Froggy Friends

Katherine Ross

Michael McSweeney

Today, enjoy the Empire newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



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<h2 class="wp-block-heading">It’s been four years…</h2>



It ain’t over ‘til the fat lady sings — or until an appeals court says it’s siding with Judge Analisa Torres’ decision in the SEC&#8217;s case against Ripple.



If you haven’t a clue what I’m referencing, the SEC filed yesterday to appeal the <a href="https://blockworks.co/news/ripple-fined-civil-penalty-sec-lawsuit">$125 million judgment</a> in its case against Ripple. The case, which is now as old as a human toddler (and will celebrate its fourth birthday in December if it’s still going on by then), has been a long and hard-fought battle for both the SEC and Ripple.



The two sides had until Oct. 7 to decide if they were going to pursue an appeal. An SEC spokesperson told me that it filed the appeal because it believes the decision “conflicts with decades of Supreme Court precedent and securities laws.”&nbsp;



Right now, we don’t really know what the appeal will look like, though the statement gives us some clues.&nbsp;



What we do know, however, is that this appeal isn’t what some others in crypto — specifically looking at Bitwise — wanted to see from the SEC. <a href="https://blockworks.co/news/bitwise-files-for-spot-xrp-etf">Bitwise just filed yesterday</a> for an XRP ETF. And Galaxy Digital’s Alex Thorn warned that the likelihood of success from Bitwise “drops to near zero” with an appeal.



<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">SEC has until next week (Oct. 7) to appeal Judge Torres’ July 2023 ruling (which held that secondary sales of XRP through exchanges were not securities) likelihood of this ETF filing succeeding drops to near zero if they do appeal (i’ll be very surprised if they don’t appeal) <a href="https://t.co/FBGVZPNvwV">https://t.co/FBGVZPNvwV</a>&mdash; Alex Thorn (@intangiblecoins) <a href="https://twitter.com/intangiblecoins/status/1841214766607384582?ref_src=twsrc%5Etfw">October 1, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Ripple and the SEC both notched wins and suffered some losses throughout the years. In July of last year, Judge Torres <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security">handed the two parties</a> the biggest decision yet: Ripple’s programmatic sales of XRP didn’t constitute investment contracts. However, the double-edged sword was that Torres ruled that the institutional sales did.



“The vast majority of individuals who purchased XRP from digital asset exchanges did not invest their money in Ripple at all. An Institutional Buyer knowingly purchased XRP directly from Ripple pursuant to a contract, but the economic reality is that a Programmatic Buyer stood in the same shoes as a secondary market purchaser who did not know to whom or what it was paying its money,” she wrote at the time.&nbsp;



At the time, the SEC sought to file an interlocutory appeal on the decision but was later denied.&nbsp;



And now we’re here. It’s not a huge surprise that the SEC would appeal, after all they didn’t necessarily win on the final judgment either. Though, one could also argue that Ripple didn’t either.&nbsp;



Basically, the SEC sought an eye-watering sum of $2 billion in the final judgment. Ripple, on the other hand, wanted a far lower sum of $10 million. In the end, Torres announced that Ripple would pay $125 million. When looking at the wide range, it falls closer to Ripple’s ask than the SEC’s request.



Following the decision, <a href="https://blockworks.co/news/empire-newsletter-ripple-sec-legal-battle">I was told by lawyers</a> that it wouldn’t be surprising if the SEC sought an appeal.&nbsp;



Ripple’s chief legal officer Stuard Alderoty agreed with that assessment, calling the appeal filing “disappointing.”&nbsp;



“The Court already rejected the SEC’s suggestion that Ripple acted recklessly, and there were no allegations of fraud and, of course, there were no victims or losses,” he added.&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">(1) The SEC&#39;s decision to appeal is disappointing, but not surprising. This just prolongs what&#39;s already a complete embarrassment for the agency. The Court already rejected the SEC’s suggestion that Ripple acted recklessly, and there were no allegations of fraud and, of course,… <a href="https://t.co/PQozMMtthf">https://t.co/PQozMMtthf</a>&mdash; Stuart Alderoty (@s_alderoty) <a href="https://twitter.com/s_alderoty/status/1841596012588114116?ref_src=twsrc%5Etfw">October 2, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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CEO Brad Garlinghouse <a href="https://x.com/bgarlinghouse">reiterated</a> that Ripple will continue to fight and didn’t mince words about the appeal.&nbsp;



“If Gensler and the SEC were rational, they would have moved on from this case long ago. It certainly hasn’t protected investors and instead has damaged the credibility and reputation of the SEC,” he said. “Somehow, they still haven&#8217;t gotten the message: they lost on everything that matters. Ripple, the crypto industry, and the rule of law have already prevailed.”



Now we’ll just have to see if the Court of Appeals agrees with him.&nbsp;



— Katherine Ross



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



<ul class="wp-block-list">
<li>XRP’s down 11% after the SEC filed its appeal Wednesday.</li>



<li>Bitcoin is at $60,758 early Thursday, down slightly from yesterday, as tension in the Middle East continues to weigh on it.</li>



<li>Ether, however, is down 4% to $2,351.</li>



<li>Long liquidations totaled $218 million in the past 24 hours and $56 million of shorts were liquidated.</li>



<li>EIGEN is down nearly 25% from an all-time high of $4.53 earlier this week to $3.42 after it unlocked. </li>



<li>PYUSD’s market cap sits at $702 million, down over 21% in the past 30 days. It’s ranked ninth on <a href="https://app.rwa.xyz/stablecoins">rwa.xyz’s</a> stablecoins list.</li>
</ul>



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



<ul class="wp-block-list">
<li>Banks in Europe and North America will <a href="https://www.swift.com/news-events/news/live-trials-digital-asset-transactions-swift-start-2025#:~:text=The%20ability%20to%20execute%20digital,of%20digital%20assets%20and%20currencies.">test</a> live digital asset transactions on the Swift network next year, the company said Thursday.</li>



<li>A US citizen has <a href="https://www.justice.gov/usao-sd/pr/indiana-man-pleads-guilty-conspiracies-involving-cyber-intrusion-and-37-million">pleaded guilty</a> to stealing some $37 million in crypto in 2022, according to a DOJ statement. </li>



<li>OpenAI <a href="https://www.axios.com/2024/10/02/openai-new-funding-round-restructuring">raised</a> $6.6 billion in a VC funding round led by Thrive Capital. </li>



<li>Metaplanet <a href="https://x.com/Metaplanet_JP/status/1841718887689187627">boosted</a> its BTC hoard via an options sale, according to its X account.</li>



<li>Gurbir Grewal, the SEC’s enforcement director, will <a href="https://blockworks.co/news/sec-enforcement-director-departure">depart</a> next week.</li>
</ul>



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



Q: The SEC’s head of enforcement Gurbir Grewal announced he is leaving the agency this month. What does the departure signal?



I’ll go out on a limb and call it —&nbsp;potentially —&nbsp;quite significant.



I’ve never bought the theory that the SEC is so monolithically opposed to crypto or that all decisions flow down from crypto’s favorite bugbear, Gary Gensler.&nbsp;



Rather, I’ve held the view that agencies like the SEC are composed of people with different ideas, different incentives and, yes, different views on crypto.&nbsp;



Yesterday’s statement made particular hay about Grewal’s crypto bonafides, including the “more than 100 enforcement actions addressing widespread noncompliance in the quickly growing crypto space” he oversaw.



Grewal’s deputy, Sanjay Wadhwa, will take over on an acting basis. But whoever is slotted into the spot more permanently could take a decidedly different tack, especially amid a shifting political climate. Gensler’s bitcoin ETF step-down earlier this year was an acknowledgment, good or bad, that the agency isn’t immune from outside forces.



So let’s wait and see, as we often do here in crypto.&nbsp;



— Michael McSweeney



The fish rots from the head, right?&nbsp;



If we’re assuming that the SEC is taking an opposition to crypto because Gensler’s leading the charge, then the resignation of one of his top dogs is not going to rock the ship too much.



Gurbir Grewal has certainly left his mark on the SEC, but that’s not to say that his replacement won’t go after the same types of cases.&nbsp;



I hesitate to read too much into his decision to resign. We don’t know the facts, for one, and while he played an important role in the agency I believe that his position is one that’s fairly replaceable. Sorry, Grewal, but it’s true.&nbsp;



For all we know, he’s seen so many crypto cases that he’s gone and started his own project (this is a joke) or perhaps he’s gone the way of some former SEC officials and joined companies with crypto exposure (see Robinhood’s Dan Gallagher or a16z advisor Bill Hinman).&nbsp;



Bottom line is this: If Gensler’s the one paving the way forward for an anti-crypto SEC, Grewal’s departure won’t change a thing.&nbsp;



— Katherine Ross



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The court battle between Ripple and the SEC isn’t over yet

Ben Strack

Visa has created a new platform in a bid to help financial institutions issue fiat-backed tokens and test out their use cases.&nbsp;&nbsp;



The payments giant’s guidance to banks exploring this space is part of a broader effort to create global standards that ease interactions between such entities, Visa executives noted.&nbsp;&nbsp;&nbsp;&nbsp;



As more real-world assets — from real estate to debt securities — come onto blockchains, there’s a growing need to bring more forms of cash onto those rails to trade them, said Visa crypto head Cuy Sheffield.



“We think that creates a significant opportunity for banks to issue their own fiat-backed tokens on blockchains, do it in a regulated way and enable their customers to access and participate in these on-chain capital markets,” he told Blockworks.&nbsp;



<a href="https://blockworks.co/tag/visa">Visa</a> has watched first hand as central banks explore the potential of <a href="https://blockworks.co/tag/tokenization">tokenization</a> and how it can modernize financial infrastructure, Sheffield noted.&nbsp;



The company last year did a pilot with HSBC and Hang Seng Bank, for example, as part of the Hong Kong Monetary Authority’s <a href="https://blockworks.co/news/hong-kong-cbdc-pilot-testing">Digital Hong Kong Dollar program</a>. The test simulated interbank business-to-business payments, including property payment and settlement between collection institutions and merchants.



Also last year, the Central Bank of Brazil picked Visa to participate in a CBDC pilot of the digital real.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/digital-dollar-visa-brazil-cbdc">‘Learning by doing’ is critical to digital dollar development, Visa exec says</a>



“And then we started to see more interest from many commercial banks and our existing partners starting to tiptoe in and say, ‘What are fiat-backed tokens and tokenized deposits?’” Sheffield told Blockworks earlier this year. “‘Should we create one?’”



Spain-based Banco Bilbao Vizcaya Argentaria (BBVA) has been working in the new Visa Tokenized Asset Platform (VTAP) sandbox this year, Visa said Wednesday.&nbsp;



The bank was testing the issuance, transfer and redemption of a bank token on a testnet blockchain. It seeks to launch an initial pilot with select customers in 2025 on the Ethereum blockchain.&nbsp;



“From our experience working with banks, it’s [a slow process] for a reason,” Sheffield said. “You have to be careful and make sure that you understand the technology and that you’re educating both internal stakeholders as well as regulators.”&nbsp;



Fintechs, <a href="https://blockworks.co/news/paypal-launches-stablecoin">like PayPal, have made innovative strides with stablecoins</a> in recent years. Large asset managers have started to embrace blockchain technology more meaningfully, with BlackRock launching its USD Institutional Digital Liquidity Fund in March.



Franklin Templeton, which launched its OnChain US Government Money Fund in 2021, started allowing institutional investors to transfer shares of the fund to other shareholders earlier this year.



Read more: <a href="https://blockworks.co/news/stablecoin-with-yield-franklin-templeton">A stablecoin with yield? Tokenized fund perhaps just the start for fund giant</a>



“We think the next phase is the banks coming in, starting to experiment and creating their own products,” Sheffield told Blockworks. “I think that will open up a lot of opportunities when you can have more liquidity.”



<h2 class="wp-block-heading">What are the use cases?</h2>



Among the lowest hanging fruit for banks is allowing real-time money movement between their own clients, Visa executives said.&nbsp;



The JPM Coin System, a permissioned payment rail and deposit account ledger, allows for this, for example.&nbsp;



Read more: <a href="https://blockworks.co/news/jpmorgan-blockchain-payments">JPMorgan adds ‘holy grail’ payments feature as part of blockchain push</a>



In markets where central banks are actively creating wholesale <a href="https://blockworks.co/tag/cbdc">CBDC</a>s, financial institutions are also interested in inter-bank transfers.&nbsp;



Catherine Gu, Visa’s head of CBDC and tokenized assets, told Blockworks that offering clients cross-border transfers is an area of focus for banks.&nbsp;&nbsp;



“For especially multinational corporates moving money 24/7, right now the rails are very limited for them to do so,” she said. “So a lot of these major tier-one banks — as they’re looking at the blockchain use cases — are really coming from that perspective.”



Interacting with tokenized real-world assets may end up driving the most demand, Sheffield said.



Read more: <a href="http://v">How the latest TradFi blockchain trial could mark the ‘five-yard-line’ for mass adoption</a>



A bank could let customers use a fiat-backed token to buy tokenized commodities or Treasurys with instant settlement, for example.&nbsp;



Using <a href="https://blockworks.co/tag/smart-contracts">smart contracts</a> to create structured financial products is another area banks are exploring.&nbsp;



“You can have collateral that represents a commodity,” Sheffield explained. “And then you [will] be able to lend in a tokenized version of fiat against that commodity, and that can happen all automatically through a smart contract.”



Banks will likely utilize and create products on a range of public and private blockchains based on the use cases and regulatory environments they are operating in.



Read more: <a href="https://blockworks.co/news/goldman-sachs-future-public-blockchains">Goldman Sachs head of digital assets: The future is on public blockchains</a>&nbsp;



Fragmentation remains a key hurdle to overcome, Gu said — noting there is not a uniform approach to tokenization and smart contracts.&nbsp;



Visa could seek to help create standards to ensure interoperability between financial institutions that wade into this segment.&nbsp;



“It would be nice to think about a uniform platform, which is the blockchain, that you can facilitate both the cash-flow leg as well as whatever you’re trying to trade and transact,” Gu noted. “To really think about how tokenization can become mainstream, you’ve got to think about a way to do so.”



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Visa to help banks test tokenized assets, smart contracts

Robinhood is expanding its European offerings, allowing customers to transfer crypto in and out of its app.&nbsp;



Robinhood’s Johann Kerbrat told Blockworks that the company will continue to roll out new features. He added that right now Robinhood is limiting its marketing to a few countries over in the EU as it awaits its MiCA license.&nbsp;



Once Robinhood has that in hand, the company plans to scale all “across the EU.”



The reason for Robinhood’s EU focus is simple, Kerbrat explained.&nbsp;



“You have a lot <a href="https://blockworks.co/news/ireland-crypto-vasps-coinbase">more companies in the EU</a> working on crypto than in the US. We have a bit more of a clear framework, and so we are able to launch the product…in a fast way, because we know how to adapt to the regulatory framework, and because we&#8217;re getting this constant feedback loop from customers, we&#8217;re able to…add what&#8217;s missing or what they are looking for,” he said.



Read more: <a href="https://blockworks.co/news/uk-crypto-regulation-panel-das">The UK is at a turning point in crypto regulation, policymakers say&nbsp;</a>



Unfortunately, to no one’s surprise, the US market isn’t so easy. Obviously there isn’t a crypto license that’ll allow <a href="https://blockworks.co/tag/robinhood">Robinhood</a> to safely offer the same types of features to US residents. And then there’s the pesky matter of the <a href="https://blockworks.co/news/robinhood-wells-notice-sec">Securities and Exchange Commission’s Wells Notice</a>.&nbsp;



Kerbrat said the company hasn’t heard anything back from the <a href="https://blockworks.co/tag/sec">SEC</a> “at this point.”&nbsp;



“We were disappointed. I think we&#8217;ve been really focusing on establishing a safe business. We didn&#8217;t list a ton of assets like some of our competitors. We never offered staking in the US. So, you know, we&#8217;ve felt like we&#8217;ve done our work to work with the SEC and get to a good position, but we were obviously disappointed with the Wells notice,” Kerbrat said.&nbsp;



It’s unclear, at this stage, what the SEC is planning. The regulatory agency had a spree of crypto-related enforcement actions last month to round out its fiscal year.



<a href="https://blockworks.co/news/empire-newsletter-sec-issues-robinhood-wells-notice">In May we wrote</a> that, based on how the SEC has approached other lawsuits, it was likely that it would file its lawsuits (if it chooses to do so, because Wells notices don’t always mean that a lawsuit is incoming) last summer. And it did…with Consensys, after the company received a Wells notice last spring. But we haven’t seen actual lawsuits against either Robinhood or Uniswap yet.



But despite the will they or won’t they situation playing out with the SEC, Kerbrat says nothing’s really changed for Robinhood when it comes to its US business.&nbsp;



Read more: <a href="https://blockworks.co/news/crypto-must-work-closely-with-regulators">Crypto needs ‘to work closely with the regulators:’ Gemini deputy general counsel</a>



Though, he noted, they’re not super focused on adding more assets to the platform.&nbsp;



“Our focus at this point is more about making sure that the features we have are working for our customers,” he noted.&nbsp;



Robinhood, due to its customer base, is a good gauge of how the retail crowd is doing.&nbsp;



“I think we still see a lot of engagement off-chain and onchain. And I think the onchain part is important because it really shows that people are not just buying the crypto somewhere and holding it there, but we actually see them transacting and using a self-custody wallet, engaging with steps and all these kinds of things. So we haven&#8217;t seen too much of that changing. We do see volume cycling, and that&#8217;s something that we are used to. We see it almost every year,” he said.



Kerbrat also addressed the stablecoin <a href="https://www.bloomberg.com/news/articles/2024-09-26/robinhood-revolut-explore-entering-the-burgeoning-stablecoin-sector">rumors</a>. While he noted that stablecoins are a “very interesting business,” he clarified that “at this point we don&#8217;t have anything that we are preparing.”&nbsp;



A modified version of this article first appeared in the daily Empire newsletter. Subscribe <a href="https://blockworks.co/newsletter/empire">here</a> so you don’t miss tomorrow’s edition.



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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>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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Robinhood is seeing ‘a lot of engagement’ from retail users

Casey Wagner

Today, enjoy the Forward Guidance newsletter on Blockworks.co. Tomorrow, get the news delivered directly to your inbox. <a href="https://blockworks.co/newsletter/forwardguidance">Subscribe to the Forward Guidance newsletter</a>.



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<h2 class="wp-block-heading">New US spot crypto ETF plans take shape</h2>



The spot bitcoin ETFs hitting US exchanges was the talk of the town in January (not to mention the months of anticipation after BlackRock jumped into that race).&nbsp;



Though ether ETFs haven’t seen as much investor interest (and weren’t expected to) since their July launches, that was deemed another milestone. Not to mention the iShares Ethereum Trust fairly quickly gathered $1 billion in assets.



As institutions wade deeper into crypto, ETFs have proven to be a gateway into the space. All this to say: New crypto ETF filings are pretty significant, particularly ones that would directly hold an asset not yet available in such a wrapper.



But for them to really change the game, of course, they need to be approved.



That preamble sets up what we saw today: Crypto-focused asset manager <a href="https://blockworks.co/news/bitwise-files-for-spot-xrp-etf">Bitwise filed for an XRP ETF</a>. Canary Capital also appeared to file for a similar product, the Delaware Division of Corporation website shows.



Bitwise decided to put out a press release — not exactly common after an <a href="https://www.sec.gov/Archives/edgar/data/2039525/000121390024084334/ea0216197-s1_bitwise.htm">S-1 filing</a>. In it, the firm mentions XRP’s role in facilitating cross-border payments and remittances — adding that the XRP Ledger public blockchain typically processes transactions in seconds, with fees under a cent.



XRP’s market capitalization of roughly $33 billion means it ranks seventh among crypto tokens.



“We believe blockchains will usher in new, apolitical monetary assets and permissionless applications for the 21st century,” Bitwise CEO Hunter Horsley said in a statement.&nbsp;



Last month <a href="https://blockworks.co/news/on-the-margin-newsletter-bear-market-vibes">I wrote</a> about how Grayscale’s XRP Trust launch didn’t necessarily mean such an ETF was coming. Sure, Grayscale has an intended product lifecycle that ends in an ETF listing; but the SEC has to allow such a conversion for that to be fulfilled.



Some have previously told Blockworks that spot crypto ETF approvals in the SEC (outside of BTC and ETH) might be tough given the precedent of the regulator wanting to <a href="https://blockworks.co/news/us-spot-crypto-etf-approvals-outlook">first see a regulated futures market</a>. None exist for XRP (or solana).



But the plans laid out from Bitwise and Canary seem to advance the growing perception that the US crypto regulatory winds are changing. Then again, it could just be wishful thinking.



While Bitwise declined to comment on that, a Canary Capital spokesperson told me there are indeed “encouraging signs of a more flexible regulatory environment.” The representative added: “This year&#8217;s approval of the spot Ethereum ETFs, following the earlier spot bitcoin ETF approvals, signals positive momentum, especially considering how long it took for ETH futures products to be approved. We&#8217;re optimistic about the next phase of developments in the space.&#8221;



Neena Mishra, director of ETF research at Zacks Investment Research, said Bitwise is preparing for an XRP ETF in case Trump wins the presidency. The former president did, after all, <a href="https://blockworks.co/news/donald-trump-speaks-bitcoin-2024">promise to “fire” SEC Chair Gary Gensler</a> if elected.&nbsp; “If Harris wins and Gensler remains SEC chair, the filing has no chance of approval, despite [Harris’s] <a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">recent comments</a> about supporting digital assets,” Mishra argued.



Mishra’s thoughts are similar to ones expressed by VanEck’s Matthew Sigel after his firm <a href="https://blockworks.co/news/how-us-canada-solana-fund-filings-differ">filed for a solana ETF</a> in June. He had noted that filing was essentially <a href="https://x.com/matthew_sigel/status/1807775290396942559?lang=en">a bet on a Trump victory</a> in November, given the Republican nominee’s rhetoric in recent months.



Sigel did not want to comment on the latest Bitwise S-1 today, noting only: &#8220;We like SOL a lot more than XRP.&#8221;&nbsp;



Bitwise’s filing also comes as crypto enthusiasts monitor whether the SEC will appeal the ruling in the regulator’s legal battle with Ripple Labs. The court <a href="https://blockworks.co/news/ripple-fined-civil-penalty-sec-lawsuit">ordered Ripple to pay</a> a $125 million penalty — far below the $2 billion <a href="https://blockworks.co/news/empire-newsletter-ripple-sec-legal-battle">the SEC had sought</a>.



Judge Analisa Torres <a href="https://blockworks.co/news/judge-rules-ripple-xrp-not-security?utm_source=on-the-margin.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=new-day-sahm-rule&amp;_bhlid=e486fbf0e817113df4c1fb8a41cfff47c7497df6">last year ruled</a> that while Ripple’s institutional sales of XRP counted as an unregistered securities offering, programmatic sales did not. An appeal could delay clarity on XRP’s status, possibly impacting planned ETFs that hold the asset.



Ultimately, ETF issuers want to be ready for any scenario — particularly given the edge asset managers often gain from launching a product first, Mishra noted.



“Bitwise, well known for its crypto expertise, will likely launch this product in the future,” she explained to me. “Politics will determine whether this happens soon or in a few years.”&nbsp;



— Ben Strack&nbsp;



<h3 class="wp-block-heading">0 </h3>



The number of times crypto was mentioned during last night’s vice presidential debate.&nbsp;



We can’t say we were terribly surprised, but given Kamala Harris and Donald Trump do not have any more debates scheduled before Nov. 5, last night appeared to be a final pre-election opportunity to hear digital asset regulation discussed on a national stage.&nbsp;



Still, there is plenty of time left for Trump and/or Harris — plus their running mates — to share more information about their respective crypto platforms (or <a href="https://blockworks.co/news/on-the-margin-newsletter-fomc-meeting-takeaways">stop into an NYC bar and pay with bitcoin</a>).&nbsp;



<h2 class="wp-block-heading">More employment data boosts odds of a 25bps cut&nbsp;</h2>



Private sector employers added 143,000 jobs in September, up from 103,000 in August, ADP reported Wednesday. This beat the forecast of 128,000 new positions.&nbsp;



Hospitality led with 34,000 new jobs. Construction and education and health services posted 26,000 and 24,000 new positions, respectively.&nbsp;



The report noted too that wage growth is slowing, which we also saw in yesterday’s JOLTS report. ADP said the 12-month pay increase for employees who had not left their position was 4.7%, compared to 4.8% in August.&nbsp;



The JOLTS report showed that layoffs and discharges are leading quits on a percentage basis, but job openings are still up. Job openings — as a percentage of the overall US labor force — now sit at 4.77%, similar to where we were prior to the pandemic.&nbsp;



This data comes after Fed Chair Jerome Powell on Monday said the committee is not looking to rush interest rate cuts. The lowering cycle will continue, he added, “over time.”&nbsp;



Labor market health, as we’ve discussed in this newsletter before, is a top concern for Powell as he attempts a soft landing.&nbsp;



“We do not believe that we need to see further cooling in labor market conditions to achieve 2% inflation,” he said Monday.&nbsp;



Federal funds futures markets now show a 63% chance of a 25-basis point cut in November, according to CME Group <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">data</a>.&nbsp;



Powell is going to want to see annual wage growth closer to the 3% to 3.5% level, which he’s said in the past is consistent with a 2% inflation rate. Still, I’d tend to agree with the futures markets here; these latest two reports are not convincing me that we’ll see another aggressive cut next month.&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Latest CME Group launch surpasses prior crypto product debuts&nbsp;&nbsp;</h2>



CME Group’s new Bitcoin Friday futures (BFF) are so far a smash hit — at least when considering day-one reception compared to its previously launched crypto derivatives offerings.



Sized at one-fiftieth of a bitcoin, the new contracts are cash-settled to the CME CF Bitcoin Reference Rate (New York Variant) at 4 pm ET every Friday. New contracts are listed every Thursday at 6 pm ET, and market participants can trade the nearest two Fridays at any given point.



CME Group noted Tuesday that 31,498 BFF contracts traded across two different contract weeks during the Sept. 30 debut.



A company spokesperson put this number into perspective. The highest-volume CME crypto launch prior to yesterday was micro bitcoin futures, which traded about 7,400 contracts when introduced in May 2021.



A majority of the volume — at 69% — came from investors in the Europe, Middle East and Africa regions, CME data shows. Those in North America and the Asia Pacific regions made up 19% and 12% of the volume, respectively.



The derivatives marketplace publicly plotted out the launch of these futures contracts in August. The concept was simple: to offer smaller-sized contracts in an effort to attract participation from more types of investors.



Institutions and retail traders alike “will be able to more accurately fine-tune their bitcoin exposure on a regulated exchange,” CME crypto products head Giovanni Vicioso said in a statement at the time.&nbsp;



Galaxy and Marex made the first trade of such contracts on Sept. 29, CME noted on Tuesday.



Marex’s co-head of derivatives engine, Harry Benchimol, said the weekly contracts are an efficient hedging tool and are closer to the perpetuals offered on crypto platforms.&nbsp;&nbsp;&nbsp;



Thus, he noted, “CME Group is closing the gap between traditional financial and crypto markets.”



Interest is coming “both on screen and in the block market,” Vicioso told Blockworks Wednesday.&nbsp;&nbsp;



This seems to give CME Group plenty of incentive to continue building out its crypto product lineup. It’ll be interesting to see what it comes up with next.&nbsp;



— Ben Strack&nbsp;



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>A federal appeals court has cleared prediction market platform Kalshi to reopen its US Congressional election betting markets. The ruling comes three weeks after a different appellate judge <a href="https://apnews.com/article/betting-on-elections-kalshi-gambling-c060aad4d12f9622d36f83e525088dcc">sided with the CFTC</a> and issued a temporary freeze on the markets. </li>



<li>Dockworkers from 36 ports on the East Coast continued their strike Wednesday as <a href="https://nam.org/manufacturers-call-on-president-to-invoke-taft-hartley-act-to-stop-port-strike-32188/?stream=series-press-releases">pressure mounts</a> for President Biden to invoke the Taft-Hartley Act and intervene. Biden has said he will not step in. </li>



<li>We are a week away from <a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a>! Get your tickets now to hear Felix host  Forward Guidance live. (Word to the wise, we hear prices are increasing soon!)</li>
</ul>



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The XRP ETF filing: A sign of regulatory progress or wishful thinking?

Gurbir Grewal, who has served as the US Securities and Exchange Commission’s director of the division of enforcement since July 2021, will leave the agency this month.&nbsp;



The current deputy director of the division, Sanjay Wadhwa, will step in as acting director starting on Oct. 11, the SEC <a href="https://www.sec.gov/newsroom/press-releases/2024-162">announced</a> Wednesday.&nbsp;



“From recalibrating penalties and remedies to confronting emerging risks to holding issuers, insiders and gatekeepers accountable, I am incredibly proud of all that we’ve accomplished as a division during my tenure,” Grewal said in a statement. “I am grateful to Chair Gensler not just for the opportunity to lead the division, but also for his unwavering commitment to investor protection and support of a robust enforcement program.”



Read more: <a href="https://blockworks.co/news/on-the-margin-newsletter-sec-leader-departs">SEC crypto enforcement leader departs</a>



Grewal joined the agency just months after SEC Chair <a href="https://blockworks.co/tag/gary-gensler">Gary Gensler</a> was sworn into his position in April 2021. Cryptocurrency-related enforcement actions, which had been on the rise before Grewal and Gensler took over, were a significant part of Grewal’s tenure.&nbsp;



Under Grewal’s leadership, the agency issued 35 crypto enforcement actions in 2022 and a total of 40 in 2023. The division of enforcement almost <a href="https://www.sec.gov/newsroom/press-releases/2022-78">doubled</a> its crypto assets and cyber unit in May 2022, bringing the team’s total to 50.&nbsp;



As of Sept. 6, 2024 the agency had brought 18 crypto enforcement <a href="https://www.sec.gov/securities-topics/crypto-assets#account">actions</a> since the start of the year.&nbsp;



Read more: <a href="https://blockworks.co/news/empire-newsletter-sec-crypto-settlements">SEC settlements are becoming the cost of doing crypto business</a>



“Every day, [Grewal] has thought about how to best protect investors and help ensure market participants comply with our time-tested securities laws,” Gensler said in a statement. “He has led a division that has acted without fear or favor, following the facts and the law wherever they may lead. I greatly enjoyed working with him and wish him well.”



Wadhwa started at the <a href="https://blockworks.co/tag/sec">SEC</a> in 2003 as a staff attorney in the New York office’s enforcement division. He served as the senior associate director of the New York enforcement division for eight years before he became the deputy director for the entire division.&nbsp;



A representative from the SEC declined to comment.



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SEC’s enforcement director announces departure 

Jack Kubinec

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Roughly a month and a half after its PYUSD supply vaulted past Ethereum’s, Solana’s stash of PayPal’s stablecoin has fallen back to Earth.



The stablecoin’s supply, once in excess of $660 million, has fallen to around $320 million, a decline of roughly 50% in about a month. Ethereum currently has a supply of $377 million PYUSD.



The drawdown comes as Kamino and other DeFi protocols slowly wind down once-lucrative liquidity incentive programs that juiced yields for the stablecoin’s holders. Now, those yield farmers appear to have gone in search of greener pastures, raising questions about how worthwhile those incentives investments will prove to be in hindsight.



PayPal’s PYUSD is issued by a firm called Paxos, which has tried to peel away liquidity from the USDT-USDC stablecoin duopoly by contracting with a <a href="https://blockworks.co/news/paypal-stablecoin-aave-deployment">firm called Trident Digital</a> for liquidity programs. After PYUSD launched on Solana earlier this year, Trident Digital facilitated liquidity incentives programs <a href="https://blockworks.co/news/kamino-seeing-benefits-from-liquidity-incentives-on-pyusd">on multiple Solana DeFi platforms</a>, where it would temporarily raise yields in an attempt to capture liquidity.



To do so, Trident Digital would dole out funds for DeFi protocols to pass on to users as a fraction of the various platforms’ PYUSD supply, which were subject to caps, according to a person with knowledge of the matter. These caps gradually lifted over time, and yields also declined over time.&nbsp;



At around the peak of Solana PYUSD, $350 million in the stablecoin was <a href="https://x.com/y2kappa/status/1825979796930834635">earning</a> 18% yield on Kamino. Today, the APY is at 9.24%, still nothing to sneeze at but seemingly less than some investors are willing to take. It’s unclear whether those incentives ultimately came from PayPal or the Solana Foundation’s coffers, and both organizations did not return requests for comment.&nbsp;



There’s a version of this story where the funds for liquidity incentives were akin to wasted funds.



“Mercenary capital sucked up the $pyUSD incentives on Solana and left,” Kilian Boshoff, chief commercial officer of Swell, <a href="https://x.com/Fundi_Crypto/status/1841220882145980793">wrote</a> on X.



But at the same time, PYUSD was never meant to be primarily used for things like DeFi lending. PayPal is a payments company, and its <a href="https://blockworks.co/news/paypal-pyusd-stablecoin-live-on-solana?utm_source=lightspeed-4bed7b.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=are-we-there-yet">public messaging around PYUSD</a> has centered around the usefulness of the stablecoin for things like remittances and payments. Being able to avoid banks certainly seems useful for a company that has to deal with the fees and headaches of moving funds into and out of bank accounts around the world.



So, whether the PYUSD liquidity incentives were a worthwhile or ill-advised investment is definitely an open question, particularly given the recent supply decline. But it’s also premature to judge the deployment, which still represents a big step into Solana from one of the world’s largest fintechs.



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PayPal’s stablecoin flows out of Solana as incentives wane

Donovan Choy

Macauley Peterson

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<h2 class="wp-block-heading">The FUD around EigenLayer tokenomics</h2>



Here’s how private investor allocations into pre-launch tokens generally work:



<ol class="wp-block-list">
<li>You are a reputable name or a KOL with many Twitter followers, and projects want your clout.</li>



<li>A project offers you a percentage of locked tokens at a favorable price, so you agree to invest.</li>



<li>On the day the project launches its “token generation event” (TGE) and tokens become tradable, your locked allocation of tokens enter a “cliff” period.</li>



<li>That cliff is typically about a year (though in bull markets has been known to drop to six or even three months), during which your tokens are effectively locked up.</li>



<li>Once that cliff is up, your tokens enter a “vesting” period — typically two to four years — during which your locked tokens begin to slowly unlock and become liquid and tradable.</li>
</ol>



Things are set up this way to create long-term incentive alignment between investors and projects to build a successful product, and ultimately deter predatory dumping on retail investors.



EigenLayer finally made its native EIGEN token transferable yesterday, amid a barrage of criticism around the opaqueness of EIGEN’s true float (circulating supply).&nbsp;



That is pretty important to know because low-float tokens are more volatile and subject to less market price discovery, and are therefore <a href="https://cobie.substack.com/p/new-launches-part-1-private-capture">predatory</a> for the unsuspecting retail investor eyeing them hungrily on the Binance mobile app.



After accounting for unclaimed EIGEN and the 73 million EIGEN already restaked on EigenLayer, Kairos Research estimated that the real float of EIGEN was about 2.42% — a float even shockingly lower than Worldcoin’s (WLD) ~4.9% — though EigenLayer <a href="https://x.com/Ian_Unsworth/status/1840753494560587859">disputed</a> that number.



And it gets more complicated.



The “locked” EIGEN tokens by EigenLayer investors are apparently not entirely locked.



During the so-called locked cliff period, EigenLayer investors can already stake their “locked” tokens, receive rewards, and begin selling those rewards on the open market. As noted in their <a href="https://docs.eigenlayer.xyz/eigenlayer/information-and-transparency/disclosures">just-updated docs</a>:



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
<figure class="wp-block-pullquote"><blockquote>“*EIGEN staking: Eigen Labs Investors are not restricted from staking EIGEN on EigenLayer. As such, investors may choose to stake their EIGEN and receive staking rewards the same as any other user. EIGEN provided by Eigen Labs to investors is subject to the Lockup Schedule, but EIGEN investors receive from staking will not be subject to the Lockup Schedule.”</blockquote></figure>
</blockquote>



But if locked tokens are accruing a yield, then that is arguably not a “locked” token.



I was under the impression that this was a rare and frowned upon practice that <a href="https://x.com/karl_0x/status/1841325496266596791">Celestia</a> <a href="https://x.com/TardFiWhale/status/1841307976134484264">started</a>, but it’s apparently becoming a standard playbook with several L1 projects including Sui, Sei and Aptos.



Yield-generating “locked” tokens defeats the whole purpose of locking up private investor tokens for “incentive alignment,” and it’s also effectively a form of double-dipping. Worse still, it double-dips from a reward pool that could have been allocated to actual productive capital, e.g. restaking and securing an EigenLayer AVS.



In EigenLayer’s defense, there is at least a cap on those emitted rewards. Based on its <a href="https://x.com/eigenlayer/status/1841313990401548434">docs</a>, 1% of the total EIGEN supply ($60 million) is emitted as rewards annually, and 25% of that is reserved for EIGEN stakers, while the other 75% goes to ETH stakers on EigenLayer.



I guess when EigenLayer was talking about “restaking,” it had in mind its investors too.



— Donovan Choy



<h2 class="wp-block-heading">Chart of the Day</h2>



USDS heads skyward:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdI4Kr1Y-epxHWTIOpfVB80gqO9IEpA9yL1zYcWNZpnHOIbrkFTWOqMSt0wP_qzxJUCobJW1iFgpaQwQExp1xBLyRdn6OKDHRRVKN2TT3ex2zY64izRlfEYtIWrPLqD90--DysPi8N4kdQETB99pe6UXlvl?key=w8qNfYNiNHCY4XnEWz3pZQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://info.sky.money/tokens/0xdc035d45d973e3ec169d2276ddab16f1e407384f">Sky.money</a></figcaption></figure>



Sky’s USDS stablecoin has hit $1.1 billion since its inception exactly one month ago. In Maker’s <a href="https://blockworks.co/news/maker-rebrands-as-sky-dai-will-be-changed-to-usds">rebrand to Sky</a>, existing DAI holders have the option to convert DAI to the rebranded USDS.



The joint market cap of both USDS and DAI is now nearly $5.9 billion, the <a href="https://makerburn.com/#/charts">highest</a> it’s been on a year-to-date basis.



— Donovan Choy&nbsp;



<h2 class="wp-block-heading">Degen Corner</h2>



<h3 class="wp-block-heading">Simple bitcoin staking</h3>



We previously looked at <a href="https://blockworks.co/newsletter/research/issue/post_339ee473-ace9-402e-a5cb-2419f96a403e">BOB Stake</a> for the Bitcoin/Ethereum “hybrid L2” BOB, and <a href="https://blockworks.co/newsletter/research/issue/post_9f505f0e-c0a8-4fde-a27a-375e53a10ab0">Stroom</a>, a liquid staking provider for the Lightning Network. To further the theme of safe bitcoin staking for noobs, leading staking-as-a-service provider P2P.org today introduced a <a href="https://blockworks.co/news/institutions-get-in-line-for-staking-bitcoin-with-babylon">Babylon</a> staking API to offer exchanges, custodians and wallet providers a way to integrate bitcoin staking directly into their platforms.



Instead of switching to a third-party interface, individual users and institutional investors can use the service to access bitcoin staking rewards through a familiar platform. Candidates include exchanges, wallets and LRT providers.



The API is designed to simplify the complex tasks of creating, signing and broadcasting bitcoin transactions, for instance by handling the <a href="https://app.blockworksresearch.com/glossary/#remote-procedure-call-rpc">RPC connection</a>.



In terms of future updates, P2P plans to add features like batch staking — allowing users to generate multiple staking transactions from a single address. This will help institutions stake bitcoin efficiently before the Babylon BTC cap is reached.



— Macauley Peterson



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Critics question the transparency and true float of EIGEN tokens

Bitwise officially filed a registration statement with the Securities and Exchange Commission for a spot XRP ETF.



According to the filing, Bitwise would hold XRP in the ETF, similar to the way it offers its ether and bitcoin ETFs.&nbsp;



“The Trust will hold XRP and establish its net asset value by reference to the CME CF Ripple – Dollar Reference Rate – New York Variant. The Pricing Benchmark is calculated by CF Benchmarks Ltd. based on an aggregation of executed trade flow of major XRP trading platforms,” the filing said.



The filing is the first step in a potential ETF, though SEC Chair Gary Gensler hasn’t signaled support for crypto ETFs beyond bitcoin and ether.&nbsp;



Back in January, after the bitcoin ETFs were approved Gensler warned that the approval didn’t signal anything “about the Commission’s views as to the status of other crypto assets under the federal securities laws or about the current state of non-compliance of certain crypto asset market participants with the federal securities laws.”



The Wednesday filing is light on details, with Bitwise saying that the “Trust provides investors with the opportunity to access the market for XRP through a traditional brokerage account without the potential barriers to entry or risks involved with acquiring and holding XRP directly. The Trust will not use derivatives that could subject the Trust to additional counterparty and credit risks.”



“At Bitwise, we believe blockchains will usher in new, apolitical monetary assets and permissionless applications for the 21st century,” said Bitwise CEO Hunter Horsley. “It’s why for the past seven years we’ve helped investors access the opportunities in the space, and we’re excited to continue that work with our filing for a Bitwise XRP ETP.”



Bitwise marks the first asset manager to try for an XRP ETF, though fellow asset manager <a href="https://blockworks.co/news/vaneck-files-for-solana-etf">VanEck filed for a solana ETF</a> in the US earlier this year.



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Bitwise files SEC paperwork to launch spot XRP ETF

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<h2 class="wp-block-heading">Can’t stop, won’t stop</h2>



Robinhood continues to expand its European offerings, announcing yesterday that it was rolling out transfers that will allow users to move crypto in and out of its app.



Robinhood’s Johann Kerbrat told me that the company will continue to develop new features. He added that Robinhood is currently limiting its marketing to a few countries in the EU as it awaits its MiCA license. Once it has that in hand, it plans to scale to all “across the EU.”



Unfortunately, to no one’s surprise, the US market isn’t so easy.&nbsp;



Obviously there isn’t a crypto license that’ll allow Robinhood to safely offer the same types of features to US residents. And then there’s the pesky matter of the SEC’s Wells notice.&nbsp;



Kerbrat said that the company hasn’t heard anything back from the SEC “at this point.”&nbsp;



“We were disappointed. I think we&#8217;ve been really focusing on establishing a safe business. We didn&#8217;t list a ton of assets like some of our competitors. We never offered staking in the US. So, we&#8217;ve felt like we&#8217;ve done our work to work with the SEC and get to a good position, but we were obviously disappointed with the Wells Notice,” Kerbrat said.&nbsp;



It’s unclear, at this stage, what the SEC is planning. The regulatory agency had a spree of crypto-related enforcement actions last month (45 to be exact, but who’s counting?) to round out its fiscal year. And yet it bucked the pattern that I, personally, thought we’d see if they were to file a lawsuit against Robinhood.&nbsp;



<a href="https://blockworks.co/news/empire-newsletter-sec-issues-robinhood-wells-notice">In May I wrote</a> that, based on how the SEC has approached other lawsuits, it was likely that it would file its court actions (if it chooses to do so, because Wells notices don’t always mean that a lawsuit is incoming) last summer. And it did… with Consensys after the company received a Wells notice last spring. But we haven’t seen actual lawsuits against either Robinhood or Uniswap yet.



But despite the will-they-won’t-they situation playing out with the SEC, Kerbrat says nothing’s really changed for Robinhood when it comes to its US business. Though, he noted, they’re not super focused on adding more assets to the platform.&nbsp;



“Our focus at this point is more about making sure that the features we have are working for our customers,” he noted.&nbsp;



So is retail bouncing back?&nbsp;



“I think we still see a lot of engagement off-chain and on-chain. And I think the on-chain part is important because it really shows that people are not just buying the crypto somewhere and holding it there, but we actually see them transacting and using a self-custody wallet, engaging with steps and all these kind of things. So we haven&#8217;t seen too much of that changing. We do see volume cycling, and that&#8217;s something that we are used to. We see it almost every year,” he said.



And, finally, I asked Kerbrat about the stablecoin <a href="https://www.bloomberg.com/news/articles/2024-09-26/robinhood-revolut-explore-entering-the-burgeoning-stablecoin-sector">rumors</a>. While he noted that stablecoins are a “very interesting business,” he clarified that “at this point we don&#8217;t have anything that we are preparing.”&nbsp;



Robinhood’s close to closing its Bitstamp acquisition — which will happen in the first half of 2025 and for Robinhood, that’s going to be a focus this quarter… which is the final one of 2024.&nbsp;



Time flies when you’re having fun, right?



— Katherine Ross



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



<ul class="wp-block-list">
<li>Bitcoin fell to $60,953 (down 4.4%) as the conflict in the Middle East intensified Tuesday.</li>



<li>Ether dropped 7% to $2,446 on the news. </li>



<li>SOL fell under $150 to $146, also dropping 7%. SOL and ether saw the biggest drops.</li>



<li>$557 million was liquidated from traders in the past 24 hours with $484 million in long liquidations, according to data from Coinglass.</li>



<li>Spot bitcoin ETFs notched outflows of $243 million on Tuesday, the biggest outflows in nearly a month.</li>
</ul>



<h2 class="wp-block-heading">Opinion: No ‘crypto elections’ here</h2>



Another election season debate — this time featuring would-be VPs JD Vance and Tim Walz —&nbsp;has come and gone, with nary a whisper about crypto.



I suppose it was to be expected. Despite efforts within the industry to characterize crypto as an election-year issue, I don’t think it actually worked. There was one moment when the debate shifted into the topic of inflation, and I half expected Vance — whose campaign has focused on crypto more deeply than the Democrats — to throw in a mention. Alas not.



Perhaps the tradition of crypto journalists eagerly awaiting something to write about on debate nights should be quietly put aside, at least until Gen Z candidates begin taking the stage.&nbsp;



Some recent <a href="https://www.coindesk.com/policy/2024/09/30/crypto-poll-us-voters-more-serious-about-demanding-candidates-with-know-how/">industry-backed polling</a> has once again pushed the idea that vast swaths of Americans are focused on crypto issues and, in turn, want their candidates to be better informed and more focused on said issues.&nbsp;



Admittedly, this has always been a difficult narrative to swallow. Far more likely in my view is that folks, rather than wanting their candidates to “know about crypto,” simply want candidates who are, well, informed about things beyond their own fundraising numbers. You don’t have to travel far in America to find folks who see the US government as out of touch with their daily lives.&nbsp;



Trump’s apparent transformation from bitcoin hero to DeFi platform hype man gives away the game. It wasn’t ever about any kind of ideological alignment — to put it bluntly, it’s the art of playing to the room in order to get campaign cash. It <a href="https://www.washingtonpost.com/politics/2024/07/14/trump-cryptocurrency-donors/">seems like it succeeded</a>. Along the way, the US crypto sector transformed into another American special interest, with a political funding apparatus that must be maintained in perpetuity. What happens when the money stops? Inquiring minds wish to know.



Somewhere between World Liberty Financial and Kamala Harris’ <a href="https://www.washingtonpost.com/business/2024/09/26/crypto-kamala-harris-bitcoin/">more-or-less restatement</a> of Biden White House crypto policy is a simple truth: this election isn’t about crypto. Yes, Americans hold crypto. Perhaps quite a few of them. But does this also make them gold voters? ETF voters? World Liberty Financial governance token voters?&nbsp;



The crypto world can and should invest money to push and promote its ideas in the public square. Effective PR can work. But I would caution about reading the crypto poll tea leaves too deeply —&nbsp;there simply isn’t much there for now.&nbsp;



— Michael McSweeney



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



<ul class="wp-block-list">
<li>CoinDesk published <a href="https://www.coindesk.com/tech/2024/10/02/how-north-korea-infiltrated-the-crypto-industry/">an investigative report</a> into the inadvertent hiring of North Korean developers by numerous crypto startups. </li>



<li>Bitwise has filed to register a trust entity in Delaware for a spot XRP ETF.</li>



<li>Australian officials <a href="https://www.abc.net.au/news/2024-10-02/ghost-app-creator-cryptocurrency-millions-restrained-by-afp/104419224">seized</a> millions of dollars in crypto from the alleged creator of a dark web messaging app. </li>



<li>World Liberty Financial <a href="https://x.com/worldlibertyfi/status/1841183761041436744">says</a> “thousands” of users have signed up to its whitelist. </li>



<li>Solana startups are <a href="https://blockworks.co/news/lightspeed-newsletter-solana-restaking-startups">beginning to bet</a> on a yet-to-be-built staking ecosystem. </li>
</ul>



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



Q: Are we in for a ‘Downtober’?&nbsp;



The best I can muster here as an answer is another question: where are the positive catalysts?&nbsp;



Softening inflation (by some metrics), war in the Middle East, a spicy presidential election in the US…do these lend themselves well to number-go-up? It doesn’t exactly feel like it.&nbsp;



There seems to be a belief among some that a Trump win would be a boon for crypto prices. Maybe, at least, for holders of World Liberty Financial tokens.



It’s hard to shake the feeling that things might just continue to meander along for a while. A market in search of a narrative or a scrap of good news. Mehtobert? Yawntober? Stay tuned.&nbsp;



— Michael McSweeney&nbsp;



Pain before gains, amirite?



While yesterday’s escalation of Middle Eastern conflict is a risky sign for bitcoin, the long-held belief is that the fourth quarter is when crypto will start to ramp up once more.



Now whether that means that spooky vibes settle in for the next month before the cobwebs are shaken off at the end of the year or if this conflict is serious enough to throw off the price predictions we’ve talked about (bitcoin at $75,000 or more by the end of the year), I’m not sure yet.&nbsp;



And, unfortunately, I’ve misplaced my crystal ball.&nbsp;



One thing’s for sure: Uptober or Downtober (or Mehtober, as McSweeney suggested) doesn’t matter if there are enough catalysts for a bull market next year.&nbsp;



— Katherine Ross



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Robinhood expanding in Europe while US landscape remains uncertain

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Welcome to the Forward Guidance Newsletter, brought to you today exclusively by Casey Wagner. Here’s what you’ll find in today’s edition:



<ul class="wp-block-list">
<li>With the election just over a month away, we break down the latest crypto-focused voter surveys. </li>



<li>The KYC process for Donald Trump’s DeFi project is officially open. What, exactly, is the project? TBD.  </li>



<li>The week of jobs data is not off to the best start. Here’s why.</li>
</ul>



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



<h2 class="wp-block-heading">What the numbers have to say about the ‘crypto voter’</h2>



We know it’s election season because political polls are popping up everywhere.&nbsp;



(Well, that and the incessant commercials, but I don’t have cable, so I’ve been mostly spared.)&nbsp;



<a href="https://consensys.io/blog/half-of-all-us-voters-support-pro-crypto-policies">Consensys</a>, <a href="https://assets.ctfassets.net/sygt3q11s4a9/7oELfEbBOMbx3GPgyMswFE/169fee00ffc261bed675586c6b3f50c7/StateofCrypto_Q32024_Report__1_.pdf">Coinbase</a> and <a href="https://www.grayscale.com/globalassets/harris-poll/grayscale-crypto-election-research-report.pdf">Grayscale</a> have all published crypto-focused political surveys in recent days. Each crypto firm partnered with a polling company (HarrisX, Morning Consult and The Harris Poll, respectively), and findings focused on one central theme: The number of voters who own crypto is increasing, and most of this demographic is at least considering a candidate’s crypto policies when casting their vote.&nbsp;



Of course, it’s important to remember the sources here — and keep in mind that data can be presented in a way that shows just about any trend the presenter wants, so I encourage you to unpack the reports yourself and consider the methodology of each.&nbsp;



That being said, here are some of the most notable findings from the surveys:&nbsp;



<ul class="wp-block-list">
<li>Voters currently seem pretty split between Democrats and Republicans. Consensys reported that 35% of respondents most trusted Republicans on crypto policy. Coinbase found that 47% of crypto owners will vote for Kamala Harris and 47% will vote for Donald Trump. Grayscale’s survey says 34% of voters think Republicans are more favorable to the industry, vs. 33% who said the same for Democrats. </li>



<li>Crypto owners generally want to see more regulation, all surveys found. Coinbase’s report states that 72% of crypto owners would “consider greater involvement” in the industry <a href="https://blockworks.co/news/crypto-must-work-closely-with-regulators">if regulations were more clear</a>. 44% of crypto owners think the US government is doing “too little” to support the industry, according to Consensys, and 80% of US voters think regulators have a role in overseeing emergency technology, per Grayscale’s report.</li>



<li>Crypto just may be a swing state issue. Consensys found that 59% of voters in Michigan “prefer a free market approach to crypto” vs. the 44% who think the government should oversee the industry. Coinbase says one in eight crypto owners lives in a swing state (they included seven states here: AZ, GA, MI, NC, NV, PA and WI). </li>



<li>Americans are primarily concerned with economic issues this election year, Grayscale found, with 30% of voters ranking inflation as the “most pressing problem” in the US and 15% ranking the “state of the economy” as their top concern. </li>



<li>And last but not least, Coinbase found that 71% of Gen Z crypto owners think about crypto as much, if not more, than they think about Taylor Swift. The survey interviewed 1,577 crypto owners in the US who are eligible to vote, but did not reveal exactly how many are Gen Z. </li>
</ul>



We are now 35 days away from Nov. 5. While both <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-crypto-promises">Trump</a> and <a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">Harris</a> have made comments about digital assets and revealed some of their policy intentions, we have yet to see a formal, comprehensive crypto plan from either candidate.



I’ll keep my eyes peeled, but I am not holding my breath.&nbsp;



<h3 class="wp-block-heading">36&nbsp;</h3>



The number of US ports where longshoremen are on strike. The walkout, which began when the contract between the ports and members of the International Longshoremen&#8217;s Association expired at midnight Monday, marks the first strike since 1977.&nbsp;



The longer it continues, the more pressure the supply chain will face, potentially leading to higher prices for consumers. The Conference Board <a href="https://www.conference-board.org/press/port-workers-strike-could-cost-economy">says</a> a one-week strike could cost the economy $3.78 billion.&nbsp;



With a very tight presidential election just weeks away, the situation may quickly become a campaign talking point.&nbsp;



<h2 class="wp-block-heading">World Liberty Financial is open, as long as you have $1M</h2>



Enrollment for the <a href="https://blockworks.co/news/world-liberty-financial-kyc-starts">Donald Trump-backed crypto project is underway</a>, the former president announced Monday.&nbsp;



Details about World Liberty Financial, the DeFi project Trump and his family <a href="https://blockworks.co/news/on-the-margin-newsletter-trump-family-defi-venture">have been teasing for months</a>, have been slow to emerge. But yesterday we learned one more important detail: If you are a US resident looking to buy WLFI, you must be an accredited investor.&nbsp;



Because of “outdated” regulations, the whitelist is only available to accredited investors in the US, the project confirmed in the World Liberty Telegram channel Monday. Specific regulations preventing the team from opening the project to all investors were not disclosed. A second whitelist will be available for “non-US persons.”&nbsp;



The team behind the project includes Trump’s sons, Donald Jr., Eric and Barron. Chase Herro and Zachary Folkman are also involved.&nbsp;



Herro, who describes himself as “the dirtbag of the internet” founded the now-shuttered crypto trading firm Pacer Capital. Folkman and Herro also collaborated on building Dough Finance, the Aave-based DeFi platform that was exploited over the summer for $2 million.&nbsp;



The current KYC process asks users to confirm their country of residence, link their wallet, submit a proof of identification and complete a “liveness check.”&nbsp;



Accredited investors, per SEC <a href="https://www.sec.gov/resources-small-businesses/capital-raising-building-blocks/accredited-investors">guidelines</a>, are those with a minimum net worth of $1 million and individual income of $200,000. Couples can qualify with a combined income of $300,000. So, not exactly your average American.&nbsp;



We’ll be continuing to update you on World Liberty’s launch, so keep an eye on Blockworks.co for the latest.&nbsp;&nbsp;



<h2 class="wp-block-heading">Happy jobs data week!&nbsp;</h2>



Well, “happy” may not be the right word. Things kicked off a bit rocky today with latest data from the Bureau of Labor Statistics showing that job openings jumped in August.&nbsp;



There were 8 million positions open at the end of last month, compared with 7.71 million at the end of July, Tuesday’s JOLTS <a href="https://www.bls.gov/news.release/jolts.nr0.htm">report</a> shows. Analysts had expected 7.68 million openings.&nbsp;



Openings are, however, down 1.3 million year over year.&nbsp;



Overall, it’s a weak report. Job openings are up, hiring is about the same (5.3 million hires were reported at the end of August), quits are down and layoffs/firings are about the same (1.6 million in August). Translation: It’s hard to find a job.&nbsp;



With labor currently being the Fed’s number one priority, the report unsurprisingly moved expectations of a 50-basis point cut in November up. Odds of a 25bps decrease now sit at 61%, compared to 65% yesterday, according to data from <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">CME Group</a>.&nbsp;



This is one of many reports this week though, so we’ll have to see what the other numbers say before drawing any major conclusions about the health of the labor market. Next up is the ADP employment report on Wednesday, followed by initial jobless claims and the September labor report on Thursday and Friday, respectively.&nbsp;



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>Robinhood Crypto today launched crypto transfers in the EU, enabling European customers to deposit and withdraw more than 20 cryptocurrencies, the company <a href="https://www.globenewswire.com/news-release/2024/10/01/2955809/0/en/Robinhood-Crypto-Launches-Crypto-Transfers-in-Europe.html">announced</a>. It’s also offering a 1% deposit match for a “limited time.” </li>



<li>Crypto hacks increased during the third quarter, with a total of $753 million exploited, according to a new report from cybersecurity team Certik. </li>



<li>Excited for Permissionless III next week? We are too! Escape the conference center for a bit and sign up for the <a href="https://edgein.io/events/pickleball-tournament/">official pickleball tournament</a>. Spots are limited, so act fast. </li>
</ul>



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Unpacking survey findings about the ‘crypto voter’

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Solana restaking has long made intuitive sense: Take Ethereum’s most successful narrative from the past year and apply it to the blockchain making the strongest attempt at grabbing Ethereum’s mantle.&nbsp;



For some crypto startups, it’s an intuition worth staking their business on. Multiple startups have already begun developing tools for Solana restaking, essentially betting that the technology will be implemented — and further betting there will be demand for it once it’s available.



Restaking is the EigenLayer-popularized concept of taking staked tokens used to secure blockchains and staking them a second time to secure another layer of infrastructure and services (which are sometimes called AVSs, though Jito calls them NCNs).



On Solana so far, there are two main competitors: Jito and Solayer. <a href="https://blockworks.co/news/jito-releases-code-for-solana-restaking-network">Jito Restaking has open-sourced</a> its code, and I <a href="https://blockworks.co/news/solayer-solana-restaking-platform-live">most recently heard</a> it was hoping to deploy the platform by the end of the year (although, obviously, these things are subject to change). <a href="https://blockworks.co/news/solayer-solana-restaking-platform-live">Solayer is live</a>, but restaked tokens are currently limited to so-called endogenous AVSs, which don’t enable slashing and are mostly focused on providing the protocols better bandwidth in the form of stake-weighted quality of service (SWQoS).



Still, there are at least two businesses building solely atop these platforms, meaning their success hinges on the success of protocols that are yet to fully launch, let alone prove robust demand.



Both appear to have started building full Solana restaking platforms. Cambrian came to light in February of this year <a href="https://cambrianone.substack.com/p/cambrian-restaking-sol-to-enable">promising</a> a “modular security layer for Solana” (restaking is sometimes referred to as modular security because it lets a protocol swap in different security sources). It <a href="https://x.com/cambrianone/status/1803796019852763295">added</a> to this vision in June, promising “orchestration for different services” on top of other Solana restaking protocols. There’s not much else out there about the project, but it appears to be leaning more into the “orchestration” side of things lately.



There’s also Fragmetric, which is planning to launch a liquid restaking token (LRT) on top of Jito Restaking. The LRT plans to solve the problem of how AVSs or NCNs can distribute rewards to restakers without encouraging tokens to be dumped onto the market. It hopes to accomplish this with transfer hooks, a feature of Solana’s SPL token extensions that let specific actions happen when a token is transferred (in this case, updating the balance in Fragmetric’s “rewards module”).



Sang, a co-founder of Fragmetric, told me they were building a Solana restaking protocol themselves, but it felt like a “disaster” when they learned Jito was launching a restaking protocol because of its size and developer quality. But still being bullish on the prospects for Solana restaking, Fragmetric pivoted to building on Jito.



“Many people in the Solana ecosystem hate restaking,” Sang told me, because it has been used mainly to focus on infrastructure on EigenLayer, which <a href="https://x.com/sreeramkannan/status/1840465753763672147">hasn’t ingratiated itself</a> much with the Solana community. But, Sang added, Solana restaking is more focused more on user-facing products and services compared to EigenLayer, pointing to Jito’s StakeNet and <a href="https://blockworks.co/news/lightspeed-newsletter-squads-smart-accounts">Squads</a> as examples.&nbsp;



FragSOL is meant to launch in two weeks. Would it be another such disaster for Fragmetric if Solana restaking doesn’t manage to take off?



“Yeah, that’s right,” Sang said.



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Startups hedge their bets on unlaunched Solana restaking platforms

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<h2 class="wp-block-heading">Averting disaster</h2>



There are about 1.38 million <a href="https://app.blockworksresearch.com/glossary/#erc-20-token">ERC-20 tokens</a> in existence. But exchanges, naturally, support only a tiny fraction of those tokens for deposits and trading. <a href="https://blockworks.co/tag/coinbase">Coinbase</a> caters to around 200.



If you sent one of the unsupported tokens into an exchange deposit address, you would be very disappointed to find it vanish into the aether (not to be confused with ether!).



Enter asset recovery. Coinbase’s in-house tool, launched in December 2023, was recently upgraded to support <a href="https://blockworks.co/tag/base">Base</a>.



<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">Asset recovery is now available for Base. Users can now recover unsupported ERC-20 tokens mistakenly sent to their Coinbase account via Base. For more information head to: <a href="https://t.co/vDPQaYiTAF">https://t.co/vDPQaYiTAF</a> <a href="https://t.co/rm7sjPVqiF">https://t.co/rm7sjPVqiF</a>&mdash; Coinbase Assets 🛡️ (@CoinbaseAssets) <a href="https://twitter.com/CoinbaseAssets/status/1839738260311990538?ref_src=twsrc%5Etfw">September 27, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



According to a spokesperson, the tool will allow users to recover some 4,000 distinct ERC-20 tokens erroneously sent to Coinbase addresses over the years.



The US dollar value of all that previously marooned crypto was not disclosed, but if you were the unwitting Coinbase client with assets cast asunder, you may be in luck.



Customers can recover eligible assets and send them to a self-custodial wallet, although for recoveries over $100, “a small administrative fee” applies, along with network fees (deducted from the user’s ether balance).



<h3 class="wp-block-heading">Sygnum’s Safe Solution</h3>



What if, after you recover some castaway crypto from Coinbase and sent it to your <a href="https://blockworks.co/tag/safe">Safe</a>, you suffer another sad misfortune and misplace a private key to your multisig?



Today, Sygnum Bank switched on a module for Safe’s Recovery hub that could come to the rescue.



Sygnum is the first bank to offer this service, <a href="https://blockworks.co/news/safe-social-recovery-eases-private-key-management">in development since last year</a>, which provides an institutional-grade recovery option for users who lose access to their Safe wallets. When designated as a recoverer on Safe’s platform, Sygnum can restore wallet access, thus addressing a thorny problem in the crypto space.



Forgotten keys often result in inaccessible funds, and somewhere north of 900,000 ETH — worth billions of dollars — may have been irrevocably stranded due to lost keys, the bank estimates.



The safe module is an alternative to relying on social recovery methods, such as sharing private key fragments with friends and family, or managing personal backups.



And you don’t have to trust the Swiss bank to designate it as a third-party recoverer. Importantly, Safe’s design allows the owner to cancel any recovery attempt through onchain veto rights in the case a bogus recovery is attempted. The tool is designed to be flexible, allowing users to set multiple recoverers, and also features additional security measures like time delays.



The service is designed to be compliant with regulatory requirements, requiring identity verification (<a href="https://blockworks.co/tag/kyc">KYC</a>) for both the setup and recovery process.



That may rub some the wrong way, but Martin Burgherr, Sygnum’s chief clients officer, assures that the bank takes “appropriate security measures to maintain the required security of personal data and ensure its confidentiality.”



In the future, one might imagine a more Web3 identity alternative that uses zero-knowledge proofs to allow clients to provide selective disclosure. That’s something the bank is watching, Burgherr told Blockworks.



Key management remains a challenge for many, but Sygnum and Safe are working toward a practical solution that retains the concept of self-sovereignty for both institutional and individual users.



— Macauley Peterson 



<h2 class="wp-block-heading">It’s pronounced &#8216;swee&#8217;</h2>



I opened up Twitter today and all over the timeline was Sui.



The MoveVM L1 is <a href="https://x.com/EmanAbio/status/1840782691652034660/photo/1">coming up 6th</a> in daily trading volumes, a Sui bridge connecting to EVM-based chains is going <a href="https://x.com/SuiNetwork/status/1840829418455126182">live</a> today on mainnet, and the SUI token has <a href="https://coinmarketcap.com/">rallied</a> this week into the top 20 tokens by market cap at $5.2 million.



The armchair analyst kind of way to explain this type of sudden burst in growth is to look at how much Sui is giving out in terms of liquidity incentives.



As far as I can tell, that number is not officially reported. But we can make some guess-timates based on Twitter posts:



<ul class="wp-block-list">
<li>Navi Protocol, the top lending market on Sui, is getting <a href="https://x.com/navi_protocol/status/1838235899949134315">520,000 SUI</a> ($936k) for two weeks. </li>



<li>Scallop, the second-largest lending market on Sui, is receiving about <a href="https://x.com/Scallop_io/status/1840688487982608846">170,000 SUI</a> ($314k) on a weekly basis.</li>



<li>Suilend, the third-largest lending market, is doling out <a href="https://x.com/suilendprotocol/status/1838375314055139454">426,195 SUI</a> over two weeks.</li>
</ul>



Together, that’s a weekly average of about 643k SUI. If we assume that 15 Sui dapps have the liquidity tap turned on, that bill comes up to something like 77.2 million SUI ($139 million) over the last two months.



That is a lot of money for a very short period of time.&nbsp;



Again, that is just a guess, but with that much money up for grabs, it does explain why Sui’s TVL has seen an up-only direction:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXehFPDwrDPtErteZr3IxzNFXJpKp-BYaUuYTlU4igps7aaAL4jkpq4BIPKOAeA7EAluty36mMxut108Wnm5_qrMzOgBt7fJRb3X3ZSuZ6Lt848tMw9A2Lv5clCLka_LMrSqAiuKWBNuCJ59-TXabI7JiV8N?key=imRRQbvv5W89unYTWykNRQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://defillama.com/chain/Sui">DeFiLlama</a></figcaption></figure>



That is not to take anything away from the technological design of Sui, which I&#8217;m sure is impressive.&nbsp;



Like all new L1s on the block, Sui is fast. Its founders have <a href="https://youtu.be/d4T0vLwTbxA">claimed</a> on the 0x Research podcast the chain’s parallelized execution design allows horizontal scalability to be “infinite,” thus rendering Vitalik’s <a href="https://vitalik.eth.limo/general/2021/05/23/scaling.html">blockchain trilemma</a> “irrelevant.”



Sui does not have to grapple with the multitude of scalability problems that plague older chains like Ethereum. It doesn’t have to deal with the kind of political turmoil stirred when a new up-and-coming researcher like Max Resnick comes in and questions the overarching multiyear-long roadmap and proposes a radical idea of his own (multiple current proposers).&nbsp;



Sui’s fee markets are also segmented and use auctions to <a href="https://docs.sui.io/concepts/tokenomics/gas-pricing">ensure</a> stable network fees globally, even when SUI’s price spikes up or down. This multidimensional fee market contains gas spikes to local fee markets. It’s a similar idea to one <a href="https://www.umbraresearch.xyz/writings/toward-multidimensional-solana-fees">Solana</a> has been talking about to explore solving its many network outages in earlier years <a href="https://blockworks.co/news/lightspeed-newsletter-dropped-solana-transactions">due to transaction spam</a>.



— Donovan Choy 



<h2 class="wp-block-heading">Chart of the Day</h2>



USDC transfers on Base:



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf16rFN3LLcKGGdTzl0j5tYzzz3Jp3AxyeNSlcJNzgcDmaGutsEfk53TTyeKHsOhp_3YcY2fTgiNP1B427EhlMEvtr9lBrj0-OFN30we1EAqio1yCp5EZjirERsyLqxzWpEa0KXDSY1aYiAWLPvQgR_ida8?key=imRRQbvv5W89unYTWykNRQ" alt=""/><figcaption class="wp-element-caption">Source: <a href="https://dune.com/queries/2291768/3755580">Dune</a> (h/t Sebastien Derivaux)</figcaption></figure>



Base’s share of total USDC transfer volumes across major EVM networks is hitting a second consecutive weekly peak over Ethereum mainnet —&nbsp;60.2% share this time. It’s not clear what onchain activity is driving the surge.



My first hunch was memecoins, yet Base’s memecoins do not drive that much trading volume. Its top memecoin, BRETT, <a href="https://www.coingecko.com/en/coins/brett-2">generated</a> $44 million in trading volume over the last 24 hours. For context, total USDC transfer <a href="https://dune.com/queries/2291768/5147382">volumes</a> in the last week of September was $75.8 billion.



Other relevant variables may include the revamp of Coinbase’s Web3 smart wallet, which lets users send USDC (and EURC, cbBTC) for free, or the <a href="https://x.com/base/status/1833222011176554573">conclusion</a> of <a href="https://blockworks.co/news/base-kicks-off-onchain-summer">Base’s three-month long “Onchain Summer” </a>campaign which distributed 300+ ETH to builders and generated $5 million revenue for creators.



— Donovan Choy



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Saving self-custody from bone-headed blunders

Adrien Stern

Crypto was supposed to revolutionize payments by simplifying the process, lowering costs and cutting out the middlemen. Yet here we are, more than a decade into the experiment, and the infrastructure we&#8217;ve actually built is starting to look as fragmented and complicated as the traditional financial networks it was meant to replace.



We need to focus on creating seamless, interoperable blockchain systems in order to enable the global, frictionless transfer of value that crypto originally promised. Otherwise, we&#8217;re just going to keep repeating the same inefficiencies and barriers of the old financial system, and this entire experiment in decentralization will have been for nothing.



The promise of cryptocurrency was simple: eliminate borders, reduce fees and speed up transactions. But if you&#8217;ve ever tried to send money to another country using a bank, you’re likely familiar with the headache of dealing with complicated codes like SWIFT and IBAN, hefty fees and a lack of traceability. In 2023 alone, failed cross-border payments cost US merchants $3.8 billion in <a href="https://www.pymnts.com/news/cross-border-commerce/cross-border-payments/2024/failed-cross-border-payments-cost-us-merchants-an-estimated-3-8b/">lost sales</a>, with successful transactions often taking days and <a href="https://remittanceprices.worldbank.org/sites/default/files/rpw_main_report_and_annex_q323_1101.pdf">costing</a> up to 6% in fees.



Read more from our opinion section: <a href="https://blockworks.co/news/blockchain-lost-decentralized-spirit">Blockchain has lost its decentralized spirit</a>



With cross-border commerce expected to reach <a href="https://www.bvnk.com/blog/b2b-cross-border-payments-fxc-intelligence">$290 trillion</a> by 2030 and many jobs no longer being region-specific, it’s finally time for us to solve how we move money.&nbsp;



In theory, crypto should enable peer-to-peer cross-border payments as originally intended. In practice, however, we’re stuck with hundreds of disparate blockchains that operate like little nations – each with their own language, customers, culture, “citizenship,” governance, entry requirements and financial assets.&nbsp;



It’s difficult to transfer currency or data across crypto borders, and progress around ecosystem fluidity or interoperability is slow. Given crypto’s steep learning curve and global regulatory ambiguity, fiat often feels like the easier hedge, even for forward-thinking companies and individuals.&nbsp;



Read more: <a href="https://blockworks.co/news/sap-touts-blockchain-solution-payments">International payments are a pain — SAP touts a blockchain solution</a>



There are over 1,000 blockchain networks and <a href="https://www.statista.com/statistics/863917/number-crypto-coins-tokens/">10,000 cryptocurrencies worldwide</a>, vs. roughly <a href="https://www.sofi.com/crypto-guide/#:~:text=Fiat%20money%20cannot%20be%20redeemed,forces%20of%20supply%20and%20demand.">180 fiat currencies</a>. The sheer number of protocols has recreated a fragmented onchain ecosystem. At the protocol level, crypto can function as intended, but at the macro level, it’s just a bunch of gated ecosystems without interrelationship.&nbsp;



Managing different wallet addresses for each blockchain, navigating complex security steps and dealing with fees and minimum transfer amounts only add to the frustration. The user experience, often clunky and convoluted, contributes to the sense that crypto is an exclusive club reserved only for those willing to jump through the agreed upon hoops.&nbsp;



But just like in the traditional financial world, power and politics are at play here too. The early adopters and insiders who built these ecosystems often stand to gain the most. By keeping their protocols closed, they maintain control and benefit from the scarcity and exclusivity they’ve created. The more closed off these systems are, the harder it becomes for new users or even entire blockchains to participate.



This mirrors the very same vested interests that we see in the fiat world — where profit and control are concentrated in the hands of a few. As long as crypto ecosystems remain isolated, true decentralization remains out of reach. Yet, despite these barriers, there is hope. We are beginning to see a shift in priorities.



More capital is now flowing into technologies that are designed to bridge these blockchain borders — things like cross-chain infrastructure, chain abstraction and liquidity bridges. These innovations suggest the industry is starting to recognize the need for a more interconnected ecosystem, one where value and data can move freely between blockchains.



Read more: <a href="https://blockworks.co/news/simplify-crypto-user-experience">To defeat centralization, the crypto user experience has to be easier: Synthetix founder</a>



The future of crypto payments isn’t tied to a single chain or protocol. It’s multi-chain. And the solution to crypto’s payment problem lies in creating a system that allows anyone, anywhere, on any network, to send and receive value quickly, cheaply and seamlessly; a unified onchain experience where the technical barriers between blockchains disappear and enable crypto to finally deliver on its promise of frictionless, global finance.



Achieving this will require embracing true interoperability, not just within individual blockchains, but across all of them. Just as nations in the traditional financial world have learned that cross-border trade is essential for economic growth, our &#8220;crypto-nations&#8221; must realize that cross-chain liquidity and cooperation are essential for their survival.To thrive, the industry must focus more on the fundamentals and less on the FOMO. Only when “onchain” is no longer tied to “on which chain?” will crypto have a shot at fulfilling its mission.



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Crypto is becoming the same broken system it promised to fix

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<h2 class="wp-block-heading">Wen ETH szn?</h2>



It’s hard being ETH right now.&nbsp;



It’s struggling to keep up against bitcoin — ETH is down 33% over the past year when compared to BTC — and it’s lagging behind the market over the past year too.&nbsp;



If you were to just boil ETH down to its ETFs, you’d see an incredibly different tale from the bitcoin ETFs, which not only kicked off the year but quickly smashed records. Ether ETFs, on the other hand, haven’t seen that type of market reception.



(I must caveat here that ETH is very different from BTC in a lot of ways, but for the purpose of the ETF talk, I needed to simplify the two.)



With ETH continuing to struggle, the question on my mind is simple: Where do we go from here?



K33 analyst David Zimmerman told me that he thinks ETH needs to see more positive inflows from the ETFs to kick it up a notch.&nbsp;



“This is not necessarily to say that institutional buying will drive up price alone, but rather that this would be necessary to shift ETH sentiment. ETF flows are now the major focus for ETH. ETH ETFs haven’t yet enjoyed the major inflows that BTC ETFs saw (even in relative terms). In my eyes, ETH is an institutional asset now, and the big guns need to show interest first if retail is to hop on board,” Zimmerman said.



Jordi Alexander, who joined the <a href="https://blockworks.co/podcast/empire/c9736b82-7f82-11ef-b86d-7f36ebad39c3">Empire podcast for an episode</a> this week, laid out his bull and bear case for ETH.&nbsp;



“Ethereum is the place where it can be unleashed into DeFi and lending and all this stuff. And instead of focusing on its own monetary properties, it could try to get Bitcoin bridged in and then just use that you know, trillion of value to to unleash it. I do think that ETH has a chance at some monetary premium, though, and I think that Western countries that are more woke, environmentally friendly, they don&#8217;t want the mining,” he told Empire’s Jason Yanowitz.



“You remember, [Elon Musk] just dumped all his bitcoin because of the mining stuff… So, there could be a large contingent that wants Ethereum to be like a safer, cleaner form of digital native money. So that&#8217;s the bull case, and maybe it happens.”



The bear case, he added, is “just more dispersion.”



Speaking of bears, the sentiment on Crypto Twitter, as Yanowitz pointed out in Empire, is that Solana’s eating “ETH’s lunch.”&nbsp;



“I think that has been the story of this market for a while and I expect it to continue,” Zimmerman said.&nbsp;



“SOL has managed to solidify its place in crypto. I isolate ETH as an institutional asset in its own category, while I consider Solana the leading L1 from ‘the rest of the pack.’ I no longer really think in terms of ‘ETH killers’ or ‘ETH competitors.’ If anything, I am more focused on SOL competitors that can steal attention away from SOL, as SUI has done recently. If bullish momentum continues through Q4, I expect SUI to continue doing well, while the market will likely also rotate through to other L1 coins such as APT,” he continued.



SOL, SUI and APT are expected to outperform ETH in a bullish environment, but Zimmerman was careful to add that he still believes ETH can be a good allocation for some folks.&nbsp;



“Holding it comes with less risk than the rest, and chasing rotations through different L1s can also be tricky and stressful.”



But one comment from Alexander stuck with me. What should Vitalik Buterin’s role be?&nbsp;



Alexander suggested that ETH’s code needs to “speak for itself” which would mean that Buterin should somehow step aside (Alexander has two ideas for him: dissociate or retire).&nbsp;



Zimmerman, candidly, said he’s not sure what kind of role Buterin should take but he’s not sold on too much distance given that he does provide “real value” with his knowledge and overall technical expertise.



Putting Buterin aside, until we see more inflows to the ETFs, it’s going to be hard to make Zimmerman a bull.&nbsp;



Sorry folks, no ETH szn just yet.



— Katherine Ross



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



<ul class="wp-block-list">
<li>Ether’s up 1% over the past day, sitting around $2,635.</li>



<li>Bitcoin hasn’t seen the same gains, up slightly to $63,763. </li>



<li>EigenLayer’s EIGEN unlocked last night, trading around $3.82 as of Tuesday morning. It debuted at $6.51B FDV, per <a href="https://www.coindesk.com/business/2024/10/01/eigenlayers-eigen-token-debuts-at-651-fdv/?_gl=1*15zptyn*_up*MQ..*_ga*MTI3NjY5NzEwNi4xNzI3NzgzOTI1*_ga_VM3STRYVN8*MTcyNzc4MzkyNC4xLjAuMTcyNzc4MzkyNC4wLjAuMTA1MDc5MDAzMA..">CoinDesk</a>.</li>



<li>Popcat, Fantom and Bonk lead the top gainers this morning, while TIA, JASMY and WLD are all in the red. </li>



<li>Total stablecoin value is down over 2.2% to $171 billion over the last 30 days, though stablecoins notched an all-time high in August, per <a href="https://app.rwa.xyz/">data</a> from rwa.xyz.</li>
</ul>



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



<ul class="wp-block-list">
<li>Jesse Pollak, creator of Base, said on X that he will <a href="https://x.com/jessepollak/status/1840880049165365432">also lead</a> Coinbase’s Wallet team. </li>



<li>Two senior Coin Center staff members, including executive director Jerry Brito, are <a href="https://blockworks.co/news/coin-center-senior-staff-stepping-down">set to depart</a> after a decade at the DC-based advocacy group. </li>



<li>The SEC <a href="https://www.coindesk.com/policy/2024/10/01/us-judge-sides-with-sec-in-case-against-crypto-wallet-rivetz-over-sale-of-unregistered-securities/?utm_medium=referral&amp;utm_source=rss&amp;utm_campaign=headlines">won</a> a summary judgment against Rivetz, having alleged that the crypto firm sold unregistered securities, according to CoinDesk. </li>



<li>Robinhood’s European users can now <a href="https://www.cnbc.com/2024/10/01/robinhood-launches-crypto-transfers-in-europe-in-push-overseas.html">transfer</a> crypto in and out of its app, per CNBC. </li>



<li>Metaplanet has <a href="https://x.com/Metaplanet_JP/status/1840954225796186287">bought</a> another 107.91 BTC, per the publicly traded firm’s X account. </li>
</ul>



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



Q: <a href="https://blockworks.co/event/permissionless-iii">Permissionless</a> kicks off in just over a week. What are you most excited about?



While I won’t be in Salt Lake City myself, here’s my list: Bitcoin DeFi, regulation/politics, and a smattering of vibes.



Maybe it’s the last one that interests me the most. Where are the vibes right now? Where does the wind point these days? Crypto often feels like an industry in search of direction. At least here in the US, so much (feels like it) hinges on the upcoming election season — for good or for worse, I don’t know.



Events like Permissionless are good for sticking your thumb in the air for a sense of the direction of things. And even though I won’t be physically present, I’m eager for such answers.&nbsp;



— Michael McSweeney&nbsp;



Honestly? The people. The panels are a close second, given the variety of topics that’ll be discussed.&nbsp;



Of course, I have to hype one of my own panels (yes, I’m biased here). NFTs: The Comeback, which’ll take place on Friday, October 11.&nbsp;



IMO, NFTs are in a really interesting spot right now given the sudden regulatory interest, but still an overall lackluster appetite. The panel includes Luca Netz of Pudgy Penguins, OpenSea’s Devin Finzer and Blur’s Pacman. It should be an interesting conversation, given the three unique perspectives on stage.&nbsp;



But the best part of crypto events hands down is getting to interact with folks who are building, innovating and eager to connect.&nbsp;



If you’re headed to SLC next week, say hi if you see a redhead wandering around the convention center.&nbsp;



— Katherine Ross



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Analysts dig in on Ethereum’s market prospects

Crypto think tank Coin Center is making changes to its senior leadership, executive director Jerry Brito announced Monday.



Brito and Robin Weisman, senior policy counsel at the non-profit, will each step down from their respective positions at the end of the year. Both will remain on the board of directors, Brito said in a <a href="https://x.com/jerrybrito/status/1840783764793737359">post</a> on X.&nbsp;



Brito and Weisman have held their respective positions since Coin Center’s inception in 2014.&nbsp;



Peter Van Valkenburgh, Coin Center’s current director of research, will take over as executive director on Jan. 1. Landon Zinda, who currently serves as policy counsel at Coin Center, will become the advocacy group’s policy director, Brito added.&nbsp;



Read more: <a href="https://blockworks.co/news/coinbase-legal-team-hire">Crypto Hiring: Coinbase adds ex-SEC adviser to legal team</a>



“I’ll leave my role at Coin Center very proud of what we’ve accomplished over the last 10 years,” Brito said. “When we started in 2014, it was not clear that governments would allow bitcoin to flourish. Bitcoin and crypto are technically unstoppable, yes, but in the short-term there was a lot of harm that could have been done and that many tried to do.”



The news comes weeks after <a href="https://blockworks.co/tag/coin-center">Coin Center</a> won its appeal to re-open its 2022 lawsuit against the Treasury Department and Internal Revenue Service. The suit was over an <a href="https://blockworks.co/news/new-crypto-tax-reporting-obligations-us">amendment to the US tax code</a> that includes “digital assets” in the definition of cash, requiring individuals and businesses to report transactions exceeding $10,000.&nbsp;



Coin Center, who alleged the amendment violates the Constitution, had its case dismissed originally, but the appeals court found in August that some of Coin Center’s arguments have a legal leg to stand on.&nbsp;



Coin Center was also one of several crypto advocacy groups who filed <a href="https://www.coincenter.org/coin-center-files-a-court-brief-in-defense-of-tornado-cash-developer/">amicus briefs</a> in support of Tornado Cash and its founder in the US government’s lawsuit against two of the mixing services’ founders.&nbsp;



The letter of support followed Coin Center’s own lawsuit against the Treasury’s Office of Foreign Assets Control, which it filed after the US sanctioned Tornado Cash. The court <a href="https://blockworks.co/news/tornado-cash-fans-appeal">sided with the US government in 2023</a>, ruling that the agency was within its right to add Tornado Cash to its list of sanctioned entities.



Weisman in a <a href="https://x.com/RobinWeisman/status/1840784507051384864">post</a> on X Monday said she was “incredibly grateful for the opportunity” to build Coin Center.



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Coin Center senior staff to step down at end of year 

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<h2 class="wp-block-heading">(Attempting to) answer the Q4 Qs&nbsp;</h2>



We’ve just about made it to the final quarter of 2024. With the rate-cutting cycle underway, the election looming and geopolitical tensions rising, there’s a lot to keep an eye on these next three months.&nbsp;



Here’s an overview of where economic forecasts currently stand and what we can learn from historical data:



Recessionary fears are still present, but generally not increasing 



Analysts from S&amp;P Global are keeping their probability for a recession beginning in the next 12 months unchanged at 25%.&nbsp;



“For now, near-term recession fears appear overblown,” they <a href="https://www.spglobal.com/ratings/en/research/articles/240924-economic-outlook-u-s-q4-2024-growth-and-rates-start-shifting-to-neutral-13258419">wrote</a>, adding that the recent increase in unemployment is largely due to labor force expansion rather than layoffs, which would be more indicative of a looming recession.&nbsp;



Analysts from <a href="https://russellinvestments.com/us/global-market-outlook">Russell Investments</a> mostly agree, adding that declining inflation, modest wage growth and cooling labor market pressures all bode well for avoiding a recession. They say the most important figure to watch will be weekly initial jobless claims. Should first-time claims continuously come in above 260,000, a “more painful” adjustment would likely follow.



Initial claims came in at 218,000 for the week ended Sept. 21, a 4,000 decrease from the week prior. The four-week moving average currently sits at 224,750.&nbsp;



A 90s-style soft landing&nbsp;



90s fashion is back — according to Gen Z at least — so let’s hope the economic conditions that allowed for a soft landing in 1994/1995 are also making a comeback.&nbsp;



The Fed’s 1994 rate-raising cycle saw rates go from 3% to 6% over seven increases. The central bank cut rates by 75-basis points the following year and held them there for over a year. Economic growth did slow, but did not dip into recession-territory. The S&amp;P 500 ended 1995 34% higher.&nbsp;



The end-of-year outlook&nbsp;



Bitcoin and ether are currently around 43% and 14% higher, respectively, year to date. The gains were largely made in the first quarter of the year, but some analysts insist there is still room left to rally. Bitcoin particularly is looking to close September higher than it has in months, at about 7% in the green.&nbsp;



“We anticipate a constructive Q4 2024 due to US rate cuts and significant fiscal and monetary <a href="https://blockworks.co/news/on-the-margin-newsletter-china-stimulus-stagnation">stimulus from China</a>, which should enhance market liquidity and support BTC performance,” analysts from Coinbase Institutional wrote in a recent <a href="https://www.coinbase.com/es-la/institutional/research-insights/research/weekly-market-commentary/weekly-2024-09-27#:~:text=Coinbase%20Exchange%20%26%20CES%20Insights,see%20renewed%20interest%20from%20buyers">report</a>.



Tom Dunleavy, partner at MV Capital, <a href="https://x.com/dunleavy89/status/1838201835737305418">says</a> risk assets currently have “almost the perfect setup,” citing data showing that when the Fed cuts rates when stocks are already up, the rally tends to intensify.&nbsp;



The case for volatility&nbsp;



The summertime volatility that saw the VIX hit 38 in August could be mostly behind us, analysts from BlackRock suggest in the Q4 outlook <a href="https://www.blackrock.com/us/individual/insights/taking-stock-quarterly-outlook">report</a>. Most of the uncertainty in the third quarter was due to the variability around Fed policy, but now that the rate-cutting <a href="https://blockworks.co/news/on-the-margin-newsletter-interest-rate-cut">cycle has begun</a>, this should ease.&nbsp;



Still, Q4 brings its own set of unpredictable conditions. But BlackRock analysts say this is no reason to panic; when volatility is driven by sentiment and technical factors, it can provide a healthy reset for the market.&nbsp;



— Casey Wagner



<h3 class="wp-block-heading">12.5%&nbsp;</h3>



The percentage of crypto owners that live in one of seven swing states (AZ, GA, MI, NC, NV, PA and WI) this election cycle, according to a new <a href="https://assets.ctfassets.net/sygt3q11s4a9/7oELfEbBOMbx3GPgyMswFE/169fee00ffc261bed675586c6b3f50c7/StateofCrypto_Q32024_Report__1_.pdf">report</a> from Coinbase and Morning Consult.&nbsp;



95% of crypto owners are expected to vote in the <a href="https://blockworks.co/news/2024-elections-crypto-policy-outlook">upcoming election</a>, the report added.&nbsp;



The survey did not include information about how many crypto owners intend to be so-called “<a href="https://blockworks.co/news/single-issue-crypto-voter">single-issue</a> crypto voters,” but it did find that crypto owners appear to be evenly split between both major candidates, with Kamala Harris and Donald Trump each polling at 47% among the demographic.&nbsp;



<h2 class="wp-block-heading">Crypto product development check-in</h2>



As we’ve written about before, ETF powerhouse State Street chose to enter the <a href="https://blockworks.co/news/state-street-galaxy-crypto-etfs">crypto ETF arena</a> with Galaxy Digital at its side, and the pair is taking an active focus.&nbsp;



State Street’s thought was that many investors want more than just spot crypto exposure, or they wish to stray from some of the existing passive equity fund offerings.



A quick recap of the new products: The Digital Asset Ecosystem ETF (DECO) holds crypto equities, futures contracts and ETFs. Another fund — the Transformative Tech Accelerators ETF (TEKX) — expands that equities universe by also investing in AI-related companies.&nbsp;



Finally, the Hedged Digital Asset Ecosystem ETF (HECO) is like DECO, but manages volatility via covered call options and protective put options.&nbsp;



The latter strategy has so far won out from an asset-gathering perspective. DECO and TEKX each have just $6 million assets under management, while HECO leads the way with $115 million in assets.



Top holdings in the three companies currently include bitcoin miners like Terawulf, Cipher Mining and Core Scientific. Chris Rhine, Galaxy’s head of liquid strategies, noted the “huge opportunity” for miners with the infrastructure to build out their high-performance computing <a href="https://blockworks.co/news/btc-miners-evolving-revenue-post-halving">(HPC) and AI</a> verticals. “The reason bitcoin miner stocks are so volatile is because the price of bitcoin is volatile,” Rhine told Blockworks. “But if you can create a 10- or 15-year contract with steady revenues, it really will reduce the volatility of the equity. And typically what happens [is]: As the volatility of the equity comes down, the multiple of the equity goes up.”



In addition to HECO’s literal hedging efforts, the ability for TEKX, for example, to invest in “downstream” industries (like electrical equipment providers, power companies, etc.) can contribute to risk mitigation during rocky times for crypto-specific bets.&nbsp;&nbsp;



I was curious how many more active crypto ETFs State Street and Galaxy could look to launch going forward, and where they see the white space in this segment.&nbsp;



Anna Paglia, State Street Global Advisors’ chief business officer, didn’t get too specific — telling me in an email that the firm “[does] not discuss product development ideas under consideration.” Still, SSGA is “always evaluating” opportunities to launch more products.



Rhine said there will be a period of just trying to deliver results and prove these three ETFs are ones investors want to own.&nbsp;



But longer term, he said, an expanding universe of public crypto companies (and firms adjacent to the industry) could spur ideas for new funds. Some crypto players are clearly <a href="https://blockworks.co/news/circle-files-ipo">eying IPOs</a>.



“There’s a lot of optimism that the regulatory landscape is going to improve a bit over the next 12 months, and I think that’s going to be regardless of which candidate wins the presidency,” he added. “That could enable a whole new group of companies to go public.”



The seemingly imminent listing of <a href="https://blockworks.co/news/on-the-margin-newsletter-btc-etf-options">bitcoin ETF options</a> is also likely to <a href="https://x.com/NateGeraci/status/1837645673597968813">spur</a> more product development.&nbsp;



All is to say, the ways for investors to get exposure to the crypto industry will only continue to evolve — with smaller crypto-focused firms and the State Streets of the world likely to each play a big part.&nbsp;&nbsp;



— Ben Strack&nbsp;



<h2 class="wp-block-heading">On Our Radar</h2>



Happy Monday! Last week’s lower-than-expected inflation data may have increased the odds of another more aggressive rate cut from the Fed come November, but it remains to be seen whether the coveted soft landing can actually be achieved. This week’s data will give us a better picture of where we stand, particularly in terms of labor conditions.&nbsp;



Here’s what’s on tap:



<ul class="wp-block-list">
<li>It’s a big week for jobs data. On Tuesday the August JOLTS report drops, which is expected to come in relatively flat from July at 7.67 million. Remember: July’s figure came in lower than expected and showed a 2.16 million decline from June, so another miss will be disappointing for markets. </li>



<li>Jobs week continues on Wednesday with the ADP employment report for September slated to drop. August’s figure showed that nonfarm private payrolls increased by just 99,000, coming in far below the forecasted 145,000 and marking the smallest gain since 2021. Wednesday’s report is expected to show a 110,000 increase. </li>



<li>Finally, on Friday, we’ll get the September US labor report. Nonfarm payrolls are expected to increase slightly to 144,000, compared with 142,000 in August. The unemployment rate is forecast to remain unchanged at 4.2% and analysts are calling for hourly wages to have increased 0.3%, down slightly from August’s figure of 0.4%. </li>
</ul>



— Casey Wagner



<h2 class="wp-block-heading">Bulletin Board&nbsp;</h2>



<ul class="wp-block-list">
<li>It’s looking like longshoremen on the Gulf and East Coasts will begin a strike Tuesday as union members and employers continue <a href="https://www.nytimes.com/2024/09/30/business/port-strike-dockworkers.html">struggling</a> to reach a contract agreement. The walkout would halt most activity at some of the busiest US ports, potentially creating supply chain issues that could lead to higher prices on many goods. </li>



<li>Digital asset investment products posted a third-straight week of inflows last week, bringing in a total of $1.2 billion in capital, <a href="https://blog.coinshares.com/digitalassetfundflows/home">data</a> from CoinShares shows. </li>



<li>The Blockworks <a href="https://blockworks.co/event/permissionless-iii">Permissionless III</a> conference is only 10 days away. Get your tickets now to connect with Felix, Casey and Ben onsite, plus hear from some of the leading names in crypto and macro. </li>
</ul>



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



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