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Just days after the House of Representatives examines stablecoin regulation, the Senate will take its own look at the issue.

The Senate Banking Committee has slated a February 15 hearing entitled “Examining the President’s Working Group on Financial Markets Report on Stablecoins,” according to the body’s February hearing schedule. This is one week after the House Financial Services Committee holds its own hearing, “Digital Assets and the Future of Finance: The President’s Working Group on Financial Markets’ Report on Stablecoins.”

The witness list for the House hearing includes the CEOs of a number of prominent crypto firms, including Jeremy Allaire of Circle, Sam Bankman-Fried of FTX, Alesia Jeanne Haas of Coinbase and Brian Brooks of Bitfury, who also once served as Acting Comptroller of the Currency. The witness list for the Senate’s hearing is not yet available. 

Both hearings promise an examination of the President’s Working Group on Financial Markets’ Report on Stablecoins, which came out at the start of last November. In that report, the group urged Congress to limit stablecoin issuance to insured depository institutions. Meanwhile, the Financial Stability Oversight Council designated stablecoins a systemic risk, meaning FSOC could leverage emergency regulatory powers if Congress fails to act. 

Representative Patrick McHenry (R-NC) wrote to House Financial Services Committee Chair Maxine Waters last week, advocating Congress create more clarity surrounding cryptocurrency to keep regulators from broadening their mandates. 

© 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.

Silvergate Capital Corporation will acquire the Diem Payment network’s intellectual property and other assets, the Diem Association and Silvergate announced today. 

The assets include development, deployment and operations infrastructure and tools for running a blockchain-based payment network. They’ll also get “proprietary software elements critical to running a regulatory-compliant stablecoin network,” according to a statement from Silvergate.

A partnership between Diem and Silvergate, a crypto bank, was announced last May, when Diem left Switzerland for the US after two years of regulatory concerns. Silvergate hoped Diem would present opportunities for monetization in the stablecoin space, as The Block reported at the time. 

Diem, which started as Libra in 2019, has faced a long and ongoing battle from regulators and legislators who were hesitant about a stablecoin with ties to Facebook (now called Meta). US regulators were concerned regarding the project’s intentions, and Congress had brought in Diem co-creator David Marcus and Mark Zuckerberg to testify on the project.

In October, a letter to CEO Mark Zuckerberg from five democratic senators, including Banking Committee, called to shutdown Diem and Novi, a crypto wallet intended to hold Diem. 

“Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead,” said Stuart Levey, Diem Networks US CEO in a statement today. “As a result, the best path forward was to sell the Diem Group’s assets, as we have done today to Silvergate.”

© 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 crypto lobby is on track to score a win on new financial surveillance legislation. 

Congressman Jim Himes has prepared an amendment to language in the so-called America COMPETES Act outlining new surveillance-related powers for the Treasury — language that crypto advocacy group Coin Center began warning of last week.

The lobbying organization and the representative from Connecticut indeed worked together on the amendment, which aims to keep in place limits on the Treasury’s ability to step in on private financial accounts. 

The language of the COMPETES Act as it originally came out last week would give the Treasury sweeping powers to freeze or block transactions and accounts interacting with foreign entities by expanding its existing authorities under 31 U.S. Code § 5318A, which lists special measures that Treasury is allowed to take to prevent money laundering.

One such measure, “Prohibitions or conditions on opening or maintaining certain correspondent or payable-through accounts,” is restricted to regulation, which means that the Treasury must issue public notice and remain open to public comment when it aims to restrict accounts.

The language of the COMPETES Act would change that to “by order, regulation, or otherwise as permitted by law,” a significantly lower bar for the Treasury’s public accountability. 

The bill cited the need to combat ransomware in particular, and would also grant the Treasury extensive discretion to target transactions by type. Coin Center noted that this would create risk for crypto exchanges interacting with self-hosted wallets. As a result, the issue provoked a minor uproar among the crypto world. 

In addition to requiring the Treasury to go through regulatory processes in order to block accounts, Himes’s amendment would retain 120-day limits on such orders.

A leader of the moderate New Democrats Coalition who sits on both the Financial Services Committee and the Intelligence Committee, Himes will present the amendment later this week for debate. Since was a leader in drafting the original language, the outlook for changing the crypto language is good.

Moreover, many in the crypto industry will find Himes’s interest in engaging with Coin Center encouraging. The crypto policy debate and, especially, related lobbying has been heating up in Washington. Coin Center’s reaction to the new language resembled another high-profile conflict over IRS definitions of “broker” in cryptocurrency, which ultimately made it into law but also drew a great deal of industry attention to Washington. 

© 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.

OpenSea, the world’s largest non-fungible token (NFT) marketplace OpenSea revealed late last week in a Twitter thread that more than 80% of the NFTs minted using its free minting feature were plagiarized, spam or fake.

OpenSea originally released the free NFT minting feature, called “lazy minting,” in December of 2020 to allow artists to release NFTs without paying upfront gas costs. But to combat misuse of free minting, on January 27 OpenSea introduced a new rule that limited free minting only to five collections of up to 50 NFTs each.

Within the same day, users responded stating that they couldn’t finish their collections. So OpenSea has now reversed its decision to impose the limit and is “working through a number of solutions to ensure we support our creators while deterring bad actors,” the company wrote on Twitter.

“To all the creators in our community impacted by the 50 item limit we added to our free minting tool, we hear you and we’re sorry.” 

In addition to facing community backlash for the limit and for failing to prevent fraudulent transactions, OpenSea is also reeling from user interface issues that can cause some NFTs to be listed thousands of dollars below market price — and the poachers taking advantage of the situation.

While OpenSea started off 2022 with strong NFT sales, users have started looking to other platforms such as LooksRare. The upstart has accrued more than $2 billion in sales since its January 10 launch but has faced issues with wash 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.

The Crypto Council for Innovation (CCI), a coalition of major firms committed to lobbying policymakers on crypto issues, has installed a former executive from the World Economic Forum as its CEO. 

Bloomberg reported today that Sheila Warren will helm the group, which includes heavy hitters like Fidelity Digital, Coinbase, Block (formerly Square) and Andreessen Horowitz.

At the WEF, Warren served as Head of the Centre for the Fourth Industrial Revolution, head of Data, Blockchain, and Digital Assets and as a member of the Executive Committee.

The CCI launched in April of last year with the goal of influencing the policy narrative around digital assets. Since then, crypto has become a bigger issue in Washington, thanks in large part to controversial new legislation aimed at crypto tax reporting. 

In recent months, unprecedented sums have been devoted to lobbying on behalf of crypto issues. The CCI did not report any spending on lobbying until August, when it spent $60,000 on a contract with law firm Brownstein Hyatt Farber Schreck.

Bloomberg reported that the CCI plans to keep its focus domestic in the short term. However, Warren told the publication that she also wants to focus on global policy and plans to develop the international connections she forged during her time at the WEF. 

© 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

• Despite investing in blockchain startups, Monzo co-founder Tom Blomfield is ambivalent about the future of web3 as he joins Y-Combinator as visiting partner.
• He says that he regrets not exploring stock and cryptocurrency trading during his time as Monzo CEO. 

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The share price of both financial services company Galaxy Digital and cryptocurrency exchange Coinbase showed signs of resilience as markets opened this morning after a difficult week for crypto stocks. 

Last week, Coinbase plummeted to its lowest level ever with shares trading hands at $162. At the same time, Galaxy Digital’s stock hit $11—a decline of more than 60% from all-time highs. 

Friday’s recovery spilled into Monday morning with Coinbase shares up more than 4.6%, while shares in Galaxy Digital were trading hands up 2.0%. 

This could be the first sign of recovery amidst a wider lack of investor confidence in crypto or crypto-adjacent stocks as the value of digital assets has dropped. 

The recovery for Coinbase comes despite calls by some analysts that its stock is overpriced, citing a “crypto desert” alongside trading-fee compression. Last week, a Mizuho analyst poured cold water on the stock price of the cryptocurrency exchange, cutting its price target to $220 from $300. 

© 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.

US banking giant JPMorgan threw cold water on the two largest cryptocurrencies in a note sent out to clients this week. 

Bitcoin’s volatility will be the biggest factor in obstructing widespread institutional adoption, the bank said. Ethereum’s challenges include its waning dominance in the decentralized finance (DeFi) space as alternative blockchains like Solana gain traction. 

The JPMorgan analysts compared the volatilities of bitcoin and gold, noting that bitcoin must reach $150,000 in value to equate to comparable gold investment holdings. “Needless to say, such convergence or equalization of volatilities or allocations is unlikely in the foreseeable future,” researchers led by Nikolaos Panigirtzoglou wrote. 

The bank noted in April that a decline in bitcoin’s volatility could help its adoption among institutions.

Still, bitcoin remains five times more volatile than gold and experiences frequent boom-and-bust cycles, which can scare off institutional investors. 

Ethereum’s challenges include its waning dominance in the decentralized finance (DeFi) space as alternative blockchains like Solana gain traction.

However, Ethereum has lost its dominance in the DeFi space in the past year as alternative blockchains take up more space. 

“What has been striking during this month’s correction is that ethereum has not managed to recapture market cap share versus its main competitors as its price declined by a similar magnitude to smaller altcoins,” the researchers wrote.

© 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.

Phantom, a crypto wallet for accessing the Solana ecosystem, has raised $109 million in a Series B funding round and is now valued at $1.2 billion.

Paradigm led Phantom’s funding. Existing investors, including Andreessen Horowitz (a16z), Variant Fund, Jump Capital, DeFi Alliance, and Solana Ventures, also participated in the round.

This was an equity funding round and will help Phantom expand across multiple blockchains, including adding support for Ethereum before the end of this year, its CEO Brandon Millman told The Block. Phantom is also looking to launch its Android app in the first half of this year, said Millman.

Phantom has released its iOS app today. The wallet initially launched as a browser extension in July last year and has quickly grown to become the leading Solana wallet, like Ethereum’s MetaMask.

Phantom claims to have gained more than two million monthly active users within just six months of its launch. MetaMask was launched in 2016 by ConsenSys and hit one million monthly active users in October 2020. Today, it has more than 21 million monthly active users.

Millman said Phantom is “doubling down” on Solana by focusing on mobile apps and features that will help streamline the onboarding experience for new users. “We will accelerate the growth of the web3 ecosystem on Solana by bringing a world-class onboarding and DApp discoverability experience for users on mobile,” he said.

To that end, Phantom is also looking to expand its current team of 20 to at least 40 in the near future. The firm is hiring for various functions, including engineering, operations, and customer support, said Millman.

The Series B round brings Phantom’s total funding to date to $118 million. It raised $9 million in Series A funding led by a16z in July last year. Millman said Phantom isn’t looking to raise more funds in the near future. When asked for a potential native token launch, he said there is no concrete plan yet. But launching a token is “definitely on the table,” Millman told The Block last September.

© 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.

Binance has explained why it placed restrictions on the crypto trading accounts of some Nigerians over the last few days.

In a letter to the Nigerian crypto community, Binance CEO Changpeng Zhao stated that the move was in compliance with international anti-money laundering (AML) regulations.

“Some 281 Nigerian accounts have been affected by these personal account restrictions with approximately 38% of these cases restricted at the request of international law enforcement,” CZ stated in the letter.

According to CZ, Binance is doing its best to speedily resolve the situation. The exchange’s CEO also stated that 79 cases had been resolved and all “non-law enforcement-related cases” will be settled in a fortnight.

Before CZ’s letter, Binance had come in for significant criticism among many in the Nigerian crypto space. The hashtag #BinanceStopScamming was a trending topic on the “Nigerian Twitter” space over the last few days amid a chorus of groans from users reportedly locked out of their accounts without due explanation.

Nigeria’s central bank banned commercial lenders from providing services to cryptocurrency exchanges in the country in February 2021. The central bank has also taken action against companies and individuals found to be involved in crypto trading activities by freezing their accounts.

© 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.