evening, the study found. Volatility then begins to pick up once again during US working hours, peaking by about 2 pm.



With people in the US starting a new trading day, “we would typically expect more trading activity during these hours,” TRP said.



Large levels of exchange trading volumes have been witnessed occurring during those times, which is consistent with the analysis, researchers said.



Ethereum, too, was also shown to have the same volatility patterns as bitcoin, which makes sense given their close correlation during major market moves.



“Findings are not too surprising given the regular working hours around the world,” TRP said. The study also found that, of the 50 digital assets it analyzed, Friday, offered up significantly higher volatility than other days.



To test the statistical significance of the results, the researchers conducted a mean difference test between Tuesday and other days and found the weekend offered the lowest levels of significant price changes.



The results are likely correlated to crypto’s round-the-clock trading times compared to traditional markets, meaning more people are likely to trade during days when they are at work taking a break during the weekend, they said.



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Bitcoin’s Price Movement is ‘Highly Predictable’ on Set Days, Study Finds

Following a successful Goerli testnet <a href="https://blockworks.co/news/shapella-upgrade-brings-ethereum-closer-to-long-awaited-withdrawals">upgrade</a>, Ethereum’s “Shapella” hard fork has now been scheduled to deploy on mainnet on Apr. 12.



The Shapella upgrade is the combination of the execution layer (Shanghai) with the consensus layer (Capella), which will allow validators to withdraw their locked-up ether from the network.



“It&#8217;s called &#8220;Shapella&#8221; as a portmanteau of &#8220;Shanghai&#8221; and &#8220;Capella,&#8221; Noam Hurwitz, engineering lead at Alchemy told Blockworks. The date was decided during today’s Ethereum core developers call.



In the existing proof of stake model, the Ethereum network is secured by decentralized validators who must post 32 ether — about $52,500 — to participate in block production on the network.&nbsp;



The first ETH stakers locked their tokens in the network’s Beacon contract in Nov. 2020. Ether was worth $450 at the time, now it&#8217;s trading for $1,660.



Activating withdrawals will enable two things, Hurwitz said. First, offline validators can reclaim their principal stake, and they can also claim earned fees.



“There&#8217;s also a less talked about change that reduces the gas cost applied to earning this fee,” Hurwitz said. “So in general, this is a much anticipated economic unlock for validators.”



A researcher at Arbitrum who goes by the pseudonym <a href="https://twitter.com/terencechain">terencechain</a> told Blockworks that there aren’t many roadblocks ahead of the Shapella hard fork on Ethereum’s mainnet.



“Goerli testnet went smoothly despite some operators forgetting to upgrade their nodes,” they said. “Client teams are gearing up for the main release for upgrading the mainnet to Shapella, not that we have an upgrade time. Expect releases in the next 2 weeks and minor last min bug fixes.”



Tooling is receiving last minute bug fixes, and user interface is receiving last minute touch ups to ensure optimal user experience.&nbsp;



“It&#8217;s important for them to be ready earlier so stakers can safely perform full withdrawal or partial withdrawal,” terencechain said.



Documentation is also being reviewed, he noted. Adding that “We want the documentation to be as solid as possible. That&#8217;s the gateway to stakers withdrawals.”



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Ethereum Devs Finally Set Date for ETH Withdrawals

The Federal Deposit Insurance Corporation (FDIC) said it seeks to sell Signature Bank’s entire business, contradicting a report that buyers would have to agree to give up the company’s crypto dealings.



The report came Thursday from Reuters, which cited people familiar with the matter. Bids for <a href="https://blockworks.co/tag/signature" target="_blank" rel="noreferrer noopener">Signature</a>, as well as Silicon Valley Bank (SVB), are said to be due Friday.&nbsp;



But the FDIC would not require the divestment of crypto activities as part of any sale of the banks, a spokesperson told Blockworks.&nbsp;



The FDIC’s stance is consistent with previous <a href="https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20230103a1.pdf" target="_blank" rel="noreferrer noopener">guidance</a> from the corporation — along with the Federal Reserve’s board of governors and the Office of the Comptroller of the Currency (OCC) —&nbsp; about the risks of cryptoassets.&nbsp;&nbsp;&nbsp;&nbsp;



“Banking organizations are neither prohibited nor discouraged from providing banking services to customers of any specific class or type, as permitted by law or regulation,” the regulators said in a January joint statement.



Potential acquirers of Signature will tell the <a href="https://blockworks.co/tag/fdic" target="_blank" rel="noreferrer noopener">FDIC</a> what assets and liabilities they’re willing to take from the bank, the FDIC representative added.



“So clearly, those who are interested in the bidding process will create their own conditions for purchase,” the spokesperson said.



Samuel Dibble, a partner at law firm Baker Botts, said some buyers might want to include a clause that excludes buying the crypto business for a couple reasons.&nbsp;&nbsp;



“They [may] have made a conscious decision not to acquire or hold any digital assets, or they don’t know how to value digital assets and therefore want to submit a bid that avoids having to value them,” he said.



<h2>Interest to buy?</h2>



An executive at a mergers and acquisitions (M&amp;A) advisory firm, who agreed to speak under the condition of anonymity, said Signature’s crypto-related business, including its digital payments platform, <a href="https://www.signatureny.com/business/signet" target="_blank" rel="noreferrer noopener">Signet</a>, is crucially important to the sector and will be “very valuable” to the right acquirer.



“I suspect that the crypto portion of the business will find a buyer,” they said. “We see this as a crucial test for the industry.”



Though <a href="https://blockworks.co/news/no-more-sen-now-what">Silvergate shut down its exchange network, SEN</a>, earlier this month, Signet remains operational. Signet, powered by technology from Tassat Group, allows commercial clients of the bank to transfer funds between one another in real-time.



“Signet … has operated smoothly and without interruption during this period to help facilitate needed intra-bank payments for Signature&#8217;s clients,” Tassat CEO Kevin Greene said in a statement. “The current events extend beyond Signature, and affect every bank in the country.”



But Donald Putnam, a managing director with M&amp;A specialist Grail Partners, said he expects banks that have acted as rails for fintech payment systems, such as Signature and SVB, will find few ready buyers.



“Those businesses are under regulatory scrutiny and low margin,” he added. “A few banks — Cross River comes to mind — have made a big profitable business supporting fintech, but they are the exception. The larger banks are still experiencing losses on every transaction when all costs are accounted for.”



Dibble said the benefit of buying Signature’s assets would be to acquire its relationships that it has with depositors and borrowers. But he noted, the market is a bit “spooked” right now.



“I don’t really see the ‘too big to fail’ banks rushing into a crypto business at this stage and I also don’t see any other mid-size or regional banks…looking to double down by acquiring all of Signature’s assets&nbsp; — or even just its crypto assets,” he said.



<h2>Advocacy groups speaking up</h2>



The <a href="https://blockworks.co/news/who-will-bank-crypto">crypto banking landscape is clearly in flux</a> after the collapse of Silvergate, Signature and Silicon Valley Bank.&nbsp;



The original report which stated whoever acquires Signature would have to give up the company’s crypto dealings sparked the ire of certain advocacy groups in the sector.&nbsp;&nbsp;



“As long as a crypto company can demonstrate its ability to be a good bank customer, it should be able to be banked and not be subject to a black-and-white blanket ban,” Sheila Warren, CEO of the Crypto Council for Innovation, said in a statement.&nbsp;



The Blockchain Association said Thursday it sent Freedom of Information Act (FOIA) requests to the FDIC, OCC and the Federal Reserve’s board of governors to investigate the potential de-banking of lawful crypto business, in what some have theorized could be part of a second “<a href="https://blockworks.co/news/operation-choke-point-2-0">Operation Choke Point</a>.”



The advocacy group added that allegations include account closures and the refusal to open new accounts, which it said is “more concerning in the wake of this week’s banking crisis.”



<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">3/ These reports are especially concerning this month after the failures of Silvergate, Silicon Valley Bank, and Signature Bank. Those banks had many crypto companies as customers, who are now rushing to open new accounts elsewhere to make payroll and stay in business.&mdash; Jake Chervinsky (@jchervinsky) <a href="https://twitter.com/jchervinsky/status/1636356461914726402?ref_src=twsrc%5Etfw">March 16, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



A Blockchain Association spokesperson did not comment on which banks are allegedly de-banking crypto firms. The group has established a tip line seeking to collect more information.&nbsp;



Jake Chervinsky, the Blockchain Association’s chief policy officer, argued via Twitter that there is no valid reason to de-bank crypto companies.&nbsp;



“They&#8217;re just like all other law-abiding companies that need bank accounts to operate: they hold dollars to pay rent, salaries and taxes,” he wrote. “If regulators are debanking crypto companies, they&#8217;re breaking the law.”



Updated March 16, 2023 at 3:42 pm ET: Added comments from Samuel Dibble, a partner at law firm Baker Botts.



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FDIC Seeks To Sell Signature Bank — Crypto Business and All

John Gilbert

The Ethereum Foundation’s ERC-4337 account abstraction went live on Ethereum’s mainnet on March 1. While some expressed excitement for the news and the potential for smart contract wallets, the leading smart contract wallet providers reminded everyone that they already exist.



So what’s different? And what in the world is a smart contract wallet again?



Key takeaways:&nbsp;



<ul>
<li>Smart contract wallets provide a means of self custodying crypto assets.</li>



<li>They enable bundled transactions, customizable recovery options, the ability to pay gas fees in a different token, greater privacy in identity management and more.</li>



<li>Not all smart contract wallets remove the EOA from the equation.&nbsp;</li>
</ul>



<ul>
<li>There lacks a universal standard to account abstraction that can address risk concerns.</li>



<li>ERC-4337 is an account abstraction approach that intends to remove the reliance on centralized relayers and EOAs.</li>



<li>It can potentially provide a universal standard that addresses security concerns but needs further infrastructure.&nbsp;&nbsp;</li>
</ul>



<h2>What are smart contract wallets?</h2>



A smart contract wallet is a device or application that lets users customize the way they would prefer to manage their digital assets.&nbsp;



Account abstraction is how developers make smart contract wallets possible. They abstract all the essential functions of the Externally Owned Account (EOA) and plug them into a smart contract full of new levers and buttons.



In other words, it&#8217;s a choose-your-own-adventure approach to self custody.&nbsp;



<h3>Use Cases</h3>



You can program the smart contract wallet for the use cases that mean most to you — things like social recovery and bundled transactions. Proponents believe that it will onboard millions more to Web3 by revolutionizing the user experience, and critics fear that it introduces additional risks.&nbsp;



<h2>The Ethereum account model explained</h2>



Before we explain how it works and the significance of <a href="https://blockworks.co/news/ethereum-erc4337-account-abstraction-smart-contract">ERC-4337 account abstraction</a>, it&#8217;s worth refreshing our understanding of the Ethereum account model.



Unlike Bitcoin and other cryptocurrencies, Ethereum uses an account model instead of a UTXO (unspent transaction output) model. This allows users to deploy and use self-executing smart contracts that can run applications such as <a href="https://blockworks.co/tag/uniswap" target="_blank" rel="noreferrer noopener">Uniswap</a>.



There are two types of accounts on the Ethereum network: externally owned accounts (EOAs) and smart contract accounts.&nbsp;



<ul>
<li>Both are represented by a unique public address, which is essentially a string of letters and numbers.&nbsp;</li>



<li>Both can be used to send, hold or receive ether.</li>
</ul>



However, EOAs and smart contract accounts differ in how they are controlled and used. EOAs are controlled directly by the user through a private key signing function. This authorizes the account to perform three primary tasks:&nbsp;



<ul>
<li>Validate transactions&nbsp;</li>



<li>Execute transactions&nbsp;</li>



<li>Pay transaction fees&nbsp;</li>
</ul>



In contrast, smart contract accounts are controlled by their embedded logic — a series of if-then statements. But this design makes smart contracts dependent on EOAs. They are still needed to deploy the smart contracts and prompt smart contract actions.&nbsp;



The smart contract’s dependence on EOAs makes it difficult for wallet providers to program new ways for users to validate, execute and pay transaction fees.&nbsp;&nbsp;&nbsp;



<h3>Limitations of this model</h3>



This accounts model limits many wallet providers to only offer users a <a href="https://blockworks.co/news/what-are-seed-phrases">seed phrase</a> in the case that they lose access. The seed phrase though is notoriously vulnerable to users forgetting it or losing it to theft — which discourages users from interacting with the blockchain, and makes it difficult for them to manage their digital assets.



Read More: <a href="https://blockworks.co/news/what-are-seed-phrases">What is a seed phrase and are they necessary?</a>



Another pain point is the number of steps it takes for a user to interact with a smart contract. Since every interaction with a smart contract requires a signature, gas fees can get expensive quickly. This also adds vulnerability for the user, as each transaction increases risks associated with potential network congestion, errors in smart contract code, or other technical issues.



Lastly, the standard EOA model limits the innovation of wallet providers. There are workarounds that use smart contracts that enable more use cases with greater customization, but they come with a new set of risks.&nbsp;



<h2>How does account abstraction work?</h2>



Before ERC-4337, smart contract wallets had two general approaches to account abstraction. They could either use third party relayers with an abstracted EOA or use a layer-2 solution with native account abstraction.&nbsp;



<h3>The EOA and relayer approach</h3>



Smart contract wallets like Safe use an EOA as the basis of a smart contract wallet and a <a href="https://docs.safe.global/learn/gnosis-safe" target="_blank" rel="noreferrer noopener">transaction relay service</a> to bundle and process transactions on behalf of the smart contract account.&nbsp;



Remember, the current EVM logic requires users to deploy a smart contract with their EOA account. So in this approach, safe wallets use an EOA for its initial set up. But once the account is created, users can add a layer of customization to the authorization process.&nbsp;



<h4>Benefits</h4>



For example, with Safe, users can configure several types of transaction confirmation methods, including multi-sig, time-lock, and threshold signatures.&nbsp;



<ul>
<li>A multi-sig confirmation method is a security feature that requires multiple parties to approve a transaction before it can be executed. It adds an extra layer of security to transactions and helps prevent fraudulent activity.</li>
</ul>



<ul>
<li>In a time-lock confirmation method, a transaction is scheduled to execute at a future time and is confirmed automatically when that time is reached, without requiring any additional approval. This approach is useful for scenarios where a group of people want to agree on a transaction in advance, but don&#8217;t want to coordinate their approval at a specific time.</li>
</ul>



<ul>
<li>Threshold signatures is a multi-signature scheme where a transaction can be authorized by a subset of a group of signers, instead of requiring all signers to approve it. This allows for greater flexibility in the approval process and can increase security by reducing the likelihood of all signers being compromised at the same time.</li>
</ul>



This layer of abstraction can also be used to customize account recovery. For example, it lets users add trusted accounts that can help recover the account in case the user loses access. The recovery process involves a time delay and a confirmation from a majority of trusted accounts to prevent unauthorized access.&nbsp;



Since the smart contract is on Ethereum, it still costs gas to execute actions that require multiple transactions. So instead of executing a set of transactions individually, the smart contract can be programmed to send authorized transaction metadata to a transaction relay service that executes them on the user’s behalf.&nbsp;



<h4>Risks</h4>



This allows third parties to cover the gas fees for the user or let them pay the fees with a different token. The challenge though is, not all third party relayers are the same. Some contain unique centralization risks that the average user is not going to understand.&nbsp;&nbsp;



<h3>Layer-2 native account abstraction</h3>



Smart contract wallets like Argent have partnered with ZK-Era to provide account abstraction through a layer-2 solution. This avoids the need for third party relayers and removes the need for a user to set up an EOA.



ZK-Era’s native abstraction uses Zero-knowledge proof rollups to bundle a set of transactions from an Argent smart contract account that are then settled using the ZK-Era smart contract on the Ethereum blockchain.&nbsp;



<h4>Benefits</h4>



Since the accounts are on a layer-2, users don’t need to use an EOA for initial set up and authorization. This adds greater scalability and complexity because smart contracts on layer-2s can process more computations without delegating to a third party like a relayer.&nbsp;



<h4>Risks</h4>



The exact process is too complicated to explain here, but the main concerns are rooted in the security and dependency of the layer-2 smart contract responsible for settling deposits and withdrawals.



<h3>ERC-4337 account abstraction&nbsp;</h3>



ERC-4337 account abstraction offers an approach that doesn’t require third party relayers, layer-2 smart contracts, or a consensus layer change. It lets people manage a smart contract wallet without ever needing to use an EOA in the same way. 



It does this through providing a new standard of transaction messaging. Instead of executing transactions individually or sending the metadata of a set of authorized transactions to a relayer, smart contract wallets can send a series of user operations to a bundler.&nbsp;



So what is a bundler and user operation? And how are they different from a relayer and transaction?&nbsp;



<h4>Benefits and risks&nbsp;</h4>



To get a full breakdown of how this works, keep an eye out for an <a href="https://www.blockworksresearch.com/research?author=westie" target="_blank" rel="noreferrer noopener">upcoming report</a> from Blockworks Research analyst <a href="https://twitter.com/westiecapital" target="_blank" rel="noreferrer noopener">Ryan West</a>.



In short, the model offers the potential for a more decentralized version of what relayers do for smart contract wallets like Safe.&nbsp;



But many on Twitter have pointed out that the current bundler infrastructure is centralized and fragile.&nbsp;



Twitter user @blockomotive <a href="https://twitter.com/blockomotive/status/1631996557280116736" target="_blank" rel="noreferrer noopener">stated</a>, “there’s been other projects and technology offering transaction relaying services for a while.”



“However,” they <a href="https://twitter.com/blockomotive/status/1631996553102491655?s=20" target="_blank" rel="noreferrer noopener">added</a>, “until many bundlers are up and running (which still requires dedicated [infrastructure]), the system remains centralized and fragile. Currently, only a few projects offer API services to run bundlers, increasing the centralization of 4337.”



And @Safe <a href="https://twitter.com/safe/status/1625466577230389248" target="_blank" rel="noreferrer noopener">stated</a> in February 2023:



“We are evaluating an EIP-4337 integration (also based on a module). We will only roll out this integration when we meet our very tough security standards.”



<h2>Final thoughts</h2>



Even though the majority of the smart contract wallet discussion is centered around alternative account recovery systems, there are many more exciting use cases. Smart contract wallets have the potential to customize the way users manage their identity online, vote on governance proposals, delegate user responsibilities of DAO wallet and more.&nbsp;



Read more: <a href="https://blockworks.co/news/what-is-decentralized-identity">What Is Decentralized Identity? The Pillar of Web3</a>



Most account abstraction methods still require some form of dependency — whether it is a relayer, bundler or layer 2 smart contract. Web3 users shouldn’t be expected to understand the difference in risk between the three primary alternatives.



But if the industry adopts a universal standard, users may feel more comfortable using smart contracts wallets — unlocking the smart wallet advocate’s promised new wave of adoption.



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What Are Smart Contract Wallets? A Beginners Guide

The world’s largest annual blockchain conference has plans to grow beyond Denver after seeing record attendance at this year’s event.



ETHDenver saw headcounts jump by more than 50% this year, with an estimated 15,000 individuals from 115 different countries coming together to discuss the future of Web3 and crypto innovation.



The event, hosted by blockchain companies and 100% community-funded, is completely free for anyone interested.&nbsp;



“This year&#8217;s #BUIDLathon winners give a great look at the future of the crypto ecosystem, with strong projects across regenerative finance, NFT marketplaces and infrastructure demonstrating just how many interesting new projects are moving the industry forward,” John Paller, ETHDenver founder, told Blockworks.



More than 6,000 developers participated in the hackathon and almost 400 projects were submitted for review. An estimated $100,000 was awarded to 18 finalists.



Almost $1 million was further handed to developers in the form of bounties. This year, 62 sponsors distributed 180 bounties.



Following the success of this year&#8217;s event, organizers are looking to take the event global and attract more developers and interested participants into the space.



“From the incredible speakers to the immensely creative project winners, it’s invigorating to see what this community is accomplishing year in and year out at ETHDenver and beyond,” Paller said.&nbsp;



“We are hopeful that 2024 will bring new opportunities and locations to expand access worldwide.”



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ETHDenver Has Plans To Go Global After Record Attendance

FTX transferred substantial amounts to Sam Bankman-Fried and other key employees, mainly via Alameda Research, the exchange’s new management said Wednesday. 



A total of $3.2 billion was disbursed, including $2.2 billion to <a href="https://blockworks.co/tag/sam-bankman-fried" target="_blank" rel="noreferrer noopener">Bankman-Fried</a>, $587 million to former co-lead engineer Nishad Singh, $246 million to co-founder Zixiao “Gary” Wang, $87 million to FTX Digital Markets’ co-CEO Ryan Salame, $25 million to former Alameda’s co-CEO John Samuel Trabucco and $6 million to former Alameda CEO <a href="https://blockworks.co/tag/caroline-ellison" target="_blank" rel="noreferrer noopener">Caroline Ellison</a>. 



The dates or timing of the transfers were not mentioned, but it is likely that these payments were made before the crypto exchange went bankrupt. “The amount and timing of eventual monetary recoveries cannot be predicted at this time,” administrators <a href="https://www.prnewswire.com/news-releases/ftx-debtors-file-schedules-and-statements-of-financial-affairs-with-bankruptcy-court-301773613.html?tc=eml_cleartime" target="_blank" rel="noreferrer noopener">said</a>, adding that further analysis will uncover more details on assets and liabilities.



The amount handed out did not include the more than $240 million spent to purchase luxury property in the Bahamas.



The new management at <a href="https://blockworks.co/tag/ftx" target="_blank" rel="noreferrer noopener">FTX</a> said it is investigating legal claims against the beneficiaries. New CEO John Ray has said his top priority is to repay customers who have funds stuck in the exchange.



A representative for Bankman-Fried declined to comment.



FTX sought bankruptcy protection in November after being unable to redeem customer withdrawal requests, going down as one of the worst disasters in digital asset history.



Ellison, Wang and Singh have agreed to plea deals on charges related to the exchange’s collapse. Meanwhile, Bankman-Fried has pleaded not guilty to charges of wire fraud and money laundering. He is scheduled for a criminal trial on Oct. 2, but his lawyers say the date may have to be <a href="https://www.reuters.com/legal/bankman-frieds-lawyers-say-october-trial-may-need-be-delayed-2023-03-09/" target="_blank" rel="noreferrer noopener">delayed</a> due to the need for more time to review evidence.



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FTX Transferred Over $3.2B to Bankman-Fried, Other Execs

Bankrupt crypto lender Voyager has almost finished liquidating its monumental crypto portfolio in a bid to make customers whole — but it still has about $166 million to go.



Blockworks compiled Arkham Intelligence data to recreate Voyager’s crypto holdings as of Jan. 1 — just days before it significantly ramped up deposits to crypto exchanges — to see exactly how the process has gone.



Voyager has so far pulled $433 million in stablecoins (mostly USDC and a small amount of USDT) from crypto exchanges Coinbase and Binance US year to date, having initially sent mountains of ether (<a href="https://blockworks.co/price/eth" target="_blank" rel="noreferrer noopener">ETH</a>), polygon (<a href="https://blockworks.co/price/matic" target="_blank" rel="noreferrer noopener">MATIC</a>) and shiba inu (<a href="https://blockworks.co/price/shib" target="_blank" rel="noreferrer noopener">SHIB</a>), among dozens of other tokens.



An additional $18.2 million USDC was received from market maker Wintermute, which also runs an over-the-counter trading desk. Voyager has sent Wintermute amounts of ETH, SHIB and MATIC, as well as smaller amounts of sushiswap (<a href="https://blockworks.co/price/sushi" target="_blank" rel="noreferrer noopener">SUSHI</a>), aave (<a href="https://blockworks.co/price/aave" target="_blank" rel="noreferrer noopener">AAVE</a>) and yield games guild (<a href="https://blockworks.co/price/ygg" target="_blank" rel="noreferrer noopener">YGG</a>).



(For the purposes of this report, crypto sent to exchanges is considered “sold.”)



Voyager at the start of the year:



<ul>
<li>held about $546 million in Ethereum-bound crypto across dozens of tokens; with</li>



<li>ether making up 46% of those funds, followed by USDC (15%) and SHIB (13%); and</li>



<li>kept 187.7 million <a href="https://blockworks.co/price/vgx">VGX</a> (then worth $56 million), 10% of its Ethereum token portfolio.</li>
</ul>



<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/13015203/embed#?secret=hyQfxyXY6S" data-secret="hyQfxyXY6S" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Ether made up most of Voyager’s portfolio at the start of the year. Not anymore. | Chart by David Canellis</figcaption></figure>



As well, 6,905.61 <a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a> ($171 million) sat in a Bitcoin <a href="https://bitinfocharts.com/bitcoin/address/12qA97T8hsDgvVoRCXGZifd9PCraqvd2DW" target="_blank" rel="noreferrer noopener">address</a> that once handled some Voyager withdrawals until Wednesday, when it was sent to an external address which has been <a href="https://github.com/VHRanger/tether/blob/main/data/known_addresses.json" target="_blank" rel="noreferrer noopener">linked</a> to Coinbase. It’s <a href="https://twitter.com/shingolavine/status/1605473013800980481" target="_blank" rel="noreferrer noopener">unconfirmed</a> whether the address belongs to Voyager’s estate, so it’s currently excluded from the charts. Blockworks has reached out to Voyager’s bankruptcy lawyers Kirkland &amp; Ellis for comment.



<h2>Voyager already sold all its MATIC, worth $53M</h2>



<a href="https://blockworks.co/news/doj-binance-voyager-sec">Binance’s US arm has fought for the right to acquire Voyager’s assets</a>. The firm filed for bankruptcy last July under the weight of exposure to Three Arrows Capital and associated market volatility around that time, initially triggered by the demise of algorithmic stablecoin Terra.



Voyager said it had $1.3 billion in user crypto to liquidate at its first day bankruptcy hearing in July 2022, although an exact breakdown of its portfolio wasn’t provided. Considering the volatile and illiquid nature of some cryptocurrencies tied to Voyager’s estate, it’s likely their true value was much lower. Voyager also may have other assets on other blockchains not contained in this analysis.



Still, Voyager spent the following months hoovering crypto from various blockchain addresses to two primary Ethereum wallets. Initial estimates suggested Voyager has upwards of 100,000 creditors, to whom Voyager owes between $1 billion and $10 billion.



<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/13015352/embed#?secret=PIamYt3fw6" data-secret="PIamYt3fw6" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Toggle the chart between total value sold to date and percentage of stake sold | Chart by David Canellis</figcaption></figure>



As of this Wednesday, Voyager had 52,553 ETH ($86.7 million) left in its addresses, which means it has sent 75% of its initial ether stash for liquidation. And by raw number of tokens (not including stablecoins), Voyager addresses have sent almost 66% of all its cryptocurrency to exchanges so far this year.



The firm has already deposited all of its MATIC, BNB, ontology (ONT), ocean protocol (OCEAN), wrapped bitcoin (WBTC) and yearn finance (YFI) to exchanges, holdings which together were worth $42.5 million at the time of their outflows, nearly all of that MATIC.



<h2>Loads of shiba inu still left to unwind</h2>



Ether aside, Voyager’s largest non-stablecoin holdings are now SHIB and VGX. Its addresses started the year with 9 billion SHIB and 181.8 million VGX — worth $73 million and $54.3 million at the time, respectively.



Voyager has since sent almost 66% of its SHIB to exchanges, alongside 69% of its VGX. But thanks to increased crypto prices, Voyager’s remaining SHIB is still worth $32.6 million and its <a href="https://blockworks.co/news/bankrupt-issuers-tokens-survived" target="_blank" rel="noreferrer noopener">VGX</a> $18.2 million.&nbsp;



<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/13089230/embed#?secret=iPHjkaHyFJ" data-secret="iPHjkaHyFJ" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Voyager has sent $53M VGX to exchanges, $18M left to go | Chart by David Canellis</figcaption></figure>



VGX was intended as a utility token that also paid loyalty rewards. Users could pay for withdrawal fees and the like with VGX while earning tokens by referring new users, staking VGX and even as cashback rewards via Voyager’s debit card.&nbsp;



But with Voyager now defunct, VGX’s value proposition is effectively moot, much like <a href="https://blockworks.co/news/bankrupt-issuers-tokens-survived">other ‘zombie’ coins</a>.



So much selling might suggest that Voyager has been influencing token prices downward, but it doesn’t seem so.&nbsp;



Practically every token of which Voyager has offloaded a material amount of crypto has seen increased prices since Jan. 1, despite all the liquidations.&nbsp;



<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/13014850/embed#?secret=jPG9RM76Uj" data-secret="jPG9RM76Uj" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Voyager’s ETH deposits to exchanges have ramped up over the past week | Chart by David Canellis</figcaption></figure>



All in all, Voyager’s bankruptcy estate has done quite well. What was a near-$550-million crypto portfolio is now worth $700 million — after selling two-thirds of those assets.&nbsp;



And in a bear market, no less.



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Voyager’s $500M Crypto Liquidation Is Almost Complete

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.

Tickets

Buy Tickets

Prices increase every 2 weeks. Only 250 tickets available in each drop. Register today and save!

General Admission Pass

Get notified 

Student tickets will be launching in early 2023

Student Ticket 

Prices increase every 2 weeks. Only 250 tickets available in each drop. Register today and save!

Presenting Sponsor 

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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