Casey Wagner

<div id="highlights-block_614a4d4a76985" class="highlights">
 <ul>
 <li>The SEC head has turned his attention to stablecoins, and signals a shift towards more intense scrutiny of the digital asset industry</li>
 <li>Federal Reserve Chairman Jerome Powell has said that stablecoins pose a threat and exist within an “underdeveloped regulatory framework.”</li>
 </ul>
 
</div>



United States Securities and Exchange Commission Chairman Gary Gensler thinks digital assets have potential, but that does not make them immune to regulatory oversight, Wall Street’s top regulator explained during a Washington Post <a href="https://www.youtube.com/watch?v=aatNpmgNHRA">virtual event</a>.&nbsp;



“I taught this and studied it for many years at MIT and I wouldn’t have dedicated my time to it if I didn’t think it was interesting and innovative,” Gensler said. “But, at the same time, I don&#8217;t think technologies last long outside of a social and public policy framework and in this case, we have to insure for investor and consumer protection.”&nbsp;



Prior to his position with the SEC, Gensler taught a blockchain course at the Massachusetts Institute of Technology and also served as a co-director of Fintech@CSAIL, a research group that investigates disruptive technologies. Many in the industry expected his education to lead to a favorable view of cryptocurrencies from a regulatory perspective, but his recent comments have indicated that he intends to increase oversight over the industry.&nbsp;



<blockquote class="wp-block-quote">“I think there are innovations in that basic ‘white paper,’ so to speak, that Satoshi Nakamoto put out about a dozen years ago,” Gensler said. “But what we have now is an asset class that’s highly speculative, stored on a digital ledger and the value could go down dramatically, it could go up dramatically. In many cases, there is not something standing behind it other than what somebody else will pay you for it.”&nbsp;</blockquote>



The SEC head turned his attention to stablecoins, and he’s not the first US regulator to do so.&nbsp;



Federal Reserve Chairman <a href="https://cms.blockworks.co/most-fed-officials-say-inflation-goal-met-tapering-to-start-this-year/">Jerome Powell has said</a> that stablecoins pose a threat and exist within an “underdeveloped regulatory framework.”



“These stablecoins are acting almost like poker chips at the casino right now,” Gensler said, saying the assets that claim to be backed by the US dollar may not be what they seem.&nbsp;



Stablecoin reserves have been called into question recently as it was revealed that most “cash reserves” are actually not kept in cash. Earlier this year, <a href="https://cms.blockworks.co/more-capital-flowed-into-stablecoins-than-muni-bonds-in-2021/">Tether revealed</a> a breakdown of USDT reserves, of which only 2.6% are kept in cash. The remainder is a combination of secured loans, corporate bonds, crypto holdings and other investment vehicles. Centre Consortium, which includes Coinbase and Circle, <a href="https://cms.blockworks.co/coinbase-circle-to-move-usdc-reserves-out-of-high-risk-investments/">recently</a> revealed that all of the assets backing USDC, the world’s second largest stablecoin, will be moved into cash and short-term treasuries.&nbsp;



Gensler, however, still has doubts over the security and legitimacy of the assets, although he did acknowledge that the cryptocurrency industry has been able to influence broader finance.&nbsp;



“I do think this new technology is very interesting, and whoever Satoshi Nakamoto was, it’s led to real change,” he said. “It’s pushing at the side of central banks around the globe to reconsider how to provide payments systems, it’s pushing on the side as a catalyst for change in finance and fintech.”&nbsp;



<hr class="wp-block-separator"/>



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SEC’s Gensler: Stablecoins Are Poker Chips

Drew Mailen

The cryptocurrency market is no stranger to volatility, with rapid gains and abrupt drops becoming the norm. However, the Web3 market in 2023 has experienced more than its fair share of turbulence. Those committed to the industry are now facing the challenge of explaining how the actions of certain actors do not align with the core values of the technology.&nbsp;



<h3>Staying with the fundamentals</h3>



The phrase, ‘don’t trust, but verify’ is a reminder that the open source blockchain is built to empower people.&nbsp; Yet this runs deeper than users simply owning their own keys. The industry is still attracted to the promise of unrealistic yields, creating unsustainable leverage and price speculation that is not representative of the underlying technology and its value. Real protocol yields, however, have endured the storm.&nbsp;



Blockchain infrastructure companies such as Allnodes have demonstrated that a core dedication to the technology and its efficiency of automation can help users and institutions make the most of this market and survive the crypto winter. They provide access to real protocol yield while also being non-custodial, users always have control over their funds – with the added benefit of participating in protocol governance. 



<h3>Weathering the storm</h3>



Agility is one of the most important factors to surviving the current market. Besides being over-leveraged many companies scaled too quickly during the bull market, and are now facing a trap in the bear. A primary driver behind this trend is the belief that employment growth automatically equals success and that demand was always going to increase at a steady rate. It leads companies to focus on fundraising,&nbsp; growing their headcount and administering the business rather than a focus on the fundamental technology.&nbsp;



As a result, companies with that business model tend to get stuck with bloated overhead. For decades, research on a global level has supported this theory. Scaling in the crypto industry during the last 2 years witnessed an enormous inflow of investor funds. In “The Timing of VC Investments and the Employee Growth of Startups” (Roy van der Loos, 2019), a positive correlation was found in Britain, where startups indicated a higher growth around financing events. But in Web3, if the protocol does most of the work, and the rest can be automated by relying on smart contracts and dApps, do the same Web2 growth rules apply? The likelihood that the same principles apply is extremely slim if adoption is the watermark.



<a href="https://www.allnodes.com/stake" target="_blank" rel="noreferrer noopener">Allnodes</a>, a non-custodial staking provider, has proven that Web3 doesn’t need to follow the same growth model as Web 2.  They oversee a substantial amount of blockchain infrastructure with over 33k nodes supporting 65+ different protocols, but with just under 15 employees they still maintain one of the highest ratings compared to other staking and node operators.



How is this possible with a team of fewer than 15 employees? What’s the secret? Blockworks sat down with <a href="https://www.allnodes.com/stake">Allnodes’</a> Robert Ellison to find out.



“Our performance speaks for itself, however don’t take my word for it, you can visit a site like <a href="https://www.rated.network/" target="_blank" rel="noreferrer noopener">rated.network</a> and view a breakdown of effectiveness ratings for ETH,” said Ellison.



<img decoding="async" loading="lazy" width="624" height="337" src="https://lh5.googleusercontent.com/WCOE3FkmMLzjKPHyeV-Cn2EnaiOVEV-baL9MQvV7UmNVT4T4lw-nGmPr3GM2cUsH-0YWPpPGg9LjwJdoSjaU1pbedOq2YZ67CSzt_SML_3yELz8pkJgTXXHYxwAqkIzefp7__Woge5Py7POz41fF6g4u3d-eAZcnRNcehh3rdHVPuW2cEbh5j4RxTfIquA"> Figure A: <a href="https://www.rated.network/?network=mainnet&amp;view=nodeOperator" target="_blank" rel="noreferrer noopener">Rated. Network</a> Node Operator Effectiveness Rating 



Allnodes credits its success to a low headcount, agile development, and its engineering team’s efficiency. 



“Blockchains are very resilient and decentralized, but they are also complex so we’ve automated management and onboarding into our tech stack from day one. We have exceptional engineers that allow us to be very efficient and scale on demand while also monitoring our infra to ensure everything is healthy.  Our primary goal is for managing and optimizing staking and running nodes for clients to be as simple and straightforward as possible, this encourages adoption and use,” said Ellison.  



The team also credits its success to limited red tape and efficiency.



“We have less hoops to jump through from an administrative and corporate structure. It’s not perfect, we have a backlog and roadblocks when it comes to development and onboarding and sometimes it is hard to figure out what to prioritize,” said Robert.



Our business is cash-positive without venture capital backing which allows for a lot of freedom, this translates into having the majority of the staking commissions flow directly to our end-users while still maintaining an expansive infrastructure.



We try our best to stay true to the values of the block-chain itself, so we remain non-custodial, take a fair and minimal commission, do not lock anyone into long-term contracts, and encourage users to participate in governance.&nbsp;



Allnodes currently runs approximately 16,000+ Ethereum validators with 6 MEV Boost options for users. They support both ETH validator nodes and Testnet nodes. And while 32 ETH is required to run a node, they also support RocketPool nodes which only need 16 ETH. This type of staking diversity lowers the barrier of entry for self-stakers, while encouraging validator diversity. 



<h3>The benefits of growing pains&nbsp;&nbsp;</h3>



In the dotcom bubble of Web2, companies like Amazon and Google survived because they were agile and rooted in the fundamentals. Even though the market collapse wiped out over <a href="https://ideas.ted.com/an-eye-opening-look-at-the-dot-com-bubble-of-2000-and-how-it-shapes-our-lives-today/" target="_blank" rel="noreferrer noopener">200,000 jobs and 17 companies</a>, these few went on to revolutionize the web and society. Ellison believes that these events help clean out the hype and speculation. He said, “I think the industry has sobered and will be much more mature and practical. The technology is an incredible leap forward and there are too many amazing people in space to stop building with it.”  



Agile companies that stick to the revolutionary potential and efficiency of blockchain infrastructure and Web3 will be able to carry the industry toward new heights. So even if there are a few more growing pains to come, blockchain infrastructure companies like Allnodes will be here for the long run.



This content is sponsored by <a href="https://www.allnodes.com/stake" target="_blank" rel="noreferrer noopener">Allnodes</a>.



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A Web3 Survival Guide to Crypto Winter

Shalini Nagarajan

Cryptocurrency exchange Coinbase is winding down its business in Japan after laying off more than 950 people in its <a href="https://blockworks.co/news/coinbase-layoffs-shift-in-focus">most recent round of job cuts</a>.&nbsp;



The exchange said in a <a href="https://www.coinbase.com/blog/halting-operations-in-japan" target="_blank" rel="noreferrer noopener">Wednesday blog</a> that it will terminate transactions with current customers, who have until Feb. 16 to withdraw their assets.



“All Coinbase, Inc. customers can withdraw fiat currency and cryptocurrency holdings from Coinbase by February 16th,” the company said.



Customers can either choose to liquidate their holdings or withdraw Japanese Yen to their local bank account. They won’t be able to make fiat currency deposits after Jan. 20.&nbsp;



After the deadline, any remaining cryptoassets will automatically be converted into the local currency, and these will be deposited with the Legal Affairs Bureau in line with the law.



Industry rival Kraken also announced at the end of December that it would <a href="https://blockworks.co/news/kraken-pulls-out-of-japan-leaving-more-room-for-binance">pull out of Japan</a> by the end of January, saying the resources needed to grow its business there weren’t justified at the time.



Coinbase laid off more than 2,000 people in the last year as exchanges navigated turbulent markets and lower revenues from an intensifying crypto winter, that has left its stock price vulnerable to periods of significant volatility.&nbsp;



Rating agency S&amp;P Global recently <a href="https://www.marketwatch.com/story/coinbases-debt-rating-lowered-at-s-p-global-profits-likely-to-remain-pressured-01673477763" target="_blank" rel="noreferrer noopener">downgraded</a> Coinbase’s long-term issuer credit rating, citing slow crypto trading volumes and rising regulatory risks. However, BTIG analysts said in a Jan. 16 note that certain factors could boost the company and its stock in 2023.



Coinbase has the advantage of market share as a result of FTX’s collapse, BTIG said. In fact, the exchange’s market share is said to have increased from 29% in October to 39% in December.



“Our bullish thesis for [Coinbase] shares at this point is anchored by two beliefs: that the company’s liquidity should provide it with the runway it will need to support its operations until the next digital asset bull market begins, and that its status as a safe haven will enable it to emerge from the ongoing shakeout within the crypto exchange space in a position of strength,” BTIG analysts Mark Palmer, Andrew Harte, Thomas Smith wrote.



Coinbase shares are down 76% in the last 12 months, but are up 43% in the last week alone, according to data from <a href="https://www.tradingview.com/symbols/NASDAQ-COIN/" target="_blank" rel="noreferrer noopener">TradingView</a>.



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Coinbase Follows Kraken to Japan Exit

The still-nascent cryptocurrency industry has attracted many bad actors, including some company insiders or executives. Finding the best way to regulate the industry while leaving room for innovation is of paramount concern to lawmakers across the globe, including in the US.



The <a href="https://blockworks.co/tag/sec">Securities and Exchange Commission</a> (SEC) has often been accused of pursuing “<a href="https://blockworks.co/news/crypto-industry-eyes-secs-regulation-by-enforcement-ramp-up">regulation by enforcement</a>” rather than <a href="https://blockworks.co/news/sec-ftt-complaint-is-yet-another-case-of-regulation-by-enforcement">setting clear guidelines</a>, and in 2022 the agency issued 30 enforcement actions against 79 digital asset market participants, Cornerstone Research said in a <a href="https://www.cornerstone.com/wp-content/uploads/2023/01/SEC-Cryptocurrency-Enforcement-2022-Update.pdf" target="_blank" rel="noreferrer noopener">report</a> published Wednesday. Of those, 56 were individuals and 23 were firms.



That represents a 50% jump from 2021 and the highest number of actions taken by the SEC since 2013. Total fines imposed came to about $2.6 billion since 2013, out of which settlements amounted to $242 million as of Dec. 2022.



Among the enforcement actions in 2022, the most recurrent infractions were related to fraud and unregistered securities offerings.&nbsp;



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="600" src="https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-1024x600.jpg" alt="" class="wp-image-44259" srcset="https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-1024x600.jpg 1024w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-300x176.jpg 300w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-768x450.jpg 768w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-1536x900.jpg 1536w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-2048x1200.jpg 2048w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-428x251.jpg 428w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-445x261.jpg 445w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-374x219.jpg 374w, https://cms.blockworks.co/wp-content/uploads/2023/01/SEC-enforcement-graph-80x47.jpg 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Note: The figure focuses on the total of 127 SEC cryptocurrency enforcement actions (both litigations and administrative proceedings under Section 8A of the Securities Act and/or Section 21C of the Exchange Act). An enforcement action may be associated with more than one allegation. “Other Allegations” include claims that have been alleged in only a few litigations or administrative proceedings, such as violations of restricted period, failure to register as an investment company, fraudulent transactions by investment advisers, failure to maintain internal controls, and falsification of internal controls. | Source: Cornerstone Research</figcaption></figure>



Separately, the SEC has engaged in 82 crypto-related lawsuits over the last 9 years, 43% of which were litigated in New York federal courts.



Since <a href="https://blockworks.co/tag/gary-gensler">Gary Gensler</a> was sworn in as chairman of the SEC in April 2021, the agency has upped its focus on crypto lending and DeFi platforms, Cornerstone said.&nbsp;



The SEC was open about increasing its scrutiny on the crypto industry and decided to establish a <a href="https://blockworks.co/news/sec-plans-new-office-of-crypto-assets-to-find-soft-targets">specific Crypto Assets and Cyber Unit</a> to scan digital asset players.



“As Chair Gensler has noted, the ‘runway is getting shorter’ for crypto intermediaries to register with the SEC. This could lead to more enforcement actions coming from the SEC’s Crypto Assets and Cyber Unit, which recently expanded its workforce to investigate securities law violations in the crypto markets,” Simona Mola, principal at Cornerstone Research, said in a statement.



BlockFi faced the largest monetary penalty by the SEC in 2022, having to pay <a href="https://blockworks.co/news/crypto-lender-blockfi-to-pay-100m-in-fines-to-us-regulators">$100 million</a> for failing to register its crypto lending product. The most recent <a href="https://blockworks.co/news/sec-charges-sam-bankman-fried-with-defrauding-investors">charge</a> was against Sam Bankman-Fried in December for his alleged role in operating a scheme to defraud investors in <a href="https://blockworks.co/tag/ftx">FTX</a>.



Critics point out that the SEC’s actions have generally failed to protect consumers, either focusing on cases without obvious victims, such as <a href="https://blockworks.co/news/no-ico-is-no-excuse-lbry-ruling-shows-bad-news-for-ripple">the LBRY case</a>, or, as most clearly illustrated by the latest pursuit of FTX, far too late to do consumers any good.



The SEC’s approach also may have the consequence of pushing startup activity overseas, due to uncertainty and high costs of doing business in the US, <a href="https://blockworks.co/news/house-republican-sec-commissioner-partner-on-token-sales-policy">members of Congress have observed</a>.



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SEC Crypto-related Fines Hit $2.6B Through 2022

Crypto-focused early-stage VC firm Electric Capital has found that while Ethereum has the most developers in total, a majority of monthly active developers are working on other ecosystems.



Despite a bear crypto market in 2022, developers continued to create and progress towards mass adoption of decentralized applications (dApps). The crypto industry added 5% more developers in 2022 year-on-year, despite a 70% plunge in cryptoasset prices, the <a href="https://www.developerreport.com/developer-report" target="_blank" rel="noreferrer noopener">report</a> released on Tuesday showed.  



The year was a rocky one for cryptoassets, given the tightening monetary policy and a string of bankruptcies, stirring fears of liquidity due to contagion. Yet, the industry captured over 61,000 first-time developers — an all-time high. Since the creation of Bitcoin in 2009, there are now more than 23,000 developers in the industry.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="534" src="https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-1024x534.jpg" alt="" class="wp-image-44250" srcset="https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-1024x534.jpg 1024w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-300x156.jpg 300w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-768x400.jpg 768w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-1536x801.jpg 1536w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-2048x1067.jpg 2048w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-428x223.jpg 428w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-470x245.jpg 470w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-389x203.jpg 389w, https://cms.blockworks.co/wp-content/uploads/2023/01/electric-capital-monthly-active-devs-80x42.jpg 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Total monthly active developers based on crypto ecosystems GitHub; Source: Electric Capital</figcaption></figure>



Core blockchain developers focus on designing the front-end and back-end of a proposed blockchain network, which will then be used as a foundation by others. Even after a blockchain is built, they continue to develop new features and technology to improvise or activate upgrades for better functionality.



Electric Capital found that developer activity in 2022 was far busier than the previous crypto winter of 2018, when <a href="https://blockworks.co/news/bitcoin-first-bearish-engulfing-candle">bitcoin plunged 65%</a> 



Since 2018, the number of monthly active developers rose nearly 300% for Bitcoin. For Ethereum, developer count quintupled from 1,084 to 5,819 in that time period.



<h3>Some devs opt for emerging blockchains</h3>



The year of the <a href="https://blockworks.co/tag/ethereum-merge">Merge</a> was significant for Ethereum, and its share of new developers for the stands at 16%.



But developers working on the Solana, NEAR and Polygon protocols rose 40% year-on-year, and added more than 500 total monthly active developers combined.



<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">Comparison to Other Ecosystems: 🔸Ethereum is the largest total (full-time + part-time + one-time)⁰developer ecosystem and is 2.8X larger than the next i.e SOLANA 🔸Solana grew by +83% to 2000+ developers 🔸Polygon grew by +40% to 1100+ developers <a href="https://t.co/kWTkG7pNIu">pic.twitter.com/kWTkG7pNIu</a>&mdash; Shivam Sharma🌱 (@theweb3sharma) <a href="https://twitter.com/theweb3sharma/status/1615592471240802307?ref_src=twsrc%5Etfw">January 18, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<a href="https://blockworks.co/tag/sui">Sui</a>, <a href="https://blockworks.co/tag/aptos">Aptos</a>, <a href="https://blockworks.co/tag/starkware">Starknet</a>, <a href="https://blockworks.co/price/mina">Mina</a>, <a href="https://blockworks.co/tag/osmosis">Osmosis</a>, <a href="https://blockworks.co/tag/hedera-hashgraph">Hedera</a>, <a href="https://blockworks.co/tag/optimism">Optimism</a> and <a href="https://blockworks.co/tag/arbitrum">Arbitrum</a> were other blockchains that absorbed developer activity.



Those working on software for non-fungible tokens saw a 300% jump since 2021.



Developer engagement is an “early and leading indicator of value creation,” according to the VC firm. “Developers build killer applications that deliver value to end users, which attracts more customers, which then draws more developers,” it added.



And what about Bitcoin, recently? Although developers working on the OG crypto tripled from 372 to 946 since 2018, year-over-year, the total has flat lined.



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Ethereum Has Most Developers, But These Newer Chains Are Growing Fast

Bessie Liu

HashKey Capital has raised half a billion dollars for the cryptoasset manager’s latest vehicle. 



The fund, HashKey Fintech Investment III, is designed to key in on “the growing opportunities in emerging [digital asset] markets,” the firm said in a statement on Tuesday.&nbsp;



It’s a notable $500 million haul in <a href="https://blockworks.co/news/bargain-basement-opportunity-for-crypto-volatility-traders" target="_blank" rel="noreferrer noopener">unsteady crypto markets</a>, and the funds have been earmarked to invest in a number of cryptocurrency and blockchain initiatives globally — under that emerging markets focus. Limited partners, according to HashKey, include sovereign wealth funds and family offices.&nbsp;



HashKey has “weathered at least three cycles in the industry,” according to Dennis Chao, the asset manager’s chief executive. The firm’s parent company, Hong Kong-headquartered HashKey Group, is known as a specialist in investing in blockchain projects in Asia and was an early backer of <a href="https://blockworks.co/tag/ethereum" target="_blank" rel="noreferrer noopener">Ethereum</a> — dating back to 2015.&nbsp;



“These unique experiences and insights will be invaluable to us in navigating through turbulence,” Chao said in a statement.



Chao’s firm has since backed a number of crypto projects that have since moved into the limelight, including Cosmos, dYdX, Animoca Brands and Polkadot. The cryptoasset manager launched in 2018. 



HashKey Group inspired Ethreum’s upcoming “Shanghai Upgrade,” according to Xia Feng, the investment manager’s chair. Shanghai is slated as the next major upgrade for the Ethereum network and is designed to allow the proof-of-stake blockchain’s validators to withdraw their staked ether, the network’s native token. 



The pending upgrade, which appears to be on track to occur in March, marks the first time validators — which verify transactions on the protocol — would mark the first time validators are able to cash in on their locked up ether, which has been accruing staking rewards. Ethereum <a href="https://blockworks.co/news/ethereum-to-reach-500000-validators" target="_blank" rel="noreferrer noopener">hit half a million</a> validators earlier this month as momentum builds toward Shanghai.&nbsp;



“We have maintained since the first day that the power of blockchain and crypto innovation can create a better future,” Feng said. “Fund III will follow our time-tested investment principles while&nbsp; also looking for game-changers, which would be those that will propel the industry forward into the next stage.”&nbsp;&nbsp;



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HashKey Has ‘Weathered at Least Three Cycles.’ $500M Fund Is Latest Proof.

Sebastian Sinclair

The timing of the European Union’s landmark crypto bill, slated for a vote in the EU Parliament, has been pushed back from February a further two months.



Although technical in nature — rather than reflecting a policy or political disagreement — the delay will allow industry-related firms extra time to prepare.



Dubbed the Markets in Crypto Assets (MiCA), the EU Regulation seeks to lay the formal groundwork for supervisory provisions, consumer protections and environmental safeguards for digital assets. In European law, Regulations have binding legal force throughout every Member State.



Originally intended for a vote next month, the delay stems from technical translation issues into the EU’s 24 official languages after the English version was <a href="https://blockworks.co/news/eu-members-reach-agreement-on-mica">agreed upon by lawmakers in July</a> of last year.&nbsp;



The European Parliament Committee on Economic and Monetary Affairs <a href="https://blockworks.co/news/european-crypto-regulations-enter-final-phase">reached a preliminary deal</a> in a 28-to-1 member vote in October. The bill&#8217;s delay follows further pushbacks in November over similar issues surrounding the technical nature of the legislation’s text.



Nick Jones, CEO of FCA-registered crypto payments app Zumo told Blockworks the delay could give EU-based crypto businesses “breathing room” to prepare for upcoming regulatory changes.



“More interesting might be the implications of what this means in the conveyor belt of other things on the EU’s agenda,” Jones said. “If there is a knock-on effect in delays in these areas as a follow-on from delays in MiCA, then that sets up an interesting interaction with the potential actions of other jurisdictions,” he said.



Specifically, MiCA seeks to establish a licensing regime for exchanges and wallet providers while ensuring stablecoin issuers have adequate reserves on hand to back redemptions. NFTs and DeFi have been deliberately excluded from MiCA’s remit, with certain activities and additional investigations to follow.



The bill’s delay also impacts the entry into force of <a href="https://blockworks.co/news/european-crypto-regulations-enter-final-phase">the closely-related Transfer of Funds Regulation</a> (TFR) — the bloc’s implementation of the Financial Action Task Force’s travel rule for digital assets, Patrick Hansen, Circle’s director of EU Strategy &amp; Policy, <a href="https://twitter.com/paddi_hansen/status/1615333415167094785" target="_blank" rel="noreferrer noopener">tweeted Tuesday</a>.



TFR focuses on the <a href="https://blockworks.co/leaked-eu-docs-warn-members-to-clamp-down-on-crypto-mixers">tracing and blocking of suspicious on-chain</a> transactions, mostly aimed at cryptoasset service providers such as wallets, exchanges and staking platforms. The final vote on TFR has also been pushed back to April.



An earlier version of the MiCA bill <a href="https://blockworks.co/eus-crypto-bill-mica-heads-to-a-monday-vote-without-proof-of-work-ban">had sought to ban proof-of-work-based digital assets</a>, including bitcoin, amid industry uproar, though the provision was <a href="https://blockworks.co/eu-committee-votes-down-anti-proof-of-work-clause-in-crypto-bill">eventually scrapped in March</a> 2022.



Correction, Jan 18. 2023 at 8:00 a.m. ET: Payments app Zumo is FCA-registered, not FINCA-registered.



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MiCA Delay Until April Gives EU Crypto Firms Ample ‘Breathing Room’

Digital assets have sprung to life in the past week, despite ongoing concerns a looming recession may place higher valuations on hold in traditional markets.



<a href="https://blockworks.co/price/btc">Bitcoin</a> is up more than 23% from weekly lows of around $17,100 to $21,350 placing the average holder and mining operations back into the black. Its price is now trading at three-month highs.



The crypto’s clean break above $19,000 on Friday led to a continuation in price action for digital assets across the board. It&#8217;s worth noting the rally is beginning to weaken courtesy of overbought conditions.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="545" src="https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-1024x545.jpg" alt="" class="wp-image-44221" srcset="https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-1024x545.jpg 1024w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-300x160.jpg 300w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-768x409.jpg 768w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-1536x817.jpg 1536w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-2048x1089.jpg 2048w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-428x228.jpg 428w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-470x250.jpg 470w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-389x207.jpg 389w, https://cms.blockworks.co/wp-content/uploads/2023/01/Glassnode-bitcoin-price-2-week-80x43.jpg 80w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Bitcoin 3-week price; Source: Glassnode</figcaption></figure>



“To date, the 2022-23 bear market has spent 179-days below the Realized Price, making it the second-longest duration across the last four bear cycles,” data analytics firm Glassnode said in a <a href="https://insights.glassnode.com/the-week-onchain-week-3-2023/?utm_campaign=woc_03_2023&amp;utm_medium=woc_newsletter&amp;utm_source=email" target="_blank" rel="noreferrer noopener">newsletter</a> on Monday.



Realized price in crypto refers to the value all BTC was bought for divided by the amount in circulation.



There are notable similarities in market strength to 2019’s bear market despite bitcoin having yet to ascend beyond $22,400 for long-term holders (155 days or more) of the asset when viewing in Realized Price, Glassnode said. Breaking above $22.4k would place long-term holders back into profit.



With the crypto now trading at highs not seen since before the collapse of FTX, miners are also experiencing reprieve after suffering from several market routs in 2022.&nbsp;



The recent rally in digital assets has led to outsized gains for <a href="https://blockworks.co/news/crypto-miners-log-stock-price-gains">many miners</a>’ stock valuations, including Hive Blockchain and Marathon Digital which jumped 31% and 37% last week on reports of easing inflation.



A drop below $17,000 could put miners — many of whose stock valuations had plummeted considerably in recent months — back on notice.&nbsp;



<h3>Investment product inflows and lingering fears of a recession</h3>



Digital asset investment products saw minor inflows totaling $9.2 million last week alongside low trading volumes of around $866 million, digital asset trading group CoinShares said in a report on Monday.



The industry’s price appreciation has resulted in a weekly gain of 13% in assets under management — the largest in 14 months. Ether has also shrugged off eight weeks&#8217; worth of outflows, with an inflow of $5.6 million coming off the back of a favorable shift in trader sentiment, CoinShares said.



An attitude toward risk-on assets, such as crypto, has been guided by a boon in sentiment for traditional equities in recent weeks — also witnessed across Asia-based markets.&nbsp;



Stocks trading in China and Hong Kong <a href="https://www.bloomberg.com/news/articles/2023-01-16/asia-stocks-to-open-mixed-as-new-year-rally-stalls-markets-wrap" target="_blank" rel="noreferrer noopener">closed in the red</a> on Monday following announcements of less than favorable growth in economic activity last year. Crypto has followed suit, with bitcoin stalling near a peak of $21,600 on the day, before falling back to current prices.



The tightly controlled nation’s economy grew just 3% last year, clocking its second-slowest run in almost 50 years. Still, China’s shift away from its COVID-19-zero policy earlier this month has some analysts anticipating a stronger-than-expected recovery this year as the country begins to reopen to the world.&nbsp;



Quarterly and monthly economic data have continued to exceed analyst expectations as the country eyes a recovery, <a href="https://www.cnbc.com/2023/01/17/chinas-earlier-reopening-means-earlier-recovery.html" target="_blank" rel="noreferrer noopener">CNBC reported</a> Tuesday. That could lead to a rebound in Asia-based equities and a chance for increased capital to flow to risk-on assets such as bitcoin, despite a <a href="https://www.bbc.com/news/technology-58678907" target="_blank" rel="noreferrer noopener">heavy ban</a> on digital assets being in place since November 2021.



Fears of a looming recession could put any hope of a stronger return to last year’s pricing for digital assets on hold, with many <a href="https://www.bloomberg.com/news/articles/2023-01-16/chief-executives-and-economists-worry-global-recession-looms-as-davos-begins?leadSource=uverify%20wall" target="_blank" rel="noreferrer noopener">business leaders</a> predicting global growth to slow considerably over the coming 12 months, Bloomberg reported.



Some macro analysts, such as Andy Constan of Damped Spring Macro Research, are skeptical that the Federal Reserve can engineer a hoped for ‘soft landing,’ and avoid a recession. Consequently, Constan is short both stocks and bonds, <a href="https://twitter.com/ForwardGuidance/status/1615349764215951366" target="_blank" rel="noreferrer noopener">he told Blockworks’ Forward Guidance podcast</a> last week.



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Bitcoin Price Rally to $21.5K Takes Pause

Circle, the company behind the USDC stablecoin, released its “state of the USDC economy” report, in which it emphasized the importance of dollar-backed cryptos and attempted to ease worries about the state of its reserves. 



“Our history of pioneering transparency underscores our commitment to providing USDC holders and the general public with open, timely reporting on how we minimize risk and maintain liquidity in the USDC reserve,” Circle said in the <a href="https://6778953.fs1.hubspotusercontent-na1.net/hubfs/6778953/PDFs/2301StateofUSDCEconomy_Web.pdf" target="_blank" rel="noreferrer noopener">report</a>, released Tuesday. 



Circle said it will now partner with Deloitte, Coinbase’s accounting firm of choice, for audits on its proof of reserves. A Binance spokesperson told Blockworks in December they were under the impression the “Big Four” accounting firms — known to be Deloitte, Ernst &amp; Young, KPMG and PricewaterhouseCoopers — were <a href="https://blockworks.co/news/crypto-auditors-call-it-quits">“currently unwilling”</a> to conduct a proof-of-reserves audit for a private crypto company. 



Circle, while currently privately held, was considering entry into the public market through a special purpose acquisition partnership (SPAC) with Concord before <a href="https://blockworks.co/news/circle-kills-spac-plans">abandoning its plans</a> last month in the wake of the FTX collapse. 



“We are disappointed the proposed transaction timed out, however, becoming a public company remains part of Circle’s core strategy to enhance trust and transparency, which has never been more important,” Circle CEO Jeremy Allaire said in a <a href="https://www.prnewswire.com/news-releases/circle-and-concord-acquisition-corp-mutually-agree-to-terminate-proposed-business-combination-301694560.html?tc=eml_cleartime" target="_blank" rel="noreferrer noopener">statement</a> at the time of the announcement.



Circle, who for years partnered with firm Grant Thornton for its audits, makes the switch as various accounting firms have exercised caution over audits of crypto companies.&nbsp;



Mazars Group and Armanino <a href="https://www.forbes.com/sites/emilymason/2022/12/15/ftx-accounting-firm-armanino-ends-crypto-audit-practice/?sh=54b386bd362f" target="_blank" rel="noreferrer noopener">reportedly</a> dropped <a href="https://blockworks.co/news/ftx-auditor-proof-of-reserves">their crypto clients</a> last month. Mazars, which handled proof-of-reserves audits for exchanges KuCoin, Binance and Crypto.com, elected to stop providing the services because of “concerns regarding the way these reports are understood by the public,” according to <a href="https://www.cnbc.com/2022/12/16/mazars-suspends-all-work-with-crypto-clients-including-binance-cryptocom.html" target="_blank" rel="noreferrer noopener">reports</a>. 



<h3>Regulating USDC Reserves</h3>



Circle’s report comes as the industry continues to wait for more regulatory guidance from Congress, which <a href="https://blockworks.co/news/stablecoin-regulation-congress-priority">will likely come to the stablecoin sector first</a>, experts said.&nbsp;



“The first Congressional focus point will no doubt be stablecoins,” Katherine Dowling, general counsel and CCO at Bitwise Asset Management, told Blockworks last week.&nbsp;



Stablecoin regulation, namely about reserve reporting and liquidity requirements, has been a long time coming, Dowling said, pointing to the <a href="https://blockworks.co/news/bipartisan-stablecoin-regulation-has-a-slim-chance-of-passing-this-year">bipartisan bill lawmakers failed to pass</a> last session. With much of the legwork already done, Dowling said stablecoin legislation has the potential to be an early win for Congressional members looking to solidify some sort of crypto policy.



“Regardless of where members of congress are on the crypto spectrum — pro or con — or on the learning curve, there is a general sense that something must be done here,” Dowling said.&nbsp;



Allaire agreed, noting in the report that Circle is prepared on a regulatory front and is watching developments closely.&nbsp;



“Policymakers globally are sharpening their focus, ushering in much-needed regulation for how trusted digital currencies can be supervised — in a consistent and harmonized manner — by banking and payments regulators,” Allaire wrote.



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Circle Taps Deloitte as New Auditor, Doubles Down on Proof of Reserves 

Ben Strack

Silvergate lost $1 billion during the fourth quarter — enduring significant outflows of deposits as the industry spiraled from several high-profile bankruptcies.&nbsp;



The loss came as the crypto industry saw “a crisis of confidence” spurring a “risk-off” position by various industry participants across digital asset trading platforms, according to commentary from the company published Tuesday.&nbsp;



Silvergate’s shares opened up around 20% in early market action, before paring gains to 15%, and as trading hands at about $15 per share as of 11:05 a.m. ET. 



The California-based crypto bank’s average digital asset customer deposits were $7.3 billion during the fourth quarter — down about 40% from $12 billion in the prior quarter.&nbsp;



The Silvergate Exchange Network (SEN) handled $117.1 billion of US dollar transfers in the fourth quarter, a quarter-over-quarter increase of 4%. However, the SEN handled $563.3 billion of such transfers in 2022 — a decrease from $787.4 billion in 2021.&nbsp;



Silvergate seeks to maintain a highly liquid balance sheet going forward, Silvergate CEO Alan Lane said in a statement.&nbsp;



“While we are taking decisive actions to navigate the current environment, our mission has not changed,” he added. “We believe in the digital asset industry, and we remain focused on providing value-added services for our core institutional customers.”



The earnings report comes nearly two weeks after Silvergate <a href="https://blockworks.co/news/silvergate-stock-plummets-45-on-major-staff-cuts-massive-withdrawals">said it was forced to sell assets</a> at a major loss to fulfill roughly $8 billion of customer withdrawals.&nbsp;



Silvergate held $4.3 billion of short-term Federal Home Loan Bank advances, as of Dec. 31, according to a Jan. 5 company <a href="https://ir.silvergate.com/news/news-details/2023/Silvergate-Announces-Select-Preliminary-Fourth-Quarter-2022-Financial-Metrics-and-Provides-Business-Update/default.aspx" target="_blank" rel="noreferrer noopener">filing</a>. This funding <a href="https://blockworks.co/news/silvergate-home-loan-bank-advances">was used to satisfy outflows</a>, according to the company. 



The bank also said earlier this month it would be cutting 200 positions, or about 40% of its staff, in an effort to reduce costs. 



Mark Palmer, BTIG head of digital assets research, commenting on the earnings report, said that Silvergate &#8220;would evaluate its product portfolio and potentially exit less profitable lines of business.&#8221;



A class-action lawsuit filed against Silvergate last week alleges that the bank held the accounts of now-bankrupt FTX and Alameda Research, a trading firm also founded by Sam Bankman-Fried, adding that it knew FTX held investor funds and that Alameda engaged in risky trading.&nbsp;



The company “did nothing” when it witnessed billions of dollars of FTX customer funds being wired directly to Alameda and related entities, the complaint claims.



“As a federally regulated bank, we take our compliance and risk management responsibilities very seriously,” a Silvergate spokesperson told Blockworks. “While we don’t comment on pending litigation, we are aware of the lawsuit[s] and intend to defend against them vigorously.”



This story was updated on Jan. 17, 2023, at 11:20 a.m. ET with additional detail.



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Silvergate Stock Surges 20% Despite $1B Quarterly Earnings Loss

Polygon’s Ethereum-compatible proof-of-stake sidechain (Polygon PoS) underwent a hard fork on Jan. 17 — an upgrade intended to help address gas spikes and chain reorganization issues that have affected the network.



According to <a href="https://blockworks.co/newsletter/issue/30264806">Blockworks Research</a>, the hard fork will result in lower transaction fees and refine the security of blocks. It went live at approximately 4:00 a.m. ET at block height 38,189,056.



Polygon first officially announced the hard fork in a Jan. 12 <a href="https://polygon.technology/blog/hardfork-incoming-upgrading-polygon-pos-chain-to-boost-performance" target="_blank" rel="noreferrer noopener">blog</a>, which also mentions longer-term technical upgrades for the network. The fork was proposed based on a forum discussion and community feedback.



In its blog, Polygon laid out reasons why the upgrade was required. For one, its network faced “gas spikes,” an undesired exponential jump in price encountered during surges in demand on its network following <a href="https://forum.polygon.technology/t/impact-of-eip1559-and-future-possibilities/1749" target="_blank" rel="noreferrer noopener">Ethereum Improvement Proposal-1559</a>. The fork is expected to help smoothen fluctuations in gas prices. 



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="780" src="https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg" alt="" class="wp-image-44188" srcset="https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-1024x780.jpg 1024w, https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-300x229.jpg 300w, https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-768x585.jpg 768w, https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-337x257.jpg 337w, https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-343x261.jpg 343w, https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-287x219.jpg 287w, https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate-80x61.jpg 80w, https://cms.blockworks.co/wp-content/uploads/2023/01/polygon-pos-gas-estimate.jpg 1222w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



Coming to on-chain reorganization, Polygon said that it wanted to reduce what’s known as “sprint length” — the number of blocks produced by a validator — to reduce the time taken for validation. This results in “fewer reorgs overall,” which impacts the finality of transactions, Polygon said.



Blockworks Research noted the low level of participation in this governance proposal, as the latest fork was passed by just <a href="https://forum.polygon.technology/t/pre-pip-discussion-addressing-reorgs-and-gas-spikes/10623" target="_blank" rel="noreferrer noopener">15 votes</a>, with each Polygon validator team being able to cast one vote.



“While validators still need to implement the new software for the new chain to be canonical, Polygon governance discussions seem to leave a lot to be desired,” the research team said.&nbsp;



Governance matters should expect to see fewer participants during bear markets, according to Hendo Verbeek, head of risk at Spool Finance, a DeFi liquidity aggregator organized as a DAO.



<blockquote class="wp-block-quote">
“By no means should we label this lack of participation as a bad thing because the actors that do remain are generally very high-level and extremely well incentivized to ensure the best outcome for all parties involved,” Verbeek told Blockworks.
</blockquote>



The price of native token <a href="https://blockworks.co/price/matic">MATIC</a>, which is up nearly 20% — in US dollar terms — since the hard fork was announced, has been <a href="https://blockworks.co/news/bitcoin-price-hits-greediest-point-in-4-months-as-it-flirts-with-19k">in line with the recent market rally</a>, and is mostly flat versus <a href="https://blockworks.co/price/eth">ether</a>.



MATIC has significantly underperformed ETH <a href="https://blockworks.co/news/ftx-bankrupt-hacked-investigated-a-timeline-of-events">since the November FTX bankruptcy on Nov. 11, 2022</a>, down around 24%.



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Polygon Upgrade Goes Live Following Low Governance Vote Turnout

North Korean hacker group Lazarus made attempts to move funds worth $63 million that were stolen from last year’s <a href="https://blockworks.co/news/defi-cross-chain-horizon-bridge-hacked-for-100m">Harmony bridge hack</a>, but the crypto exchanges used for the process claim its transfers have been blocked.



Blockchain sleuth ZachXBT <a href="https://twitter.com/zachxbt/status/1614771861266792449" target="_blank" rel="noreferrer noopener">shared</a> on Twitter that the group moved some 41,000 ETH over the weekend using Ethereum-based Railgun, a smart contract that keeps user identities private, to exchanges Binance, OKX and Huobi. The transactions were carried out between Jan. 13 and 14.



ZachXBT also shared over 350 addresses associated with the hacker group.&nbsp;



Binance CEO Changpeng Zhao <a href="https://twitter.com/cz_binance/status/1614887319177428992" target="_blank" rel="noreferrer noopener">tweeted</a> that the exchange has previously detected the hacker’s fund movement, and that it coordinated with Huobi in freezing the accounts. They also together managed to recover 124 bitcoin ($2.6 million), according to Zhao, implying that some of the stolen ether was swapped for bitcoin.



Huobi too was able to detect and prevent the hacker from attempting to launder funds, <a href="https://twitter.com/justinsuntron/status/1614901672102465538" target="_blank" rel="noreferrer noopener">according to</a> Justin Sun. About Capital, Sun’s investment firm, <a href="https://blockworks.co/news/huobi-founder-sells-100-stake-to-justin-sun-fund-report">acquired Huobi in October</a>.&nbsp;



Harmony’s Horizon bridge was one of the biggest hacks of last year. It allows users to move their cryptoassets via cross-chain transfers between Ethereum, Binance Smart Chain and Harmony blockchains. The bridge was exploited in June 2022 for $100 million, with <a href="https://blockworks.co/news/funds-from-100m-horizon-bridge-exploit-sent-to-tornado-cash-mixing-service">the proceeds initially moved</a> via now-OFAC-sanctioned <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a>.&nbsp;



Blockchain analytics firm Elliptic <a href="https://hub.elliptic.co/analysis/over-1-billion-stolen-from-bridges-so-far-in-2022-as-harmony-s-horizon-bridge-becomes-latest-victim-in-100-million-hack/" target="_blank" rel="noreferrer noopener">said</a> that different types of cryptoassets were stolen including ETH, BNB, USDT, USDC and Dai. After the theft, the hacker used different types of decentralized exchanges to swap the tokens for ETH, which is a “common technique utilized by DeFi hackers,” the firm added.&nbsp;



The<a href="https://blockworks.co/news/crypto-hacks-2022"> total amount of funds lost to hacks in 2022</a> amounted to $4.3 billion of cryptocurrency, representing a 37% jump from 2021. Smart contract vulnerabilities that lead to malicious exploits remain among the most pressing threats that need to be solved in 2023.



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North Korea’s Lazarus Hackers Try to Exfiltrate Harmony Funds

CoinFLEX is <a href="https://coinflex.com/blog/coinflex-update-january-16-2023/">justifying</a> its new potential venture “GTX” with Three Arrows Capital (3AC), saying the plans represent an evolution of its own goals.



A <a href="https://www.docdroid.net/7k8oW7r/gtx-pdf">pitch deck</a> leaked on Jan. 16 showed CoinFLEX plans to team up with 3AC co-founders Kyle Davies and Su Zhu to create a new crypto exchange.&nbsp;



They expect it to be a place where creditors of insolvent firms like FTX would be able to trade their claims. Users will have the ability to transfer their claims to GTX and immediately receive a credit via a new token called USDG.



In the pitch deck, GTX estimates a $20 billion market for its product, based on the notional value of crypto claims. The team is looking to raise $25 million for the exchange, and is eyeing a launch before the end of February.



It intends to “fill the power vacuum” left by FTX, to become the go-to marketplace for crypto claims within two to three months of its launch.



The name GTX, a play on fallen crypto exchange FTX, is currently a placeholder and will be changed eventually. It was chosen because “G comes after F,” one <a href="https://twitter.com/CryptoDuck_TH/status/1615163817692139520/photo/1">slide</a> shows.



CoinFLEX CEO Mark Lamb will remain as CEO and co-founder Sudhu Arumugam will stay on the management team. The team also includes other CoinFLEX executives Kent Deng, Leslie Lamb (who is married to Mark Lamb) and Ewelina Mielecka.



CoinFLEX said it will provide further details once it has managed to secure fundraising or an established partnership.&nbsp;



<h3>GTX attracts controversy</h3>



The planned venture has triggered some criticism from the crypto community. Reddit users pointed out flaws in the idea, with one Redditor saying, “basically the idea is to let people trade on the platform by promising funds from another platform that is in bankruptcy proceedings?”



Wintermute CEO Evgeny Gaevoy <a href="https://twitter.com/EvgenyGaevoy/status/1614984548886155271">hinted</a> on Twitter that he didn’t want his firm, one of the largest crypto makers, to be associated with anyone invested in the CoinGlex/3AC venture.



<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">And since we are talking about cancelling stuff, if you are investing into coinflex/3ac &quot;exchange&quot; you might find it a bit more difficult to work with wintermute in future (on the relationship building side)&mdash; wishful cynic (@EvgenyGaevoy) <a href="https://twitter.com/EvgenyGaevoy/status/1614984548886155271?ref_src=twsrc%5Etfw">January 16, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Meanwhile, Ripple’s former director of engineering Nik Bougalis <a href="https://twitter.com/nbougalis/status/1615024369289564160">said</a> Zhu and Davies are “trying to steal more money.”&nbsp;



<blockquote class="wp-block-quote">
“Anyone that gives these irredeemable scammers a single red cent to help fund this new exchange, will only be exposing themselves as a consciously bad actor,” Bougalis added.
</blockquote>



Matthew Liu, co-founder of Origin Protocol, however, <a href="https://twitter.com/matthewliu/status/1615148375422431232">commended</a> the concept, adding that he favored “people getting back on the horse after they’ve taken a fall.”



<h3>Both firms had a rough 2022</h3>



3AC blew up last year after <a href="https://blockworks.co/news/genesis-reveals-exposure-to-bankrupt-three-arrows-capital">defaulting</a> on a $2.4 billion loan from crypto lender Genesis. Its bankruptcy triggered a downward spiral for several crypto participants, since it had a long list of counterparties. Zhu and Davies have allegedly not been cooperating on asset disclosures with liquidators, and they have not been open about their whereabouts. But liquidators <a href="https://blockworks.co/news/3ac-liquidators-file-yacht-claim">believe they may either be in Bali or Dubai</a>.



CoinFlex itself <a href="https://blockworks.co/news/after-months-of-issues-troubled-exchange-coinflexs-restructuring-poised-to-pass">filed for restructuring</a> in Seychelles last year after a single client failed to meet a margin call. It also raised eyebrows after announcing it would try to raise missing funds by <a href="https://blockworks.co/news/coinflex-plans-to-raise-missing-funds-with-new-token">issuing a new token</a> with a 20% yield.



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CoinFLEX Defends Controversial ‘GTX’ Venture with 3AC Founders

Michael Bodley

A new venture capital firm keying in on Latin American crypto blockchain founders is in the works, according to two sources familiar with the matter and marketing materials obtained by Blockworks.&nbsp;



Emerging asset manager Aztlan Capital is co-led by Lightshift Capital alum Armando Aguilar — a prominent, and fairly sizable, digital asset investment manager that predominantly focuses on blockchain venture capital plays. Aguilar is joined, as managing partner, by Jack Saracco, who has founded a couple of blockchain startups in the region.



Saracco, who is based in Argentina, is also an alum of Silicon Valley’s well-known venture incubator, Y Combinator. Aguilar, who declined to comment on behalf of the startup, is based in Puerto Rico. Both, per sources, work on the investment and incubation side of the business.&nbsp;



Aztlan, which plans to hold a first capital close from limited partners by the end of the first quarter, sees abundant opportunity throughout <a href="https://blockworks.co/tag/latin-america">Latin America</a> when it comes to capitalizing on promising startups that have largely lacked attention from institutional US backers, according to both sources. The same is true for other crypto hotbeds, including Southeast Asia and parts of Europe.



The general sentiment is not a new development in digital assets: Investing in startups in south and Central America typically necessitates “boots on the ground” for conducting proper due diligence, one source said. And it’s somewhat rare for buy-side venture players based elsewhere to have an outpost in the region or make routine enough visits to justify writing checks with much regularity.&nbsp;



Mercedes Bidart, the chief executive of digital assets-focused Quipu Bank, said Latin America’s <a href="https://cointelegraph.com/news/the-driving-forces-behind-crypto-adoption-in-latin-america-in-2022" target="_blank" rel="noreferrer noopener">emerging disruptive technologies</a> have <a href="https://blockworks.co/news/survey-more-than-half-of-latin-americans-have-paid-with-crypto">rendered the region a prime place</a> for crypto funds to deploy capital. Bidart, in an interview, was speaking generally, not about Aztlan specifically.&nbsp;



“Latin America is one of the regions where there’s some crypto funds emerging that are not just looking to Latin America, [but also emerging economies],” Bidart told Blockworks.



<blockquote class="wp-block-quote">
“[Several funds] invest in Africa, Latin America and not in other countries. And I think that’s because, even if there’s a crisis, crypto is something that helps our countries to gain more stability or to develop other ways of making our economy work.”
</blockquote>



There were 205 million or so — or a whopping 43% — residents of the region lacking bank accounts in 2021, according to CB Insights data that is still one of the more comprehensive such accounts on the market. That’s good for a disproportionate 12% of the world’s unbanked population, per the same study.&nbsp;



Crypto investors with dry powder to spare — a rare segment these days — are paying closer and closer attention to Latin America, which they view as chock-full of alpha waiting to be tapped. The opportunity, in their view, is that a window of opportunity is closing as others catch on to its digital assets growth potential.



A number of studies over the last couple of years have accordingly found that blockchain usage is growing exponentially. And that’s not to mention <a href="https://blockworks.co/news/bitcoin-now-legal-tender-in-special-economic-zone-of-honduras">governments tapping bitcoin as legal tender</a>.&nbsp;



The thesis of Aztlan and others, often goes something like this: The region’s residents — commonly beset with soaring inflation and a lack of the same banking solutions that the likes of US citizens may take for granted — are “increasingly turning to decentralized networks,” a source said, via cell phones and improving internet infrastructure, generally.&nbsp;



And a preponderance of investor capital and partnerships in the area, per sources detailing the new launch’s view, has historically been concentrated on later-stage venture plays. “Those that didn’t have access to infrastructure when it comes to traditional finance services can form the base for crypto,” one source said.&nbsp;



Here’s how Aztlan is playing out, broadly speaking, its own twist on that thesis, per sources:&nbsp;



<ul>
<li>Through the lens of “relatively cheap” valuations among Latin American blockchain-based or focused startups, the firm plans to write checks to early-stage (including pre-seed and seed rounds), often employing an incubation model in doing so.&nbsp;</li>



<li>Tap a crypto-native network composed of like-minded venture capitalists, layer-1 developers and similar partners to drum up Latin American dealflow.</li>



<li>Focused on growth sectors within digital assets: infrastructure, Web3, DeFi, the metaverse and custody, as well as L-1s, L-2s and multi-chain solutions.&nbsp;</li>



<li>Fundraise from peer venture firms, plus private equity entities. The pitch is that Aztlan’s strategy provides more liquidity than their own.</li>



<li>Part of that liquidity proposition: the firm, in addition to pure-play venture tickets, is set to invest in liquid cryptoassets via a strategy designed to drive yield — including engaging in tandem trades of two digital assets carried out via stablecoins.&nbsp;</li>
</ul>



Aztlan’s flagship fund has a seven-year time horizon, with investors able to first redeem after three years, then again three years after that. It carries a $1 million investment minimum for institutional limited partners and imposes a 3% management fee, plus a baseline 20% performance cut under a 5% <a href="https://www.investopedia.com/terms/h/hurdlerate.asp#:~:text=A%20hurdle%20rate%20is%20the%20minimum%20rate%20of%20return%20required,rates%20come%20with%20lower%20risk." target="_blank" rel="noreferrer noopener">hurdle rate</a>.&nbsp;



The firm is set to soon reach out to prospective limited partners, sources said, and is in the process of finalizing partnerships with a number of crypto counterparties.



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Latin America Growing Crypto Hotbed, Per Venture Launch’s Strategy

John Gilbert

Despite all the bankruptcies and contagion fears, 2022 set new records for blockchain and cryptocurrency adoption, particularly in countries where inflation was high and citizens were cut out of the global payment network.&nbsp;



For example, the 2022 Statista Global Consumer Survey data showed that cryptocurrency adoption in Turkey, a country with the <a href="https://www.visualcapitalist.com/mapped-which-countries-have-the-highest-inflation/">7th highest inflation rate</a>, increased from <a href="https://www.statista.com/statistics/1202468/global-cryptocurrency-ownership/">25% to 40%</a>. And in Nigeria, <a href="https://www.statista.com/statistics/1246963/unbanked-population-in-selected-countries/">where 60% of the population is unbanked</a>, adoption increased to a new record high of <a href="https://www.statista.com/statistics/1202468/global-cryptocurrency-ownership/">45%</a>.&nbsp;



These regions&#8217; monetary policies and payment infrastructure represent serious shortcomings of the dominant banking systems. Speakers at a recent <a href="https://www.youtube.com/live/dU1h9DrZGng?feature=share&amp;t=15468">Decipher conference panel</a> agreed that the current financial system&#8217;s failure to reach the unbanked and provide price stability drives developing countries to lead the world in blockchain adoption. The need to protect purchasing power and settle payments instantly is still the leading use case for the technology.&nbsp;&nbsp;



Many central banks are exploring various ways to compete with these solutions to remain at the core of the settlement process. And while some countries like <a href="https://www.reuters.com/world/china/china-central-bank-vows-crackdown-cryptocurrency-trading-2021-09-24/">China have outlawed cryptocurrencies</a> in their authoritarian CBDC rollout, other countries like Italy are considering a collaborative approach that can leverage blockchain security and digital asset ecosystem interoperability.



<h2>The central banks exploring blockchain solutions&nbsp;</h2>



In July 2022, The Bank of Italy <a href="https://www.bancaditalia.it/pubblicazioni/mercati-infrastrutture-e-sistemi-di-pagamento/approfondimenti/2022-026/N.26-MISP.pdf?language_id=1">published a report</a> analyzing the benefits of using digital ledger technologies (DLT) for settlement purposes. The objective of the report was to discover a way that central bank money could safely and reliably be used to purchase something like a tokenized security, cryptocurrency or digital asset. The authors concluded that both the TIPS Hash-Link and TIPS-Algorand settlement models offered feasible solutions and were considered for further experimentation. And on December 13th, 2022, <a href="https://www.prnewswire.com/news-releases/algorand-chosen-as-public-blockchain-to-support-digital-guarantees-platform-in-italy-301701329.html">Algorand announced</a> that the Bank of Italy endorsed the launch of a national platform using the layer-1 blockchain to support a digital guarantees platform – marking a step toward blockchain and central bank integration&nbsp;&nbsp;



As Federico Rajola, a professor with the research Centre on Technology, Innovation and Finance (CETIF), coordinating the platform, stated in <a href="https://www.prnewswire.com/news-releases/algorand-chosen-as-public-blockchain-to-support-digital-guarantees-platform-in-italy-301701287.html">a press release</a>: &#8220;We selected Algorand because of its unparalleled level of innovation and security among permissionless DLTs, as well as because of its leadership in sustainability… We believe [platforms such as the Digital Sureties platform supported by Algorand] can and will dramatically contribute to the country&#8217;s competitive sustainability for the benefit of all.&#8221;



This approach represents an alternative central bank response to cryptocurrencies. Instead of responding with a CBDC designed to enforce strict censorship measures, they are collaborating with existing blockchain infrastructure to remain an integral part of the settlement process. This shows that permissionless blockchain cryptocurrencies don’t need to beat out CBDCs or replace central banks to succeed. This collaboration between Algorand, the Bank of Italy and other Italian public entities and institutions, signals a potential future where the ecosystems for crypto and central bank money can benefit from each other.&nbsp;



<h2>The unbanked populations driving blockchain adoption</h2>



Most countries are not equipped to ban blockchain-based cryptocurrencies. For example, despite <a href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/cryptocurrency-usage-soars-in-nigeria-despite-bank-ban-70497781">Nigeria’s Crypto ban in 2021</a>, it still led the world in adoption in 2022. And a <a href="https://www.bloomberg.com/news/articles/2022-10-25/shunned-digital-currency-looks-for-street-credibility-in-nigeria?sref=323RPL5z">Bloomberg report</a> states that fewer than 0.5% of Nigeria&#8217;s population of 217 million are using the government-issued digital currency one year after its launch. So as more people use crypto to preserve purchasing power and access financial services, they may force central bank hands to pursue interoperable solutions.&nbsp;



But even crypto has its challenges in servicing the unbanked. The Taliban&#8217;s takeover of Afghanistan in August 2021 pushed the country&#8217;s banking system to the brink of collapse nearly immediately, and the system remains in a <a href="https://www.worldbank.org/en/country/afghanistan/overview#:~:text=Afghanistan's%20financial%20sector%20remains%20in,print%20new%20afghani%20currency%20notes">crisis state</a> still today. For some, crypto and other blockchain-based solutions quickly became <a href="https://www.algorand.foundation/news/hesabpay-giving-access-to-resources-for-the-people-of-afghanistan">a safe alternative for vulnerable people to receive aid</a> and safely pay for critical things like medical expenses and food.&nbsp;&nbsp;



The challenge, though, was that many people had no access to smartphones or the technological literacy needed to send and receive crypto. Sanzar Kakar, the founder of a crypto payment system called <a href="https://hesab.af/home">HesabPay</a>, started using QR code cards to meet this need. On the ‘<a href="https://www.youtube.com/live/dU1h9DrZGng?feature=share&amp;t=15468">Payment Revolution is Now</a>’ Panel discussion at the Decipher conference, he stated,&nbsp;



“Our niche is not someone that necessarily understands [how to send and receive crypto] or have a smartphone and internet access. So we use QR codes. We recently provided 7500 of these to widows in Afghanistan – where they can use them to pay for things without understanding how blockchain works or having access to a smartphone. They just went to the shop every month with their QR code card and showed the shopkeeper who scanned it to deduct donated funds from their Algorand wallet.”



These QR codes, linked to blockchain wallets, also protect against the security risks that exist in informal money transfer systems that are still common across the Middle East, South Asia, and other parts of the world. With HesabPay, anyone holding a QR code card wallet can receive outside donations and remittances even in the absence of traditional banks.&nbsp;&nbsp;



These innovative efforts may offer a scalable model that can onboard even the most hard-to-reach people to the rails of blockchain payments. Therefore, as Nigeria&#8217;s CBDC and others like it fail to even reach its general population, governments may seek greater interoperability with the system that is working in the most remote regions.



This content is sponsored by <a href="https://www.algorand.com/" target="_blank" rel="noreferrer noopener">Algorand</a>.



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Why Central Banks and the Unbanked Are Both Looking at Blockchain

A handful of crypto projects have received venture funding in the second week of 2023.



The most significant fundraise was secured by CyberX, a market maker for digital assets, which secured a $15 million Series A led by Foresight Ventures.



CyberX plans to use its latest financing to expand its team internationally, with a specific focus on its Asian and North American markets and on continuing to integrate DeFi protocols into its network.



&#8220;Liquidity is fundamental for further developments in this nascent crypto industry. It is pivotal to have experienced market makers like CyberX to retain market efficiency,” Forest Bai, CEO of Foresight Ventures, said in a statement.&nbsp;



“We believe CyberX has the advanced technology, experienced team, and extensive market knowledge to emerge at the forefront of the competition, which is why we have made this substantial investment of $15M into their future,” he said.



A social cryptocurrency wallet dubbed The Easy Company also secured a large amount of funding, closing a $14.2 million deal with investors including Lobby Capital, Relay Ventures, and 6th Man Ventures, among others.



The wallet is available on iOS and Android and is designed to combine user profiles with social discovery features similar to what exists on Instagram.



Another wallet company that caught venture capital interest was Momentum Safe (MSafe), a multi-signature wallet solution on the Aptos/Move ecosystem.



MSafe closed a $5 million seed round led by Jump Capital, with participation from Circle Ventures, Coinbase Ventures, Superscrypt (founded by Temasek), Redpoint Ventures, SV Angel, Shima Capital, and Spartan Group.



Proceeds from the latest financing round will be used to grow the MSafe team and invest in product development, the company noted in a statement. The team has upcoming features such as DAO tooling solutions and recurring payment capabilities to be expected over the next few months.



“MSafe&#8217;s non-custodial digital asset management platform offers best-in-class security, decentralization and flexibility needed by organizations,” Saurabh Sharma, head of investments at Jump Crypto, said. “Excited to support MSafe’s strong team with ambitious goals and capabilities to scale web3 financial services.”



Other noteworthy raises this week include:



<ul>
<li>Open source protocol for consensus capital markets, Alkimiya, landed $7.2 million in seed funding led by Castle Island Ventures and 1kx.</li>



<li>Decentralized peer-to-peer gateway on the Cosmos network, Quasar, received $5.4 million from Shima Capital, bringing it to a $70 million valuation.</li>



<li>Open Forest Protocol (OFP), an on chain measurement and reporting platform working on forestation, secured $4.1 million in pre-seed funding from over 17 venture capital firms and angel investors.</li>
</ul>



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Funding Roundup: Funding Gains Momentum in Second Week of 2023

As Congress gears up for its next session with a slew of what the industry hopes will be crypto-friendly lawmakers, Bitwise’s general counsel has her eye on stablecoin regulations.&nbsp;



&#8220;The first Congressional focus point will no doubt be stablecoins,” Katherine Dowling, general counsel and CCO at Bitwise Asset Management, told Blockworks.&nbsp;



Stablecoin regulation, namely about reserve reporting and liquidity requirements, has been a long time coming, Dowling said, pointing to the <a href="https://blockworks.co/news/bipartisan-stablecoin-regulation-has-a-slim-chance-of-passing-this-year">bipartisan bill</a> lawmakers failed to pass last session. With much of the legwork already done, Dowling said stablecoin legislation has the potential to be an early win for Congressional members looking to solidify some sort of crypto policy.&nbsp;



“Regardless of where members of congress are on the crypto spectrum — pro or con — or on the learning curve, there is a general sense that something must be done here,” she said. “The more complex, hairier topic of crypto market structure regulation will follow, but this topic will require more education, hearing and will take longer to arrive at negotiated, bipartisan agreement.”



Crypto, no longer a new issue on Capitol Hill, has already proven to be a major focus for both the House and Senate. While there were several attempts at a more comprehensive legislative package, a more focused approach is probably more likely in the near-term, Dowling said.&nbsp;



The Senate has been paying attention to the emerging asset class, most recently with a focus on crypto <a href="https://blockworks.co/news/new-crypto-bill-suggests-some-daos-be-taxed-like-businesses">tax regulation</a> and <a href="https://blockworks.co/news/bitcoin-ether-to-be-regulated-as-commodities-by-cftc-per-new-senate-bill">token classification</a>, both of which will impact traders and exchanges.&nbsp;



New Financial Services Committee Chair Patrick McHenry, R-N.C., who made digital assets a <a href="https://blockworks.co/news/crypto-tax-provisions-coming-in-january-2023">pillar</a> of his Congressional platform in the past several elections, created the Subcommittee on Digital Assets, Financial Technology and Inclusion. The Subcommittee will be led by Rep. French Hill, R-Ark, Rep. McHenry announced Thursday.



Coinbase rated Rep. Hill “<a href="https://www.coinbase.com/public-policy/legislative-portal/ar/houseOfRepresentatives/57GmHI1BeuIU6uQJdQxlqY" target="_blank" rel="noreferrer noopener">very supportive</a>” of the industry in its <a href="https://blockworks.co/news/coinbase-adds-crypto-policy-integration">crypto sentiment calculator</a>, based on “legislative record, media statements, social media posts, caucus membership, and public letters,” the exchange said. 



Coming off of a tumultuous year for markets, coupled with bankruptcies, criminal charges and generally low sentiment toward the industry, lawmakers are feeling the pressure now more than ever to get bills over the finish line, Joe Acosta, partner at law firm Dorsey and Whitney, said.&nbsp;



“Without regulation, you can see how customers can easily be duped,” Acosta said, pointing out that the turf war over jurisdiction between Federal agencies needs to be cleaned up as well.&nbsp;



Generally, regulatory clarity will be a net positive for the space, Dowling added.



“Right-sized legislation in the space will be a huge boon to the industry and while there may be some pain points in the short term around preparing and organizing, over the long term we will all benefit from clear rules of the road,” she said.



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Stablecoin Regulation Is Congress’ Top Priority, Says Bitwise General Counsel

EffortCapital

Agoric

Agoric: Hardened Javascript for Easy dApp Development

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



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



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



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



See you in Paradise.

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Speakers

Erik Voorhees

Mary-Catherine (MC) Lader is the Chief Operating Officer of Uniswap Labs, a developer of foundational web3-based products and applications. In this role, she oversees the company’s growth efforts, strategic initiatives, and operations. Previously, she held various leadership roles at BlackRock, including as the Global Head of the firm’s digital sustainability business, Chief Operating Officer of the firm’s Digital Wealth Business, and leader of the firm’s strategic fintech investments and blockchain activities. MC began her career in Goldman Sachs’ Special Situations Group and worked on the staff of the World Economic Forum’s Davos gatherings. 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

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

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

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Speaker applications can be submitted <a href="https://form.asana.com/?k=L3gwAY1GRAX-RRAGDZYc0g&amp;d=1199885946213540">here</a>. Due to the high volume of submissions, we will not respond to all applicants. We anticipate &lt;2% of applicants being selected.
Blockworks&#8217; content team will reach out in the event you are accepted to speak. Please do not follow up directly.

Speaker Application

<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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