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The European Commission has released its proposal for the union’s new Data Act, with some concerning fine print for the future of smart contracts.

The February 23 draft legislation focuses on overall data protection and privacy within the European Union. In that context, it identifies smart contracts as: 

“Computer programs on electronic ledgers that execute and settle transactions based on pre-determined conditions. They have the potential to provide data holders and data recipients with guarantees that conditions for sharing data are respected.”

Smart contracts indeed play a surprisingly big role in the European Commission’s vision for data protection. The proposal nonetheless puts forward requirements for smart contract developers that would impose startling new legal standards for their use in data-sharing and protection applications — which could end up being the bulk of applications for smart contracts that exist. As Thibault Schrepel, a tech and law professor noted, this particularly threatens oracles. 

Notably, article 30 as currently written would mandate that applications using smart contracts include a kill switch. The section on “[S]afe termination and interruption” would require those selling or using smart contracts in their applications to:

“[E]nsure that a mechanism exists to terminate the continued execution of transactions: the smart contract shall include internal functions which can reset or instruct the contract to stop or interrupt the operation to avoid future (accidental) executions.”

The provision is likely a reaction to a few notable failures of smart contracts that have facilitated a number of hacks. Recently, this included Ethereum-Solana bridge Wormhole, but another infamous example was the 2016 hack of the smart contract behind the DAO, which recently returned to headlines. 

However, kill switches on smart contracts by their nature threaten the promise of immutability: with the ability of a single source to make a change, the contract is no longer autonomous. In the case of the DAO, the decision to undo the damage on the Ethereum network was controversial enough that die-hards in favor of immutability forked the network into Ethereum Classic. In that network, the hacker kept their funds. 

The aggregate effect of the EU requiring kill switches on smart contracts is hard to conceptualize as smart contracts also cross borders so readily. But while the European Commission’s version of this Data Act is still far away from actually becoming law, the EC is the most powerful force in making such regulations. The European Parliament and Council will eventually weigh in before this becomes law, but even if they challenge these provisions, the Commission will have the chance to restate their case later on as well. 

© 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

• FRAX is a stablecoin that is partially collateralized and partially algorithmic with the use of Frax Shares (FXS) as the seigniorage token.
• Protocol-owned collateral is deployed into various DeFi protocols, and a portion of the profit flows to FXS stakers.
• Frax copied Curve’s playbook in implementing a vote locking mechanism that aligns the protocol’s interest with its loyal community members by incentivizing long-term FXS staking.

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Rakuten Group Inc, the firm behind the popular online shopping platform Rakuten, announced Friday that it has launched its own non-fungible token (NFT) marketplace. 

The Rakuten NFT marketplace will offer users digital collectibles of sports and entertainment — such as music and anime — the firm wrote in a release. In addition, Rakuten will offer minting services for intellectual property (IP) holders to create digital assets of their IP. The firm intends to provide peer-to-peer listing and sales in 2021 or later.  

Rakuten’s first NFT drop will occur on February 25 and will include digital assets from an anime called Ultraman as well as the horse-racing themed comic Kurogane Hiroshi G1 Gekitoshi (2010 Series). 

Rakuten is a Japanese e-commerce store that sells goods and services in books, fintech, cosmetics, digital content and more, and offers buyers cashback for making purchases on the platform. Rakuten earned over 26.9 trillion yen ($232.7 billion USD) in the fiscal year of 2021, the firm reported.

© 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 veteran Roger Bartlett is the latest to exit Wall Street in favor of a move to the crypto space by joining Coinbase.

Bartlett’s 15-year tenure at Goldman Sachs saw him rise to the position of managing director and global co-head of operations for global markets.

Bartlett joins the crypto exchange as vice president and global head of financial operations. Writing on his LinkedIn page on Friday, Bartlett described “the mission to create economic freedom” as a “once in a lifetime opportunity,” hence his decision to join Coinbase.

The US crypto exchange giant has steadily grown its workforce over the last year. This aggressive hiring spree saw the company’s employee base triple between 2020 and 2021, ending the year with 3,730 staff members.

Some of these new employees have been high-profile hires from the traditional finance (“tradfi”) space. Earlier in the year, the exchange tapped a former US Securities and Exchange (SEC) counsel to lead its public policy division.

According to its Q4 2021 earnings report issued on Thursday, Coinbase still has plans to add more workers to its payroll with a target of reaching 6,000 employees by the end of this year.

© 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

• Liquid staking is an emerging form of staking that seeks to unlock the value of staked tokens.
• Figment and Blockdaemon are both bringing out liquid staking services for their institutional clients.

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The parliament of the European Union has delayed a key vote on its long-awaited cryptocurrency market regulation in response to outrage from the crypto world.

The Markets in Crypto-Assets Directive, known as MiCA, was on the docket for a vote on February 28 that would send it from the European Parliament into negotiations between that body and the Council of the European Union and the European Commission — putting future alterations into question.

However, Stefan Berger, chairman of the Economics Committee and rapporteur in charge of that vote, has postponed it, Berger’s office told The Block today. 

A source close to negotiations over the directive told The Block that the primary point of contention was late-stage changes that some interpreted as bans on proof-of-work networks, primarily out of concerns over their energy usage. After a leak generated negative press as well as overwhelming Twitter response, the right and center-right members withdrew support for the latest amendments. 

Berger took to Twitter to explain that “As rapporteur, it is central for me that the MiCA Directive is not misinterpreted as a de facto Bitcoin ban.”

Die Abstimmung des EU-Parlaments zu #MiCA wird auf meine Forderung hin abgesetzt und nicht am 28. Februar stattfinden. Als Berichterstatter ist es für mich zentral, dass der MiCA-Bericht nicht als de-facto #Bitcoin-Verbot missinterpretiert wird @btcecho 1/4

— Stefan Berger (@DrStefanBerger) February 25, 2022

The directive has been in progress since 2019. The European Parliament has not publicized the most recent amendments. A February 21 draft seen by The Block reads: 

“It is therefore urgent to highlight the need for consensus mechanisms to deploy more environmentally friendly solutions and call the Commission to identify those consensus mechanisms that could pose a threat to the environment having regard to energy consumption, carbon emissions, depletion of real resources, electronic waste and the specific incentive structures. Unsustainable consensus mechanisms should only be applied on a small scale.”

The delay was welcomed by many in the crypto industry. 

“Postponing the vote is the right decision, as several critically important issues in the bill remain unresolved,” Seth Hertlein, global head of policy for Paris-based wallet manufacturer Ledger, told The Block. “The future financial competitiveness of Europe depends on getting MiCA right.”

But as Patrick Hansen, head of strategy and growth at Berlin-based Unstoppable Finance pointed out, it remains to be seen how long this process will take.

© 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.

Jump Trading is one of the deepest-pocketed firms operating in the crypto market. 

Jump put its full scale on display earlier this month when the firm stepped up to cover hundreds of millions of dollars in losses after Wormhole—a DeFi project to which Jump contributes code—was hacked. In this episode of The Scoop, Jump president and CIO Dave Olsen explained how the firm reacted to the hack and market-bought more than $300 million in ETH to cover the losses.

“This was not a syndicate or a group of folks that pool resources to go out and purchase 120,000 ether,” he said, explaining:

“We did debate that but what led to such a swift conclusion was what we felt that we would have a bigger impact on the community by immediately being able to tell everything that their assets were backed one-to-one and step up and kind of lead the community.”

Once a secretive equities trading operation, Jump Trading has become more public-facing in a bid to grow its presence in the crypto market.

During this episode, Olsen dove into details that have not been historically talked about publicly—including Olsen’s view on what is important in market making in both crypto and traditional markets.

In Olsen’s view, connectivity to as many venues as possible is one of the three “building blocks” for being successful as a market maker. 

“You’ve got to be involved and connected to and able to trade pretty much everywhere that instrument trades,” he said. 

In addition to connectivity, you also need ample capital, he said. “So connectivity, scale, and then the ability to analyze all the information you’re getting and translate that into your best prediction of what should the price be for that asset at that moment in time? Those are really the three building blocks.”

During this episode Olsen and The Block’s Frank Chaparro also unpack:

• Why the crypto market is less deterministic than other financial markets and how that influences its market structure
• How Jump went about re-starting the Wormhole network after the hack
• Why the firm is still bullish on Solana
• Jump’s “agnostic” approach to hiring 

© 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.

Traders on Robinhood were left perplexed by a seemingly steep discount in the price of bitcoin on the investment app yesterday evening. 

On the evening of February 25 Pacific Time (PT), users were able to place orders to buy bitcoin at around $34,500 — some $4,000 short of the prevailing market rate of $38,500, at the time of writing. 

But none of those orders have been executed, according to a person with knowledge of the situation.

Robinhood has since posted a statement on Twitter, explaining that the app “experienced a temporary issue that led to an incorrect display price for crypto for an hour at 6:50pm PT.”

The issue has since been resolved, but customers who tried to execute trades during that time have been left with unfilled orders, according to the same statement. 

Twitter users were quick to point out the sudden and unexplained dip in Robinhood’s bitcoin quote relative to its price on other crypto apps and exchanges, with some also expressing anger that their orders hadn’t been filled.

The price of the world’s biggest cryptocurrency has fluctuated wildly back and forth between around $34,500 and $39,500 over the past week, with some attributing its recent volatility to Russia’s invasion of Ukraine.

© 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 donations to a pro-military Ukrainian group have surged in the past day.

Russian President Vladimir Putin deployed what he termed a special military operation against Ukraine early Thursday morning, launching a series of missile attacks. Ukraine is now facing a full-scale invasion from Russia on three fronts.

As Ukraine braces itself against further onslaught, blockchain analytics and compliance firm Elliptic noted earlier in the day that $400,000 in bitcoin had been donated to “Come Back Alive,” a Ukrainian non-governmental organization based in Kyiv that distributes supplies to soldiers.

That number continues to grow. At current prices, the address has amassed $808,521 in bitcoin, having transacted over 900 times on the Bitcoin blockchain. Most of the transactions have occurred in the past week — and a full $725,000 in bitcoin donations, spread across 780 transactions, have landed in the wallet since yesterday. The NGO lists a bitcoin address under the contribution options on its website.

In tracking today’s uptick in crypto donations, Elliptic added to a report detailing crypto donations to Ukrainian NGOs and volunteer organizations. The firm identified a number of wallets controlled by Ukrainian NGOs, finding the addresses brought in about $570,000 in bitcoin donations in 2021. More recently, Come Back Alive began seeing a surge in Bitcoin donations, receiving about $200,000 in crypto in the second half of 2021.

Come Back Alive has been crowdfunding for Ukrainian armed forces through a number of platforms. On Wednesday, it announced in a Facebook post that it had raised 20.5 million hryvnia, or about $685,000, in a day. It also raised $300,000 through Patreon, though the platform has since removed the NGO’s page and is conducting an investigation into the campaign since the site does not allow the use of the platform to support the purchase of military equipment.

© 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 Department of Justice said Thursday that Arthur Hayes and Benjamin Delo, co-founders of the crypto derivatives exchange BitMEX, have pleaded guilty to violating the US Bank Secrecy Act.

The announcement closes a legal chapter that began in the fall of 2020, when Hayes and Delo, in addition to co-founder Samuel Reed and BitMEX head of business development Greg Dwyer, were accused of “evading U.S. anti-money laundering requirements,” US officials said at the time.

Specifically, the two “pled guilty to one count each of violating the Bank Secrecy Act, which carries a maximum penalty of 5 years in prison,” per the DOJ. 

Per the DOJ statement:

“Under the terms of their respective plea agreements, HAYES and DELO each agreed to separately pay a $10 million criminal fine representing pecuniary gain derived from the offense.”

“Today’s guilty pleas reflect this Office’s continued commitment to the investigation and prosecution of money laundering in the cryptocurrency sector,” US Attorney Damian Williams said in a statement. 

This story is developing. 

© 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.