Baby Doge Coin

Ben Strack

Vanguard has said it doesn’t believe in crypto’s investment case, and it doesn’t allow bitcoin ETFs to trade on its platform.



But the fund giant’s new CEO, Salim Ramji, led BlackRock’s ETF business as the company spurred an industry double-take with its bitcoin ETF filing last year.&nbsp;



So something’s got to give, right?&nbsp;



Maybe not soon, but ultimately yes, according to Ric Edelman, founder of the Digital Assets Council of Financial Professionals (DACFP).



Ramji was <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s global head of iShares and index investing before leaving the world’s largest asset manager in January. He started his career leading the firm’s corporate strategy and moved on to become its head of US wealth advisory.



Vanguard said Tuesday that Ramji would succeed Tim Buckley as chief executive on July 8. The firm had revealed in February that Buckley was set to retire by the year’s end.&nbsp;&nbsp;



Though Ramji left BlackRock the month that US spot bitcoin ETFs <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">gained Securities and Exchange Commission clearance</a>, he was of course involved in the lead-up.



Fast-forward four months, and BlackRock’s iShares Bitcoin Trust (IBIT) has so far <a href="https://blockworks.co/news/blackrock-bitcoin-etf-inflows-streak">led the category with $15.5 billion of net inflows</a>. IBIT trails the segment’s largest fund — the Grayscale Bitcoin Trust ETF (GBTC) — by less than $1 billion in assets under management.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-etf-performance-first-four-months">Strong start, slowing demand: The first 4 months of US spot bitcoin ETFs </a>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



In a July 2023 <a href="https://twitter.com/BloombergTV/status/1678499259581100040">interview</a> on Bloomberg TV, Ramji said the company was “incredibly excited” about blockchain technology given its ability to remove considerable “friction” across the financial ecosystem.



The then-BlackRock executive likened the planned bitcoin product to its physical gold ETF — the iShares Gold Trust (IAU) — launched in 2005.



“The gold is held in custody in a vault, which is remote from us, but it’s now easier to transact in gold using our gold ETFs,” he said at the time. “We’re applying that same philosophy to other new and emerging asset classes like bitcoin, just as we did to gold 20 years ago and just as we did to bonds 20 years ago.”



The <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETF</a> bid was an effort to “help investors gain access to parts of the market that otherwise have been more difficult or really expensive or opaque for them to access otherwise,” Ramji added.&nbsp;&nbsp;&nbsp;



For what it’s worth, Vanguard’s Tuesday news release does not mention IBIT or crypto.



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



While brokerage firms Fidelity and Charles Schwab, for example, give investors access to trade bitcoin ETFs, Vanguard does not. The company has called the investment case for cryptocurrencies “weak” — noting that most crypto assets “lack intrinsic economic value” and are highly volatile.



Read more: <a href="https://blockworks.co/news/vanguard-disallows-bitcoin-etf-trading">As spot bitcoin ETF volumes soar, Vanguard is blocking such trades</a>



DACFP’s Edelman, who also founded Edelman Financial Services, said he believes Ramji will bring a more “market-focused approach” to Vanguard.&nbsp;



After all, he noted, the company’s focus on being the cheapest doesn’t give it as much of an edge in an increasingly low-cost industry.



“Paternalistic views that prevent investors from owning what they want won’t foster growth either,” Edelman told Blockworks.



Bloomberg Intelligence analyst James Seyffart said in an X <a href="https://twitter.com/JSeyff/status/1790504096195084583">post</a> that he doesn’t think the hire means Vanguard launches a bitcoin ETF in the near-term.



“But I think Salim could reverse Vanguard’s stance on not allowing their clients to buy spot bitcoin ETFs on their brokerage platform,” Seyffart added.



Bitcoin won’t be the first item on Salim’s agenda, Edelman noted.



“But eventually…Vanguard will indeed offer bitcoin ETFs,” he said. “From a purely business perspective, it’s foolish not to. And Salim is not foolish.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Yes, Vanguard’s new CEO supported BlackRock’s bitcoin ETF launch

Katherine Ross

Circle’s looking to move across the pond.&nbsp;



The USDC issuer confirmed to Blockworks that its parent company filed the “required paperwork with the High Court of the Republic of Ireland to redomicile the company to the US.”



<a href="https://www.bloomberg.com/news/articles/2024-05-15/usdc-issuer-circle-to-make-us-legal-home-ahead-of-ipo">Bloomberg</a> first reported the news.



Earlier this year, Circle revealed that it confidentially filed for an initial public offering in the US in January of this year. The approach is common and has been used by other companies such as Airbnb and Uber. 



Read more: <a href="https://blockworks.co/news/circle-files-ipo">Circle confidentially files for US IPO</a>



“The number of shares to be offered and the price range for the proposed offering have not yet been determined. The initial public offering is expected to take place after the [Securities and Exchange Commission] completes its review process, subject to market and other conditions,” the press release said at the time.&nbsp;



This isn’t the first time that <a href="https://blockworks.co/tag/circle">Circle</a>’s expressed interest in a US IPO, though the move from Ireland could suggest that the company is pursuing the traditional approach to going public.&nbsp;



Circle had previously <a href="https://blockworks.co/news/circles-public-listing-plans-undeterred">expressed interest in going public</a> through a special-purpose acquisition company or SPAC. The route — which requires the private company looking to go public to merge with an existing publicly listed shell company — was popular throughout 2021 and 2022.&nbsp;



While the S-1 filed with the <a href="https://blockworks.co/tag/sec">SEC</a> hasn’t been publicly released yet, it shows that the company is pursuing the more traditional IPO model this time around. 



Per SEC <a href="https://www.sec.gov/corpfin/announcement/draft-registration-statement-processing-procedures-expanded">rules</a>, potential investors won’t be able to publicly view the S-1 filed with the regulatory agency until 15 days before the company starts its roadshow. This changes, however, to 15 days prior to the registration date if a company chooses to not pursue a roadshow.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Circle says it plans to ‘redomicile’ company in the US

Miller Whitehouse-Levine

We find ourselves in a strange interregnum for crypto policy in the United States.&nbsp;



On one side, Securities and Exchange Commission Chair Gary Gensler is <a href="https://blockworks.co/news/secs-gensler-crypto-disclosures-for-investors">ramping up an all-out war</a> against the crypto industry, accelerating enforcement actions and saber-rattling, perhaps in anticipation of being replaced after November&#8217;s elections. The aim seems straightforward: Let’s do as much damage to crypto while we have the chance.&nbsp;



On the other side, a growing bipartisan group in Congress is working, ploddingly, towards new crypto-focused legislation in an acknowledgment that the current status quo is untenable.&nbsp;



The slow and steady legislative pace gives Chair Gensler the chance to be the fox in the crypto henhouse while our lawmakers are occupied with other jobs on the farm.&nbsp;



The insatiable campaign against crypto undermines the work that Congress has done so far to address crypto’s long-standing regulatory quagmire. It’s time the farmers regain control and flush the fox out.



Indeed, Congress has made notable progress towards addressing key regulatory issues, even if their efforts remain imperfect and incomplete. Some of the pieces of draft legislation could prove a net positive for the crypto ecosystem with considered revisions. Rep. Patrick McHenry and Rep. Maxine Waters&#8217; yet-to-be-released stablecoin bill has <a href="https://www.coindesk.com/policy/2024/03/20/key-us-lawmaker-mchenry-says-house-has-workable-stablecoin-bill/">garnered decent bipartisan support</a> and could reach a House floor vote this session. McHenry&#8217;s FIT21 bill on crypto market structure is <a href="https://rules.house.gov/bill/118/hr-4763">headed for a full-House vote at the end of May</a>.&nbsp;&nbsp;



Just last week, <a href="https://www.axios.com/2024/05/08/house-vote-sab121-sec-guidance-crypto-custody">a bipartisan House coalition repealed</a> the SEC&#8217;s punitive SAB 121 accounting rules for crypto — a clear rebuke of Gensler&#8217;s aggressive tactics, and a sign there is Congressional appetite to move quicker than the typical glacial speed they are accustomed to with core crypto issues.&nbsp;



These moves demonstrate that lawmakers at least seem to grasp that if they don&#8217;t act soon to rein in Gensler&#8217;s crusade, they may end up protecting just a <a href="https://blockworks.co/news/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn">rump of what was once a vibrant American crypto industry.</a>



What is to be done? Congress faces two key constraints: It&#8217;s an election year when major legislative lifts are difficult, and they must consolidate enough bipartisan consensus to push comprehensive crypto legislation over the finish line.



Fortunately, new polling indicates growing public engagement on the crypto issue which could provide productive tailwinds.&nbsp;



According to a <a href="https://theblockchainassociation.org/cryptovoters/">recent Harris Poll</a>, most voters don&#8217;t trust elected officials to understand innovative technologies like crypto, and over half are concerned about policymakers stifling innovation through heavy-handed regulation. Those sentiments are warning lights for the SEC and are opportunities for members of Congress. Former President Trump&#8217;s <a href="https://x.com/EleanorTerrett/status/1788375364223283485">recent overtures</a> embracing crypto and courting crypto-aligned voters should also add impetus for Congressional action.



Read more from our opinion section: <a href="https://blockworks.co/news/eth-not-security-howey">No, ETH isn’t suddenly a security now</a>



Ultimately, lawmakers must recognize that an overzealous regulator is attempting to unilaterally decide the fate of an ecosystem that is vitally important to America&#8217;s future economic competitiveness and technological leadership. This circumvents the proper role of Congress in setting foundational rules, and our elected officials should reassert their prerogative rather than ceding that power to crypto&#8217;s most fervent detractors.



The clock is ticking. As election day approaches, the impetus for Chair Gensler to gobble up even more crypto hens will grow stronger. Our nation&#8217;s legislative farmers must return to the crucial task of protecting and catalyzing the homegrown crypto ecosystem. They’re close to drafting fit-for-purpose rules that would clarify how the government understands and regulates crypto, though much more work needs to be done.&nbsp;



If they don’t move quickly, they may find the hen house empty and wonder why they didn’t act sooner.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Miller has overall strategic and operational responsibility for the execution of the organization’s mission and goals. Prior to joining the fund, Miller led the Blockchain Association’s policy operation and worked at Goldstein Policy Solutions on a range of public policy issues, including crypto. Miller holds a B.S. in international politics and a minor in Mandarin Chinese from Georgetown&#8217;s School of Foreign Service.
</div>


<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

It’s time for Congress to protect the crypto henhouse

<h2 class="wp-block-heading">A new scare tactic</h2>



Crypto mixers, and those who make them, are having their day in court.&nbsp;



Yesterday, Tornado Cash developer Alexey Pertsev was <a href="https://blockworks.co/news/alexey-pertsev-tornado-cash-guilty">found guilty of money laundering</a> and sentenced to 64 months in a Dutch prison.&nbsp;



The sentencing, which happened after a brief trial in March, left CoinCenter’s Peter Van Valkenburgh “sad” and “angry that the money laundering laws in the Netherlands have such a low threshold for intent, especially mere negligence.”



But the verdict shouldn’t impact US cases, which is important to note because <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a> co-founder Roman Storm is expected to face a trial later this year.&nbsp;



So let’s zoom out for a second here.&nbsp;



Crypto mixers, such as Tornado Cash, have clearly hit a nerve with governments outside the US. But, as we previously mentioned here, the US government is looking to seriously inhibit or scare people away from these services. Tornado Cash was <a href="https://blockworks.co/news/roman-semenov-tornado-cash-ofac-list">sanctioned years ago</a>, then both Storm and Roman Semenov were charged. (Semenov is notably still at large, though Storm was arrested.)



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/8AcwGA-hMmu3Qec1xlLPHqD85nj2Mc6DHjQ2s_NgBuux66vOKMeg_YqASNZLOQyU1SlYHgUejbRAARHyukSUy9BV6F3Rj2sZ-c_6aKMoSZZuc-n2Nn0v_MwdyeUunJif36UfiGCIBfMzcqf0oruSyS8" alt=""/></figure>



The chart from Dune shows that there are still cash deposit transactions happening on Tornado Cash, though there’s clearly been a drop-off since the March 2022 highs. The US government sanctioned Tornado Cash in August 2022, making it illegal for US citizens to interact with the protocol, which is reflected in charts of deposit and withdrawal transactions.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/sNZzs8Jh4Qw_JoezRWH20lQfq8pO_ys_2VWtQqcsuaC7zd2_1YKaXM9k-26yEXjKQEOwG5ukqGNsEYhdHKwJAW75K-sXEGzFnpqWY6J0GFXIumOeDJyEm85GkWKqwDj-Q4sYxWqTHRslM84LBirDv3M" alt=""/></figure>



The privacy tool has many lawful users and provides a receipt mechanism to prove the provenance of withdrawn funds when requested by an appropriate authority.



Then there’s Samourai Wallet, which <a href="https://blockworks.co/news/doj-arrests-founders-samourai">saw a bit of a different approach</a> from the US government.



The Department of Justice teamed up with other international agencies to not only arrest two co-founders — William Lonergan Hill and Keonne Rodriguez —- but also seized the web servers and domain “in coordination with law enforcement authorities in Iceland.”



The indictment accuses the Samourai Wallet account on X of encouraging users to “launder proceeds” using its services.&nbsp;



What’s the aim here for the government? Is it to suppress the technology or is it to punish those behind it?



That’s the question I’ve been mulling over when looking at the approach that the DOJ has taken to both cases.&nbsp;



CoinCenter’s note earlier this month explained how the DOJ changed tack when it comes to the developers.&nbsp;



As we <a href="https://blockworks.co/news/binance-changpeng-zhao-deal-unpacked">talked</a> about previously, guidance from FinCEN — the Treasury’s financial enforcement bureau — has long suggested that crypto shouldn’t count as funds.



The agency further wrote: “The person participating in the transaction to provide additional validation at the request of the owner does not have total independent control over the value.”



These points are worth bringing up once again because of the potential shift they show. The <a href="https://blockworks.co/tag/doj">DOJ</a> has seemingly disregarded such guidance in favor of directly targeting the developers.&nbsp;



And, while the Dutch legal system is totally separate and neither the US nor the Dutch systems will have any direct influence on these types of cases, the underlying theme here is that multiple governments have targeted the developers behind the technology.



Is that enough to end mixers? In crypto, probably not as seen by the aforementioned charts. But it’s clearly enough to scare folks from using the services.&nbsp;



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>Among memecoins, FLOKI’s <a href="https://www.coingecko.com/en/crypto-gainers-losers?top=100">leading</a> the gains — up 10% — this morning as Roaring Kitty continues to post videos on X. </li>



<li>Grayscale’s bitcoin ETF saw outflows of $50 million on Tuesday, while ARKB brought in $133 million, per <a href="https://farside.co.uk/?p=997">Farside data</a>. </li>



<li>Ark’s Bitcoin Monthly <a href="https://ark-invest.com/crypto-reports/the-bitcoin-monthly-april-2024-report/?utm_campaign=The%20Bitcoin%20Monthly&amp;utm_medium=email&amp;_hsenc=p2ANqtz-9omYG7oTStDKnjIqc2-iL8QUtnSf0MsTMGsbQs9fWfDd-FC9mGUNfLMVvcbUH9OVM0Dz6w-ikAqe-DaoKGfL9u4KYVEQ&amp;_hsmi=307073862&amp;utm_content=307073862&amp;utm_source=hs_email">noted</a> that there are two “crucial” support levels remaining for bitcoin: the 200-day moving average of $48,335 and the on-chain mean, which is $42,538.</li>



<li>BTC’s price is hovering around $62,000, a 1.2% change in the last day.</li>



<li>Core Consumer Price Index month-over-month fell to 0.3%, just under the 0.4% expected in April. </li>
</ul>



<h2 class="wp-block-heading">The end is near</h2>



After a few years of bankruptcy proceedings, we may be near the endgame when it comes to the companies that failed at the beginning of last cycle’s downturn.&nbsp;



As we wrote about last week, <a href="https://blockworks.co/tag/ftx">FTX</a> put forth a creditor payback plan that could be approved by both a creditor vote and, in June, a court.



But it may not be all smooth sailing for the former crypto exchange, as Blockworks’ Ben Strack and I <a href="https://blockworks.co/news/ftx-latest-creditor-payback-proposal">previously reported</a>. The estate’s plan does have some “controversial elements” that aim to shield some of the non-debtor entities from potential future lawsuits, Matthew Gold, partner at Kelinberg Kaplan, told Ben last week.&nbsp;



<a href="https://blockworks.co/tag/ftx">FTX</a>’s bankruptcy — though it came at a time when there were a number of other bankruptcies such as Celsius, Voyager and BlockFi — <a href="https://blockworks.co/news/ftx-comparison-crypto-bankruptcies">stands on its own</a>, said Jonathan Groth, partner at DGIM Law.



The bankrupt exchange is a “special case” in comparison.&nbsp;



“The plan that they&#8217;re proposing [and the fund they’ve amassed] to repay creditors is really based more on the liquidation of securities holdings through FTX’s branch of Alameda and other recoveries…just really selling off other assets,” Groth said.



Voyager and Celsius returned between 35% and 65% to 85%, respectively, to creditors. Just looking on a numbers basis, FTX is saying it is planning to make customers whole and even pay interest to some. That, of course, doesn’t take into account the appreciation of certain cryptocurrencies such as bitcoin. When FTX filed for bankruptcy, bitcoin was under $20,000. Now, of course, it’s above $60,000. That’s clearly a massive change.&nbsp;



However, the bankruptcy code — which Judge John Dorsey <a href="https://blockworks.co/news/ftx-bankruptcy-victim-compensation">upheld earlier this year</a> at a hearing after some creditors said they wanted their <a href="https://blockworks.co/news/ftx-former-customers-oppose-bankruptcy-plan">payouts to recognize current prices</a> — says that customers should be repaid based on the date that the company declared bankruptcy.&nbsp;



FTX also benefited from the asset location, managing to cobble together between $14 billion and $16 billion to repay creditors. Creditors are owed $11 billion.



“In any of these other insolvency proceedings where the estate and the fiduciary may be lucky enough to still hold some crypto assets, they may be able to benefit from this market upswing that we’re seeing,” Groth said.



Even if some creditors are unhappy with the plan, Groth said “it’ll be really difficult for a court to look at this and say, ‘How unhappy can you be?…You’re being made whole.’”&nbsp;



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>Circle is looking to make the US its legal home base ahead of its planned IPO, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-05-15/usdc-issuer-circle-to-make-us-legal-home-ahead-of-ipo">reports</a>. </li>



<li>Peter Thiel’s VC fund and Vitalik Buterin <a href="https://www.bloomberg.com/news/articles/2024-05-14/peter-thiel-s-founders-fund-backs-election-betting-with-polymarket-funding">backed</a> Polymarket in a $70 million raise across Series A and Series B rounds.</li>



<li>Ex-FTX executive Ryan Salame is <a href="https://www.coindesk.com/policy/2024/05/15/former-ftx-exec-ryan-salame-asks-for-lenient-18-months-in-prison/">seeking</a> an 18-month sentence, according to a court filing.</li>



<li>Robinhood <a href="https://blockworks.co/news/robinhood-solana-staking-europe">announced</a> its first-ever staking product — Solana staking — for customers in Europe. </li>



<li>Berachain’s $1.5 billion valuation following its $100 million Series B raise last month <a href="https://news.crunchbase.com/venture/unicorn-board-april-2024-ai-web3-e-commerce-xaira/">earned</a> it a spot on Crunchbase’s Unicorn Board. </li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



Former Binance CEO <a href="https://blockworks.co/tag/changpeng-zhao">Changpeng Zhao</a> is about to have a lot of time on his hands as he prepares to serve his four-month prison sentence in the US. Or, as he called it, “quiet time.”



So what’s a guy to do with all that time?



Sounds like CZ might be going the very classic route of publishing a book. The former executive said he’ll “give it a try” in a <a href="https://twitter.com/B_daojia/status/1789506320204435781">response</a> on X.&nbsp;



What could the said book be about? I’m thinking not about what led to his prison sentence, and Zhao — at least in court — said he’d go back and “change that part of Binance’s story” when discussing what led him to be in front of a judge for sentencing.&nbsp;



Read more: <a href="https://blockworks.co/news/empire-newsletter-cz-vs-sbf-sentencings">Empire Newsletter: Why CZ and SBF’s sentencings were so different</a>



CZ’s newest endeavor is Giggle Academy, a nonprofit education platform, so maybe he’ll pen a self-help book or advice on how to be the next crypto kingpin.&nbsp;



Actually, the latter might be helpful — depending on what he writes about — because we’ve seen quite a few topple thanks to casual law-breaking and deceptive practices. But, hey, there’s always room for improvement.&nbsp;



Either way, there’s no denying that CZ is a force within crypto even putting the guilty plea aside. I’m hoping that his book ends up in the hands of our very own Molly Jane Zuckerman.&nbsp;



— Katherine Ross



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Empire Newsletter: Crypto mixers have their day in court

Yet another potential milestone for crypto is just days away.



Or, we may find out US spot ether ETFs are — for now — not meant to be.



The Securities and Exchange Commission’s decision on such funds by fund firms Ark Invest and VanEck, slated to come by May 23, is only half of what to watch for next week.



In the case of a denial, the SEC is set to give its reasoning. There is also the question of whether a lawsuit follows, how quickly it is filed, and who would lead that charge.



<h2 class="wp-block-heading">Expected reasons for possible denial&nbsp;</h2>



The SEC was essentially forced to <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">approve spot bitcoin ETFs</a> in January after Grayscale Investments notched a legal victory against the regulator.



Then there was SEC Chair Gary Gensler’s warning in his statement published a day before spot bitcoin ETFs launched on Jan. 11: “Today’s commission action is cabined to ETPs holding one non-security commodity, bitcoin.”



A reasonable interpretation: Not so fast, prospective ether ETF issuers.&nbsp;



Read more: <a href="https://blockworks.co/news/ether-etf-approval-unlikely-soon">Ether ETFs coming in May? Here’s why many are bearish</a>



“I think the SEC is aware that sponsors may assume an air of inevitability of additional spot crypto approvals once multiple crypto ETPs have been approved,” said Arie Heijkoop, partner at law firm Haynes Boone. “It will take an extra cautious approach as a result before approving any further spot crypto ETP — at least under this current administration.”



Perhaps the biggest elephant in the room is the SEC’s reticence to call ether a security or a commodity.



A March 8 <a href="https://www.federalregister.gov/documents/2024/03/08/2024-04928/self-regulatory-organizations-the-nasdaq-stock-market-llc-order-instituting-proceedings-to-determine">filing</a> confirms the regulator continues to mull this question, Van Buren Capital general partner Scott Johnsson said in an X post.



The <a href="https://blockworks.co/tag/sec">SEC</a> asks in the document whether the listing exchange — in this case Nasdaq — filed to properly list and trade shares of BlackRock’s proposed iShares Ethereum Trust “given the nature of the underlying assets held by the trust.”



<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">The obvious purpose is to potentially deny on the basis that these spot filings are improperly filed as commodity-based trust shares and do not qualify if they are holding a security.&mdash; Scott Johnsson (@SGJohnsson) <a href="https://twitter.com/SGJohnsson/status/1790219763211198510?ref_src=twsrc%5Etfw">May 14, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The document also asks whether arguments supporting the list of spot bitcoin ETFs apply to ether given “its proof of stake consensus mechanism and concentration of control or influence by a few individuals or entities.”



Read more: <a href="https://blockworks.co/news/sec-investigation-of-eth-as-security">SEC has been investigating ETH for over a year, new court filing shows</a>&nbsp;



Indeed, K&amp;L Gates partner Richard Kerr noted during an ETF Prime <a href="https://etfstore.com/vanecks-matthew-sigel-on-spot-ether-etf-hodl-cryptos-investment-case/">podcast</a> last week that the proposed spot ether ETFs are registered under the Securities Act of 1933 as commodities-based products. They would not be allowed to trade under that designation if ether is deemed a security, he noted.&nbsp;



More likely, Kerr added, the SEC will “very carefully try to push the decision on ETH down the line” by saying the correlation between the ether futures and spot markets is not as strong.&nbsp;



The SEC <a href="https://blockworks.co/news/ether-futures-etfs-vaneck-proshares-bitwise-offerings#">allowed ETFs that hold ether futures contracts</a> to start trading last October.&nbsp;&nbsp;&nbsp;



Matthew Sigel, VanEck’s head of digital assets research, said during the same podcast he does not believe such an argument holds water.



A March <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/rule-filings/filings/2024/SR-NYSEArca-2024-31.pdf">analysis</a> by crypto asset manager Bitwise <a href="https://twitter.com/BitwiseInvest/status/1773427635919458551">found</a> the correlation values for the ether futures and spot markets, when compared to bitcoin, differ up to 0.2% for the hourly correlation, 5% for the five-minute correlation and 8% for the one-minute correlation.



“We think the SEC may use any reason, not necessarily a logical one, to disapprove,” Sigel said. “But we would highlight that the correlation between ethereum spot and ethereum futures…is similar to what the SEC found acceptable for the approval of spot bitcoin ETFs.”



Approved or not, multiple industry watchers previously told Blockworks the SEC would almost definitely not allow ether products that stake their holdings. Ark Invest and 21Shares, which previously <a href="https://blockworks.co/news/ark21shares-ether-etf-staking">proposed for their planned fund to stake the fund’s ETH</a>, did not include such language in a May 10 <a href="https://www.sec.gov/Archives/edgar/data/1992508/000121390024041758/ea0205580-01.htm">filing</a>.&nbsp;



<h2 class="wp-block-heading">Would a lawsuit follow?</h2>



An SEC denial could be challenged, as the bitcoin ETF rejections ultimately were.



Some lawyers have told Blockworks a court decision could be the best route to seeing these products launch.&nbsp;



Read more: <a href="https://blockworks.co/news/ether-etf-sec-question">Court decision could be only way US spot ether ETFs see light of day</a>



But Johnsson <a href="https://twitter.com/SGJohnsson/status/1788973146478948614">said</a> he would be surprised to see a lawsuit after Grayscale withdrew its ether futures ETF application earlier this month.&nbsp;



<a href="https://blockworks.co/tag/grayscale">Grayscale</a> CEO Michael Sonnenshein <a href="https://www.dlnews.com/articles/regulation/grayscale-to-focus-on-spot-ethereum-products-says-ceo/">reportedly</a> said at an event hosted by the Financial Times that the firm “decided to focus our energy on our spot products.”&nbsp;



A company spokesperson declined to comment further on the proposal withdrawal.&nbsp;



Johnsson noted in a separate X <a href="https://twitter.com/SGJohnsson/status/1787955970762490042">post</a> that keeping the product in registration would have put the SEC “on record with a 19b-4 order” related to ether futures.&nbsp;



A 19b-4 form is filed by stock exchanges and other entities to record a rule change with the SEC. A regulatory decision on such a rule change was “critical” in Grayscale’s legal victory against the SEC last year, Johnsson added.



Existing US ether futures ETFs, registered under the Investment Company Act of 1940, did not go through the 19b-4 process.



Heijkoop said he doesn’t expect Grayscale’s ether futures product withdrawal to impact a decision to sue the SEC, if it comes to that.



“If a litigant can show strong correlation between ether futures and spot prices, I think the same premise of the Grayscale bitcoin court ruling should provide legal precedent here, which is that disparate treatment of futures and spot market products is ‘arbitrary and capricious’ in cases where strong correlation is present,” Heijkoop told Blockworks.&nbsp;



Neena Mishra, director of ETF research at Zacks Investment Research, puts low odds on a lawsuit, noting the regulator should approve the products based on the correlation argument.&nbsp;



Issuers, she guessed, would re-apply for ether funds and hope for more engagement with the SEC within the next 240-day period.



“The legal process is costly, and spot ether ETFs are likely to attract much less interest from investors compared to spot bitcoin ETFs,” Mishra explained. “Moreover, with elections approaching, issuers may prefer to wait until the outcomes are known. They will hope for an SEC chair who is more favorable towards cryptocurrency.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Why the SEC could choose to deny ether ETFs, and what could happen next

Jack Kubinec

Robinhood’s European crypto branch launched Solana staking.



The feature will offer roughly 5% APY at launch, though that could vary as staking rewards change, Robinhood Crypto general manager Johann Kerbrat told Blockworks in an interview.&nbsp;



This puts Robinhood Crypto a tick below Coinbase, which offers an estimated reward of 5.42% for Solana stakers. The Phantom wallet offers Solana staking with an APY as high as 7.58%.



The firm chose Solana for its first staking product because SOL’s one of the most popular tokens among its EU customers, and staking on <a href="https://blockworks.co/tag/solana">Solana</a> is simpler than on Ethereum, Kerbrat said.



Read more: <a href="https://blockworks.co/news/robinhood-trading-volume-february">Robinhood’s crypto trade volume rose 10% in February</a>



(Bitcoin is the most-held crypto among EU customers, <a href="https://blockworks.co/tag/robinhood">Robinhood</a> said in a press release.)



Kerbrat mentioned that the company was drawn to Solana’s shorter bonding period — the amount of time it takes before newly-staked assets begin earning yield. Solana’s bonding <a href="https://solana.com/staking#how-do-i-estimate-and-view-my-staking-rewards">period</a> is roughly two days, while Ethereum’s <a href="https://help.coinbase.com/en/prime/staking/unbonding">varies</a> from a few days to a few weeks.



When asked if Robinhood Crypto would add <a href="https://blockworks.co/tag/staking">staking</a> for additional assets — like Ethereum — in the future, Kerbrat said “we are definitely thinking about it,” but declined to go into specifics.&nbsp;



Robinhood Crypto launched in December as a crypto trading app in the European Union. The entity is registered and regulated in Lithuania, according to a Robinhood blog <a href="https://newsroom.aboutrobinhood.com/robinhood-launches-crypto-trading-in-the-eu/">post</a>. The company’s crypto arm noted that its app is highly downloaded by users in Poland, Italy and Lithuania.



Read more: <a href="https://blockworks.co/news/robinhood-eyes-eu-expansion">Robinhood looks to jumpstart crypto trading revenue via EU expansion</a>



Robinhood Crypto lists 33 tokens, as opposed to Robinhood’s US trading app, which only <a href="https://robinhood.com/us/en/support/articles/no-commission-crypto/">offers</a> 15 crypto assets — even fewer in New York and Texas.&nbsp;



SOL and Solana <a href="https://blockworks.co/tag/meme-coins">memecoins</a> including BONK and DogWifHat are available in the EU but not the US.



<a href="https://blockworks.co/news/robinhood-nixes-ada-matic-sol">Robinhood’s US arm delisted Solana</a> — among other cryptocurrencies alleged by the US Securities and Exchange Commission to be unregistered securities — in June of last year after the agency filed lawsuits against Coinbase and Binance.



Robinhood’s crypto efforts in <a href="https://blockworks.co/tag/europe">Europe</a> are perhaps overshadowed by the company receiving a Wells Notice from the US SEC for its crypto listings last week. 



Read more: <a href="https://blockworks.co/news/robinhood-wells-notice-sec">Robinhood discloses Wells notice over its crypto business</a>



Robinhood and Robinhood’s EU crypto branch are “completely separate entities with different business models and different structures, and so at this point, the business in Europe is completely isolated from what&#8217;s happening in the US,” Kerbrat said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Robinhood enables Solana staking for customers in Europe

Jeff Albus

Hiya!



Markets may be down slightly, but that’s not the main thing bumming me out today. Last night, I took a train all the way up to Queens just to see the Mets blow a 9th-inning lead. What even is a “Phillie?”



Anyways, let’s talk Solana.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">Pandora’s Box of L2s</h2>



Solana’s lack of layer-2s has long been a point of pride for some Solana supporters.&nbsp;



Rather than relying on a fragmented and expanding network of blockchains to scale à la Ethereum, why not just move to a blockchain fast and cheap enough to keep everyone in the same building?



But since fast things can always be faster, and cheap things cheaper, the layer-2 bug appears to be coming for Solana.&nbsp;



Zeta Markets announced a $5 million raise Tuesday, partially to build a DeFi layer-2 on Solana. Electric Capital led the round, which added to the $8.5 million Zeta Markets raised in a 2021 seed round led by Jump Capital.&nbsp;



Zeta Markets currently runs a regular derivatives DEX — the fifth-largest on Solana, <a href="https://defillama.com/protocols/Derivatives/Solana">according</a> to DefiLlama. By adding a layer-2 to the mix, it wants to make its DEX as fast as a CEX.



Zeta Markets founder Tristan Frizza told me that he’s always been a “monolithic chain maxi,” but when you’re letting traders take big leverage on derivatives, market makers want to see some really low latency.



“Solana does what, 400 millisecond block times? But these guys are used to like 10 milliseconds on Binance,” Frizza said.



Off-chain centralized exchanges can basically figure out the price of assets faster than decentralized exchanges, which are slowed down by the underlying blockchain’s throughput. In some cases, savvy arbitrageurs can exploit the momentary differences in price — <a href="https://blockworks.co/news/bell-curve-lvr-defi-liquidity-providers-unfair">to the detriment</a> of DEX liquidity providers.&nbsp;



So, there are justifiable reasons beyond snake oil sales for why Solana would want to build layer-2s. Still, it bears notice that Solana co-founder Anatoly Yakovenko — who invested in this Zeta Markets round — <a href="https://blockworks.co/news/lightspeed-yakovenko-layer-2-scaling">appeared on Lightspeed</a> in August asserting that having too many layer-2s can create massive composability and user experience problems. Other notable Solana ecosystem angel investors also took part in Zeta’s round.



Perhaps this signals that Solana’s thought leaders are softening toward rollups.&nbsp;



Zeta’s layer-2 is set to launch in the first quarter 2025, The Block <a href="https://www.theblock.co/post/294284/solana-dex-zeta-markets-token-funding-round">reported</a>. By then, I wouldn’t be surprised to see other Solana projects following suit.



— Jack Kubinec



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">Zero In</h2>



<figure class="wp-block-image"><img loading="lazy" decoding="async" width="1600" height="963" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png" alt="" class="wp-image-85890" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=434 434w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=364 364w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/image-3.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /></figure>



Solana&#8217;s fee generation looks to be rapidly closing the gap with Uniswap. Over the past year, Uniswap&#8217;s fees stand at $751.193 million, while Solana&#8217;s reach $185.173 million; that&#8217;s about $14.446 million and $3.562 million per week, respectively.&nbsp;



However, Solana&#8217;s fees have risen sharply over the past week to $10.078 million, nearly matching Uniswap&#8217;s $12.260 million. Interest in the Solana network continues to increase, thanks at least in part to Solana&#8217;s high network uptime, low transaction fees, and ever-increasing user adoption in the DeFi and NFT segments.&nbsp;



If this trend continues, Solana could soon surpass Uniswap in fee generation. This rise suggests growing network usage and transaction volume, which — while positive for Solana&#8217;s ecosystem — could also mean higher costs for users​.



— Jeffrey Albus



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">The Pulse</h2>



If you&#8217;ve ever spent time exploring Solanaland, you&#8217;ve probably come across the term OPOS — Only Possible on Solana. And while this may sound exaggerated to the uninitiated, it is true that certain innovations are indeed only achievable within the Solana ecosystem. Well, for the most part&#8230; kind of&#8230; at least for now.



The idea isn&#8217;t so much that other blockchains can&#8217;t do what Solana is capable of, full stop. It&#8217;s more that there are a lot of things that other chains just can&#8217;t do quite so well.&nbsp;



For instance, Solana&#8217;s state compression technology drastically reduces the cost of storing data on-chain. That makes large-scale transactions far more feasible, and is why projects like Drip Haus are able to affordably distribute millions of NFTs to users across the ecosystem. Other blockchains, which famously struggle with scalability and high fees, would have a tough time developing similar projects.



Projects like Hivemapper and Helium also benefit from Solana&#8217;s high throughput and low costs in support of their decentralized mapping and community-powered 5G services. This is yet another area where transaction speeds and costs hinder the practical implementation of such large-scale decentralized applications for most other chains.



But while Solana holds the advantage in these areas for now, there is little reason to believe it will stay that way forever. Competing networks are assuredly taking notes on what is and isn&#8217;t working across Web3, and may soon develop similar or even superior capabilities. So the question is: Will Solana be able to keep up with these challenges over the long term? Anything is possible.



— Jeffrey Albus



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">One Good DM</h2>



An excerpt of our chat with Sam Lehman, principal at Symbolic Capital:



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="550" height="628" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Screenshot-2024-05-14-at-11.48.57-AM.png" alt="" class="wp-image-85886" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Screenshot-2024-05-14-at-11.48.57-AM.png?w=550 550w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Screenshot-2024-05-14-at-11.48.57-AM.png?w=263 263w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Screenshot-2024-05-14-at-11.48.57-AM.png?w=225 225w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Screenshot-2024-05-14-at-11.48.57-AM.png?w=229 229w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Screenshot-2024-05-14-at-11.48.57-AM.png?w=192 192w, https://blockworks-co.imgix.net/wp-content/uploads/2024/05/Screenshot-2024-05-14-at-11.48.57-AM.png?w=70 70w" sizes="(max-width: 550px) 100vw, 550px" /></figure>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Lightspeed Newsletter: Solana caught the layer-2 bug

Macauley Peterson

On-chain social network infrastructure Lens is getting a new home.



The new Lens Network will build upon the work of the original Lens Protocol as one of zkSync’s ZK Stack hyperchains.



Lens Lab develops the protocol under the umbrella of Avara, which also built DeFi giant Aave.



But <a href="https://blockworks.co/news/aave-companies-rebrands-avara">Avara CEO Stani Kulechov</a> told Blockworks that the non-financial use cases of crypto — citing identity and online social interactions — have the potential to be even bigger.



“The way I think about finance and social [spaces] is that there are a lot of people who have financial capital, but everyone on the planet has social capital — the content we create, the relationships we create and the identities we interact with,” Kulechov said.



Read more: <a href="https://blockworks.co/news/web2-social-media-kinda-sucks">Web2 social media kinda sucks. So why aren’t people using Web3 platforms?</a>



The ZK Stack chain will serve as a “central hub” for Lens, which, according to a blog <a href="https://app.t2.world/article/clw6l2z0018727620mc1dq26xr2">post</a> released Tuesday, will “seamlessly integrate with other EVM and non-EVM blockchains.”



A testnet release of the new network is still months away. The current version of <a href="https://blockworks.co/tag/lens-protocol">Lens</a> has been operational on Polygon’s PoS chain since May 2022.



The modular, open-source ZK Stack framework, <a href="https://blockworks.co/news/zksyncs-evm-era-opens-to-the-public">based on the zkSync Era code</a>, will provide Lens with horizontal scaling, connecting as many Lens chains as needed by zk bridges, according to Matter Labs CEO Alex Gluchowski.



“You can add one billion users and you will not lose any of the properties of verifiability,” Gluchowski told Blockworks. “Every single transaction of those millions and billions of users will be verified by every single Ethereum validator — which is the magic of zk,” he said.



Lens pioneered on-chain social infrastructure, but was initially conceived and developed at a time when <a href="https://blockworks.co/tag/zero-knowledge-rollup">zk rollup</a> technology was still seen as years away from production at scale.



Read more: <a href="https://blockworks.co/news/zksync-launches-op-stack-rival">ZkSync launches rival to Optimism’s OP Stack</a>



“We want to build something that enables open and fair social spaces that anyone can participate on a network level, and because of the ownership aspect that also means you can own your social capital,” Kulechov explained.



That’s not possible with today’s social networks. User-created content is owned by the platforms, giving users limited ways to monetize without locking them in or relying on advertisers.



“We see Lens as the forebearer of Ethereum values when it comes to social,” Gluchowski said. “Lens is the only network that is actually making users the owners of their identities and their content. Everything is happening on-chain.”



Read more: <a href="https://blockworks.co/news/empire-newsletter-crypto-users">Empire Newsletter: Here’s where all the crypto users really are</a>



That’s in contrast to <a href="https://blockworks.co/tag/farcaster">Farcaster</a>, where posts and interactions are primarily off-chain, as are user profiles, although they are linked to an on-chain Ethereum address.



Mainstream <a href="https://blockworks.co/tag/web2">Web2</a> social options like Facebook are <a href="https://blockworks.co/news/web3-web2-interoperability-mistakes">centralized and silo user-generated content</a>.



“Our mission is to change the relationship to be more fair [and] give more ownership and power to the users. Hopefully that user choice creates more open social spaces where users can choose algorithms and experiences as well, and there’s more competition on the application level,” Kulechov said.



The parties did not disclose any financial terms related to the move, or a strategy to incentivize users to migrate to the new version.



“We haven’t had any thoughts on migration incentives,” Kulechov said, adding: “I think people will organically migrate from the existing structure into the Lens Net fork down the line.”



But Kulechov noted that the phased approach to the rollout would include inviting users to migrate during a testnet phase and then be upgraded into the mainnet when ready.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Lens Network to migrate to zkSync

Gísli Kristjánsson

A <a href="https://www.bloomberg.com/news/articles/2024-05-05/more-than-90-of-stablecoin-transactions-aren-t-real-study-finds">Bloomberg headline</a> recently claimed that &#8220;more than 90% of stablecoin transactions aren’t from real users,” sparking concern about the authenticity of transactions within the blockchain ecosystem.&nbsp;



This isn’t the first time that the digital assets industry has faced scrutiny about an apparent lack of authenticity in transactions. Last year, the SEC <a href="https://www.wsj.com/articles/some-binance-us-crypto-trading-was-a-mirage-the-sec-alleges-55a6e321?st=ruat3lr6wfei3rn&amp;reflink=desktopwebshare_permalink">accused</a> Binance.US of inflating trading volumes. Way back in 2019, a <a href="https://www.cnbc.com/2019/03/22/majority-of-bitcoin-trading-is-a-hoax-new-study-finds.html">study</a> by Bitwise found that 95% of spot bitcoin trading volume by unregulated exchanges was faked. Both findings have their detractors.



This isn’t the first moral panic around crypto’s legitimacy, and it won’t be the last.



However, a deeper dive into this “more than 90%” figure reveals a more nuanced narrative. A narrative, in fact, that oversells the fraudulent nature of crypto and severely undersells the transformative nature of blockchain technology.



The cited source for this headline, a collaboration between Allium and VISA, introduces a <a href="https://www.allium.so/post/visa-x-allium---making-sense-of-stablecoins">dashboard</a> that attempts to differentiate between &#8220;organic&#8221; stablecoin transactions initiated by end consumers and businesses versus transactions orchestrated by computer programs.&nbsp;



This differentiation, while well-intentioned, fails to grasp the unique execution model of blockchain technology.



Blockchain technology operates on a fundamentally different paradigm compared to traditional payment rails. At its core, blockchains are decentralized, immutable ledgers maintained by a network of nodes. Transactions on blockchains are executed through smart contracts, which are self-executing agreements with contract terms directly written into code.



Unlike centralized payment systems where transactions are initiated and validated by trusted intermediaries, blockchain transactions are triggered by external actions interacting with smart contracts. These actions can be programmatically executed by automated processes — commonly referred to as bots — without the need to extend any trust to the bots.



Read more from our opinion section: <a href="https://blockworks.co/news/cryptographer-expertise-web3">You’re still rolling your own crypto. You need to stop.</a>



Bots play a crucial role in facilitating efficient and secure transactions on blockchains. They serve various functions, from optimizing transaction fees to executing complex financial operations on behalf of users. They are not the equivalent of social media “bots” like those that now plague Elon Musk’s X.



With that in mind, let&#8217;s explore some practical examples of bot-initiated stablecoin transactions:



1. Gas payment services: With blockchain networks like Ethereum, users must pay gas fees to execute transactions. Paymasters are services that cover these gas fees on behalf of users, ensuring seamless transaction execution without requiring the user to own the underlying transactional token.



2. Recurring payments: Smart contracts can be programmed to execute recurring payments based on predefined conditions set by users. While authorized by users, the execution of these payments is automated through smart contract logic initiated by bots.



3. Coupon payments for tokenized bonds: In DeFi, tokenized bonds can automate coupon payments to bondholders through smart contracts, ensuring timely and transparent distribution of interest payments. Smart contracts are unable to initiate future coupon payments, so bots must be the initiators of the payments. Importantly, the bots are trustless in the sense that they never have custody of the funds being paid.



4. Intent-based trading: Users can express their trading intentions, e.g., swapping a token for a stablecoin, by providing a digital signature to a bot through user interfaces. Bots then leverage DEXs to identify the best trade routes and execute transactions on behalf of users, optimizing for efficiency and cost-effectiveness. The blockchain ensures that the bots are unable to do anything other than what was expressed by the user.



5. Rollups and layer-2 solutions: Scaling solutions like rollups enable off-chain transaction aggregation while settling final balances on the main blockchain. Bots can initiate transactions on these layer-2 solutions, streamlining transaction throughput and reducing costs.



<h2 class="wp-block-heading">No cause for alarm</h2>



The dominance of bot-initiated transactions in stablecoin flows is not a cause for alarm, but a testament to the disruptive capabilities of blockchains. It is a feature, not a bug.&nbsp;



Automation empowers developers to create sophisticated financial applications. For instance, imagine a future where flash loans are used for daily mortgage refinancing, facilitated entirely through automated smart contract execution initiated by bots. This level of automation reduces operational overhead and introduces unprecedented accessibility to financial services.



The dominance of bot-initiated stablecoin transactions is a sign of the maturation of blockchains into a robust infrastructure for automated financial interactions. Rather than viewing bots as a detractor of &#8220;real&#8221; transactions, we should celebrate their role in enhancing user experience and unlocking new use cases. Embracing automation on blockchains enhances efficiency and fosters innovation across diverse industries.&nbsp;



As we navigate the evolving landscape of blockchain-based payments, it&#8217;s essential to revisit our understanding of what constitutes a &#8220;real&#8221; transaction.



In traditional finance, payments are often equated with direct human interaction. However, blockchain&#8217;s execution model introduces a paradigm shift where transactions are initiated and executed through autonomous code.&nbsp;



That isn’t to say that fraudulent transactions don’t exist, or that trading volumes aren’t ever inflated — but a casual read-across from traditional finance to DeFi is rarely so easy.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Gísli Kristjánsson is co-founder and CTO of Monerium, the first company to issue fiat onchain. He fell in love with programming at the age of 13. After working as a bonds broker, Gísli saw the inefficiencies of securities settlements firsthand and recognized the potential of Bitcoin. Prior to co-founding Monerium in 2015, Gísli founded and sold a platform to give users access to geo-blocked content. Fun fact: Gísli’s Ethereum address is among the 1% of the oldest addresses.</div>


<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Stablecoins bots are a feature, not a bug

The upcoming US presidential election may spur bitcoin out of its current “consolidation phase,” according to Galaxy CEO Mike Novogratz.



Crypto will likely stay politicized until more Democrats pivot their anti-segment stance, he argued, meaning a change in administration could be significant for the space.



Novogratz said during a Tuesday earnings call that, following the approval of spot bitcoin ETFs and last month’s block reward halving, he believes bitcoin could keep trading between $55,000 and $75,000 in the near-term.&nbsp;



The price of bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) was at about $61,450 at 12:30 pm ET Tuesday.



“I think that’s probably where we are — certainly for this quarter and maybe next quarter — until either the Fed starts cutting rates because the economy finally slows or we get through the election.”



Read more: <a href="https://blockworks.co/news/macro-headwinds-bitcoin-summer">Macro headwinds could spur a ‘boring’ bitcoin summer — or something worse</a>



The 2024 presidential election is likely to bring clarity to the crypto regulatory landscape as the segment has increasingly been politicized. Joe Biden and Donald Trump are set to face-off in a rematch as they did four years ago.



Just last week, the Biden administration said in a statement that <a href="https://blockworks.co/news/biden-backing-gary-gensler-resolution">the president would veto a resolution</a> invalidating Securities and Exchange Commission’s Staff Accounting Bulletin (SAB) 121 if it reached his desk. The bulletin, introduced in 2022, says crypto custodians <a href="https://blockworks.co/news/sec-staff-call-for-crypto-entities-to-show-liability-on-balance-sheet">should report a liability and “corresponding assets”</a> on their balance sheets for all custodied cryptocurrencies.&nbsp;



“It just read to the crypto community as the Democrats saying no to crypto,” <a href="https://blockworks.co/tag/mike-novogratz">Novogratz</a> said of the Biden administration&#8217;s comments. “And it’s unfair; there are a ton of Democrats that are pro-crypto…but the power has been held by Elizabeth Warren on the Senate banking committee, [Gary] Gensler and a few others.”



The Galaxy CEO likened Democrats’ crypto opposition to party members bad-mouthing dogs.



“Can you imagine a party coming out and saying we don’t like dogs?” Novogratz said. “It’s just terrible politics, but that’s where we’re at.”&nbsp;



Forbes pegs the number of US dog owners at 65 million. There could be as many as 93 million crypto owners in America, according to recent <a href="https://www.security.org/digital-security/cryptocurrency-annual-consumer-report/">estimates</a> by Security.org.&nbsp;&nbsp;



Pair Biden’s veto possibility with Trump signaling he would be a pro-crypto president, and the differing attitudes become more highlighted. Trump invited Ryan Selkis, founder of crypto data platform Messari, to speak during an event last week at Mar-a-Lago.&nbsp;&nbsp;



“There was a shift in the Twitter space; there was a shift in people I spoke to saying, ‘Wow, Republicans good, Democrats bad,’” Novogratz said.



“I think that’s kind of dangerous thinking in that broadly, for our industry to thrive, you’re going to need bipartisan support,” he added. “Because you can’t go from one regime to the next and not know where you stand.”



Read more from our opinion section: <a href="https://blockworks.co/news/only-a-fool-would-vote-on-crypto-alone">Only a fool would vote on crypto alone</a>



After the House of Representatives approved the resolution to reverse SAB 121 in a 228-182 vote, it now moves onto the Senate. Along with across-the-board support from House Republicans, 21 Democrats backed it.&nbsp;&nbsp;



Novogratz said a prospective Senate vote would be the “first litmus test” on whether some Democrats would look to pivot their stance on crypto.&nbsp;&nbsp;&nbsp;



Though the House has passed several bills out of committee, like the<a href="https://blockworks.co/news/stablecoin-bill-bipartisan-support"> Clarity for Payment Stablecoins Act</a>, it has not held floor votes on them.&nbsp;



Sens. Cynthia Lummis,&nbsp; R-Wyom., and Kristen Gillibrand, D-N.Y., brought a <a href="https://www.congress.gov/bill/118th-congress/senate-bill/2281/all-actions">new</a> version of their Responsible Financial Innovation Act to the Senate floor last summer, but the bill has not progressed.



Read more: <a href="https://blockworks.co/news/crypto-bills-in-house-and-senate">Crypto bill update: What legislation is making its way forward?&nbsp;</a>



“We’re in an election year, and you’re having a hard time getting Dems and Republicans to do much together,” Novogratz said. “While, for us, this is unbelievably important…broadly it just doesn’t rise to the level of [being] important enough for the mass of Congress to care enough about.”&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Bitcoin may stay in a ‘consolidation phase’ until US election: Novogratz

Casey Wagner

As the 2024 election looms, crypto-focused legislation is starting to make its way through the US House. But roadblocks in the Senate still loom.&nbsp;



House members last week approved joint resolution 109 — which would invalidate the Securities and Exchange Commission’s Staff Accounting Bulletin (SAB) 121 — in a 228-182 vote. It’s the first time a crypto bill has made it to and passed the House in a floor vote.&nbsp;



The resolution now moves on to the Senate, where the Democrat majority makes it unlikely to pass, although there were 21 Democrats who voted against their party and in favor of the resolution in the House. If the legislation does make it past the Senate, however, the Biden administration has said the president will veto the resolution.&nbsp;



Read more: <a href="https://blockworks.co/news/biden-backing-gary-gensler-resolution">Biden backs Gensler as House advances resolution to power-check SEC&nbsp;</a>



​​“Limiting the <a href="https://blockworks.co/tag/sec">SEC</a>’s ability to maintain a comprehensive and effective financial regulatory framework for crypto assets would introduce substantial financial instability and market uncertainty,” the White House wrote in a <a href="https://www.whitehouse.gov/wp-content/uploads/2024/05/SAP-HJRes109.pdf">statement</a> last week.&nbsp;



The House has passed several crypto bills out of Committee, but has failed to bring the vast majority of them to the floor for a full vote. The <a href="https://blockworks.co/news/republicans-landmark-crypto-bill-clears-2-house-committees">Blockchain Regulatory Certainty Act</a>, the <a href="https://blockworks.co/news/stablecoin-bill-bipartisan-support">Clarity for Payment Stablecoins Act</a>, the Keep Your Coins <a href="https://www.congress.gov/bill/118th-congress/house-bill/4841/text">Act</a> and the Financial Technology Protection <a href="https://www.congress.gov/bill/118th-congress/house-bill/2969/text">Act</a> all survived markup, but have not been scheduled for a full vote.&nbsp;



The Financial Innovation and Technology for the 21st Century Act, known as the FIT act, last week advanced to the House Committee on Rules. It should be <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409251">heading</a> for a floor vote later this month, House Financial Services Committee Chairman Patrick McHenry, R-N.C., said.&nbsp;&nbsp;



In the <a href="https://blockworks.co/tag/senate">Senate</a>, crypto-related bills, even those with bipartisan support, have yet to grab the interest of committee heads, who would need to add markups to their respective agendas.&nbsp;



The Digital Asset Anti-Money Laundering Act, backed by Elizabeth Warren, D-Mass., Roger Marshall, R-Kan., Joe Manchin, D-W.V., and Lindsey Graham, R-S.C., has been the topic of several Senate Banking Committee hearings, but has not been voted on or marked up.&nbsp;



“At the end of the day, <a href="https://blockworks.co/tag/elizabeth-warren">Elizabeth Warren</a> has a lot of power right now in the Biden administration, she&#8217;s got a lot of influence over who the appointees are,” Blockchain Association CEO Kristin Smith said last month at a Brown Rudnick event in New York. “But she hasn&#8217;t always been influential in actually getting legislation passed.”&nbsp;



Longtime collaborators Sens. Cynthia Lummis,&nbsp; R-Wyom., and Kristen Gillibrand, D-N.Y., last summer brought a <a href="https://www.congress.gov/bill/118th-congress/senate-bill/2281/all-actions">revamped</a> version of their Responsible Financial Innovation Act to the Senate floor, but the bill has not progressed.&nbsp;



The Senate received joint resolution 109 last week but has not yet scheduled a date to vote. Both the Senate and House are scheduled to recess on May 24 until June 3.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Crypto bill update: What legislation is making its way forward? 

<a href="https://trondao.org/">TRON DAO</a> today announced that Google Cloud has joined its roster of Super Representative candidates on the TRON blockchain. <a href="https://tronscan.org/#/sr/representatives">Super Representatives</a> are responsible for producing blocks and packing transactions to help ensure blockchain governance on the TRON network.&nbsp;



This initiative builds on TRON’s collaboration with Google Cloud to make its data <a href="https://console.cloud.google.com/marketplace/product/bigquery-public-data/blockchain-analytics-tron-mainnet-us?hl=en-GB">available</a> on BigQuery, Google Cloud’s fully-managed, serverless data warehouse. Having TRON data on BigQuery equips developers with advanced analytics to dissect blockchain transactions and smart contract intricacies on the TRON network. 



It not only streamlines in-depth analysis for data-driven decision-making but also paves the way for more sophisticated decentralized applications (dapps). The scalability and cost-efficiency of BigQuery bolsters the TRON ecosystem, aligning with its vision of an accessible decentralized internet. 



TRON will also be using Google Cloud’s suite of solutions that empower the Web3 space including Compute Engine for scalable computing resources and Kubernetes Engine for managing containerized applications.



Dave Uhriyniak, Ecosystem Lead at the TRON DAO, expressed enthusiasm about this collaboration: &#8220;The initiative with Google Cloud represents a significant&nbsp; step for TRON DAO in our journey towards decentralizing the web and making blockchain technology more mainstream. Google Cloud&#8217;s becoming a Super Representative candidate underscores our shared vision for a secure, innovative, and decentralized future.&#8221;



“At Google Cloud, we’re committed to making it easy for developers to build Web3 products on our efficient, secure, and reliable infrastructure. We look forward to providing this infrastructure for the TRON ecosystem,” said Rishi Ramchandani, Head of APAC Web3, Google Cloud.



With its high-performance blockchain that supports smart contracts, dApps, and a wide array of digital assets, TRON facilitates fast, low-cost transactions, making it an attractive platform for developers and users alike.



This content is sponsored by TRON and does not serve as an endorsement by Blockworks. The veracity of this content has not been verified and should not serve as financial advice. We encourage readers to conduct their own research before making financial decisions.  



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

TRON DAO adds Google Cloud as a Super Representative candidate on the TRON blockchain

Degen chain, a layer-3 blockchain, hasn’t produced a block in over 42 hours. 



According to the last post on Degen’s X account, a resync was expected to be completed at around 9 am ET, or 6 am PT. Yet hours later, the network remains stalled.&nbsp;



“Post-resync, they&#8217;ll test the chain to ensure all data affected by the reorganization is restored. We apologize for the downtime,” the last post — which went up earlier Tuesday — <a href="https://twitter.com/degentokenbase/status/1790267562137153780">said</a>.



Degen’s chain explorer <a href="https://explorer.degen.tips/">shows</a> that no transactions have happened today, and that the last transaction took place two days ago.



Third-party infrastructure provider Conduit’s last post is nearly 24 hours old.&nbsp;



Read more: <a href="https://blockworks.co/news/community-focused-layer-3-degen-chain">What is Degen chain? The L3 built for the memecoin community Degen</a>



“After a custom config change on Friday at [2 pm ET] 11 am PT, two Conduit chains, Degen and Proof of Play’s Apex, stopped posting batches for more than 24 hours. Upon resuming, the first batches triggered reorgs on both chains,” Conduit <a href="https://twitter.com/conduitxyz/status/1790065376975552549">said</a>.



“We’re working with both teams and Offchain Labs to restore service and minimize impact to users,” the post continued.



As previously reported by Blockworks, Degen chain was designed to let developers access the <a href="https://blockworks.co/tag/meme-coins">memecoin</a> community, and has become especially popular with <a href="https://blockworks.co/tag/farcaster">Farcaster</a> users.



“Degen, an ERC-20 token launched in January 2024, has reshaped the Farcaster ecosystem by enabling Casters to reward others with Degen for posting quality content,” Degen’s site <a href="https://www.degen.tips/">said</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

L3 Degen chain stopped producing blocks 42 hours ago

The state of Wisconsin’s investment board disclosed holdings in BlackRock’s bitcoin ETF on Tuesday.&nbsp;



The 13F filing with the Securities and Exchange Commission shows that the board bought $99 million, or roughly 2.4 million shares, of IBIT. The <a href="https://www.sec.gov/Archives/edgar/data/854157/000106299324010116/xslForm13F_X02/form13fInfoTable.xml">filing</a> also revealed that the board holds roughly one million shares of Grayscale’s bitcoin ETF. 



According to its website, the agency is an investment organization that manages the Wisconsin Retirement System and the State Investment Funds alongside some smaller funds.



“SWIB has been successful in generating respectable returns and maintaining the trust of the beneficiaries and stakeholders of the funds we oversee,” the site said.&nbsp;



SWIB declined to comment on the holdings in the disclosure. 



Investment managers are required to disclose their holdings in 13F forms if they manage $100 million or more. The filings show what firms bought and held through the last quarter.&nbsp;



Read more: <a href="https://blockworks.co/news/13f-filings-institutional-appetite-bitcoin-etfs">What 13F filings tell us about institutional appetite for bitcoin ETFs</a>



Blockworks previously reported that BNY Mellon as well as BNP Paribas disclosed holdings, though both banks owned far less shares in comparison to Wisconsin’s disclosure on Tuesday.&nbsp;



Paribas disclosed roughly 1,000 shares, and BNY Mellon had 20,000 shares of IBIT and 7,000 shares of Grayscale.&nbsp;



Other investment managers have disclosed much larger holdings. Quattro Advisors, a Pittsburgh-based registered investment manager, disclosed 468,000 shares of IBIT, for example.&nbsp;



On Monday, Wolverine Asset Management <a href="https://twitter.com/MacroScope17/status/1790070606748131651">reported</a> that it owned 874,000 shares of Fidelity’s bitcoin ETF. So far, that’s the largest Fidelity position that’s been disclosed.&nbsp;



Investment managers have until mid-May to file their 13Fs. 



Updated May 14, 2024 at 3:05 pm ET: Noted that SWIB declined to comment, updated number of Grayscale shares.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

State of Wisconsin’s investment board discloses nearly $100M of BlackRock’s bitcoin ETF

A Dutch court found Tornado Cash developer Alexey Pertsev guilty on Tuesday, sentencing him to 64 months in prison.&nbsp;



Pertsev was accused of laundering $1.2 billion of crypto through Tornado Cash, per an <a href="https://www.coindesk.com/policy/2024/03/20/tornado-cash-dev-pertsevs-12b-money-laundering-allegations-detailed-ahead-of-dutch-trial/?_gl=1*wxsxj6*_up*MQ..*_ga*MTI0NjQxOTk0LjE3MTU2OTEzNjA.*_ga_VM3STRYVN8*MTcxNTY5NDA5OC4yLjEuMTcxNTY5NDEwMi4wLjAuMTg1MjMzMTU4MA..">indictment</a> earlier this year. He stood trial back in March.&nbsp;



“The court concludes that the suspect consciously accepted the significant chance that the charged Ether resulting from a crime was deposited in [crypto system], as a result of which he was guilty of laundering it,” a translated version of the <a href="https://www.coindesk.com/policy/2024/03/20/tornado-cash-dev-pertsevs-12b-money-laundering-allegations-detailed-ahead-of-dutch-trial/?_gl=1*wxsxj6*_up*MQ..*_ga*MTI0NjQxOTk0LjE3MTU2OTEzNjA.*_ga_VM3STRYVN8*MTcxNTY5NDA5OC4yLjEuMTcxNTY5NDEwMi4wLjAuMTg1MjMzMTU4MA..">ruling</a> said.&nbsp;



“In view of all this, the court was of the opinion that it was foreseeable from the start that Ether resulting from crime would be deposited in [crypto system] due to the concealing effect of [crypto system]. This has actually happened frequently and to a large extent. Concealment has de facto always been a core activity of [crypto system],” the ruling continued.



Read more: <a href="https://blockworks.co/news/empire-newsletter-doj-wallet-developers">The DOJ’s about-face on money transmitters</a>



Pertsev’s conviction comes as the US also looks to crack down on <a href="https://blockworks.co/tag/tornado-cash">Tornado Cash</a>. Government officials sanctioned Tornado Cash in 2022, and last year, the <a href="https://blockworks.co/news/roman-semenov-tornado-cash-ofac-list">US publicly targeted two co-founders</a> of Tornado Cash — Roman Storm and Roman Semenov — and charged them with money laundering and sanctions violations. Storm was arrested, though Semenov remains at large.&nbsp;



Semenov’s known email addresses and Ethereum wallet addresses were <a href="https://blockworks.co/news/us-treasury-bans-citizens-from-using-mixing-service-tornado-cash">added to OFAC’s list </a>last August.



Read more from our opinion section: <a href="https://blockworks.co/news/tornado-cash-privacy-prevention">Tornado Cash got wrecked, and we could have prevented it</a>



Storm is expected to face a trial in the US later this year. CoinCenter’s head of research Peter Van Valkenburgh said that the outcome shouldn’t impact Storm’s trial later this year.&nbsp;



<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">My preliminary thoughts on the Pertsev verdict in this thread. I&#39;m sad for Alexey and angry that the money laundering laws in the Netherlands have such a low threshold for intent, essentially mere negligence. Nothing in this ruling should prejudice or carry weight in Roman… <a href="https://t.co/t8ilOSeeCZ">https://t.co/t8ilOSeeCZ</a>&mdash; Peter Van Valkenburgh (@valkenburgh) <a href="https://twitter.com/valkenburgh/status/1790379572686442713?ref_src=twsrc%5Etfw">May 14, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Some of this would be highly questionable under US constitutional law. Unlike in the SDNY case that focuses primarily on ongoing activities of the defendants, the Dutch ruling seems to come straight out and say that you can be criminally responsible merely for inventing a crypto system,” Van Valkenburgh <a href="https://twitter.com/valkenburgh/status/1790368771531538798">said</a> in a post on X.&nbsp;



Van Valkenburgh penned a note earlier this month on how the Department of Justice had turned its nose to previous guidance from the Treasury Department’s FinCEN on money transmitters, according to legal documents filed in the case against the Tornado Cash developers and also its <a href="https://blockworks.co/news/empire-newsletter-doj-targets-crypto-mixers">case against Samourai Wallet</a>.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Alexey Pertsev found guilty of money laundering, faces 64 months in prison

David Canellis

Michael McSweeney

<h2 class="wp-block-heading">Memecoins show the way</h2>



What are brand-new projects to do in such a topsy-turvy market, one that’s either <a href="https://cointelegraph.com/news/altseason-is-coming-or-at-least-data-suggests-that-its-close">teetering</a> on the brink of altcoin season or about to veer off into another crypto <a href="https://www.coindesk.com/consensus-magazine/2024/03/28/is-this-the-end-of-bitcoins-4-year-bullbear-market-cycle/">winter</a>?



It’s been about seven months since a fake news tweet from Cointelegraph pushed crypto into overdrive. The market is clearly still confused.



The salacious tweet — which reported that the SEC had approved spot bitcoin ETFs for US markets — confirmed a major bitcoin rally that had been brewing all through 2023.



Bitcoin surged by two-thirds in the months between the post and <a href="https://blockworks.co/news/sec-approves-bitcoin-etf">official SEC approval</a> in early January, and then by another 80% after the fact.



Crypto has since been outright messy. Memecoin, DePIN and computing marketplace projects have pumped, privacy coins have dumped, and ETH is <a href="https://blockworks.co/news/ether-etf-approval-unlikely-soon">stuck in no-man’s land</a> awaiting approval of its own spot ETFs a la BlackRock’s IBIT.



As Jason touches on in today’s <a href="https://open.spotify.com/episode/2ed8B3wRHkHndO6AKVIIJp">Empire podcast</a> episode, creative ways of issuing new tokens have emerged between this cycle and the last.&nbsp;



Startups and protocol stewards commonly run private token sales in funding rounds with venture capitalists — which apparently don’t piss off the SEC — before airdropping slices of the circulating supply to users and other early adopters (read: those pesky airdrop farmers).



No ICO means no SEC lawsuits, the thinking goes, while the supply ends up with folks who actively use the protocols they power. Seems like a win-win.



A byproduct of this New Style of doing crypto business is that token supplies are often drip-dropped into the market over a number of years. It’s now relatively routine for tokens to launch with less than 25% of the supply circulating — and in some cases much less.&nbsp;



The rest is kept by the team, early backers and other insiders to fund development, marketing and, eventually, provide ROI. What results is a number of low-float tokens with massively high fully-diluted valuations compared to their actual market caps, a blueprint largely perfected by Sam Bankman-Fried and Alameda Research with Serum and other “<a href="https://blockworks.co/news/sbf-altcoins-market-rally">Sam Coins</a>.”



It all begs the question of whether there’s any correlation between price performance and low-float supply dynamics.&nbsp;



There are individual cases: dYdX, for instance, had only 18% of the supply circulating when Cointelegraph’s fake news tweet confirmed the bitcoin bull market and has since released an additional 34% of the supply. dYdX’s price against bitcoin has collapsed by more than half in that time.&nbsp;



The airdropped Starknet token is another — it only has 7.3% circulating supply and its bitcoin ratio has also halved.



But after analyzing the current top 100 cryptocurrencies by market cap, as well as another two dozen or so tokens featured in the top 100 just before the bitcoin bull run really kicked off, broader correlation is harder to find.



Tokens at the top of the chart have high floats. Tokens to the right of the dotted line have beaten bitcoin. Brighter circles have increased their supplies more than darker ones. And larger circles have grown bigger market caps.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/nRc4hUAPOGTq59RH0UB8NOFr58wCM8QcpPFOICA4hRdI9wKz7n_Xi2DWaVLqG0zyFO3RiM36fGvtQqHPdTkGaSewMJKVCdt3V1YZ4QXyZrHX3BjKCR_YfLDSiRtc0qGAL-bAWTJdu6L5x2PATQVfznA" alt=""/><figcaption class="wp-element-caption">The cluster in the top left shows even the highest-float tokens have found it hard to beat bitcoin</figcaption></figure>



After removing a few outliers, about 40% of the top end of the market have outperformed bitcoin since October. At that time, the median circulating supply for tokens that have gone onto beat bitcoin was 70%. For underperformers, it was 79%. Not exactly a huge difference. Low float cryptocurrencies generally did as well as high floats.



Then, the median performance against bitcoin for tokens with circulating supplies of 80% or more was minus 21%. So, high-float tokens appear just as susceptible to losing significant ground as low-floats.



Even projects with some of the lowest floats — 19 tokens with under 25% of the supply circulating — on average have beaten BTC by 25%, while the median was almost 1% ahead.



But for standout performers, there does appear to be a link. Bitcoin ratios of nearly a dozen top cryptocurrencies have more than tripled since October. Their median circulating supply was 94% before the rally.



All those stars were memecoins and DePIN projects, which aside from Bittensor, all had a large majority of their supplies already circulating.&nbsp;



A great irony of crypto in 2024 is that perhaps, it’s time to treat <a href="https://blockworks.co/tag/meme-coins">memecoin</a> launches as the new standard moving forward.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/_zapj7HgDJOmNugHMiuF7M4ksxPS1R1lljG7zGynT5gpIg-QrL0ur5-IxQJa975PTtbwr4nydf1lNtWEeZu7rO-pLtYyftXyb3lBlo65yEpCTtIuAurHRu3iglMkODcs53joRZmz0GGZb1Ol2wHXfrU" alt=""/><figcaption class="wp-element-caption">And of course, WIF blows them all out of the water</figcaption></figure>



— David Canellis



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>Solana (a layer-1) and Uniswap (a DEX) are neck-and-neck for fees <a href="https://tokenterminal.com/terminal/metrics/fees">generated</a> in the past seven days — both $10 million.</li>



<li>Ethereum only has 174 validators waiting in the queue, down from more than 22,000 this time last month. Active <a href="https://www.validatorqueue.com/">validators</a> were at an all-time high yesterday: 1,014,915.</li>



<li>Bitcoin <a href="https://dune.com/cryptokoryo/runes">transactions</a> are more than 80% standard BTC transfers, plugging the gap left by lower interest in Runes and Ordinals.</li>



<li>Pepe’s leading the memestocks, gaining 18% over the past 24 hours, <a href="https://www.coingecko.com/en/crypto-gainers-losers?top=100">according</a> to CoinGecko.</li>



<li>GameStop’s stock is above $65 in premarket trading, on pace to shatter its 52-week high of $38.</li>
</ul>



<h2 class="wp-block-heading">Deja vu</h2>



He’s back.&nbsp;



I am, of course, talking about the man, the myth, the legend: Roaring Kitty.&nbsp;



The return of Keith Gill, the man behind the powerful online persona, sent memestocks and memecoins soaring on Monday.&nbsp;



We were left asking one big question: Is history repeating itself? The answer is…maybe?&nbsp;



We’re nowhere near the 2021 memestock mania, when GameStop’s stock rose to new heights. And it’s not just the retail investors who benefited from the memestock focus either back then or right now.&nbsp;



Pepe, Dogecoin, FLOKI, Dogwifhat and, of course, some random GME-themed memecoins (with no affiliation with the company) gained after Roaring Kitty posted a video suggesting his return.



That’s not even mentioning that GameStop’s market cap is back over $9 billion, or that the stock closed up 74% on Monday. AMC, another memestock favorite, closed up 78%.



A number of factors made 2021 unique. I’m not saying it’s impossible in this cycle, but the threads may be more similar instead of the exact same.



Memecoins dominate today’s market narrative, whereas 2021 saw NFTs booming —&nbsp;nowadays, not so much.&nbsp;



There are macro differences, too. Zooming out of crypto, interest rates are sky high with the Federal Reserve holding on to the 5.25%-and-5.50% range since the summer of 2023. Inflation still runs rampant. Retail investors simply aren’t seeing the same economic environment, not to mention the pandemic that was still a thing in 2021.&nbsp;



Back then, interest rates were so low that millennials could actually afford to buy houses.



The point is: We’re not coming out of lockdown, and we’re seeing crypto bounce back with some weakness after a rough bear market. Of course, that’s not going to stop folks who want to jump into either the memestocks or memecoins. But the conditions don’t look to be ripe enough for a repeat.&nbsp;



Just remember: Diamond hands may be forever, but these cycles tend to have a short — and volatile — lifespan.



— Katherine Ross



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>Tornado Cash developer Alexey Pertsev was <a href="https://twitter.com/KoosCouvee/status/1790346985733505040">found guilty</a> of money laundering by a Dutch court this morning.&nbsp;</li>



<li>A new crypto-focused political action committee <a href="https://blockworks.co/news/stand-with-crypto-pac-us-elections">launched</a>, according to Blockworks’ Casey Wagner.&nbsp;</li>



<li>A bitcoin mining company said to have ties to China was <a href="https://www.cnbc.com/2024/05/14/us-orders-chinese-backed-crypto-miner-to-sell-land-near-military-base.html">ordered</a> by the US government to divest land holdings near a nuclear missile base, according to CNBC.&nbsp;</li>



<li>Crypto prime brokerage Falcon Labs <a href="https://www.cftc.gov/PressRoom/PressReleases/8909-24?utm_source=govdelivery">settled</a> with the CFTC for $1.7 million. The regulator said Falcon Labs failed to register as a futures commission merchant.&nbsp;</li>



<li>OpenAI <a href="https://www.cnn.com/2024/05/13/tech/openai-altman-new-ai-model-gpt-4o/index.html">released</a> a new, upgraded AI model called ChatGPT-4o, according to CNN.&nbsp;</li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



Here’s an interesting find: Speculators on the prediction market Polymarket seem to be giving US President Joe Biden similar chances at victory than challenger Donald Trump in a new, major national poll.&nbsp;



On <a href="https://polymarket.com/event/presidential-election-winner-2024?tid=1715684883221">Polymarket</a> right now —&nbsp;in a market that has earned more than $125 million worth of bets —&nbsp;Trump leads Biden 49% to 44%. Robert F. Kennedy Jr., meanwhile, pulls a mere 3% — one percentage point less than Michelle Obama, wife of former president Barack Obama.



Read more: <a href="https://blockworks.co/news/stand-with-crypto-pac-us-elections">Stand With Crypto PAC launches as industry interest in campaign funding ramps up&nbsp;</a>



Let’s look at the new New York Times poll from this week.



Trump leads in an array of battleground states, per the Times/Siena College/Philadelphia Inquirer <a href="https://www.nytimes.com/2024/05/13/us/politics/biden-trump-battleground-poll.html">poll</a>. In two of those states, Trump pulls 49% to Biden’s 42%. Biden fares best in Wisconsin, pulling 47% to Trump’s 45%.&nbsp;



Interestingly, RFK Jr. polled around 10% in each of the battleground states —&nbsp;a marker of strength for the independent candidate and much stronger than what the folks on Polymarket are saying.&nbsp;



The polls and prediction market aren’t moving in tandem, but at some points, they rhyme. To be sure, the crypto-powered Polymarket has been giving Trump strong chances for months. But it’s a fascinating lens for a major political matchup —&nbsp;I’ll be watching as the bets continue to develop. Stay tuned.&nbsp;



— Michael McSweeney



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Baby Doge CoinBABYDOGE

market data

Baby Doge Coin Stats

What is the market cap of Baby Doge Coin?

What is the current trading activity of Baby Doge Coin?

What is the current price of Baby Doge Coin?

How many Baby Doge Coin are there?

What is the relative popularity of Baby Doge Coin?

latest Baby Doge Coin news