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The European Union is now expected to adopt a benchmark framework for regulating crypto assets early next year.

The European Parliament was to take its final vote on the Markets in Crypto-Assets legislation in an upcoming plenary session in November. But the draft needs to be translated into the 24 official EU languages. But since the text is technical and lengthy, the regulation’s adoption is now anticipated for February 2023, according to a parliament spokesperson.

Once adopted by the Parliament and the European Council, the text will be added into the EU’s Official Journal, which launches a lengthy rulemaking process. 

The MiCA legislation gives European regulators a period of 12 to 18 months to write and apply new rules based on the legislation. During this time, Europe’s financial supervisors and the European Commission will iron out final details as to how to implement the law.

A delay in the adoption of the final parliamentary vote means that the rulemaking and implementation process will set off later, with new rules outlined in MiCA likely coming into application in February 2024 at the earliest. 

© 2022 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.

Investment bank UBS AG has introduced its new digital bond, which the bank says is the first-ever to be publicly traded and settled on both blockchain-based and traditional exchanges 

The digital bond has the same investment structure, legal status and rating as a traditional senior unsecured note, the bank said in a press release. 

“We are proud to leverage distributed ledger technology to launch the inaugural UBS digital bond,” UBS Group Treasurer Beatriz Martin said in a statement. “This shows our commitment to support the development of new financial market infrastructure.”

UBS AG’s senior unsecured digital bond is a 375 million Swiss franc-denominated ($272 million) three-year bond with 2.33% coupon. The bank will list the digital bond at SDX Trading and SIX Swiss Exchange. It will be eligible for the Swiss Bond Index, along with other UBS AG senior unsecured notes. 

The digital bond settles instantly and automatically through atomic settlement technology, using the SIX Digital Exchange distributed ledger-based central securities depository network. Settlement does not require a central clearing counterparty, the bank said. 

© 2022 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.

Quick Take

• Searching for Alpha is a series that summarizes under-the-radar protocols that The Block Research team finds interesting.
• This week’s finding will look at 0xSplits and Forward Protocol.
  
• Disclaimer: The Block Research team has, is, and will be experimenting with the various protocols, projects, and applications mentioned in this series. The projects mentioned in our reports are not recommendations from our team and should not be misconstrued as investment advice. Many projects that appear in this series are highly experimental and, as such, will come with risks. Readers should evaluate their own risk tolerance before experimenting with these projects.

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Pudgy Penguins — a collection of 8,888 cartoon penguins pinned to the Ethereum blockchain — is the latest NFT collection to seek backing from venture capitalists.

The project is in talks with investors about raising up to $10 million in a seed round, based on documents obtained by The Block that include outreach to prospective investors, excerpts from a pitch deck, and a term sheet. The documents indicate that the round, if closed, would give Pudgy Penguins a $50 million valuation.

Pudgy Penguins CEO Luca Netz strongly denied that the project is raising money, however. He described The Block’s reporting as “all wrong information,” and warned he would publicly brand any story on the subject “fake news.”

Netz took over as CEO of the project after acquiring it for $2.5 million in April. The Los Angeles-based entrepreneur previously ran a dropshipping business, according to CoinDesk. Upon taking the reins of Pudgy Penguins, he outlined plans roll out a line of toys — and in August he tweeted an image of a prototype.

There was also speculation, at the time of the takeover, that Pudgy Penguins would ultimately launch a token — following in the footsteps of other major NFT collections like Bored Ape Yacht Club, which debuted ApeCoin in March. The documents reviewed by The Block earmark April 2024 for the launch of Pudgy Penguins’ token.

The $10 million raise that is currently being touted to investors takes the form of a Simple Agreement for Future Equity (SAFE) round, with token warrants attached — a structure that has become the norm in crypto-focused venture capital.

Even as the so-called crypto winter sets in, prominent NFT projects have proven an attractive target for venture capitalists. The Block recently revealed that Chiru Labs, the outfit behind Azuki, is closing in on a $30 million raise. Doodles announced a $54 million round in September; Moonbirds creator Proof Collective raised $50 million in August; and Yuga Labs, the firm behind Bored Ape Yacht Club, led the way with a $450 million round in March.

Pudgy Penguins is among the best-followed NFT projects. At the height of the NFT market, in August of last year, the collection was the subject of a New York Times column. It currently costs around 3 ETH (or $4,600) to buy a Pudgy Penguin. Since its inception, 63,664 ETH (almost $100 million) in Pudgy Penguins have changed hands on secondary markets, according to OpenSea data. 

© 2022 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.

Santander UK, the British branch of the Spanish financial giant, has announced a £1,000 ($1,120) limit on crypto transactions for customers, citing cryptocurrency fraud warnings from regulators.

The bank also said that customers will be limited to making crypto transactions worth $3,360 during a 30-day period.

These restrictions apply to customers making crypto deposits to exchanges from their bank accounts. As such, customers can still withdraw from exchange platforms to their Santander bank accounts. The bank also stated that it will be making more changes to these limits while also adding that it could ban deposits to crypto exchanges altogether.

Santander said the restrictions are intended to protect customers from crypto investment risks. “We feel that limiting payments to cryptocurrency exchanges is the best way to make sure your money stays safe.”

The bank’s notice maintained its ban on payments to Binance. Santander was among a number of banks and financial institutions that began blocking payments to Binance last year.

Santander’s announcement also follows on the heels of Swiss authorities preparing to enforce identity checks for crypto transactions above 1000 Swiss francs ($1,005).

© 2022 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.

Quick Take

• New York judge denies troubled crypto lender Celsius’s KERP Motion
• Celsius also filed a motion to seal and redact key details of the KERP
• These come months after Celsius filed for Chapter 11 bankruptcy protection in July 2022
  • In August, a judge approved crypto lender Voyager’s KERP

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members of The Block Research.
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Payments firm Stripe is firing 14% of its workforce as layoffs continue at fintech and crypto companies.

The company cited the macroeconomic environment and falls in funding for startups. The cuts were shared in an email with employees. Founders Patrick and John Collison took the blame for the decision. 

“We overhired for the world we’re in, and it pains us to be unable to deliver the experience that we hoped that those impacted would have at Stripe,” they wrote.

The news follows other significant employee layoffs in the crypto and fintech sector as both traditional and crypto asset prices slid amid global economic uncertainty. Two days ago, crypto exchange Bitmex cut 30% of its workforce. Previously, companies such as Coinbase, Robinhood and Bitpanda also reduced their number of employees.

Stripe offers support for USDC stablecoin payments on Polygon and payments support for crypto businesses. 

The cuts will mean that Stripe will now have close to 7000 employees, a similar level to what it had in February.

© 2022 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.

The founders of crypto investment platform Bitpanda have quietly set up a venture capital firm, following in the footsteps of other fintech founders who have set up investment side hustles. 

Austrian company registers show that founding trio Eric Demuth, Paul Klanschek and Christian Trummer applied to set up an investment firm named Diamond Hand Ventures in May of last year.

Filings from Companies House, the UK business register, also show that it participated in crypto custodian Copper’s $50 million Series B round in the same month. 

So far, it has also invested in blockchain developer tooling startup Tatum, payments startup Payable, and Consola Finance, a web3 accounting platform, according to a Bitpanda spokesperson who confirmed the new VC firm to The Block. Demuth has made angel investments in French fintech Finary and inclusion startup Talking Hands. 

“They started investing as angels, but now the founders have a company that handles these transactions,” Jacob Kobler, Consola founder and former crypto product lead at Bitpanda, said in an interview. “It’s super small and if you Google the name, you will see another venture capital firm with the same name.” 

Another firm named Diamond Hand Ventures does indeed exist — but this is not related to the Bitpanda founders’ firm, the company’s spokesperson confirmed. It is also unclear where the firm’s capital comes from, with the latest filings showing that only $34,134 (€35,000) has been paid in by the founders.

Fintech founder to venture capitalist pipeline

The fund follows in the footsteps of other billionaire fintech founders who have set up investment vehicles. In May, Revolut founder Nik Storonsky launched a venture capital fund. Powered by artificial intelligence, the new venture is called QuantumLight Capital and most recently hired a CEO to lead its investments. 

Checkout.com CEO Guillaume Pousaz founded his family office Zinal Growth in August last year. It backed DeFi platform Alloy in a $3 million pre-seed round in May. In March this year, The Block interviewed Hanna Wachtmeister, who helms Flat Capital, which is Klarna founder Sebastian Siemiatkowski’s investment vehicle. 

Bitpanda itself has encountered difficulties amid the current crypto bear market, cutting roughly a third of its workforce in June. It has since continued to roll out new products such as commodities trading. 

© 2022 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.

OKX, the world’s second-largest crypto-only exchange by trading volume, has followed rival FTX and obtained a digital asset license in The Bahamas, where it plans to hire up to 100 people over the next 12 months.

The Seychelles-based exchange operator will use the newly licensed entity to onboard customers — starting with clients from Mexico — Jillian Bethel, Chief Executive Officer of OKX’s Bahamian unit, said in an interview. 

”We have been working in a non-regulated space where clients trust us because of our track record,” Bethel said. OKX wants to operate in a regulated space and will eventually bring existing clients under the regulated framework, she added.

The Caribbean nation has made a bid to become a regional center for digital asset firms. In 2020, it introduced the Digital Assets and Registered Exchanges Bill, which established a licensing system for crypto-related firms. That gave exchanges and other crypto service providers the chance to gain an accreditation that sets certain minimum standards and can be used in sales pitches to clients.

Countries across the globe are deliberating on how flexible their crypto regulations should be. Some, like Malta and Dubai, have positioned themselves as crypto-friendly. In The Bahamas, Bethel says OKX will be able to offer nearly 100% of its products under its new license. By comparison, Hong Kong on Monday laid out requirements that digital asset service providers in the city apply for a regulatory license, with rules barring the platforms from offering more lucrative trading products including leveraged positions and derivatives.

One attraction of The Bahamas for OKX was that business and political circles were small. ”It is easier to have the regulator and the government along with the industry to all come together and say these are the things that happening and these are things that need to be regulated,” said Bethel.

© 2022 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.

Goldman Sachs is working with index provider MSCI and crypto data firm Coin Metrics to develop a crypto classification service.

The investment bank’s crypto classification service will target institutional investors. The bank wants to help investors make sense of crypto, executives at the firms told CNBC, which first reported the news. 

“We’re trying to create a framework for the digital asset ecosystem that our clients can understand,” Anne Marie Darling, head of client strategy at Goldman’s Marquee platform, told CNBC. Darling added, “they increasingly need to think about performance tracking and risk management in digital assets.”

The service will be known as Datonomy, a play on the scientific term for naming and classifying the natural world — taxonomy.

Darling said that Goldman, MSCI, and Coin metrics split the digital asset space into classes, sectors, and subsectors. She added that money managers at hedge funds and asset management companies will be able to think about crypto in a more granular way now.

The data feed aims to help with analysis and research. As well as this, it can be used to benchmark performance, manage portfolios, or even create investment products based on the different sectors in the digital asset space.

© 2022 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.