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Ronin will transition to a delegated proof-of-stake consensus mechanism and expand beyond Axie Infinity’s IP.

The ministry plans to launch an expert panel next month to explore the feasibility of a central bank digital currency.

Revolut, the UK-based digital bank, has irked its own board over the way it handled reports that auditor BDO was unable to verify a significant part of its 2021 revenues.

Revolut’s long-delayed accounts showed the startup achieved its first full-year of profit in 2021, but BDO cast some doubt on the numbers. Specifically, it said in the accounts that it was unable to verify three-quarters of the revenue Revolut had reported — equal to $765 million — and warned that some information may be “materially misstated.”

Then, Revolut issued a public statement insisting that BDO had confirmed the “financial statements give a true and fair view” of its finances, and hired Schillings, the lawyers, to ram the point home, according to a report today from the Financial Times.

That report also said that some of Revolut’s board members — which include city grandees Martin Gilbert and Michael Sherwood — felt the startup’s statement was an “overreaction” and suggests staff had failed to understand BDO’s opinion properly.

Crypto trading is a significant business line for Revolut, and the startup capitalized on a boom in retail trading in 2021.

Revolut did not immediately respond to a request for comment. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

XRP trading made up nearly 50% of all volumes on Korbit, a prominent local exchange.

Holders are taking short-term profits at the widest margin in more than a year, CryptoQuant analysts said.

When the Paris Blockchain Week organizers were hatching plans to hold this year’s event at the Carrousel Du Louvre, crypto was in a very different place.

“To be honest with you, we made the decision before the bear market,” said co-founder and president Michael Amar in an interview with The Block. “It was very complicated because it wasn’t built for conferences … it’s pretty uncommon to go to a crypto conference in such a setting.”

Although the crypto sector has soured significantly since then, the conference still buzzed with the energy of a bull market as attendees marched past web3 gaming simulators, signs asking passersby to tell all about their “Cex life” and even dwarfs dressed in clown outfits (for some reason not clear to The Block) to attend PBW’s litany of panels and keynotes.

While most of the event went off without a hitch — a considerable improvement from last year, when a tarpaulin almost fell on top Binance’s Changpeng Zhao — it was not without its complications.

This time, the city itself brought the brouhaha. Trash bags and burned rubble littered the city of romance, as tens of thousands of protestors swarmed the streets (not, thankfully, to protest the conference or crypto more generally.)

Just as the bear market was unexpected, the conference organizers were likely not betting on holding proceedings amid nationwide protests against legislation to raise the retirement age.

Nevertheless, the unrest was somewhat fitting, given the state of crypto — a sector rocked by bankruptcies, arrests and market chaos over the past six months.

As its penultimate day closed, the demonstrations were even close to bumping into the usually cloistered crypto crew as protestors marched past the Louvre.

Those demonstrations may have postponed the king of England’s trip to France, but they didn’t stop corporations from Google, Amazon and Reddit showing their faces.

It’s a different picture from 2019, when only 1,500 people attended the event, recalled market maker Woorton CEO and PBW co-founder Charlie Meraud. In its early days, he straddled both his leadership role at the market maker and organized the event before it hired a wider team as it grew.

“I was quoting markets in the day, and I was literally chasing speakers during the night,” he laughed.

Although blockchain has lost some of its buzz to AI, the conference has now swelled to 8,500 attendees. 

The birth of French crypto

PBW has grown alongside the French ecosystem, the roots of which can be partly traced back to the 2014 founding of La Maison du Bitcoin by serial entrepreneur Eric Larchevêque and Thomas France, said crypto wallet giant Ledger CEO Pascal Gauthier. Larchevêque and France went onto found Ledger. 

“Eric was like ‘I’m going to create a hub for crypto,’ which basically had no business model. It was like a WeWork for crypto,” said Gauthier. “But very quickly it became a physical address where you could actually go and buy bitcoin with cash and credit card and it was running meetups and hackathons too.”

La Maison du Bitcoin later evolved into the crypto investment platform Coinhouse in early 2018. A hackathon that took place at the venue later resulted in the creation of Ledger in 2015. 

Today, many of France’s homegrown brands can be found discussing the benefits of blockchain at PBW. Insurance company AXA, football club PSG and fashion houses such as LVMH, Kering and Givenchy rubbed shoulders with the usual crypto conference crop of Animoca Brands Chairman Yat Siu, Tim Draper and Circle’s Jeremy Allaire.

Corporates, culture and crypto

Key crypto players in the French capital that The Block spoke to during the conference say that this collusion of corporations, culture and crypto is unique to France’s ecosystem. Its sovereign wealth fund Bpifrance buttresses many of the interactions, claims PBW’s Amar.

Last year, The Block spoke to Bpifrance’s crypto lead Ivan De Lastours who said that the French ecosystem was able to lean on its strong reputation in the creative industries from gaming to film to fashion. 

But that wasn’t always the case, recalls Pierre Nicolas Hurstel, co-founder and CEO of Arianee, a firm that provides infrastructure for luxury brands looking to delve into web3.

He says that the startup only targeted the luxury sector as it recognized that web3 could solve some of the pain points of scarcity, ownership and transferability that the industry was experiencing.  

Its flagship Digital Passport NFT is minted on its eponymous protocol and linked to a luxury good so that holders can not only validate its authenticity but also trace the product’s life cycle including repairs, resells and ownership transfers.

Luxury Swiss watch brand Vacheron Constantin was Arianee’s first target and, thanks to some risk-taking decision-makers at the firm, it trialed the passport in 2019. 

“People inside the company fought to make it work,” he said, describing his first meetings with the wallet brand. It took until the end of 2021 for Vacheron Constantin to roll it out product-wide. 

That’s just one example of what Ledger’s Gauthier terms as a “very organic” and two-sided connection between France’s luxury sector and crypto.

Crypto firms have also cozied up to the luxury sector during events such as last month’s NFT Paris and at startup campus Station F’s incubator programs, run by the likes of LVMH and L’Oréal.

Tough times

Despite the glitz, it hasn’t been all luxury NFT drops and Punks in the Pompidou for the French ecosystem over the past year.

Its OG player Coinhouse was caught up in the crypto cataclysm of last year. In November, it suspended its yield products, for which both FTX and crypto lender Genesis had acted as counterparties, per a Les Echoes report.

CEO Nicolas Louvet told The Block via email that 92% of customers have now been reimbursed fully with an additional 7% choosing to keep a percentage of the funds locked to receive when and if the counterparties become liquid again.  

The firm, which was the first crypto startup to ever register with the country’s regulatory authorities, was also listed as one of Genesis’ creditors in its bankruptcy filing, with a claim of close to $15 million. 

That contagion to the French ecosystem momentarily triggered a regulatory wobble, with tougher legislation initially proposed in response. A milder set of licensing rules for crypto firms passed last month, however.

There are also questions left to be answered on the results of headline-grabbing statements made by Crypto.com and Binance last year, which put forward millions in investment to the French ecosystem.

PBW’s Amar said that he isn’t sure what’s going on with those arrangements, admitting that there was less presence from exchanges this year than before. 

A Binance spokesperson told The Block that France continues to be the center of the exchange’s activities in Europe. Binance continues to roll out the €100 million investment it announced last year, creating 150 jobs in the country and opening an office in Paris, the spokesperson continued. 

Crypto.com did not respond to multiple requests for comment. 

More recently the ecosystem had to deal with USDC de-pegging as Silicon Valley Bank collapsed.

“Just like with banks we’re now realizing that things we thought couldn’t collapse can,” said market maker Flowdesk’s Guilhem Chaumont. The firm offers crypto market making as a service for token issuers.

A Euro stablecoin?

As fashion and art solidify their blockchain bonds with the French capital, infrastructure is playing catch up.

Circle chose the country as its EU headquarters while it looks to procure a full French license. But the idea of a Euro-denominated stablecoin gaining widespread adoption is still a pipe dream.

The share of Ethereum fiat stablecoin supply is close to 100% in USD stablecoins, per The Block Research.

“We were expecting some strong inflow on the Euro side, but it hasn’t been a huge shift. It would have been a good opportunity for a Euro stablecoin to shine,” said Chaumont.

One of the most widely used euro stablecoins, Angle protocol’s AgEUR, was also recently impacted by the Euler hack, leading it to depeg. 

Barring another bank run, if Circle manages to successfully register with the country’s regulators, things could change — as it would be able to “onshore” its euro-backed stablecoin EUROC.  

Still, French crypto startups like Flowdesk and Ledger claim that despite the sector’s travails, things are going well.

“We had our best month in March,” said Chaumont. “We onboarded eight or nine token issuers and we’re at an all-time high in revenues and volume.”

In November, when FTX collapsed, Ledger recorded its highest-ever revenue, claimed Gauthier previously. And the luxury appetite for web3 shows no signs of going away either, said Hurstel.

Meanwhile, French president Emmanuel Macron is still struggling to quell the fire of his country’s protestors. For now, the country’s burning desire to become Europe’s crypto hub also looks difficult to extinguish. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

FTX bankruptcy lawyers say that $694 million in liquid assets have been identified before OKX’s announcement.

ALSO: Shaurya Malwa writes that a little-known Ethereum community is rallying behind the Ethereum Goerli test network in the hope that it can help find a way to keep it going. Bitcoin, ether and other cryptos spike.

The Securities and Exchange Commission takes the lead in defining what a security is, not necessarily legislation, the regulator’s Chair Gary Gensler said. 

After a House Appropriations Committee hearing on Wednesday, Gensler told reporters that existing securities laws “cover most of the activity that’s happening in the crypto markets.” 

“If Congress were to act, though I don’t think we need these authorities, not to undermine inadvertently through definitions of what’s in or out, or in essence allowing for conflicts that we don’t allow,” Gensler said. 

“I think there is one agency — the Securities and Exchange Commission, overseen by two committees — the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that,” Gensler later said. 

Lawmakers have introduced legislation over the years to regulate crypto. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., have plans to reintroduce legislation next month that would, in part, assert that the Commodity Futures Trading Commission has control over digital asset commodities, such as bitcoin.  

“I think many of the legislative vehicles would, if adopted, would undermine the securities remit,” Gensler added. 

Silence on Binance

The hearing came days after the CFTC sued the world’s largest crypto exchange, Binance, for unregistered trading activity and highlighted some major revelations in its 74-page complaint. Some of those include Binance possibly knowing that it helped facilitate illegal transactions. 

Gensler declined to answer whether the agency planned to bring its own actions against Binance, while noting that the agency has brought actions against other exchanges. 

Rules already exist

During the House hearing, Gensler also told lawmakers that regulations already exist to govern crypto. “They’re called the securities regulation,” he said. 

Gensler reiterated that most cryptocurrencies are securities and said entities overseas that sell to U.S. investors need to come under the securities law. 

“If you’re touching U.S. investors, selling these tokens to U.S. investors then you come under either the securities laws”  or the laws under the CFTC, Gensler said. 

 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance is by far the largest crypto exchange by volume, and the impact of a lawsuit filed earlier this week by the Commodity Futures Trading Commission against it will surely spread far and wide across the industry for the foreseeable future. While it still may be premature to ponder a world without Binance, analysts have been quick to point out just who’s in line to benefit from the behemoth’s legal predicament. 

U.S.-based exchange Kraken, which has had its own share of legal concerns, could see an immediate upside from Binance’s woes, according to Jeannette Spaulding, a crypto consultant and co-founder of Tokenwise. 

“At the end of the day, a lot of the crypto industry will find a way to transact,” she said in an interview in Miami. “For a lot of people, Binance is their on-ramp because that’s the easiest solution for them, and it’s the cheapest way for them to access the markets. If they no longer have access to Binance, there are a lot of other centralized exchanges, and a lot of other decentralized exchanges, and it just depends on what are people willing to pay to get access to the market.”

The CFTC suit accused Binance and its CEO Changpeng Zhao of unregistered commodities trading in the U.S., but it also alleged the company facilitated transactions by organized crime and terrorist organizations in a move that led many to assume a broader crackdown against the company could be in the works. Binance has called the suit “unexpected and disappointing,” refuting much of it in a statement on its website. 

Binance troubles

Although the sudden exit of a major exchange like Binance may seem unimaginable, it wouldn’t exactly be without precedent — it’s only been several months since former heavyweight FTX collapsed in a matter of days, albeit for completely different reasons. In that case, the industry moved on quickly, despite initial fears, and the price of bitcoin has even surged more than 30% from levels seen before FTX’s troubles first emerged in November. 

“If crypto is one thing, it’s resilient, and there are a lot of platforms that are waiting in the wings and that are competitors right now to Binance that are going to be able to step up and take on the demand,” Spaulding said, noting that Binance’s troubles could have an immediate impact on trading volume and the derivatives market that the exchange currently supports. 

If Binance was forced to scale back, Dubai-based Bybit would benefit the most as the next largest perpetual exchange, according to The Block research director Steven Zheng. Kraken and fellow U.S. exchange Coinbase would be in a position to pick up any remaining scraps, Zheng added, noting that Kraken’s futures product could see some increased volume flow into it.

Kraken didn’t immediately respond to request for comment on its capacity to handle any increased demand in the wake of the Binance lawsuit.

While alterative sources of liquidity could emerge in the event of a disruption to Binance’s operations, Fireblocks Chief Legal and Compliance Officer Jason Allegrante pointed out that “every significant market maker in the world executes trades and sources liquidity” on the exchange. In the long run, he said that new entrants including traditional financial market participants such as Nasdaq could step in to pick up the slack. 

More volatility

“Major exchanges such as Binance provide important on-ramps, price discovery, and liquidity, but we do not believe that the existence of any single exchange is critical to crypto’s long-term success, which will be determined by the utility of truly decentralized technologies and the entrepreneurs who build them,” said North Island Ventures co-founder and managing partner Travis Scher.

Jack McDonald, CEO of custody, trading and administration infrastructure startup PolySign, said that the sudden exit of a larger player from certain jurisdictions would likely create more volatility in the asset class. Opportunities exist, however, for smaller players providing service in spot, futures and derivatives markets. 

“We also expect to see increased opportunities for permissioned DEXs or DeFi platforms, given that many of the systemic failures affecting crypto tend to be centralized players and not platforms managed by code,” he said. 

Hirander Misra, chairman and CEO of GMEX Group, said the current disruptions in the market will lead to a “flight to quality,” pushing investors to seek out offerings with the right governance, control, security and risk management.

“There will be much more decoupling of functions as exchanges should be exchanges and not have market making, brokering and other such functions coupled within them,” he said.

U.S. risk

The CFTC suit, and broader regulatory uncertainty in the U.S., do present risks to companies operating in the country, even those positioned to expand operations if some actors are pushed out of the market.

“It is certainly true that rogue corrupt actors need to be penalized and that American customers need protections,” Avivah Litan, a Gartner web3 analyst, said in an emailed response to questions, adding that the move could stifle blockchain and crypto innovation in the U.S. if clearer and cohesive rules aren’t put in place by lawmakers and regulators. “This latest action continues to validate the fact that the Biden Administration is concertedly trying to squash the cryptocurrency industry in the United States.”

It’s a sentiment that was echoed by Spaulding, who said that jurisdictions including Singapore, the UAE and even some European countries could emerge as the true winners.

“The world is already not waiting for the U.S., which is sad to say, and I don’t want to be saying that, but there are already companies that I’ve had a lot of conversations with, platforms that are saying ‘you know, we’d love to be in the U.S. but it’s not feasible right now,'” she said. “Regulations aren’t inherently bad, but there is a way to enforce them that still can foster innovation. And what we’re doing right now is enforcing them in a way that stifles innovation.”

With additional reporting from Christiana Loureiro, RT Watson and Jeremy Nation.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.