BOSagora

Ben Strack

Many crypto ETFs proposed in the US don’t make it to launch.



The SEC has for years blocked planned ETFs that would invest in bitcoin directly, and some industry watchers have said they don’t expect the regulator to allow one anytime soon.&nbsp;



Though <a href="https://blockworks.co/news/21shares-ark-invest-spot-bitcoin-etf">the quest for spot bitcoin ETFs continues</a>, firms have resorted to offering funds holding the equities of crypto- and blockchain-related companies, or bitcoin futures contracts.&nbsp;



Three crypto-related ETFs — the Valkyrie Bitcoin Miners ETF (WGMI), the VanEck Digital Transformation ETF (DAPP) and the Bitwise Crypto Industry Innovators ETF (BITQ) — have year-to-date returns of more than 100% as of Friday, putting them among the top 10 highest performers for all ETFs, according to <a href="https://etfdb.com/compare/highest-ytd-returns/">data</a> from ETF Database.



The largest blockchain ETF, Amplify’s Transformational Data Sharing ETF (BLOK), has returned roughly 30% so far in 2023 — performance that ranks 59th best.



But those are products already trading. In the absence of spot bitcoin ETFs, fund groups continue to innovate new strategies.&nbsp;



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<blockquote class="twitter-tweet" data-width="550" data-dnt="true">All the Ethereum futures ETFs are withdrawn or at least will be withdrawn. But its still astounding how many times people have tried to launch a <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> or Crypto fund in the US. Most have been denied. I have at least 69 on this list and i&#39;ve likely missed some. <a href="https://t.co/jM4fMKtQkM">pic.twitter.com/jM4fMKtQkM</a>&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1660616748700438534?ref_src=twsrc%5Etfw">May 22, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<h2>Leveraged bitcoin futures ETFs</h2>



Several leveraged bitcoin futures funds are currently being considered for launch, though their fates remain uncertain.



Volatility Shares plans to launch its 2x Bitcoin Strategy ETF (<a href="https://www.sec.gov/Archives/edgar/data/1884021/000138713123004119/btix-485apos_032323.htm">BITX</a>) on June 13, the company said in a Tuesday statement. The firm declined to comment further.&nbsp;&nbsp;



Though <a href="https://blockworks.co/news/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading">the first bitcoin futures ETFs</a> launched in October 2021, BITX looks to be the first US-based ETF to offer leveraged long exposure to the cryptocurrency futures market, according to the company.



The proposed fund seeks investment results that correspond to two times the excess return of the S&amp;P CME Bitcoin Futures Daily Roll Index for a single day.



Other issuers have filed for similar funds.&nbsp;



ProShares, which was first to market with a bitcoin futures ETF, <a href="https://www.sec.gov/Archives/edgar/data/1174610/000168386323003137/f25145d1.htm">filed</a> for its Ultra Bitcoin Strategy ETF on April 6 — about a week after Volatility Shares’ filing.&nbsp;



“As a matter of policy, we don&#8217;t comment on regulatory matters,” a ProShares spokesperson told Blockworks.



Fund group Direxion followed suit by <a href="https://www.sec.gov/Archives/edgar/data/1424958/000119312523097969/d484465d485apos.htm">filing</a> for its Daily Bitcoin Strategy Bull 2X Shares on April 11. Valkyrie more recently revealed <a href="https://www.sec.gov/Archives/edgar/data/1877493/000138713123006574/valkyrie-485apos_051523.htm">plans</a> on May 15 to launch a Bitcoin Futures Leveraged Strategy ETF.



Valkyrie had filed for a fund in October 2021 that would have provided 1.25x exposure to the bitcoin reference rate and hold futures, swaps, options and forwards. It <a href="https://blockworks.co/news/valkyrie-pulls-leveraged-etf-application-at-secs-request">withdrew the application</a> a few days later. A source familiar with the matter told Blockworks at the time that the SEC had asked Valkyrie to pull the filing. &nbsp;&nbsp;&nbsp;



A Valkyrie spokesperson declined to comment on its Bitcoin Futures Leveraged Strategy ETF filing.&nbsp;&nbsp;



Dave Nadig, a financial futurist at data firm VettaFi, said he expects <a href="https://blockworks.co/news/grayscale-appears-to-win-opening-sec">the SEC to lose its case against Grayscale Investments</a>. He believes that this could spur the securities regulator to halt all US-listed crypto futures products. Some have said they expect a decision in that case during the third quarter of this year.



He added that he is “unconvinced” the proposed leveraged bitcoin futures ETFs will ever make it to launch.&nbsp;



“If in fact they do, I suspect they’ll be short lived and only used in the most narrow of retail use cases,” Nadig told Blockworks.



<h2>Other proposed funds&nbsp;&nbsp;</h2>



NEOS, a firm focused on options-based income ETFs, <a href="https://www.sec.gov/Archives/edgar/data/1848758/000138713123006484/neos-485apos_051223.htm">filed</a> earlier this month to launch a Bitcoin High Income ETF and a Bitcoin Quantitative Trend ETF.&nbsp;



The actively managed High Income ETF would employ a bitcoin futures call options strategy, while the other seeks to “capture the positive momentum of the price of Bitcoin while aiming to minimize downside risk through the use of cash and cash alternative products.”&nbsp;



The latter ETF would hold bitcoin futures contracts, US government securities and money market funds, as well as short duration fixed income and cash alternative ETFs.



NEOS proposed that these funds become effective 60 days after filing in mid-May.



The same week as NEOS’s filings, <a href="https://blockworks.co/news/grayscale-angling-for-crypto-etfs">Grayscale filed for</a> a Global Bitcoin Composite ETF — a fund that would hold ETPs backed by physical bitcoin, as well as bitcoin mining companies. A separate Grayscale Privacy ETF would invest in companies developing blockchain-based privacy solutions.



The crypto-focused asset manager had also shared plans to launch an ether futures ETF before <a href="https://blockworks.co/news/grayscale-pulls-eth-etf-filing">amending its filing to exclude that proposal</a>. Bitwise, Direxion and Valkyrie withdrew their applications for similar funds, as <a href="https://blockworks.co/news/sec-ether-futures-etfs">sources told Blockworks</a> the SEC had asked the firms to do so.&nbsp;&nbsp;&nbsp;



Lara Crigger, VettaFi’s editor-in-chief, previously told Blockworks she didn’t expect the SEC to allow the Global Bitcoin Composite ETF, noting the Privacy ETF has a better chance of launching.&nbsp;



Bloomberg Intelligence analyst James Seyffart said in a tweet earlier this month he believes the SEC would have to approve the Global Bitcoin Composite ETF after permitting bitcoin futures ETFs — due to that market being federally regulated.



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The Crypto-related ETFs Vying to Launch This Year

José Bernardes

Dan Yamamura

In recent years, with the alluring promise that always comes with new technology, blockchain apps grew exponentially.



But over time, the exponential growth slowed — the pseudo-traction of this new tech paradigm was merely venture capital-subsidized user acquisition.



While true innovation has occurred on the data, network and consensus layer, the markets’&nbsp; irrational exuberance hid what is necessary for organic growth and value creation for blockchain’s application layer.



And now, as more limitations have surfaced, the user aquisition challenges have become more apparent.&nbsp;



Decentralized applications, or dapps, have been focusing on the wrong clients all along, and entrepreneurs worldwide are more than ready for real-world use cases.&nbsp;



The real potential lies in a country that has already managed to popularize blockchain technology for both institutional, regulatory and retail customers: Brazil.&nbsp;



<h2>The land of opportunity</h2>



The good news is that <a href="https://blockworks.co/tag/brazil">Brazil</a> has always had problems.&nbsp;



Brazilians need crypto to solve these problems, and this demand has been made clear by both institutions and retail users.



While the United States SEC is under fire for its lack of transparency in crypto regulation, Brazil&#8217;s CVM has already created transparent guidelines for players in the region. While the US Federal Reserve has no true guidelines on CBDCs, the Brazilian central bank is implementing real use-cases with incumbent banks. While America weeps with 5.0% interest and inflation, Brazil has been accustomed to double digit interest rates and inflation (for decades).&nbsp;



The entrepreneurs outside of Brazil have mostly focused on infrastructure, but few know how to then create cash-flow generating businesses. While the rest of the world is focusing on the wrong problems, spending energy on layer-2 wars, ZK rollups and MEV, Brazilians have focused solely on applications.&nbsp;



In Brazil, blockchain applications are needed to solve Brazil’s real problems: inflation, lack of credit, unequal access to financial products. The latter carries more weight and deserves consideration.



Even though 85% of Brazil’s population is banked, only 45% have access to credit, and only 3% of the population invests in the stock market. Incumbent banks cannot profit from “low-income” populations, as they are operationally too expensive to keep up with. What do they do to insert the rest of the population in the banking system? Charge 300%+ on credit products, deny any credit to low-tier clients, or simply ignore them. Not enough access and transparency has prevented millions from accessing basic traditional financial services.



The Brazilian Central Bank (BCB) is taking steps toward the adoption of financial technology, with the creation of PIX and the regulatory sandbox LIFT. These initiatives have attracted the attention of both emerging and established companies, as evidenced by the partnership between Aave and the BCB.&nbsp;



Despite these advancements in Brazil, it is worth noting that all the prominent crypto <a href="https://blockworks.co/news/digital-dollar-visa-brazil-cbdc">solutions</a> in the region are centralized, which goes against crypto’s decentralized ethos. The people of Brazil have clearly embraced blockchain-enabled solutions: Now, it is up to other entrepreneurs to create decentralized solutions to ensure those solutions benefit everyone.&nbsp;



This is a call to all foreign entrepreneurs and developers to look into Brazil as a go-to setting for crypto innovation: The demographics are superb, the regulation could not be more productive, and the competitive space continues to allow for more and more entrants.&nbsp;



A country&#8217;s future cannot be composed solely by <a href="https://blockworks.co/news/brazil-crypto-company-moves-into-europe">local entrepreneurs</a>. The same way that local talent can solve global problems, we now need global talent to solve local problems.&nbsp;



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José is an Investor at Fuse Capital, focusing on Web3 in Latin America. He led the Fuse Capital Fund I Security Token Offering (STO), an unprecedented initiative in Latin America for a VC fund. Prior to Fuse, he worked in the Sales &amp; Trading division at Barclay’s and IBD at Brasil Plural. He holds a BA in Economics from New York University.



Dan is a senior investor in private and public companies with over 30 years of experience. He participated in the genesis of GP Investments, the very first private equity group in Brazil, where he was a treasurer for nine years (three of these in Ambev, GP’s portfolio company). Dan was CFO of Cervejaria Devassa and Monte Carlos Joias. Before founding Fuse Capital, Dan was at Fox Investimentos, where he led the private equity division and equity portfolio of the firm.



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Dear Developers, Don’t Forget About Brazil

Darren Kleine

One of the biggest selling points of Solana’s ecosystem is its low cost of utility for NFTs, especially when compared to its gas guzzling rival, Ethereum.



But even on the svelte blockchain platform, development still requires funding.&nbsp;



In an effort to cover some of these costs, dominant <a href="https://blockworks.co/tag/solana">Solana</a> <a href="https://blockworks.co/tag/nft">NFT</a> protocol Metaplex introduced a <a href="https://blockworks.co/news/metaplex-updates-community-members-upset">controversial network fee</a> in its “Token Metadata immutability plan,” resulting in angry calls for forks and general discontent among its community.



Following the backlash, Metaplex promptly <a href="https://twitter.com/metaplex/status/1661763752314961920?s=20">back-pedaled</a> from initial plans, removing some, but not all of the proposed fees. The company stated via Twitter that updates, verifications, freezes and thaws would remain free as costs “could prohibit important and emergent use cases.”



Co-hosts Garrett Harper and Santiago Santos discussed the fee furor and the possibility that it might draw some developers back to <a href="https://blockworks.co/tag/ethereum">Ethereum</a> in a Blockworks interview on the <a href="https://www.youtube.com/watch?v=dnGhgunH57E">Empire podcast</a>. 



<h2>Metaplex as a public good</h2>



Harper notes that Metaplex “spun out of Solana Labs,” <a href="https://www.metaplex.com/posts/metaplex-foundation-raises-46-million-in-strategic-funding-round-to-scale-nft-adoption">raising</a> $46 million, which he estimates is the third-largest raise in Solana’s ecosystem from an individual project.



“I think people thought, in general, this was gonna be a public good.”



Virtually all Solana NFTs — around 99.9% according to a company <a href="https://www.metaplex.com/posts/expanding-digital-assets-with-compression-for-nfts">blog</a> post — adopted the Metaplex standard, Harper says, “but the issue is now that they&#8217;re adding fees on top of this, people are like, okay, we&#8217;re gonna have to fork this.”



Problem being, that’s not really a feasible solution, Harper explains. “They have a license where it says it&#8217;s open source, but you can&#8217;t actually fork it” to alleviate the fee problem.



Stephen Hess, the CEO of Metaplex, <a href="https://blockworks.co/news/metaplex-updates-community-members-upset">previously told Blockworks</a> that “​​it’s acceptable under the license for anyone to fork Metaplex programs even for a competitive use case, provided the fork isn’t removing, replacing or modifying the fees.”



“Now it&#8217;s used by all these NFTs. It&#8217;s adopted by the exchanges and also wallets,” Harper says.



“It’s actually a lot of work to build and maintain the code,” he says, suggesting the company needs at least some fees to sustain a viable business model.&nbsp;



In a follow-up <a href="https://twitter.com/metaplex/status/1661763757431988225?s=20">tweet</a>, the company explains that proceeds from creator fees “will be used to fund dev work on the Token Metadata immutability roadmap as well as the broader suite of Metaplex programs (Candy Machine, Auction House, Compressed NFTs) and dev tools (SDKs, Amman, Umi, Solita).”



<h2>Will fees hinder development?</h2>



Harper explains that one of the problems for Solana, when compared to Ethereum, is that it lacks protocol standards like ERC-20 and ERC-721. “So today, the program&#8217;s just set by Metaplex and that&#8217;s what&#8217;s become the standard.”



Santos wonders if the fee introduction might hinder NFT development on the competing platform. Such a move, he says, “degrades the interest in the broader Solana ecosystem of onboarding users.”



“But at the same time, public goods need to be funded in some capacity.”



“You&#8217;re adding the taxation layer on top of it,” Santos says, which “adds another layer of difficulty when you&#8217;re trying to tell projects and users that they&#8217;re gonna be taxed for something that they&#8217;re usually not used to being taxed on in other ecosystems like Ethereum.”



<iframe loading="lazy" frameborder="0" height="200" scrolling="no" src="https://playlist.megaphone.fm/?e=BWG4299272428" width="100%"></iframe>







“It becomes an even greater problem of competition and really low barriers to entry,” he says. “If you&#8217;re a new NFT project, this actually changes the landscape of it.”



“One of the cool things about Solana,” Santos observes, is that “they do move so fast, and that&#8217;s one of their core advantages. But you can see an issue in scenarios like this where that can actually be a bad thing.”



While Ethereum’s mainnet development moves at a much slower pace than Solana’s, <a href="https://blockworks.co/tag/layer-2-2">layer-2 developments</a> offer low-cost and rapidly evolving solutions, which “allows Ethereum to still innovate in a very quick way without having to do that at the protocol level,” Santos says.



“And with that, you&#8217;re not gonna have issues with this.”



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Will Solana’s Metaplex Fees Push Developers Back to Ethereum?

Macauley Peterson

As the <a href="https://blockworks.co/podcast/bellcurve/da96220c-95d1-11ed-87e7-9bc68a4e9540">app-chain thesis</a> continues to gain mind share, developers on layer-1 <a href="https://blockworks.co/tag/avalanche">Avalanche</a> have put their own spin on the concept with the launch of AvaCloud this week.



Coincidentally, Circle, the issuer of the second-largest stablecoin USDC, announced that its euro-backed token EUROC is now natively available on the Avalanche C-chain — marking its first foray into multichain expansion.&nbsp;



AvaCloud is billed as a “launchpad for deploying and scaling no-code, fully managed custom blockchains” — what Avalanche calls <a href="https://www.blockworksresearch.com/glossary#subnetwork-subnet">Subnets</a>. These are analogous to Cosmos’ consumer chains, which are connected to the Cosmos Hub using <a href="https://blockworks.co/news/neutron-cosmos-replicated-security">replicated security</a>.



The product suite comprises an interoperable blockchain builder with managed validators and analytics tools. It is aimed at businesses that want to launch blockchains quickly with minimal overhead costs.



Avalanche touts the in-development game Shrapnel and Korean marketing platform SK Planet among its early adopters.



Aave co-founder Stani Kulechov <a href="https://twitter.com/StaniKulechov/status/1661382877077020672?s=20">called</a> it “an interesting way to deploy a customized app-specific network.” Avalanche is Aave’s third-largest market by total value locked, behind Polygon’s PoS chain and Ethereum, <a href="https://defillama.com/protocol/aave">according to</a> DeFi Llama.



Beyond making it easier to deploy interoperable blockchains, there are other parallels with the Cosmos app-chain ecosystem. In a <a href="https://twitter.com/circle/status/1661721751313604609">Twitter space</a> with Circle, Luigi D&#8217;Onorio DeMeo, head of DeFi and developer relations at Ava Labs, highlighted the “imminently launching” Avalanche Warp Messaging (AWM). This is a communication protocol for Avalanche broadly analogous to Cosmos’ Inter-Blockchain Communication (<a href="https://blockworks.co/tag/ibc">IBC</a>).&nbsp;



“That allows for somebody to take native USDC on the C-chain and move it to, for example, their payment subnet that has USDC as the gas token, and allows people to move USDC cheap and fast across the network,” DeMeo said.



Like IBC, the solution will not rely on a third-party bridge, which makes it both more secure and more scalable.



The Avalanche C-chain is its <a href="https://blockworks.co/tag/evm">EVM</a>-compatible subnet which carries the vast majority of all activity, network stats <a href="https://subnets.avax.network/stats/network?selectedChart=active_addresses&amp;selectedChains=mainnet_43114">show</a>.



Circle has issued USDC on Avalanche <a href="https://www.circle.com/blog/understanding-avalanche-usdc-vs.-usdc.e">since</a> late 2021. It is also natively <a href="https://www.circle.com/en/usdc">issued</a> on 7 other blockchains: Ethereum, Solana, TRON, Algorand, Stellar, Flow, and Hedera. Circle recently announced Cosmos’ as <a href="https://blockworks.co/news/cosmos-circle-stablecoin-usdc-noble">its next destination</a> for native USDC issuance.



Previously the stablecoin had to be bridge over from Ethereum, and there remain almost $125 million <a href="https://snowtrace.io/token/0xA7D7079b0FEaD91F3e65f86E8915Cb59c1a4C664">USDC.e</a> — the bridged variety on Avalanche — compared to $420 million in <a href="https://snowtrace.io/token/0xb97ef9ef8734c71904d8002f8b6bc66dd9c48a6e">native USDC</a>.



AvaCloud coupled with the launch of Circle’s euro-backed stablecoin could facilitate applications in forex trading, DeMeo said, as well as dapp development targeting the European market. <a href="https://blockworks.co/tag/mica">The regulatory environment in Europe is generally perceived as more favorable</a> compared to the United States.



Avalanche advocates point to the notable uptick in active addresses, which jumped by about 20,000 or 25% this week alone.



That’s not necessarily the same as “active users,” however, according to Blockworks Research analyst Dan Smith — despite Avalanche’s marketing <a href="https://twitter.com/jayks/status/1661824710290579464?s=20">claims</a> on social media.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1600" height="376" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=1024&amp;h=1024" alt="" class="wp-image-57162" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-22.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">3-month trend of active addresses; Source: <a href="https://subnets.avax.network/stats/network?selectedChart=active_addresses&amp;selectedChains=mainnet_43114">subnets.avax.network/stats/</a></figcaption></figure>



Smith points out that the cheaper a chain is to transact upon, the more manipulable the address count statistic is. Transactions on the C-chain typically cost less than 10 cents. Transaction volume overall <a href="https://subnets.avax.network/stats/network?selectedChart=tx_count">has been flat</a> over the same 3-month period, data shows.



Ava Labs calls the introduction of EUROC “a pivotal moment for Avalanche.”



“DeFi continues to expand into a multi-currency, cross-border environment — delivering a trusted and fully reserved euro stablecoin like Euro Coin will greatly accelerate the adoption of instant payments and remittances to a much larger swath of the world,&#8221; said John Nahas, business development vice president at Ava Labs, in a statement on Thursday.



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Avalanche Adds Native Euro Stablecoin, AvaCloud

David Canellis

Dogecoin is undergoing a surge in network spam so dramatic that it’s now processing more transactions than the Ethereum blockchain.



Over the past week, the memecoin network handled more than 7.9 million transactions, up nearly 11% on Ethereum’s 7.2 million and more than double Bitcoin’s count.



Not bad for a chain that has handled only 30,000 daily transactions on average since 2015 — less than 5% of Ethereum’s.



The culprit is <a href="https://blockworks.co/news/who-broke-bitcoin-ordinals">Bitcoin Ordinals</a>. Or more precisely, opportunistic crypto fans eager to capitalize on the inscriptions hype.&nbsp;



Bitcoin Ordinals aren’t exactly the same as the NFTs you might find on Ethereum or Solana. Those non-fungible tokens are minted via smart contract and adhere to their own token standards enforced by wallets, marketplaces and other key infrastructure across Web3.&nbsp;



Ordinals are instead defined by data “inscribed” into individual satoshis (sats for short). Sats are BTC’s smallest denomination: 0.00000001 <a href="https://blockworks.co/price/btc">BTC</a> currently worth $0.00027. A craft developer recently figured out how to forever imbue sats with special properties, such as enough data to render a JPEG or <a href="https://blockworks.co/news/play-doom-bitcoin">DOOM clone</a>.&nbsp;



BRC-20 tokens — a play on Ethereum’s ERC-20 standard for run-of-the-mill tokens — quickly followed Ordinals. Hype for Bitcoin-powered altcoins and collectible sats triggered a renaissance for blockspace demand, driving up fees while pushing <a href="https://blockworks.co/news/bitcoin-transactions-record-ordinals">transaction counts and mempool backlogs to record highs</a>.



If we consider Ordinals in the same genre of digital asset as Bored Apes, Bitcoin is now the <a href="https://protos.com/bitcoin-suddenly-becomes-second-biggest-nft-blockchain/">number-two</a> blockchain for NFTs behind Ethereum.



<figure class="wp-block-embed is-type-wp-embed is-provider-flourish wp-block-embed-flourish"><div class="wp-block-embed__wrapper">
<iframe class="wp-embedded-content" sandbox="allow-scripts" security="restricted" title="Interactive or visual content" src="https://flo.uri.sh/visualisation/13912334/embed#?secret=V02Rifa9oh" data-secret="V02Rifa9oh" frameborder="0" scrolling="no" height="575" width="700"></iframe>
</div><figcaption class="wp-element-caption">Dogecoin’s transaction count exploded past other prominent blockchains over the past few weeks</figcaption></figure>



<h2>Doge see, Doge do</h2>



Due to similarities between Bitcoin and Dogecoin (a code fork of a code fork of Bitcoin), it didn’t take long for developers to <a href="https://github.com/dogecoinw/cardinals/blob/main/bip.mediawiki">code</a> methods for minting Dogecoin tokens in much the same way as Ordinals and BRC-20s — except with a “D” instead of a “B.”



But Bitcoiners have multiple platforms on which traders can swap Ordinals and BRC-20s, including <a href="https://blockworks.co/news/okx-offers-ordinals-trading">crypto exchange wallets</a>. Dogecoin doesn’t.



Bitcoin’s BRC-20s in particular have been helped by an experimental token <a href="https://domo-2.gitbook.io/brc-20-experiment/">standard</a>, something akin to Ethereum’s ERC-20s.&nbsp;



The standard set enough technical parameters so that infrastructure (wallets, marketplaces and the like) can facilitate trading and whatnot without running into headaches, like duplicate listings and overtly broken code.



BRC-20 and Ordinals individually have recently made up more than half of all Bitcoin transactions, and it’s unclear just how many DRC-20-related transactions are flowing through Dogecoin right now. No tools have been built to sort DRC-20 outputs from others, which makes it difficult to quantify exactly how many Dogecoin tokens are being minted every minute.



In any case, it’s surely an impressive chunk. Multiple DRC-20 token transactions are found in practically every single block right now (which occur every one minute on average). They are easy to spot, as they usually come with a 0.001 <a href="https://blockworks.co/price/doge">DOGE</a> fee attached ($0.000071).&nbsp;



Pseudonymous Dogecoin developer inevitable360 told Blockworks that they classify DRC-20 transactions like these as spam because anyone can clone or replicate the exact same token.&nbsp;



Unlike Bitcoin and Ethereum, there is no DRC-20 token standard for Dogecoin. So, many tokens are being minted under the same name, making it practically impossible to form a legitimate market around them.&nbsp;



There’s still legitimate Dogecoin activity alongside speculators minting Dogecoin tokens via the one or two wallets that support them in their current form (which have been <a href="https://twitter.com/inevitable360/status/1659532081762844678">caught</a> boosting fees to apparently profit from the hype).



The median transaction <a href="https://bitinfocharts.com/dogecoin/">value</a> is nearly 77 DOGE ($5.46). If DRC-20s were truly the overwhelming majority, then that figure would be far lower.&nbsp;


<div class="wp-block-image">
<figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1600" height="752" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=1024&amp;h=1024" alt="" class="wp-image-57140" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=1600 1600w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/05/image-21.png?w=80 80w" sizes="(max-width: 1600px) 100vw, 1600px" /><figcaption class="wp-element-caption">Bitcoin Ordinals already have their own marketplaces</figcaption></figure></div>


<h2>It might be spam, but it’s honest work</h2>



For what it’s worth, much of the recent Bitcoin activity has also been labeled <a href="https://twitter.com/ercwl/status/1660030765017473026">spam</a>: effectively worthless transactions with no reason to exist but to exist; abundant purely because creation is cheap and the potential payoff is large.



Granted: Ethereum layer-2 networks such as Arbitrum and Optimism are each processing tons of transactions. More than a million per day for the former, in fact. If we add those in with Ethereum, then the blockchain dominates Dogecoin by far.



Ethereum fees are also high right now. High enough to apparently dissuade a portion of useless trade, particularly NFTs. But there’s something to be said for Dogecoin in this instance.&nbsp;



Many deride Dogecoin as a joke carefully crafted to trap crypto newbies into gambling on memecoins during bull runs.&nbsp;



There may be some element of truth to that. But historically, Dogecoin has served as a lucrative alternative for bitcoin miners at times when mining BTC was simply not profitable. An unsung hero, in those cases.



Dogecoin is also merge-minable with Litecoin, allowing miners to share hash rate between the two to provide some element of flexibility in support of a multichain future. It just so happens that right now, there appears to be more activity tied to DRC-20 speculation today than that tied to the use of Ethereum mainnet overall.



And Dogecoin still has lower median fees: $0.00096 compared to Ethereum’s $3.13 — no doubt an uncomfortable fact for many ETH fans.



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Dogecoin Proves It’s a Serious Blockchain, Flips Ethereum Transaction Count

Katherine Ross

The Fed, Bank of Japan, European Central Bank, and the Bank of England were just a few of the international groups who teamed up to pen a paper on central bank digital currencies (CBDCs).



From possible implementation to the policy questions around <a href="https://blockworks.co/tag/cbdc">CBDCs</a>, the paper is the newest in a series of reports that go back to 2020.&nbsp;



“Some of the members of this group are approaching a point where they may decide on whether or not to move to the next stage of their CBDC work,” the paper <a href="https://www.bis.org/publ/othp65.pdf">said</a>. “This may include deeper investment in design decisions relating to technology, end user preferences and business models, while leaving open the decision on whether to issue CBDC.”



The <a href="https://blockworks.co/news/the-bank-of-england-is-looking-to-build-a-digital-pound">Bank of England published its own paper</a> back in February that looked into a digital currency, though it noted that the infrastructure would require a commitment that the BOE is not ready to make just yet.



Canada has also <a href="https://blockworks.co/news/canada-digital-dollar-conversation">moved forward with conversations around CBDCs</a>, seeking public feedback on a digital dollar. Though, similar to the BOE, it has indicated that it is not yet prepared to implement one.



“Legislators and authorities will need to remain engaged as work on CBDC progresses. The development of solutions to some of the outstanding legal issues related to CBDC will largely be a matter of national law and will tend to be highly dependent on policy choices and the design of a CBDC,” the paper said.&nbsp;



In the US, some states are already working to ban CBDCs prior to a framework or implementation of a digital dollar. <a href="https://blockworks.co/news/florida-approves-cbdc-ban">Florida is one of those states</a>; Governor Ron DeSantis signed the CBDC ban into law earlier this month.



It is also <a href="https://blockworks.co/news/fed-cbdc-robert-kennedy-fednow">expected that the CBDC conversation</a> will bleed into the political campaigns that are being announced as the US heads toward election season.&nbsp;



Although countries are not currently ready to plan out the implementation, central banks are actively strategizing the potential use cases and design aspects of CBDCs.



“The central banks contributing to this report anticipate that any CBDC ecosystem would involve both the public and private sector,” the report wrote. “There are a variety of potential CBDC business models, and central banks may need to understand potential benefits to stakeholders and the public in each model, including incentives to participants and value added to end users.”



The banks also noted that blockchain technology “remains a possibility, though it is currently not deemed essential to the functioning of a potential CBDC system.”



While it did not contribute to the paper, <a href="https://blockworks.co/news/digital-hong-kong-dollar-trial">Hong Kong is undergoing a trial run</a> of an e-HKD – a digital version of its local currency.



The government is running the test in a sandbox environment, meaning that it&#8217;s testing multiple applications through tokenized deposits, online and offline payments, and more.&nbsp;



It’ll also create a CBDC expert group that probes into both policy and technical issues behind issuing a CBDC.



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7 Banks, Including Fed, Pen Paper on Possible CBDC Implementation

Bessie Liu

Decentralized liquidity protocol Curve is looking at reducing its reliance on third-party protocols.



Using its lending-liquidating automated market maker algorithm (<a href="https://blockworks.co/news/curve-deploys-stablecoin-smart-contract">LLAMMA</a>) — an algorithm that combines both a traditional lending pool with an automated market maker (AMM), Curve has made it possible for collateral to be gradually liquidated over a price range — rather than simply at one price.



LLAMMA currently relies on an external oracle by Chainlink to operate its lending pools. When the collateral price is higher, all of the user&#8217;s deposits will remain secured within the deposited collateral. However, when the collateral value drops below a certain threshold, the user&#8217;s deposits will be subject to liquidation.



<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">AMMs are at the root of everything elegant and useful in DeFi. That&#39;s why <a href="https://twitter.com/CurveFinance?ref_src=twsrc%5Etfw">@CurveFinance</a> put LLAMMA at the center of its lending protocol.<a href="https://twitter.com/smyyguy?ref_src=twsrc%5Etfw">@smyyguy</a> breaks down this novel mechanism👇&mdash; Blockworks Research (@blockworksres) <a href="https://twitter.com/blockworksres/status/1661797596497862656?ref_src=twsrc%5Etfw">May 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“Pretty much everything relies on Chainlink, but recently Curve governance passed a proposal to basically permit new types of pools that have their own internal oracal,” <a href="https://www.blockworksresearch.com">Blockworks Research</a> Senior Analyst <a href="https://twitter.com/smyyguy">Dan Smith</a> explained. 



This means that these liquidity pools can keep track of an exponential moving average of the traded price, taking an average based on trading size and time, similar to what an oracle does. 



Unlike Chainlink, which aggregates the prices of an asset from multiple different sources, Curve would be looking at a price based on a single liquidity source, making it inherently more risky.&nbsp;



It is important, therefore, that there is deep liquidity in these pools to ensure that the pool is not subject to price manipulation.



“If you have a deep enough pool, such as the stETH pool with billions of dollars in staked ETH liquidity, the price will be difficult to manipulate. Even if someone came in and started dumping into it, they can’t just move billions of dollars of liquidity around,” Smith said.



The community is currently determining whether or not these solid price oracles should be implemented in select pools with deep liquidity.&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">Gauge for stETH pool with a solid price oracle is in and has votes! Enjoy <a href="https://t.co/jc02CtOQCy">pic.twitter.com/jc02CtOQCy</a>&mdash; Curve Finance (@CurveFinance) <a href="https://twitter.com/CurveFinance/status/1661524731378401280?ref_src=twsrc%5Etfw">May 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



“This is what DeFi was intended to be, getting away from the reliance on something other than your own protocol,” Smith said.



If you want to learn more about Curve and its different lending pools, please check out Blockworks Research&#8217;s <a href="https://www.blockworksresearch.com/research/curve-stablecoin-and-lending-market">latest report</a>.



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Curve May No Longer Need to Rely on External Oracles

The European Securities and Markets Authority warned firms that they should register their crypto products, even as the Markets in Crypto-Assets Regulation looms over the EU.&nbsp;



Last month, the European Union <a href="https://blockworks.co/news/eu-parliament-passes-mica-vote">passed the Markets in Crypto-Assets (MiCA) legislation</a>, mandating that crypto companies register in an EU-member state. While the extent of regulation under MiCA is not yet fully known, it also includes provisions for monitoring the environmental impact of crypto assets. Meanwhile, compliance oversight is entrusted to the European Securities and Markets Authority, or ESMA, and the European Banking Authority.



Despite MiCA being “close to adoption, crypto assets offered by investment firms will continue to be unregulated in most jurisdictions until MiCA applies. Some Member States have domestic legislation and specialist regimes in place which can provide protections for investors in relation to investment firms selling unregulated products and/or services.”



Essentially, the ESMA aims to ensure that investors are wholly educated on products that are not regulated so that they understand the differences – primarily the risks – that come with investing in speculative products such as crypto assets.&nbsp;



“Unregulated products such as cryptoassets or non-transferable securities may present a higher level of risk for clients,” the authority <a href="https://www.esma.europa.eu/sites/default/files/2023-05/ESMA35-36-2813_Statement_on_investment_firms_providing_unregulated_services.pdf">said</a>. “Where clients lose their initial investment and find out that they do not benefit from the protections afforded to them under financial regulation, they may complain to the investment firm for not having provided clear information about the products they were investing in.“&nbsp;



The ESMA’s warning comes a day after <a href="https://blockworks.co/news/europe-raises-alarm-over-crypto">Europe’s Systemic Risk Board warned</a> that MiCA isn’t enough, and that more work needs to be done to properly regulate crypto. 



Systemic “risks could materialize if, for example, interconnectedness with the traditional financial system increases over time,” it said.



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EU Securities Watchdog Warns Firms to Register Crypto Products Ahead of MiCA

Riot Platforms is looking to switch accounting firms as the landscape for crypto company auditors remains in flux.&nbsp;&nbsp;



The bitcoin mining company “dismissed” its previous accounting firm Marcum on May 18, appointing Deloitte to take its place.



Marcum had audited <a href="https://blockworks.co/tag/riot-blockchain">Riot</a>’s consolidated financial statements for the fiscal years between 2018 and 2022. <a href="https://blockworks.co/tag/deloitte">Deloitte</a> is set to act as the mining company’s independent registered public accounting firm for 2023.



The change was “not as a result of any disagreement on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure,” according to a regulatory <a href="https://www.sec.gov/Archives/edgar/data/1167419/000114036123026648/ny20007472x4_defr14a.htm">filing</a>.&nbsp;



Spokespeople for Riot and Marcum did not immediately return requests for comment.&nbsp;



A stockholder vote on the change — not required by law to ratify the decision, but proposed “as a matter of good corporate practice” — is slated for June 27, the filing adds.&nbsp;



The auditor change comes as crypto companies have expressed that some large accounting firms are hesitant to offer them auditing services.&nbsp;



Mazars Group, whose clients included Crypto.com and Binance, <a href="https://blockworks.co/news/crypto-auditors-call-it-quits">reportedly suspended work with crypto firms</a> in December.&nbsp;



A Binance spokesperson told Blockworks at the time that a “Big Four” accounting firm — considered to be Deloitte, Ernst &amp; Young (EY), PricewaterhouseCoopers (PwC) and KPMG — were “currently unwilling” to conduct a proof-of-reserves audit for a private crypto company.



Crypto.com declined to comment on which firm it now uses as an auditor, while Binance did not immediately return a request for comment.&nbsp;



Accounting firm Armanino was also reportedly pausing work within the crypto industry in December. The company had conducted multiple proof-of-reserves audits for crypto exchange Kraken in 2022.&nbsp;&nbsp;



Kraken did not return a request for comment.&nbsp;&nbsp;&nbsp;&nbsp;



A Bloomberg <a href="https://www.bloomberg.com/news/features/2023-05-15/some-popular-crypto-companies-lack-boards-audits-despite-ftx-s-fall">survey</a> of 24 crypto companies last week found 46% of them had their full financial audits completed by a “Big Four” firm.



Three firms reported receiving auditing services from Marcum. Coinbase, Circle and Ripple are among the industry players that receive annual audits from Deloitte.



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Bitcoin Miner Riot Dumps Auditor for ‘Big Four’ Accounting Firm

Shalini Nagarajan

Hong Kong&#8217;s renewed embrace of crypto has ignited a wave of excitement among exchanges, with several now vying to seize potential opportunities presented by the city-state.



These are a few companies that have shown interest in being part of Hong Kong&#8217;s dynamic market:



Huobi just <a href="https://blog.huobi.com/2023/05/26/huobi-set-to-launch-trading-service-in-hong-kong/">revealed</a> its plans to launch a trading platform in Hong Kong on May 26. They&#8217;re all set to provide crypto trading services, including <a href="https://blockworks.co/price/btc">BTC</a> and <a href="https://blockworks.co/price/eth">ETH</a>, to users in the near future.



The firm’s goal is to enter the market in a compliant and regulated way, which will help boost the development of Hong Kong&#8217;s Web3 ecosystem.



Swiss-registered Gate Group, the firm behind exchange Gate.io, is also onboard. It just <a href="https://finance.yahoo.com/news/gate-hk-officially-launches-begins-130000082.html">launched</a> Gate.HK, a platform that opened for registration and trading on May 23.&nbsp;



Just like Huobi, Gate.HK is in the process of licensing with Hong Kong’s Securities and Futures Commission (SFC). Crypto-focused financial services provider Amber Group, hailing from Singapore, is also <a href="https://www.bloomberg.com/news/articles/2023-04-14/crypto-s-amber-mulls-japan-unit-sale-will-seek-hong-kong-permit">reportedly</a> considering making a move to Hong Kong.&nbsp;



<a href="https://www.okx.com/learn/enhanced-okx-app-spot-trading-hong-kong-customers">OKX</a> and <a href="https://blog.bitmex.com/bitmex-hong-kong/">BitMEX</a> are as well — the former already services local traders via its exchange app, while BitMEX’s platform will open up to Hong Kong users on Monday. The fintech arm of Chinese real estate developer Greenland has even <a href="https://blockworks.co/news/greenland-hong-kong-license">reportedly</a> shown interest in crypto now that Hong Kong has come around.



Hong Kong’s securities regulator has implemented tougher rules for digital asset companies, including a crypto licensing regime, starting from June 1.&nbsp;



This development <a href="https://blockworks.co/news/hong-kong-to-lift-crypto-ban">allows for retail trading in cryptocurrencies</a> following a challenging year for the industry, still dogged by the collapse of FTX crypto exchange.&nbsp;



<h2>Hong Kong is a ‘gold rush’ for crypto platforms</h2>



To comply with the new regulations, all trading platforms and exchanges are required to apply for a license, failure of which may result in fines and potential imprisonment.



Markus Thielen, head of research at Matrixport, believes that with the government and financial regulator&#8217;s approval, Hong Kong has the potential to reclaim its status as the leading crypto hub in Asia.



Hong Kong is the world’s “most convenient and hassle-free” city, located centrally in Asia, Thielen said.



“There is now a gold rush from international crypto firms to serve Hong Kong-based retail investors actively engaging in high-volatility products such as warrants and other derivative contracts. With nearly 100 local billionaires, the city is rich in tycoons and well-capitalized family offices that could fund crypto firms moving into the city.”



According to Matteo Greco, an analyst at blockchain investment firm Fineqia, Hong Kong’s regulatory approach appears to foster a more cooperative and supportive environment for crypto businesses compared to countries like the US or China, the latter of which has <a href="https://blockworks.co/news/cryptos-decline-as-china-doubles-down-on-regulations-markets-wrap">restrictions on bitcoin trading</a>.



Still, challenges persist and it is premature to determine whether the ultimate outcome will be favorable. For instance, there are still instances where Hong Kong banks are declining requests from crypto businesses to open local bank accounts, Greco said.



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Crypto Exchanges Are Flocking to Hong Kong

James Cirrone

Senator Cynthia Lummis had harsh words for the Biden Administration&#8217;s idea to <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">impose a 30% tax on electricity used by bitcoin miners</a>. In a word, she rejected it completely.



&#8220;That isn&#8217;t going to happen,&#8221; Lummis told Chamber of Digital Commerce founder and CEO Perianne Boring at Bitcoin Miami last week.&nbsp;



The Wyoming Republican revisited the issue Thursday, <a href="https://twitter.com/SenLummis/status/1661803569341759495">tweeting</a> reports focused on her comments at the bitcoin-centric conference.&nbsp;



“A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers,” Lummis wrote. “I will not let President Biden tax the digital asset industry out of existence.”



<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">A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers. I will not let President Biden tax the digital asset industry out of existence.<a href="https://t.co/GNUgfER8yr">https://t.co/GNUgfER8yr</a>&mdash; Senator Cynthia Lummis (@SenLummis) <a href="https://twitter.com/SenLummis/status/1661803569341759495?ref_src=twsrc%5Etfw">May 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



At the conference, Lummis also seemed to hint that bitcoin miners will simply flee the US should the Biden Administration institute the Digital Asset Mining Energy (DAME) tax, saying that “miners can mine anywhere.”



This is a point that has been made by industry participants as well. Marathon Digital CEO Fred Thiel told Blockworks in early May that in that kind of tax environment, miners would have no choice but to go abroad.&nbsp;



“We&#8217;re going to essentially make bitcoin mining unprofitable in the US. Then what you&#8217;re going to do is push it offshore,” Thiel said, talking about the tax.&nbsp;



A conservative think tank didn’t pull any punches on the Biden Administration either and <a href="https://blockworks.co/news/biden-crypto-tax-proposal-deserves-f">gave the DAME tax proposal a failing grade</a> in a scathing mid-May piece.&nbsp;



Industry members and conservatives aren’t the only ones attacking Biden on this, although much of it could be attributed to political grandstanding.



Robert F. Kennedy Jr., who is running for president as a Democrat, joined the dog pile right after the proposal was announced by the White House’s Council of Economic Advisers on May 2, 2023. He called it a “mistake.”



“It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere. Biden’s proposed 30% tax on cryptocurrency mining is a bad idea,” Kennedy <a href="https://twitter.com/RobertKennedyJr/status/1653808786577010697?lang=en">tweeted</a> on May 3, 2023.



<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">Cryptocurrencies, led by bitcoin, along with other crypto technologies are a major innovation engine. It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere. Biden’s proposed 30% tax on cryptocurrency mining is a bad idea. 🧵&mdash; Robert F. Kennedy Jr (@RobertKennedyJr) <a href="https://twitter.com/RobertKennedyJr/status/1653808786577010697?ref_src=twsrc%5Etfw">May 3, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Biden Won’t Tax Crypto Out of Existence: Lummis

Starbucks is preparing an NFT airdrop for members of its Odyssey rewards program as part of the company’s <a href="https://blockworks.co/news/starbucks-nfts-like-loyalty-cards">foray into Web3</a>.



Users will have to meet specific criteria to be eligible to receive a so-called “limited-edition stamp” from the coffeehouse giant, <a href="https://blockworks.co/tag/starbucks">Starbucks</a> told Odyssey members in an email obtained by Blockworks.&nbsp;&nbsp;



First, the airdrop is only available for US residents. Second, each participant must be a Starbucks rewards member, and enrolled in Starbucks Odyssey, the company’s waitlisted Web3 rewards platform. The program launched in beta <a href="https://blockworks.co/news/polygon-to-power-starbucks-nft-loyalty-program">back in September 2022</a>, and remains available only to a select number of individuals.



Provided that a participant is an Odyssey member, they will then have to make sure to have completed two “journeys,” and that they already own at least one limited-edition NFT stamp. Journeys are challenges that users can <a href="https://blockworks.co/news/starbucks-nfts-like-loyalty-cards">complete to win stamps embedded with rewards points</a>. One such example of a journey could be going to a different Starbucks store or trying a new drink, a former Starbucks executive told Blockworks in December.



Users who meet all of these qualifications by the company’s specified date will be eligible for the airdrop, according to Starbucks Odyssey’s airdrop <a href="https://odyssey.starbucks.com/#/terms/airdrop">terms</a>.



The terms also state that “you are not guaranteed a Stamp of your choosing [&#8230;] you will receive a Stamp as determined by Starbucks in its sole discretion.”



Starbucks has shown continued interest in the world of digital ownership. Last month, <a href="https://blockworks.co/news/starbucks-drops-first-store-nft-collection">it released the “First Store” NFTs</a> with many of the collectibles in the bundle depicting the original, much humbler Starbucks storefront that opened in downtown Seattle back in 1971.



In the last 24 hours, the First Store collection <a href="https://www.niftygateway.com/rankings">has</a> generated the highest sales volume on NFT marketplace Nifty Gateway.



Blockworks has reached out to Starbucks concerning the upcoming airdrop.



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Starbucks Airdropping More NFTs in June to Expand Web3 Rewards Program

Coinbase continues to explore relocation options outside the United States in response to prevailing regulatory uncertainty and restrictions.



Coinbase CEO Brian Armstrong has reiterated that the exchange would maintain a US presence, though it is eager to potentially expand abroad.&nbsp;



So far this year, Coinbase has faced a Wells notice from the SEC – which is essentially a warning about possible enforcement action – which led it to sue the SEC in a bid to demand regulatory clarity. 



In April, Armstrong said that “<a href="https://blockworks.co/news/could-coinbase-leave-us">anything is on the table, including relocating</a>,” at a summit. In a later interview with CNBC, he clarified his comments, stating that Coinbase “is not going to relocate overseas.”



But relocations aren’t the only focus for the crypto exchange. Armstrong praised the European Union and the United Kingdom for taking a more “thoughtful” and “comprehensive” approach to crypto, while the US remains “a little bit behind.”



“Coinbase is committed to the US, but countries around the world are increasingly moving forward with responsible crypto-forward regulatory frameworks,” Coinbase said in a statement.



“We would like to see the US take a similar approach instead of regulation by enforcement which has led to a disappointing trend for crypto development in the US.”



Coinbase has since stepped up its expansions and partnerships to show how it is prioritizing its international arms.



<h2>Coinbase partners with Bitpanda</h2>



The most recent move was announced by Coinbase and Bitpanda on May 25.&nbsp;



Bitpanda is an Austrian crypto exchange and investment platform.



Coinbase said it will use Bitpanda’s investing-as-a-service (IAAS) as part of its offerings for foreign institutional clients.



“By using Bitpanda Technology Solutions, banks can use Bitpanda&#8217;s technology to offer their customers trading in as little as three months. The best part? To their customers, it all looks like it’s part of the bank’s own brand,” Bitpanda said in the partnership <a href="https://blog.bitpanda.com/en/bitpanda-partners-coinbase-build-future-digital-investing">announcement</a>.&nbsp;



In return, Coinbase will be added to Bitpanda’s liquidity providers.



<h2>Coinbase One launched in 35 countries</h2>



Coinbase <a href="https://blockworks.co/news/coinbase-one-launches-zero-fees">officially launched Coinbase One</a> earlier this month, after beta testing the service.&nbsp;



Outside of the US, it’ll be available in 34 countries including the UK, Germany and Ireland.



Users get access to 24/7 customer support and zero trading charges as well as $1 million in account protections.&nbsp;



An additional 31 counties will get access to the service in the coming months.&nbsp;



<h2>Coinbase launches offshore crypto derivatives exchange</h2>



Earlier this month, <a href="https://blockworks.co/news/coinbase-international-futures-institutional-traders">Coinbase opened its offshore crypto derivatives</a> exchange, which targets institutional investors and traders outside of the US.&nbsp;



Initially, the Coinbase International Exchange will list bitcoin (BTC) and ether (ETH) perpetual futures&nbsp;



The new exchange is based in Bermuda, which leads us to another part of its international expansions…



<h2>Coinbase eyes further expansion internationally </h2>



Coinbase <a href="https://blockworks.co/news/coinbase-abu-dhabi-bermuda-derivatives">secured a Class F license</a> – which is issued by the Bermuda Monetary Authority – to sell, issue or redeem digital assets in Bermuda.



“Bermuda was one of the first financial centers to pass comprehensive digital assets regulation in 2018, and its regulatory environment is long known for a high level of rigor, transparency, compliance, and cooperation,” the company said in a <a href="https://www.coinbase.com/blog/an-update-to-coinbases-global-scale-to-go-broad-and-deep">blog post</a>.&nbsp;



The exchange also announced plans to operate in Abu Dhabi in an effort to diversify its offerings. It’s also eyeing Brazil.&nbsp;



Coinbase also <a href="https://www.coinbase.com/blog/building-for-canada-and-the-world-from-canada">aims</a> to stay in Canada as competitors – <a href="https://blockworks.co/news/binance-leaving-canada">such as Binance</a> – exit the market in the wake of new regulations.&nbsp;



“We continue to work with policymakers on a strong crypto regulatory framework for Canadians. We applaud the Canadian securities regulators’ efforts to bring clarity to the industry and look forward to continuing our collaboration with them on regulation that protects consumers while embracing innovation,” the exchange said in a March blog post.



<h2>On US soil, Coinbase locked in legal battles</h2>



Back on US soil, a court granted Coinbase the ability to arbitrate an IP claim from MouseBelt Labs, which claims that Coinbase and Armstrong stole its work.&nbsp;



The exchange filed a <a href="https://blockworks.co/news/coinbase-files-mandamus-petition">writ of mandamus in response to the SEC</a> refusing to give Coinbase – or the court overseeing the suit between the exchange and the commission – an answer regarding regulatory clarity.



Coinbase argued that the court should “order the SEC to explain its delay to date, state when it will respond, and provide progress reports” to the court.”



<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">Late last night Coinbase replied in the Third Circuit to the SEC’s arguments against our petition for a writ of mandamus. Mandamus is the tailor-made remedy for the extraordinary facts presented here. We continue to appreciate the Court&#39;s consideration. <a href="https://t.co/OD02kX3524">https://t.co/OD02kX3524</a>&mdash; paulgrewal.eth (@iampaulgrewal) <a href="https://twitter.com/iampaulgrewal/status/1661025095173947393?ref_src=twsrc%5Etfw">May 23, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



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Coinbase Makes International Moves as US Regulators Stall

John E. Deaton

If the crypto industry hadn’t yet appreciated the scale of the danger posed by the SEC’s legal theory at the heart of its long-running lawsuit against Ripple and the XRP token, it seems to have finally hit home for many when news broke about Grayscale’s attempted SEC registration of its Filecoin Trust.&nbsp;



When you consider the Grayscale news, <a href="https://blockworks.co/news/sec-names-other-tokens-bittrex-lawsuit" target="_blank" rel="noreferrer noopener">the SEC’s recent claim</a> that Algorand constitutes an unregistered security, and the <a href="https://blockworks.co/news/sec-serves-coinbase-in-latest-alleged-crypto-securities-violation" target="_blank" rel="noreferrer noopener">Coinbase Wells notice</a>, the SEC’s war on crypto becomes clear.



As amicus counsel for 75,000 plus XRP holders, I’ve spent more than two years warning anyone who would listen about the outrageous arguments being made by the SEC.&nbsp;



The SEC’s central theory in the <a href="https://blockworks.co/news/inside-ripple-defense-strategy" target="_blank" rel="noreferrer noopener">Ripple case</a> is that the XRP token itself is a security. The allegations are not limited to transactions offered by Ripple or its executives. The SEC is arguing all sales of XRP, regardless of the seller or the circumstances surrounding the sale, constitute the transfer of securities. From the very first one in 2013, onward into perpetuity — including on the secondary markets between parties who have nothing to do with nor even knowledge of a company called Ripple.



The SEC based this on the allegation that the “very nature” of a digital asset is to be a security and nothing else, making XRP “the embodiment” of an investment contract with Ripple no matter who holds it, uses it or sells it.&nbsp;



Anyone familiar with the Supreme Court’s 1946 Howey decision must concede the SEC’s wildly overreaching argument stretches the so-called Howey test beyond recognition.



The Howey decision makes clear that the underlying asset itself is not the security, only the scheme by which it is packaged and sold. That 1946 case was about investments in Florida orange groves being sold with the promise of profits from the harvesting and sale of the oranges they produced. The investment scheme in the groves was the security, not the oranges.



Beginning with XRP and theoretically expanding to every digital asset, the SEC has embarked on turning the Howey test on its head. For the first time since 1946, the oranges are now the securities.&nbsp;



To illustrate the Filecoin Trust situation through that prism, the agency’s lawyers are starting to chase after the grocers who are selling the oranges in a nearby town. That is how absurd this has become.



Given how the SEC has treated secondary market sales of XRP in the Ripple case, those proverbial grocers now can’t claim innocence by proving they’d bought the oranges from a middleman and not the Howey company.&nbsp;



Under the SEC’s new legal theory on cryptocurrencies, those oranges are forever tied to the Howey investment and are thus, always illegal. That is, in effect, what just happened to Grayscale.



Just like it did in the run-up to suing Ripple over XRP, the SEC is not going to find a path for registering Filecoin as a security because there is no real way to register an asset that has practical utility on a decentralized file sharing network. Logic simply does not enter the SEC’s thinking.&nbsp;



Nor will the agency help Grayscale register Filecoin Trust as an investment company if it separately sues the Filecoin Foundation. No digital asset will ever “come into compliance,” because that isn’t the SEC’s goal. How does one even attempt to register a line of digital code existing within software?&nbsp;



Instead, the SEC will continue to exploit every chance it has to drag every crypto entity into court by arguing every possible digital asset to be a security under its embodiment theory.&nbsp;



Either through bankrupting settlements or draining hundreds of millions of dollars out of targets in long, drawn out cases, the SEC’s only goal is to get the entire crypto space under its regulatory thumb no matter who gets harmed in the process. It certainly doesn’t care about harming the retail investors they claim to be protecting.&nbsp;&nbsp;



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


<div class="wp-block-post-author-biography">John E. Deaton, managing partner of The Deaton Law Firm, has closely followed the evolution of cryptocurrency and founded Crypto-Law US in 2021. Deaton has appeared as amicus curiae counsel in the SEC v. Ripple and LBRY cases, representing the interests of digital asset holders around the world. John regularly appears on cable news outlets such as Fox Business as a crypto expert.
</div>


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From Ripple and XRP to Filecoin: The SEC is Simply Illogical

Sebastian Sinclair

Binance has finally locked down a digital asset license in Southeast Asia after partnering with a local business in Thailand to establish an exchange there.



Dubbed Gulf Binance, the initiative is a collaboration between the world’s largest crypto exchange and Gulf Innova Co, a wholly-owned Thai subsidiary of publicly listed holding company Gulf Energy.



It follows a <a href="https://blockworks.co/news/binance-seeks-to-establish-thai-crypto-exchange-following-mou-with-local-business">year-long effort</a> for Binance to reestablish a foothold in the country after being booted out for operating without a license amid criminal complaints from Thailand’s securities regulator.&nbsp;



It’s also the first license Binance has secured across the region, despite continuing to operate in several countries such as the Philippines without <a href="https://forkast.news/headlines/no-legal-basis-to-ban-binance-philippines/#:~:text=The%20Philippines'%20Department%20of%20Trade,)%2C%20the%20nation's%20central%20bank." target="_blank" rel="noreferrer noopener">appropriate licensure</a>.



The agreement between the pair, laid out in January of last year, was designed to allow the exchange a viable pathway to reenter by assuaging those concerns through a domestic and publicly regulated business.&nbsp;



It’s a marked change from previous efforts from the major exchange which, <a href="https://blockworks.co/news/binance-says-singapore-license-withdrawal-due-to-redundancy-not-aml-shortcomings">in the past</a>, has operated without licensure at the risk of souring relationships with country officials and watchdogs.



Just last month, Binance had its derivatives license canceled in Australia over allegations it had mislead retail investors by allowing them to pick up risky products designated for <a href="https://blockworks.co/news/binance-loses-australia-license">wholesale clients</a>.



By partnering together, Binance and Gulf are hoping to draw in domestic users to what they’re calling a “compliant-first exchange,” a statement on Friday reads.



Approximately 4.3 million individuals, equivalent to 6.47% of the total population in Thailand, own some form of crypto, according to data provided by <a href="https://triple-a.io/crypto-ownership-thailand-2021/" target="_blank" rel="noreferrer noopener">Triple-A</a>.



Richard Teng, Binance’s regional head of Asia, Europe and MENA said those same users would be able to expect “access to a trusted and regulated service.”



Thailand stands as “a country with a thriving crypto space that has demonstrated strong commitment in embracing blockchain technology,” Teng said in the statement.



Further details on its business operations are expected to be made available closer to the exchange’s launch date in the fourth quarter of this year.



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Binance Gets Greenlight to Operate Exchange in Thailand

The World Economic Forum (WEF) has taken a stab at presenting solutions to global crypto policy, which it warns is too patchwork to properly protect markets and investors.



In a fresh white paper, &#8220;Pathways to the Regulation of Crypto-Assets,&#8221; the global body reasoned that protections baked into traditional finance might not fully extend to crypto due to its decentralization. Addressing its “borderless nature” would help bridge the gap.



“At their current level, crypto assets represent a small portion of the overall global financial system,” WEF <a href="https://www3.weforum.org/docs/WEF_Pathways_to_the_Regulation_of_Crypto_Assets_2023.pdf" target="_blank" rel="noreferrer noopener">said</a>, echoing sentiment from <a href="https://blockworks.co/news/europe-raises-alarm-over-crypto" target="_blank" rel="noreferrer noopener">Europe’s systemic risk board</a>.



“Even so, the lack of regulation in some jurisdictions and the absence of a harmonized regulatory framework is raising concerns as to whether this market could pose a threat to global financial stability.”



WEF targeted its recommendations at three major stakeholders categories: international organizations, regional or national regulators and the industry as a whole.



<ol>
<li>Establish best practices for crypto (internationals organizations)</li>



<li>Harmonize terminology and definitions (internationals organizations)</li>



<li>Foster cross sector coordination among regulators (regulators)</li>



<li>Coordinate efforts to establish interoperable technical standards (regulators)</li>



<li>Share best practices for addressing operational and cybersecurity risks (industry)</li>



<li>Innovate &#8220;responsibly&#8221; and engage with policymakers and regulators (industry)</li>
</ol>



Lax standardization of crypto regulations, policies and definitions are holding back progress for sufficient oversight, WEF said. 



A light touch approach in some jurisdictions, including those considered crypto hubs like Singapore or Hong Kong, are “leading to problems of regulatory arbitrage.”



WEF is an international non-governmental organization famously known for its annual Davos conferences, which play host to world and business leaders intent on influencing global conversations and agendas. 



The body said it built its crypto policy report with contributions from policymakers, regulators and industry figures.



Dante Disparte, chief strategy officer and head of Global Policy at Circle, as cited in the white paper, said the WEF’s “vital work,” in collaboration with the Digital Currency Consortium, offered an accessible blueprint for jurisdictions to work with.



“The advent of crypto-assets and blockchain-based financial services is proving to be more about convergence than disruption of the traditional economy, banking and finance,” he said. “This should be encouraged.”



<h2>World Economic Forum warns of Ethereum ‘concentration risk’</h2>



WEF flagged areas of the crypto industry which could suffer from concentration risk, including stablecoins (a handful of issuers dominate the market) and crypto exchanges (FTX contagion was widespread).



The ecosystem could suffer without clear regulatory frameworks to handle market abuses, competition policies and conflicts of interest, the report said.



But WEF also cited Ethereum’s dominance as a potential risk: “There are several decentralized applications powering the crypto asset ecosystem, but the underlying technology is dominated by Ethereum, one of the most decentralized blockchains.”



Other layer-1 protocols operate within the sector, but “most are based on Ethereum technology,” WEF said, adding that layer-2s such as Optimisim, Arbitrum and Polygon are addressing some concentration risks.



“Moreover, a trend towards more EVM-compatible chains that do not depend on Ethereum for consensus, such as Avalanche, can further create competitive networks that share the same developer support,” WEF said.



Ethereum aside, worldwide agencies are voicing similar concerns. Dubai’s Financial Services Authority this week <a href="https://www.bloomberg.com/news/articles/2023-05-26/dubai-watchdog-warns-on-risks-of-crypto-s-global-regulatory-gaps" target="_blank" rel="noreferrer noopener">called</a> for regulators to come together in a bid to curb exploitation of regulatory loopholes.



The Dubai watchdog took grievance with the complex nature of many global crypto firms, which operate across multiple jurisdictions under a single umbrella organization.



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