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Several progressive lawmakers want to know if and how financial regulators will cut down on their staff leaving to join crypto industry firms. 

“We write seeking information about the steps your agency is taking to stop the revolving door between our financial regulatory agencies and the cryptocurrency (crypto) industry,” one of the Oct. 24 letters to various financial agencies and government offices reads. The inquiries were organized by Sen. Elizabeth Warren, D-Mass. and Rep. Alexandria Ocasio-Cortez, D-N.Y. “The crypto sector has rapidly escalated its lobbying efforts in recent months, spending millions in an attempt to secure favorable regulatory outcomes as Congress and federal agencies work to craft and enforce rules to regulate this multi-trillion dollar industry.”

Joining the letter were Reps. Jesús “Chuy” García, D-Ill., Rashida Tlaib, D-Mich., and Sen. Sheldon Whitehouse, D-R.I.

The group sent the letters, which include requests for information on each agencies ethics rules around officials joining private sector firms with interests at the department or regulator they left. Letters requesting a response by Nov. 7 went to the leaders of the Treasury Department, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve, the Federal Deposit Insurance Commission, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. 

According to the lawmakers, over 200 government officials have left to join the digital asset sector in some capacity, ranging from, “advisers, board members, investors, lobbyists, legal counsel, or in-house executives.” Citing data from an organization called the Tech Transparency Project, they include 31 Treasury officials, 28 SEC officials, 15 CFTC officials, six Fed officials, five OCC officials, three CFPB officials and two FDIC officials in that tally. Their list also includes eight former members of Congress, 79 former congressional staffers, and 32 former White House officials. 

“Americans should be confident that regulators are working on behalf of the public, rather than auditioning for a high-paid lobbying job upon leaving government service,” the lawmakers write. “The rapidly spinning revolving door out of government and into the crypto sector, however, undermines both imperatives.”

© 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.

Cryptocurrency exchange BitOasis is partnering with Mastercard to offer customers crypto-linked payment cards.

BitOasis will offer physical and virtual cards linked to their exchange accounts, according to a statement from the firm. The first cards are set to launch in early 2023.

The crypto-linked payment cards will be available to BitOasis customers across the Middle East and North Africa (MENA). Final settlement will be fiat-based, per the announcement.

Today’s announcement represents Mastercard’s latest crypto play, having partnered with crypto lender Nexo in April to offer a similar crypto-backed payment card. The Nexo card is linked to a crypto-backed credit line, allowing investors to spend as much as 90% of the fiat value of their crypto assets. 

In 2021, the firm partnered with several firms across the Asia Pacific, including Amber Group, CoinJar, and Siam Commercial bank-owned exchange platform Bitkub to offer crypto-linked payment cards.

© 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.

Decentralized lending protocol Compound is pausing the use of four tokens as lending collateral on the platform. This means that the protocol will not allow users to deposit these assets and take loans, in order to protect the protocol from market manipulation attacks.

Compound’s governance members approved Proposal-131, which asked to pause assets with low liquidity from being used as lending collateral, on Monday. The tokens are 0x (ZRX), basic attention token (BAT), maker (MKR) and yearn finance (YFI). The members passed the proposal with overwhelming support, with 554,126 votes in favor of it, representing 99.99% of the votes. Only a single voter went against the proposal.

The four assets were found to have unfavorable liquidity profiles, the proposal stated. Prices of assets with low liquidity can be easily manipulated. The proposal comes after Mango Markets, a popular lending market on Solana, suffered a $114 million price manipulation attack earlier this month.

Compound founder Robert Leshner, who voted in favor of Proposal-131, said on the Unchained Podcast that lending protocols should review their risk parameters in response to that Mango exploit. He added that it served as a wakeup call for lending protocols, including Compound Finance. An external review of the Compound Finance codebase found that certain tokens used on Compound could potentially be manipulated to steal funds. 

“Every protocol has to address the risk parameters assuming that some black hat hacker is going to try to exploit it. It’s a great wake up call for every DeFi project on every single blockchain to take this as a wake-up call,” Leshner said, referring to the Mango Markets exploit.

A similar discussion has been going on among governance members at Aave, the largest lending protocol on Ethereum. Chaos Labs, a crypto risk management firm has suggested turning off the use of ren (REN) and 0x protocol (ZRX) as collateral assets immediately on Aave. Aave is yet to propose a vote to disable those collateral assets.

© 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

• Execution environments are a major component of blockchain architecture, shaping the way assets and smart contracts behave, as well as the end-user and developer experience
• The Ethereum virtual machine (EVM) is the most widely-used execution environment today, but new alternatives have also grown in recent years to suit the needs of changing blockchain designs
• In this piece, we look at some of the major differentiating features between popular execution environments, including the EVM, Solana’s Sealevel runtime, MoveVM, WebAssembly (Wasm), and CairoVM

This research piece is available exclusively to
members of The Block Research.
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this Research content on The Block Research.

Dan Holzmann, co-owner of Swiss football club FC Basel, and venture capital firm Tioga Capital have led a €5 million ($5 million) round for NFT startup Exclusible.

CEO Thibault Launay declined to share its valuation. Founded only last year, Exclusible is an NFT platform that works with luxury brands to develop their digital asset offering counting clients such as Asprey Bugatti, Christian Lacroix and Louis Monet.  

Along with the funding announcement, the Lisbon-based company also announced that it’s making a push into America through an acquisition of U.S. company Polycount, a metaverse development studio that has worked with Mcdonalds’ and NBA team Utah Jazz. 

Exclusible’s Launay did not share the full details of the acquisition deal but said it was a mixture of cash and shares. 

© 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.

Web3 ticketing company YellowHeart is launching a metaverse music venue – a move it hopes will drive changes in how artists, teams and event organizers release tickets and engage with fans.

Built on Spatial, the venue is set to host Grammy-nominated blues artist G.Love as its first performer later this year. Fans will be able to use multiple screens to see what is happening in different parts of the venue at once, talk with each other and take part in meet-and-greets before and after shows.

In the future, they will also be able to purchase food and drinks ahead of the show that will also appear as digital objects.

So far it’s been the gaming giants that have really pulled people into the idea of an online concert. The most popular virtual events have been held on platforms like Fortnite and Roblox. In August 2021, Ariana Grande’s concert on Fortnite drew 78 million players. Decentraland will hold its second Metaverse Music Festival next month. Its line-up includes big names like Ozzy Osbourne and Soulja Boy, as well as over 100 artists.

YellowHeart, which helped Kings of Leon release an NFT version of their latest album, said it hopes to achieve something more than just hosting an event. Founded in 2017, it has a grand mission to change the music ticketing industry at large, which has traditionally been dominated by exclusive ticketing partnerships and reselling giants. Often times, these partnerships can put restrictions on what buyers can and can’t do with their tickets. Trying to resell a ticket for a concert you can’t attend can be a nightmare. 

YellowHeart thinks giving control back to artists and fans through web3 technology can address these pain points. It can also offer benefits that can’t be programmed into traditional tickets.

“These include everything from full albums, to custom vinyl records, to exclusive merch, to immersive visual art. Web3 tickets also give artists the ability to share updates with fans about upcoming tour dates, music releases, giveaway opportunities and much more,” the company said.

It’s already worked with some big names such as MGM Resorts, Maroon 5 and Julian Lennon. Unlike non-NFT versions available on Spotify, iTunes and other platforms, those purchased through YellowHeart entitled customers to special perks.

© 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.

Ribbon Finance, a DeFi protocol that offers investors access to crypto structured products, is considering a second round of lending pools for its DeFi lending product Ribbon Lend.

The Ribbon community is considering onboarding a new set of institutional borrowers, according to a new governance proposal on the project’s forum. Four firms are currently under consideration: Parallel Capital, Amber Group, Auros, and Nibbio. Out of these four, the community will vote to select two of them. Ribbon Finance will then create two new lending pools for the selected institutional borrowers.

The governance proposal stated that the four firms under consideration have already been vetted. “Note that all the choices presented have undergone KYC/AML and have completed credit underwriting with Credora, with strong credit scores,” the proposal stated.

Ribbon launched its DeFi lending product in August. Ribbon Lend has processed over $35 million in loans to institutional borrowers including Wintermute and Folkvang, according to DeFiLlama. Lenders on the platform enjoy a 12% annualized yield divided between 7% interest and 5% in RBN emissions. RBN is Ribbon’s native token and is currently trading at $0.36, up 7% in the last 24 hours.

The Ribbon community will have five days to discuss the new borrowers under consideration. Voting on the matter will commence after the discussion period.

© 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.

Near Foundation has announced a $40 million grant toward replenishing a deficit found in collateral reserves for USN, a decentralized stablecoin on the Near Protocol blockchain that had become undercollateralized earlier this year.

After being approached by USN’s developer Decentral Bank (DCB), Near foundation, the organization leading the Near blockchain, agreed to replenish the collateral deficit, the foundation said in a statement on Monday. This has been made available via a grant called the “USN Protection Programme.”

The Near Foundation said the allocated grant fund will replenish the gap of $40 million in the total collateral funds backing USN’s value. The foundation had recommended that Decentral Bank should retire the stablecoin.

“In order to safeguard users and to facilitate the orderly winding down of USN by DCB, the Near Foundation has elected to set aside $40m in fiat (equal to the known collateral gap as described above), to be made available via a grant for the creation of a USN Protection Programme,” it said.

In response, Decentral Bank stated in a blog post that it will be “gradually winding down” the USN stablecoin even though it has been recollaterized. The team added it has disabled new USN minting, and asked USN holders to redeem their funds. 

What is USN?

Founded by an independent decentralized autonomous organization (DAO) called Decentral Bank, the USN stablecoin was launched on Near’s Layer 1 blockchain in April 2022. Originally, USN had used an algorithmic backing where the stablecoin could be minted and burned with near, the native coin of the Near blockchain. 

This was similar to TerraUSD, the stablecoin known as UST that collapsed in May and brought down its sister token luna. During the UST debacle, it was the algorithmic component of the design that caused it to become uncollateralized and fall into what some characterized as a “death spiral.” 

Even though USN did not have the exact design as UST, it had nevertheless become unbacked to the tune of $40 million amid extreme market conditions, Near Foundation said. The situation was exacerbated by a so-called double mint, where users had used their collateral twice to mint the stablecoin. The double mint occurred due to a flaw in the original stablecoin algorithm, Decentral Bank noted to the Near Foundation.

Considering the risk inherent to algorithmic stablecoins, Decentral Bank pivoted away from USN to a new design, where the stablecoin was solely backed by tether, the largest centralized stablecoin, rather than near coins. 

© 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.

Bitcoin and ether edged lower over the past 24 hours, as the former’s volatility hovers around its lowest level since July 2020. 

Price action has been relatively muted in crypto markets recently. Today, bitcoin was trading at $19,285 — down 0.8% over the day — while ether lost 0.6% in the same period to trade at $1,343, according to CoinGecko data. This stagnant price movement has seen bitcoin volatility reach fresh lows. 

Annualized bitcoin volatility is currently 27.06% — its lowest level since July 2020, when it fell as low as 23.37% — according to The Block’s data dashboard. (Volatility, in this case, is defined as the standard deviation of the past 30 days’ daily percentage change in the price of bitcoin.) 

Meanwhile, on Monday, AAVE and XTZ were added to Robinhood. Both rose on the news before surrendering those gains, with Aave’s token dropping considerably over the past day. AAVE was trading at $82.06 at the time of writing, down 5.6% over the past 24 hours, while Tezos’ coin was unchanged in the same period at $1.36, according to CoinGecko. 

Ark Invest adds more crypto-related stocks

Cathie Wood’s Ark Invest bought shares in Coinbase, Block and Robinhood, according to its latest trade filing. 

Coinbase shares closed at $66.39 on Monday, while Block finished at $56.99 and Robinhood last traded at $10.21 — all marginally up on the day.

The Ark Next Generation Internet ETF added 4,917 Block shares, valuing the purchase at a little over $280,000, based on the price at the close. The fund also added 16,503 Robinhood shares, worth over $168,000. Block shares comprise 6.18% of the fund, while Robinhood accounts for just 3.31%, according to the firm’s website.

Elsewhere, the Ark Fintech Innovation ETF bought 10,880 Coinbase shares worth around $722,000, 3,183 Block shares worth about $181,000 and 5,291 Robinhood shares for just over $50,000. Block now makes up 9.18% of the fund, Coinbase accounts for 8.12%, and Robinhood makes up 6.39%.

Ark ditched over 1.4 million Coinbase shares in July as the exchange’s share price plummeted. Coinbase will announce its third-quarter earnings on November 8 — expectations are low, per the firm’s second-quarter earnings call. Jack Dorsey’s Block will release its third-quarter earnings on November 9, while Robinhood shares its earnings on November 2. 

© 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.

Australian regulators are suing BPS Financial (BPS) for alleged misleading statements about its crypto asset Qoin.

BPS made misleading representations and engaged in unlicensed conduct in relation to Qoin, a digital currency it launched in 2019 to facilitate payments for goods and services, the Australian Securities and Investments Commission (ASIC) said in a statement.

BPS’s website claims holders can use Qoin at almost 38,000 merchants. ASIC believes this isn’t true.

“We allege that, despite what BPS represented in its marketing, Qoin merchant numbers have been declining, and that there have been periods of time where it was not possible to exchange Qoin tokens through independent exchanges,” ASIC deputy chair Sarah Court said.

ASIC is also concerned that the company misrepresented its regulatory status.

“We believe the more than 79,000 individuals and entities who have been issued with the Qoin Facility may have believed that it was compliant with financial services laws, when ASIC considers it was not,” Court said.

BPS is reviewing the allegations.

“BPS does not agree with ASIC’s position and, confident of its position, will be defending the matter. Before it started, BPS consulted with ASIC in late 2019 regarding the structure of the Qoin project and did so again in early 2021,” it said.

The date for the first case management hearing has not yet been scheduled.

Australian regulators have been paying more attention to crypto assets recently. Earlier this month, ASIC also suspended the offering and distributing of three cryptocurrencies to retail investors on Holon Investments for 21 days. It said order was to protect retail investments from investing in “very risky and speculative” crypto assets.

© 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.