Digital Asset Intelligence Weekly | Issue 16
Sunny mood defies SEC
Key headlines this week:
US regulatory proposal aims to sideline crypto; Binance is considering ending US partnerships; and altcoins tied to network utility are riding high.
Nuant Research
Stablecoins have attracted the ire of US regulators lately, with the SEC taking the view that many should be treated as securities. But all stablecoins are certainly not created equal. In this varied (and sometimes confusing) landscape, what do investors need to know? A new Nuant research series will dig into the technicalities and complexities of this important market sector. Read the first part here.
Inside Crypto
- Binance is considering cutting ties with US partners to escape regulatory pressure, according to Bloomberg reports. The company is widely believed to be under particular scrutiny, after the US Securities & Exchange Commission ordered Binance partner Paxos to stop minting stablecoin BUSD earlier this month.
- Meanwhile Bill Qian, former Binance M&A chief, is setting up a venture capital fund targeting projects that will expand the Web3 user base. Qian hopes this will address the growth limitation facing the crypto industry, with demand coming mainly from existing traders.
- The SEC offensive against stablecoins is continuing, though the latest attack comes a bit late: Terraform and its CEO Do Kwon have officially been charged with fraud. Kwon is already wanted by authorities in South Korea and is now believed to be in Serbia.
Infrastructure & Regulation
- The SEC has proposed new rules expanding the requirements for secure asset custody. Although digital assets and cryptocurrencies are not specifically mentioned in the proposal, SEC chair Gary Gensler’s statement referred explicitly to crypto trading platforms (saying they could not generally be considered to be qualified custodians). Commissioner Mark Uyeda described the result as a “no-win” that would make it impossible for regulated advisers to make crypto investments for their clients.
- Hong Kong appears to have support from Beijing for its ambitions to become a crypto hub. Although upcoming legislation for crypto investment will for now be restricted to professional investors, social media buzz around the event is already driving price gains for Chinese coins including Filecoin (which is also readying its Filecoin Virtual Machine to enable dApp development) and NEO, also a dApp platform.
Digital Assets
- Excitement around the new Ordinals Protocol, which enables NFTs on the Bitcoin network, is driving renewed interest in Bitcoin as a platform, not just a currency. That has meant knock-on gains for Bitcoin layer-2 network Stacks, and for Litecoin, after a successful fork enabled Ordinals on the network.
DeFi and CeFi
- New DEX Camelot, on the Arbitrum network, has seen steady growth since its December launch and enjoyed a 520% price surge for its GRAIL token this month. Camelot seems to have been benefiting from Arbitrum’s strong recent growth.
- Avalanche-based protocol Platypus Finance paused operations after suffering a flash loan attack. Stablecoin USP lost its dollar peg and fell to 48c in the attack, which could cost US$8.5 million.
Insight of the Week
The launch of the Ordinals protocol, which makes it possible to mint NFTs on Bitcoin, met with an enthusiastic reception. Taken in conjunction with an increasingly conservative regulatory framework that leaves BTC as almost the only token reliably not considered to be a security, the first blockchain network is suddenly hot again. This Coindesk article examines what the rise in UTXOs says about Bitcoin’s popularity and prospects.
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