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Congressman Warren Davidson (R-OH) has introduced new legislation to protect self-hosted crypto wallets from government agencies.

The bill, which was introduced on February 15, aims “[t]o prohibit Federal agencies from restricting the use of convertible virtual currency by a person to purchase goods or services for the person’s own use, and for other purposes.”

Specifically, the bill bars agency heads from restricting the ability to “[u]se virtual currency or its equivalent for such user’s own purposes, such as to purchase real or virtual goods and services for the user’s own use; or conduct transactions through an self-hosted wallet.”

Self-custody was under fire at the end of 2020 and the beginning of 2021, as the Treasury Department under then-Secretary Steven Mnuchin sought to impose limits on crypto exchanges transacting within unknown parties in the final weeks of the Trump administration. The controversial wallet monitoring rule ultimately went dormant under Janet Yellen’s Treasury. 

As to the prospect of that proposal returning, Davidson told The Block: “I would be concerned about it returning until it’s protected.”

Davidson further elaborated on his overall support for the independent operation of crypto. “People should run their own nodes and have self-custody over some portion of their digital assets,” he said. 

A member of the Blockchain Caucus and the author of the Token Taxonomy Act, Davidson last week spoke about one particular stablecoin operator facing scrutiny before Congress. 

Read the full text of Davidson’s bill below: 

   Bill.pdf by MichaelPatrickMcSweeney on Scribd

© 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.

Padawan DAO has lost half of its budget allocated to funding students to attend blockchain events through a risky approach to the management of the funds.

The DAO was set up by a group of young people and originally financed through Richard Burton, the open-source designer at crypto wallet Balance, and other donors. Last year, Padawan DAO sponsored 75 people so they could attend two crypto conferences, with the goal of continuing to encourage students to explore the crypto space.

“I’m glad we’re allocating funds to teach the young students of web3. there’s nothing more rewarding than using funds for such an honest purpose,” said a community member named Wilson in its Discord server. 

Yet the DAO has been in disarray since the core team announced that half of the budget set for sponsoring people to go to future events has been lost. These losses were incurred through the use of DeFi protocols during a dip in crypto prices.

The idea to grow the funds

On November 15, a community member named Daniel Bezerra suggested that there should be a working group for the treasury, since holding its funds in ether (ETH) meant it was at risk to the broader crypto market. Core team member Eason Wu replied that it was something the core team planned to sort out.

A few days later, community member Vampo laid out some suggestions for handling the treasury. They said it should be diversified between tokens like solana (SOL), which they suggested had growth potential, and what they described as high-yield tokens like olympus DAO (OHM). They added that converting the holdings to stablecoins was a bad idea.

Bezerra argued this would be a risky approach. He recommended putting the funds in a stablecoin and lending them out to generate interest. 

“I’d rather stick to stables generating interest than buying ‘high growth potential tokens’, the latter would seem like gambling with donors’ money,” he said.

Creating a debt position

On January 2, core team member Aleem Rehmtulla gave an update on the treasury situation. 

Rehmtulla said that the funds — worth around $150,000 — had been transferred into a collateralized debt position (CDP) for the decentralized stablecoin DAI. This means that the funds had been locked up in order to mint DAI, backed by those funds. In order to get the funds back, they would need to redeem the DAI for them.

But this approach carried risk. If the value of the underlying collateral — made up of ether — fell too low, then the funds could be liquidated. This function is to protect the stablecoin in general from becoming undercollateralized.

Rehmtulla claimed that this would keep the value of the funds stable and avoid the volatility of the market. (Although this likely wouldn’t achieve its stated aim — unless they planned to only keep the DAI — since the value of the underlying ether would still fluctuate.)

As Wu explained to The Block: “The reason why we didn’t just swap our ETH to get DAI was because some people in the DAO believed ETH would keep going up and thus would be smarter to get DAI while still having exposure to ETH… essentially over leveraging.” He acknowledged that it wouldn’t protect against the volatility of the price of ether.

Liquidation

A crisis struck when the market dropped significantly. As announced on January 27, when the price of ether fell below $2,200, it caused the DAI position to become underwater. It was subsequently liquidated by a third party.

As a result, the protocol sold 53 ETH for $117,000 to cover the loan and keep the DAI fully backed. At the same time, the project held on to its DAI.

Since the short-lived lows, the price of ETH has rebounded to $3,100. This means that if the project had not been liquidated, it would have been able to cash out its DAI and receive the 53 ETH back. As a result, the project is $33,000 worse off than when it started.

Community member Yalor, who gave the update, said: “Unfortunately that halves the budget for future events, but it serves as a valuable opportunity to improve coordination around treasury management moving forward.”

They added: “All credit goes to [Bezerra] for being absolutely right about the CDP being risky in this bearish environment.”

© 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 centuries-old art auction house Sotheby’s announced on Tuesday that it will accept cryptocurrency payments for an auction including a sports memorabilia non-fungible token (NFT) sale for the first time. 

The item in question is a shooting shirt from the late Los Angeles Lakers basketball player Kobe Bryant as he scored 81 points in a 2006 game against the Toronto Raptors. The official authenticator for the National Basketball Association (NBA) verified and photo-matched the shirt, and no other worn item from Bryant has been released for public auction. 

Bryant’s shooting shirt will be sold physically and have an accompanying NFT of an animation depicting Bryant’s 81-point game. The shirt’s starting price will begin at $200,000 USD. Sotheby’s will accept the final payment in ETH, BTC, USD Coin as well as fiat currency. 

Sotheby’s began selling NFTs in April of 2021 — primarily for digital art and not sports-related items but didn’t accept crypt payments for its auctions until May of that year. In all, Sotheby’s netted $100 million in NFT sales in 2021, The Block previously 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.

Safe Foundation, a proposed steward for the Gnosis Safe ecosystem, is plotting a $100 million token sale.

A document obtained by The Block shows that 8% of the total supply of SAFE tokens — a yet-to-be-launched governance token — have been earmarked for sale to strategic investors. The raise would therefore value the project at $1.25 billion.

Safe Foundation has already secured $65 million worth of commitments from investors including 1kx, Dragonfly Capital, Coinbase Ventures, Blockchain Capital and Zee Prime.

But the sale will not close unless the Gnosis community — specifically, holders of its native token GNO — approve a proposal to spin off Gnosis Safe from Gnosis Ltd, creating a new SAFE token and an entity named SafeDAO to govern it. Gnosis Safe is a popular multi-signature crypto management platform. There are currently more than $107 billion in ether and ERC20 tokens — those native to the Ethereum blockchain — stored on the network.

If the proposal goes ahead, Safe Foundation will be established alongside SafeDAO as a Swiss non-profit. At genesis, one billion SAFE tokens will be minted by the foundation. Its role will be to foster Gnosis Safe’s ecosystem while safeguarding some of the project’s key assets, such as IP, domain names, and GitHub repositories. The spin-off vote is set to be concluded in the coming weeks.

Lukas Schor, project lead of Gnosis Safe, said the tool has “clearly become critical infrastructure for Web3,” powering both DAOs and centralized exchanges.

“With the spin-off and token launch we aim to make Gnosis Safe a full community-run and owned project,” he said, explaining that Safe Foundation will help steward that transition.

“In the process of the spin-off we also aim to conduct a strategic token sale. The goal is to get strategic partners on board that believe in the potential of smart-contract-based accounts and have a strategic interest in the Gnosis Safe project,” Schor added.

He declined to comment on the specifics of the raise.

How to spend it

The document obtained by The Block shows that the proceeds of the token sale will go towards scaling core contributors on the network, funding Safe Foundation’s day-to-day operations, and providing three years of financial resources in fiat currency to guard against downturns in the crypto market.

But the lion’s share — some $65 million — will go towards ecosystem investments, grants and bounties. Safe Foundation will also set up incubation and accelerator programs.

“It is expected that the role of the Safe Foundation will decrease in importance over time, similar to the Ethereum Foundation, which was fundamental during the initial phase of Ethereum but also became less significant over time as the ecosystem became more decentralized,” said Schor. 

© 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.

A discussion draft of federal stablecoin legislation has been released by a member of Congress, a move that comes the morning of a hearing on the subject in the US Senate.

According to an announcement from the office of Congressman Josh Gotthiemer (D-NJ), the Stablecoin Innovation and Protection Act is aimed at “defining qualified stablecoins, carving qualified stablecoins out from more volatile cryptocurrencies, and putting appropriate protections in place for consumers and investors.”

“The legislation defines qualified stablecoins as a cryptocurrency redeemable on demand on a one-to-one basis for U.S. dollars and issued by one of two qualified issuers, either an insured depository institution such as a bank or a non-bank qualified stablecoin issuer. The bill will help protect against systemic risk, fraud, and illicit financing,” according to a summary shared with The Block. A copy of the legislation can be found here. 

One of the bill’s chief components, reflecting a recommendation contained in a December report from a White House-led working group on stablecoins, is to limit issuance to “a bank or a non-bank qualified stablecoin issuer” per Tuesday’s statement.

“The non-bank issuer must maintain at least 100% reserve assets consisting of U.S. dollars, U.S. government-issued securities such as U.S. Treasuries, and other assets as deemed appropriate by the Office of the Comptroller of the Currency (OCC). The cash collateral must be held in a segregated Federal Deposit Insurance Corporation (FDIC)-insured account,” the summary states.

The timing is notable as Congress continues to weigh the subject of stablecoins and, more broadly, crypto regulation, both at the legislative level as well as at agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Leaders from both agencies have expressed a desire to expand their respective oversight of the US crypto sector.

“The expansion of cryptocurrency offers tremendous potential value for our economy.  But for cryptocurrency to grow and thrive here in the United States, instead of overseas, we must provide more direction and certainty to the marketplace to help boost innovation and protect consumers,” Gottheimer said in a statement. “That’s why I’m releasing the Stablecoin Innovation and Protection Act to encourage cryptocurrency innovation in the United States, define qualified stablecoins, and protect Americans against bad actors like predatory entities and terrorists.”

Sources close to the House Financial Services Committee had anticipated that Gottheimer would introduce this bill last week on the same day of its hearing with Treasury official Nellie Liang. However, other Democrats on the committee didn’t seem intent on making this bill the focus of their planned legislative push around stablecoins. Many, including Chairwoman Maxine Waters, seemed to object to the concept of restricting stablecoin issuance to insured depository institutions — the central plank of the PWG report and one echoed in Gottheimer’s draft bill.

© 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.

Nejc Kodrič, founder and former CEO of Bitstamp, has failed in his bid to stop the crypto exchange’s new owners from wresting away his remaining shares.

In a recent filing, Judge Eason Rajah QC ruled in favour of the defendant Bitstamp Holdings NV, an investment vehicle owned by NXMH, which acquired Bitstamp in October 2018.

Rajah said he would make orders requiring Kodrič to sell his remaining shares — which he had transferred to a Luxembourg-based entity named White Whale Capital — to Bitstamp Holdings NV.

The ruling effectively upholds the validity of a controversial call option that was at the heart of the dispute.  

The case

In August last year, Kodrič filed a lawsuit against Bitstamp Holdings NV in the United Kingdom’s High Court after the company exercised a call option to snap up his remaining 9.8% stake in the company for $13.46 million, a price his legal team described as “very significantly lower” than their market value.

Kodrič claimed that the option was invalid and unenforceable and sought an injunction preventing the investment firm from forcing through a transfer of his shares (he had already sold two-thirds of his stake in Bitstamp in the 2018 sale).

In its defense, NXMH’s subsidiary argued that it was contractually entitled to acquire Kodrič’s shares at a discount because of its option agreement, which had been negotiated at the time of the acquisition. 

NXMH, an investment firm with some €3 billion of assets under management, is owned by South Korean gaming billionaire Kim Jung-ju.

“We are pleased the court has upheld our contractual rights,” said spokesperson for the company.

A bitter feud

Filings connected to the lawsuit have shed light on the ugly conclusion to Kodrič’s tenure at the top of Bitstamp, which he set up in 2011.

In the initial lawsuit, Kodrič described Jong Hyun (Jamie) Hong, one of NXMH’s board representatives, as “hostile and domineering.” Bitstamp Holdings NV fired back in its defense that it did not regard Kodrič’s involvement “as a shareholder or director to be critical or necessary” in any effort to take the exchange public.

The latest filings reveal Kodrič’s dismay when Bitstamp’s owners tried to exercise the call option.

“I am very very disappointed Jamie! Hope you think it is worth it. I don’t think it is. I don’t know what I did wrong. But if it is just money, I think you are making a mistake,” Kodrič told Hong at the time, according to the judgement filing. Another extract shows that Kodrič told Dan Morehead, founder and CEO of Pantera Capital, that it looked as though Hong was forcing him out of the company.

Former Starling Bank COO Julian Sawyer took over at CEO of Bitstamp in July the 2020. When reached, Sawyer said the lawsuit was a private matter that doesn’t impact the company’s strategy. 

Kodrič was contacted for comment but did not respond by press time.

© 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.

Today marks the launch of Vesta Equity, a real estate investment company with a twist. 

The platform bills itself as the world’s first peer-to-peer marketplace for real estate-backed NFT assets. 

It allows homeowners who have bought their property outright to sell off a portion of it as a tokenized, fractionalised, NFT — which is packaged as a security. 

CEO Michael Carpentier, who began working on the concept a little over two years ago, says the advantage of the model is that you can access the value of your home without having to remortgage it or sell it. 

This also means an investor anywhere in the world can theoretically benefit from the appreciating value of real estate if prices rise. 

Two frenzies in one

The platform’s launch comes at a frenzied moment in the real estate sector. According to the National Association of Realtors, as people looked to move amid pandemic lockdowns, the median home sale price for a US home was $346,900 in 2021, up 16.9% from 2020. This was the highest on record going back to 1999. Home sales had the strongest year since 2006, with 6.12 million homes sold, up 8.5% from the year before.

“Investors can participate by purchasing into the future appreciation of the property and build a portfolio of real estate assets like they do with stocks,” says Carpentier. 

People interested in investing can browse a searchable marketplace, make offers for desired assets, and “leverage liquidity” on the secondary market, or in the event of the traditional sale of the property. 

Vesta argues that this construction democratizes wealth creation by providing unhindered access to the value locked into the real estate market. 

Similar arguments have been made before by crowdfunding players in real estate, however the use of NFTs has been brought into play here due to the speed of execution on Vesta’s blockchain of choice, Algorand. 

Carpentier says the choice came down to the fact that Algorand is immune to forks, gives instant finality on sales, which usually clear within four seconds, as well as having low fees. 

The platform is looking into future models where an NFT could be used to buy an owner out of their mortgage or constructions for first-time buyers looking for options other than debt financing. 

“The model will evolve and adapt to scale-up to other use case applications,” Carpentier said. 

Vesta expects to have spread across the US within 12 months, after an initial launch in California. Properties in a number of other states will also be available on the platform on launch. 

“There will be an education process with homeowners where we will have to explain to them the proposition,” said Carpentier. 

The proposition for owners

One such property owner, who has listed his Las Vegas home on the platform, is Mike Pitcher. As someone who had dabbled in real estate investments in the past, Pitcher had been looking for a blockchain solution.

He argues that from a buyer’s point of view, this structure is beneficial because you can buy smaller portions of the asset, which is not possible under normal circumstances in real estate. 

So far, NFTs have been focused largely on tokenizing digital assets, however a recent wave of projects have set their sights on real-world applications. 

Earlier in February, Propy, a real estate blockchain company, sold its first property in the United States. 

The sale drew attention for the fact that, as part of the deal, the owner receives a non-fungible token as digital proof-of-ownership. 

As noted by the Tampa Bay Times, the condo was previously owned by Leslie Alessandra, founder of a crypto company called DeFi Limited. Among other properties, the sale of a condo in Florida under similar conditions is forthcoming.

Carpentier says that he doesn’t want to exclude potential investors or people interested in the market by only pushing the blockchain angle of the product. It has to be accessible and usable first, he said. 

“You don’t care about the technology in your phone — whether it’s 5G or 4G, you don’t care how the camera works,” he said. “You just want to know that it works, and that’s exactly the approach we’ve taken.”

© 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.

Crypto exchange Binance has renamed its blockchain ecosystem in a move that suggests the company does not want to be directly associated with the ecosystem and the token.

Its blockchain ecosystem, previously known as Binance Smart Chain, has now been renamed to BNB Chain, and its token BNB — once known as Binance coin — has now been rechristened as “Build and Build.”

“Over the years, we’ve realized that BNB has evolved into something beyond Binance and in fact, BNB means Build and Build (not Binance Coin), it’s something CZ has tweeted before,” said Samy Karim, BNB Chain ecosystem coordinator, in a statement. “The BNB ecosystem is bigger than Binance, and has transcended Binance in terms of its use cases.”

The official announcement comes a week after Binance CEO Changpeng Zhao tweeted that BNB stands for “Build’N Build,” i.e., build the community and let the community build.

The removal of the Binance name will provide BNB Chain “with more opportunities and freedom to seek innovations,” said the company. BNB Chain will also become multi-chain, it added.

“BNB Chain will embrace large-scale applications, including GameFi, SocialFi and the Metaverse. In particular, scaling from one chain to multi-chain, improving scaling solutions and expanding the validator set of BSC from 21 to 41 (with 20 validators functioning as candidate block producers),” said Karim.

Along with the name change, Binance has also come up with a new concept called MetaFi — a combination of two words — Meta (metadata) and Fi (DeFi). Through MetaFi, the BNB Chain community aims to build infrastructure for various projects, including GameFi, SocialFi, Web3, and NFTs, under one umbrella.

“MetaFi is a future all-encompassing ecosystem that promises to deliver a paradigm shift that will enable seamless interoperability between different projects and blockchains,” said Binance. “The combination of these different blockchain projects enables a full-fledged parallel ecosystem serving users from around the globe.”

© 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.

When NFTs started taking off on Solana in August, it was lacking in marketplaces to trade them and had a scarcity of data sites for monitoring price changes. Solanalysis carved out a niche by tracking the top NFT collections on the blockchain platform and making it easy to compare them.

Since then, the data site has added more features, such as the ability for users to track the value of their own NFTs. It has also recently brought out a launchpad for NFT projects to launch new collections. 

Now it’s announcing a rebrand, a recent fundraise and an NFT marketplace aggregator designed to let it capture some of the NFT trading market.

Entering hyperspace

Now known as Hyperspace (with a new domain Hyperspace.xyz), the site has announced a $4.5 million seed round led by Dragonfly and Pantera Capital. There was further participation from Jump Capital, Solana Capital, NFX, Galaxy Digital, Shima Capital, Coinbase Ventures, Sfermion, 6th Man Ventures, Soma Capital, Social Capital, and Folius Ventures. 

The money was raised a few months ago but the round has only just been announced. Hyperspace is also planning to do another raise in a few months. 

Beyond this, Hyperspace is looking to sneak into the NFT trading market with an aggregator. The aggregator will let the website’s users purchase NFTs from any of the major Solana NFT marketplaces. NFTs on offer across all of the marketplaces will be available for browsing in one place. 

Hyperspace is achieving this by directly interacting with the smart contracts for each of the NFT marketplaces — a tricky feat since they’re all built slightly differently. But it enables the site’s users to purchase NFTs on any of these marketplaces without having to leave the website.

Hyperspace co-founder Kamil Mafoud says that when it comes to trading NFTs, there’s always a buyer, seller and a site in the middle facilitating that interaction. “We want to be the platform that sits in the middle,” he says. 

At present, Hyperspace will not be adding a fee to any of these purchases in order to grow market share without adding any friction, but it may do so in the future. Buyers already need to pay fees to the marketplace facilitating the trade and to the NFT collection or artist if required.

“Right now it’s growth for us. At that point when we have concentrated as many eyeballs then we can think about adding a fee on the aggregation side,” Mafoud says.

The bigger goal for Hyperspace, however, is to take hold of a share of the NFT market. Its aggregator will also be a fully fledged marketplace. As a result, users will also be able to list NFTs for sale on Hyperspace directly, which other Hyperspace users will be able to buy.

The idea is that taking off as an aggregator, could help it to become a popular marketplace in its own right.

One challenge to this plan is that an aggregator is more likely to succeed in an ecosystem where NFT volumes are spread across multiple marketplaces — because users would need to be more careful that they’re checking prices across multiple marketplaces in order to not miss out on a better deal. 

Yet on Solana, the NFT market has largely been cornered by Magic Eden, which has sucked up more than 90% of the deal flow. As a result, there might be little demand for an aggregator right now. But Mafoud remains unperturbed.

“Very highly concentrated liquidity will reduce the need for it but the level of fragmentation is generally wavering,” Mafoud says. He speculates that Magic Eden might spread to Ethereum and OpenSea — the dominant NFT marketplace on Ethereum — might stretch to Solana. There may even be new entrants, such as Coinbase’s planned NFT marketplace, he says.  

“Very much today, much more concentration, in a month, you’re going to see even more fragmentation,” he says.

Will Hyperspace bring out a token?

Among NFT marketplaces, across both Ethereum and Solana, there has been a lot of interest in which platforms will launch tokens. On Ethereum, OpenSea appears to have opted for a different route, while LooksRare is trying to tempt users away from it with its own token. As for Solana, Magic Eden co-founder Zhuoxun Yin recently told The Block the team is interested in the idea of a token but is not rushing to build one straight away.

Hyperspace too, seems open to the idea.

“We very much get excited by being able to tie the power of a token into the platform. It is one of the few moats in Web3,” says Mafoud, adding that it’s very hard to win without one.

He says there are three important things: gaining market share, having a really good user experience and user interface, and having the community invest back into the business. “And that’s probably what we’ll look to do,” he says.

Mafoud says that the team is talking about whether some fees from the marketplace should go toward a DAO that’s managed by its community. And there have been discussions about how that would look and what percentage of each trade would be taken as a fee. 

“I don’t know if the best thing to do is to go public as an NFT marketplace. It’s very hard to operate in Web3 under that construct,” he says. 

But when it comes to established marketplaces like OpenSea, he can see the opposite strategy might work — that there might be a greater reward and less risk to going public, as opposed to the crypto-style decentralized approach.

© 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.

YouTube has kicked off the hiring process for a director of Web3 product management. 

Setting out its stall for a push into the metaverse, the job advert says it is looking for someone to “define, communicate, and execute the vision, strategy, and roadmap for Web3 at YouTube.”

The job advert, posted on LinkedIn, asks for 15 years in product management, as well as experience in “Internet consumer products and/or crypto.”

Under “preferred qualifications” it lists “experience buying, owning, and trading cryptocurrencies, NFTs, and tokens.”

It also asks for an “understanding of cryptocurrencies, blockchain, consensus mechanisms, NFTs, and other Web3 technologies.”

Earlier in February, YouTube’s chief product officer said in a blog post that the company would start creating metaverse experiences on its video platform.

“We’ll work to bring more interactions to games and make them feel more alive,” said Neal Mohan. “It’s still early days, but we’re excited to see how we can turn these virtual worlds into a reality for viewers.”

The move is the latest sign that YouTube’s parent company Google is thinking hard about its future product offerings. Tech giants are looking to augmented reality (AR) in particular to stay ahead of the pack. Google’s AR headset, reportedly codenamed project Iris, is expected for launch in 2024.

© 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.