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BlackRock Could Make History If Its Spot Bitcoin ETF Gets Approved
BlackRock, the largest investment firm in the world, has submitted an application for a Bitcoin Exchange Traded Fund (ETF) in the United States. If approved, it would be the first crypto spot ETF in the country. Other applicants, such as ARK and Grayscale, are still waiting for a response from the U.S SEC.
The new BlackRock iShares Bitcoin Trust would reportedly trade as Commodity-Based Trust Shares. According to the application, Coinbase Custody Trust Company would serve as the custodian for the Bitcoin holdings of the fund, while Bank of New York Mellon would handle custody of fiat currencies.The Bitcoin price would also be updated at least every 15 seconds using the CF Benchmarks Index during regular market trading.
The application highlights that previous spot exchange-traded products in commodities and currency markets were generally unregulated, and the Commission relied on the underlying futures market for approval. Therefore, the proposal does not require the spot Bitcoin market to be regulated for the Commission to approve it.
Despite several applicants, the SEC has not yet approved a spot Bitcoin ETF. Grayscale even appealed its rejection and argued for the validity of Bitcoin futures. Other firms like ARK Invest and 21Shares have also been pushing for spot Bitcoin ETF approval, submitting their third applications in April. The first spot traded Bitcoin ETF was established in Canada in early 2021, known as Purpose Bitcoin ETF.
Hinman Speech Sparks Controversy As Securities Debate Heats Up
Stuart Alderoty, the Chief Legal Officer for Ripple, has called for an investigation into the actions of former SEC Division Director Bill Hinman, whose infamous speech on cryptocurrency decentralization has been central to the legal battle against the SEC.
The internal documents reveal that senior SEC officials warned Hinman about the potential confusion and lack of legal basis for his analysis, but he disregarded their concerns. Alderoty questions why the SEC continued to promote this speech, despite knowing its questionable legal grounds and potential to create confusion in the market.
Ripple CEO Brad Garlinghouse has also criticized the SEC and its handling of the crypto industry, alleging political overreach and a lack of regulatory clarity. The released documents could very well ignite a heated debate about the classification of cryptocurrencies as securities, something that Ripple has been dealing with for years by this point.
Furthermore, concerns have been raised about what kind of motivations Hinman may have had alongside potential conflicts of interest related to his ties with the Enterprise Ethereum Alliance. Recently, US lawmakers have also questioned current SEC Chair Gary Gensler and his actions which have reportedly been based largely on self interest.
In conclusion, Alderoty argues that the speech should never again be considered in discussions about token securities, emphasizing the need for transparency and accountability from regulators.
SEC Stabilization Act Aims To Remove Gary Gensler
New developments have emerged in the United States regarding the controversial Gary Gensler. US lawmakers, including Rep. Warren Davidson and Rep. Tom Emmer, have introduced a bill called the SEC Stabilization Act in the House of Representatives. The primary objective of this bill is to remove Gary Gensler from his position as SEC Chair.
Rep. Warren Davidson emphasized the need to protect US capital markets from what he described as a tyrannical Chairman, referring to Gensler. He stated that the proposed legislation aims to address the ongoing abuse of power and ensure long-term market protection.
Rep. Davidson, who previously announced his intention to introduce the bill, reiterated his call for real reform and the dismissal of Gary Gensler as SEC Chair. Rep. Tom Emmer, a co-author of the bill, expressed that the SEC Stabilization Act intends to introduce sensible changes to prioritize investor protection rather than catering to the personal preferences of Gensler.
The proposed bill would not only remove Gensler from office but also redefine the power distribution between the SEC Chair and commissioners. It seeks to introduce a sixth commissioner, prevent any party from holding a majority on the commission, and establish an executive director position.
Although the lawmakers did not explicitly mention crypto in their statements, both Rep. Warren Davidson and Rep. Tom Emmer are known for their pro-crypto stance and have often been critical of Gary Gensler. Rep. Emmer has even previously referred to Gensler as a bad faith regulator.
Additionally, Rep. Davidson serves as the Vice Chair of the new Subcommittee on Digital Assets, Financial Technology, and Inclusion at the House Financial Services Committee. Needless to say, the potential removal of Gensler has led to widespread joy and satisfaction across the crypto and digital assets space.
Cardano And Ripple To Unite Against SEC
Cardano founder Charles Hoskinson recently made a surprising move aimed at reconciling with the XRP community, with whom he has had a strained relationship in the past. Taking to his official Twitter account, Hoskinson called for peace with the XRP community, sparking a series of debates on the platform.
The recent crackdowns by the SEC on major exchanges like Binance and Coinbase have demonstrated that no entity is exempt from regulatory scrutiny. In this context, gestures of goodwill could indeed help the industry navigate its current challenges more effectively.
Not everyone is as trustful of Hoskinson however, given his past comments and the recent designation of the ADA token as a security by the United States SEC, an agency which also recently targeted other cryptocurrencies like Solana, Filecoin, and Polygon.
The goal would therefore seem to be to establish a united front against the perceived common enemy, namely the SEC and its chairman, Gary Gensler. In any case, a growing number of XRP community members have responded positively to this call for a truce, recognizing that failure to unite at this time could lead to more significant issues for the entire industry in the future.
Binance US Will Suspend Fiat Withdrawals As Early As June 13th
Following a recent lawsuit filed by the SEC, Binance US has informed its users that it will temporarily halt all customer withdrawals and transition into an exclusively crypto-based exchange. The decision to do so is attributed to the intention of their banking partners to pause USD fiat channels.
In their statement, Binance US assured customers that they currently maintain 1:1 reserves for all users and that all operations are functioning normally. They urged customers to withdraw their USD funds through bank transfers before June 13th, 2023.
Additionally, the exchange announced the suspension of all USD trading pairs in the coming week, with the possibility of converting USD balances held in reserve to stablecoins after June 15th. The notice also mentioned potential delays in ACH transfers due to weekend bank closures and increased volumes.
Binance US had previously stated its intention to delist certain trading pairs. Regarding the SEC lawsuit, Binance US described the claims as baseless and criticized these tactics as aggressive and unjustified. The exchange has also faced the threat of asset freezes.
In any case, Binance US has had a turbulent history, with one CEO, Catherine Coley, disappearing from public view, and another CEO, Brian Brooks, resigning after a short tenure. Brooks previously provided testimony to the SEC that questioned the independence of the exchange.
Central Banks USD Reserves Drop To New Lows As Dedollarization Continues
Banking giant JPMorgan has recently noted that the trend of de-dollarization is gaining momentum as central banks worldwide reduce their holdings of the United States Dollar (USD).
According to JPMorgan strategists Meera Chandan and Octavia Popescu, the portion of USD when it comes to the central banks and their foreign exchange reserves has reached a record low of 58%. They also highlight the increasing prominence of de-dollarization when considering the significant accumulation of gold by central banks in the past five years.
UBS, another prominent bank, also recently stated that central banks intend to acquire 700 metric tons of gold, equivalent to $48.74 billion, in 2023. This shift is driven by concerns over geopolitical issues and persistent inflation, leading countries to move away from relying on the USD.
JPMorgan analysts acknowledge the emergence of signs indicating de-dollarization. They anticipate that this trend will persist despite the USD having a substantial presence in global trade settlements.
Over the past few decades, both the USD and the Euro have maintained stable shares of 40% to 50% in trade invoicing. Additionally, the proportion of USD when it comes to foreign exchange trading volumes remains close to its all-time high of 88%.
Furthermore, JPMorgan analysts revealed that the USD continues to dominate SWIFT payments, accounting for 43% of transactions. In comparison, the Euro constitutes 32% of transactions, while the Chinese Yuan comprises 2.3%.
Binance Accused Of Misleading Investors And Mishandling Funds
The US Securities and Exchange Commission (SEC) has accused Binance, the biggest cryptocurrency exchange in the world, of mishandling customer funds and providing false information to American regulators and investors.
This lawsuit has the potential to significantly impact the power dynamics of the crypto industry. The SEC alleges that Binance mixed billions of dollars in customer funds and secretly sent them to a company controlled by its founder. They also claim that Binance misled investors about its ability to detect manipulative trading and restrict users living in the United States.
Binance has expressed disappointment and plans to vigorously fight the lawsuit. CEO Changpeng Zhao believes the charges are part of broader regulatory efforts to rein in the crypto trading world. Binance has faced other legal actions and scrutiny in the past, resulting in the company taking steps to improve compliance such as the formation of Binance US.
Nevertheless, the SEC is seeking restitution and aims to bar the founder from holding certain positions in US entities that issue securities. US investors, on the other hand, are also disappointed as they largely believe the SEC to be acting in their own self interest rather than looking after the general public.
Amazon And Meta Shares Now Less Stable Than Bitcoin
Currently, Apple shares and gold are considered more stable investment options than Bitcoin. However, the infamous price volatility of the flagship crypto has decreased significantly compared to its historical average, with an annualized rate of 32% compared to the previous average of 71%.
While Bitcoin has been known for its highly unpredictable price swings, it is currently exhibiting less volatility than tech giants Amazon and Meta. The cryptocurrency is experiencing this unusual stability during a period referred to as the summer lull, characterized by reduced trading volume. In fact, this summer is on track to be the calmest since 2020.
Bitcoin faced significant instability last summer, marked by a sharp drop in value followed by a recovery by the end of the year. During that time, both its price and stability were negatively affected by the general downturn in the crypto market and the Terra-Luna fallout.
Although its volatility has not reached the levels seen in solid assets like gold and Apple stock, Bitcoin currently exhibits more stability than both Meta and Amazon, which have volatility rates of 44% and 34% respectively. For comparison, the volatility rate of the Dow Jones Industrial Average is currently at 13%.
However, LedgerPrime Vice President Laura Vidiella believes that this recent period of low volatility does not indicate a major shift in the market. She anticipates that significant price swings and volatility will return in the fall.
If this prediction aligns with general expectations, we might see a price surge in the late third and early fourth quarter of this year.
Self Custody Skyrockets While ETH Fees Drastically Decrease
Aligned with the prevailing sentiment in the broader cryptomarket, the price of Ethereum (ETH) has experienced a temporary halt, but the decrease in network fees suggests a reason for optimism. The lower fees create a more convenient and practical environment, making it easier for users to engage with the Ethereum network.
Recent data from Santiment revealed that average Ethereum fees have returned to their usual levels after reaching a peak of $14 per ETH transaction in early May.
Most recently, there was a significant 69% decline in just 25 days. This was initially triggered by the popularity of meme coins, particularly the successful launch of the Pepe (PEPE) token, which led to increased activity on both the Ethereum and Bitcoin networks.
Furthermore, the percentage of Ethereum supply available on crypto exchanges reached an all-time low of 9.9%. This decline is attributed to the growing trend of self-custody, where users prefer to hold their assets securely instead of relying on trading platforms. Factors contributing to this shift include concerns surrounding platform security and a lack of regulatory clarity regarding the classification of ETH as a security or commodity.
In addition to the low supply on exchanges, another noteworthy milestone for Ethereum is the deposit of over 4.4 million ETH since April 12th, resulting in a deposit contract balance exceeding $40 billion. This milestone coincides with the implementation of the Shanghai upgrade, a highly anticipated update which ETH holders had been awaiting for some time.
CryptoWeekly is proud to be an official media partner for the 5th Annual Blockchain Futurist Conference, scheduled to take place in Toronto, Canada, from August 15th-16th, 2023.
The conference is set to be the largest event of its kind and will serve as a platform for exploring the future possibilities and advancements in blockchain technology. It brings together experts in the fields of Web3, crypto, DeFi, GameFi, NFTs, DAOs, the metaverse, and more.
Put simply, the annual event offers an immersive crypto experience with features such as crypto-powered marketplaces, NFT galleries, crypto ATMs, and the integration of blockchain technology in the context of real world use cases.
With a consistent attendance of over 6,000 participants each year, the event provides an excellent opportunity to network with prominent founders, investors, and projects. Attendees can connect with industry leaders at the VIP Cabanas, participate in exciting networking events, and explore exhibitor booths located on multiple levels.
The event also aims to educate participants about the future trends and advancements in the field, encouraging them to become active contributors to the Web3 movement. Notable speakers at the event include Charles Hoskinson, Michele Romanow, Anthony Di Iorio, Ethan Buchman, Jaime Leverton, Tamara Haasen, Miko Matsumura, Silvina Moschini, Adam Cai, Sascha Darius Mojtahedi, Pamela Draper, Ben Armstrong, Trevor Koverko, and many more esteemed individuals.
Additional details will follow in the weeks building up to the event.
SEC Lawsuit May End Soon As XRP Experiences Historic Address Activity
The XRP network has recently experienced two significant surges in address activity, marking a positive trend for the digital currency. These record setting spikes were identified by blockchain analytics platform Santiment.
This occurrence suggests a potential upswing for XRP, similar to the price appreciation it observed following a surge in address activity on March 18th. Presently, XRP is valued at just over $0.50, reflecting a 4.2% increase for the day and a substantial 7.8% growth over the week.
The divergence of XRP and its behavior from other cryptocurrencies, such as Bitcoin and Ethereum further supports the notion of a possible breakout for XRP. It is worth noting that these notable address activity spikes coincide with increased attention on Ripple due to an ongoing lawsuit with the SEC concerning the classification of XRP as a security.
However, Ripple CEO Brad Garlinghouse recently hinted at the potential resolution of the case within the next few weeks, offering an optimistic outlook that could have spurred the heightened network activity.
If the SEC lawsuit is successfully resolved, it could provide a significant boost to XRP by addressing regulatory uncertainties and potentially driving increased adoption. However, nothing has been confirmed as of this moment.
Is DeFi Finding a Home in Africa with Canza Finance
Many crypto-natives think of DeFi and big names like Uniswap and Aave come to mind. However, for the everyday person that knows nothing about crypto, those names mean nothing. Why is that? Mostly because DeFi's main use cases in 2023 are still targeted at solving needs for the crypto-native. Use Uniswap to swap ETH for your favourite meme coin. Use Aave to take out a loan against your staked ETH&hellip to buy your favourite meme coin. Of course I am mostly kidding, but there is some truth here. DeFi is still quite far away from mass adoption. Or at least it feels that way. Being born and raised in North America, we can be quite ignorant to the financial problems that people in developing nations faced. In some places around the world people face:
Governments and banks stealing their funds
High FX conversion rates for illiquid currencies
Expensive fees on cross-border payments
And for the above reasons, citizens and businesses in African countries are looking to DeFi and crypto more broadly to circumvent the challenges of their existing financial system.
Enter Canza Finance
The team at Canza Finance is building a suite of products that will bring DeFi to developing regions such as sub-saharan Africa and onboard millions of users into crypto.
Canza Finance solutions entail five different but interconnected areas encompassing Cryptocurrency Onramp and Offramps, Crossborder Settlements, Treasury, Decentralized Finance, Crypto Teller Machines, Agent-based banking, and IPFS Storage.
In the future, Canza will offer on-chain asset management solutions before eventually becoming a fully on-chain investment bank.
The Canza team has high ambitions and we could spend hours detailing every area of the business, but for the purpose of this article we are going to highlight Baki.
The Problem with African FX
Currently it is quite tough to operate an intra-African trade network for many reasons. Businesses in countries like Nigeria face a crucial obstacle stemming from restricted access to central bank rates. The Nigerian government has taken it as a matter of pride to artificially keep the &ldquoofficial" FX rate for the Naira low, and only offers this rate to exclusive investors and exporters. This restriction has led to the emergence of fragmented liquidity and parallel rate markets, where trading occurs at substantially higher rates than the central bank rate. Consequently, businesses seeking to engage in local currency transactions may encounter significant limitations in obtaining the necessary liquidity, potentially resulting in additional costs when settling larger transactions.
Baki V1 introduces an FX exchange that ensures unlimited liquidity for users. It does this by providing access to synthetic on-chain assets known as zTokens, which are pegged to African currencies. Baki will pioneer the implementation of on-chain African stable coins. Its primary objective is to alleviate the scarcity of US dollars in emerging markets, offering users the ability to enter dollar markets without slippage and at the most competitive rates available in the markets.
By developing a synthetic asset that can be freely traded at the central bank rate, Baki democratizes access to exclusive exchange rates. Additionally, Baki's architecture facilitates infinite liquidity, ensuring that a unit of zUSD can always be exchanged for an equivalent value in any supported currency. This directly addresses the challenges arising from the fragmented liquidity in existing models.
Finally, Baki offers another significant advantage by enabling assets to be natively quoted in local currencies on the blockchain. This opens up opportunities for exchanges to price assets directly in local currencies, eliminating the necessity for fiat-priced on-ramps or assets denominated in US dollars.
Baki in Action
While this all may sound good in theory, lets take a deeper dive into Baki's potential user base and the LP partners that will make all of this possible.
An American construction company is looking to purchase Nigerian Naira for a project. They can either approach and onboard with Jara Network or Baki. Jara Network is a Canza Finance business line which is a typical FX OTC desk (with lower fees than the competitor). This infrastructure will act as the means to onboard future user's of Baki as they have a trusted anchor in the real world.
A company that is new to crypto can easily sell their fiat for a zToken (stablecoin currencies from around the world) and then become a Baki user. Furthermore, firms that have other access to crypto can simply use other stablecoins such as USDC to mint zTokens.
If they needed to buy $1m USD worth of Naira, they would deposit $1.5m of USDC to mint $1m ZUSD. They could then use Baki to trade zUSD for zNGN at 80 bps premium to central bank FX rates.
So who provides the liquidity on the other side of the trade?
Canza agent partners act as LPs that can offer NGN to zNGN swaps. They hold large USDT/USDC positions and therefore have an incentive to mint zTokens.
Baki LPs enjoy access to two notable properties, which offer distinct advantages:
1) They implicitly take a short position on African currencies since these positions are essentially debt positions. This means they can benefit if African currencies devalue in comparison to the US dollar.
2) 50% of Baki transaction fees are distributed to minters as yield, paid in zUSD. Consequently, during periods of volatility in African currencies, there will be excess yield available.
Considering all factors equal, let's assume someone provides NGN to zNGN, with a spread of 75% between the official exchange rate (used as a reference price by Canza) and the parallel rate (at which all P2P liquidity is provided). In this case, the price for 1 zNGN should ideally be 1.75 NGN. However, since the minter earns yield on their position, they should offer it at 1.75 NGN minus the yield they earn to maintain a fair value. Assuming a yield of 30%, they should offer 1 zNGN for 1.45 NGN.
It's also important to consider the implicit short position they hold on African currencies. As a result, they should offer zNGN at a price lower than 1.45 NGN per zNGN. Consequently, given the market's high sensitivity to fees, any entity capable of offering zNGN below the standard parallel market price will be able to capture a significant portion of the market share for FX swaps that provide on/off ramps into zNGN instead of directly into USDT.
Not all market participants are as privileged as the western world to have the access to robust financial markets and systems. In many emerging markets there are shortcomings that make it tough for consumers and businesses to predict the financial markets they reside in, making it tougher to interact with one another.
Cryptocurrency protocols such as Baki are providing solutions to these problems. DeFi in Africa has the ability to change the financial landscape as we know it, as builders in web3 find creative ways to reduce the friction of these markets and provide them with more autonomy over their financial decisions.