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Kristin Smith is the executive director of the Blockchain Association, the Washington, D.C.-based trade association representing the most prominent and reputable organizations in the crypto industry.

The past year was an awakening for crypto’s nascent national advocacy community.

It’s true: the industry raised a firestorm in Washington around the crypto broker provision in the infrastructure bill and was narrowly defeated in its efforts to remove that provision from the final bill by an unfortunate bit of Senate rule gamesmanship. We consoled ourselves with the knowledge and realization that there were several Senators and House members that would go to bat for our industry and that we likely gained new allies in the fight over this provision.

However, amidst all of the excitement and mobilization that the valiant August struggle brought, we should not lose sight of the fact that we failed insofar as the Senate even thought it was feasible to include such a provision in the first place. A truly influential advocacy and lobbying effort wouldn’t have found itself in this position.

Happily, we believe the crypto community has embraced the need for political power and is ready to engage at a new level of investment in the coming year.

First, some helpful context for the situation the industry finds itself in. The American public supports cryptocurrencies and their potential at unprecedented levels. Already, 61% of voters believe the US government should support the crypto industry so that our financial system remains a world leader. The sooner our national leaders understand the views the broader public already have on crypto, the sooner they’ll embrace the promise and potential of this technology. Many of the business world’s most recognizable figures have made owning and investing in crypto something close to boring. And other luminaries are leaving Web2 stalwarts for the green pastures of the Web3 frontier. Combine this with the growth of the crypto industry itself, generating good American jobs for workers right here in this country, and the tailwinds for crypto are clear.

To leverage this position, we are glad to predict that those telling the crypto story in D.C. will have access to much more resources over the next year and beyond. As crypto investors, founders, and others who have grown rich in this space come alive to the need for a powerful lobbying and advocacy force, the amount of money available to those shaping the policy and regulatory environment will undoubtedly increase. Likewise, new types of groups have and will continue to spring up, formed around new conceptions of lobbying, messaging, legal, and advocacy work that the industry demands.

Unfortunately, while the broader public and business worlds are increasingly open to the promise of crypto, the average Senator or House member might have some ways to go. However, some members are much savvier. For example, Rep. Patrick McHenry, has proposed the Keep Innovation in America Act alongside Rep. Tim Ryan and a bipartisan group of representatives, which aims to clarify the digital asset reporting provisions in the infrastructure bill. McHenry is the Ranking Member in the House Financial Services Committee, and is ideally positioned to lead bipartisan efforts to correct the course of action and pass meaningful legislation that properly addresses the complexities of crypto.

This is a decidedly mixed state of affairs and demonstrates the long, uphill battle the crypto community must commit itself to if it hopes to shape federal regulation, rather than simply trying to prevent the worst impulses of the anti-crypto set. The stakes for the industry are incredibly high; punitive regulation has the potential to harm our industry’s growth and undercut the United State’s traditional embrace of groundbreaking new technology. One only has to look at China’s recent effective ban on crypto mining to see what an anti-crypto government can do in a few short months.

The situation may not be so dire in the U.S., and the trends of general acceptance are with us, but we must fund and support our pro-crypto groups to ensure we are not just fighting fires, but building for the future. In 2022, I believe we will.

© 2021 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

• In the W3BB (“Web3 Building Blocks”) series, we dive into the mechanics and developments behind major areas of Web3 as part of a larger effort toward a general understanding of Web3
• Here, we look at decentralized autonomous organizations (DAOs) and governance

This research piece is available to
members of The Block Genesis.
You can continue reading
this Genesis research on The Block.

ProShares, which debuted a bitcoin futures-tied exchanged-traded fund earlier this year, wants to list an ETF that tracks companies working on metaverse-themed initiatives.

If approved, ProShares Metaverse Theme ETF, according to Wednesday’s filing, will track the Solactive Metaverse Theme Index. That particular index tracks a who’s-who of technology giants, including Apple, Meta (formerly Facebook) and Alphabet, as well as gaming majors Activision Blizzard, EA and Take-Two, among others.

In sum, the indexed companies are those believed to be staking out future business lines in the so-called metaverse, referring to virtual worlds, 3-D experiences, personal avatars and other areas.

To be sure, the ETF itself doesn’t appear to have any direct focus on cryptocurrencies or non-fungible tokens. Yet some of the companies included on the index, including Twitter and Meta, have pursued crypto-related initiatives in the past.

© 2021 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

• The Sandbox is an open metaverse to deliver a seamless social and immersive gaming experience that connects players and creators.
• The Sandbox closely follows the Roblox playbook in gameplay, price structure, and business model, though in a more equitable environment enabled by blockchain. 
• Overall, The Sandbox may be too early for the current generation as the blockchain is still in infancy.

This research piece is available to
members of The Block Genesis.
You can continue reading
this Genesis research on The Block.

The exponential growth of virtual assets offers tremendous opportunities on reshaping the capital market.  In order to strengthen the competitiveness of global financial market, a growing number of countries are gearing up for the trend of virtual assets. Custodial business, which can provide institutional and professional investors with enterprise-grade safekeeping solution for virtual asset, is becoming a key strategic partner in the virtual asset sector.

States and Regions’ Openness towards Custodial Business 

Although the global regulation and practice for the virtual asset sector are still undefined, there are more countries or regions that have adopted an open and positive attitude towards virtual asset-related custodial services, such as the United States, South Korea and Germany, in contrast to strictness of virtual asset trading.

The attitude towards virtual assets varies across states in the U.S., whereas Texas approves state-chartered banks to provide virtual assets custodial service in June 2021. Although South Korean regulators banned police from purchasing virtual assets in May 2021 this year, they allow traditional banks to conduct the virtual asset custodial business. On the other hand, the German government supports qualified virtual asset custodians to conduct business in the country.

Fierce Competition among the Custodial Industry

In the traditional financial sector, funds need to be deposited with third-party custodians for financial activities involving large amount of money. In the U.S., e.g. the SEC requires financial institutions holding more than USD 150,000 for investors to entrust their funds to a custodian. 

Thus, in the traditional financial system, the maturity and good reputation of custodian is a necessity for large-scale investment entry, and the same applies to the virtual asset industry. As of July 2021, there were 28 companies providing virtual asset custodial services to institutional clients. Of these 28 virtual asset custodians, 22 (approximately 79%) were founded in 2017 or later. There have been 46 investments in institutional client-focused custodian companies, amounting to USD 1.6 billion. (Source: The Block, data since 2012) 

Compliant custody for virtual assets is the core system for the entire industry. Not only is it valued by institutions in the virtual asset sector, but it also attracts the participation of traditional financial institutions. Currently, several traditional banks have started their virtual asset custody businesses, including Bank of America, Woori Financial Group of Korea, DBS Bank of Singapore, Commonwealth Bank of Australia, Deutsche Bank, etc. 

The blockchain industry implies for technology-driven sector and uses a completely new set of rules in terms of technology. Most traditional financial institutions lack the basic knowledge of virtual asset investment and custody, and runs with low capabilities on wallet technology, in comparing to professional institutions currently in the field who understands the market with higher technical edge. Therefore, few traditional banks are able to carry out virtual asset custody business directly. Most of them either in partner with professional custodial service providers in the sector or invest in related startups, hoping to layout the foundation on their roadmap for virtual asset custody business.

Why Is the Custody Business the Core of the Virtual Asset Ecosystem?

Traditional custody business has developed diversified business models such as custody, settlement & clearance, asset servicing, banking services, agency payments, etc., the virtual asset custody business is expected as an essential part to “entrance to the virtual asset ecosystem”. “Custody business is the core of the virtual asset ecosystem.” Jenny Lau, Head of Hong Kong office, Huobi Trust, agrees with the positive prospect of custody business and emphasizes the importance of virtual asset custody.

Trend of Compliance in Custody Industry, Conducive to Its Development

For practitioners in the blockchain industry, in addition to technical risks, they are still facing significant policy and regulatory risks, which is undoubtedly a huge challenge for virtual asset custodians. Institutions are also aware of the importance of conducting business in compliance and have started to actively apply for compliance licenses in relevant regions. For example, Huobi Trust not only has a registered Trust Company incorporated in Hong Kong holding a Hong Kong Trust or Company Service Provider (TCSP) license, but also holds a US Nevada Retail Trust Company license through a US entity.

More Institutions Entering the Market, Increasing Demand for Custody

An important reason for custodianship attracts institutional funds to the market is simply its ability to secure virtual assets. According to the Blockchain hacked archives of SlowMist Hacked, from 2012 to date, 98 blockchain security incidents of exchanges have been disclosed, with a total loss of approximately USD 6,892,365,669.39; since 2018, 25 blockchain security incidents of wallets have been disclosed, with a total loss of approximately USD 289,371,253.59. It could be seen that the security of virtual assets is extremely challenging for the capability of custodians. More virtual assets investors, especially high net worth individuals as well as institutional investors, are now choosing to have their assets safekept by professional virtual asset custodian. By leveraging their expertise and advantages in security technology, they can obtain vault-level security protection.

Scalability of Custody Is the Same as Banking Systems

In addition to asset custody business, as the underlying basic service, custodial service is naturally linked to other businesses, such as transactions, loans, and even DeFi. Users of virtual assets are not satisfied simply with the security of asset storage alone, the ability to add value to assets is becoming a new highlight of customer acquisition. More custodians are trying to add more quality service to their platforms.  Other than safekeeping client’s asset in a secured environment, offering value-added services becomes a key direction in the industry. For example, Huobi Trust has recently launched a trading asset custodial function that keeps assets in custody during users’ transactions.

The virtual asset custodial solution provides a new compliant and secure direction for the custody and use of virtual assets, which is the core foundation of the entire ecosystem. The maturity of the custody business development will certainly promote the development in compliance and the popularity of the entire virtual asset industry.

© 2021 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 new US regulatory entity focused on crypto will be proposed next year by Senator Cynthia Lummis, according to Bloomberg.

Per the outlet’s report, the yet-to-be-filed legislation includes a mandate for “a new organization under the joint jurisdiction of the Commodity Futures Trading Commission and the Securities and Exchange Commission to oversee the digital asset market.” Other aspects would focus on stablecoin regulation and consumer protection, though explicit details won’t be known until the bill is released, according to Bloomberg.

Lummis, who owns bitcoin, has emerged as one of the highest-profile advocates in Congress. She has also become a significant beneficiary of industry political donations, as reported by The Block. 

Whether the bill will succeed during this session of Congress will depend on the political dynamics of a national election year. That said, crypto as a public policy area achieved unprecedented prominence amid this summer’s bipartisan infrastructure bill fight. Lummis was one of the major figures in Congress during that period. 

This past fall, Coinbase proposed the creation of a digital assets-centric regulatory body for the US market.

© 2021 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

• This is a section from The Block Research’s published 2022 Digital Assets Outlook report

• After the market was flooded with an immense supply of PFP and blockchain gaming projects, it remains to be seen which projects will be able to walk the talk and follow up on their promises, separating long-term winners from losers

• As a result of layer two scaling solutions and novel fair launch innovations, NFT drops could become more user-friendly and cost-effective

• The recently triggered cascade of escalating metaverse hype could continue to flourish while walking a tightrope between fantasy and actual applicability

This research piece is available to
members of The Block Genesis.
You can continue reading
this Genesis research on The Block.

Jimmy Fallon, Post Malone, Diplo, DJ Khaled.

Those are just a few of the growing number of celebrities — most of them musicians — who have leaned on crypto startup MoonPay to broker purchases of extravagantly expensive non-fungible tokens (NFTs).   

The newest member of the crew is the NFT-curious rapper Snoop Dogg, who took to Twitter to flaunt four new pieces from the Bored Ape Yacht Club (BAYC) collection on December 22. In a separate tweet, he thanked MoonPay and CEO Ivan Soto-Wright for helping with the purchase. Bored Apes represent a high proportion of the NFT purchases that MoonPay has brokered on behalf of celebrities.

The vehicle steering these deals is MoonPay’s so-called ‘concierge service,’ which it unveiled in November. A spokesperson for the $3.4 billion startup described the concierge at the time as a white-glove service designed to help the super-rich and celebrities buy NFTs “without all the hassle of setting up a wallet, buying crypto, using that crypto to purchase an NFT and then taking custody of it.”

But in the hype-fuelled world of NFTs, where “adoption” is everything, observers have had mixed opinions about MoonPay’s efforts.

On Twitter, questions have been floated about whether such a hands-off style of investment should be celebrated. Many NFT devotees have also speculated about MoonPay’s commercial relationship with ape-hungry celebrities — especially after the startup’s appearances in a Post Malone music video and on Jimmy Fallon’s The Tonight Show.

Initial details of exactly how the concierge service works were scant, and although questions remain about the mechanics, CEO Ivan Soto-Wright has now offered more information in the form of a written Q&A with The Block.

Here are his answers.

The Block: How are celebrities and high-net-worth individuals finding their way to MoonPay’s concierge service to buy NFTs? Are they being approached by MoonPay sales staff? And if so, what are they being offered?

Soto-Wright: Over the past several months, I’ve been talking to artists, entertainers, athletes and creatives who are all excited about the promise of NFTs to transform the way digital rights, intellectual property and fan relationships are managed. But that excitement was met with just as much confusion about how it all worked because gaining access to this world of NFTs is still so cumbersome.

So I helped one artist figure it out. They told another who then asked for help. Word started to spread. And before you know it, I was spending a decent chunk of my time walking these folks through how to do everything, which has definitely been fun, but not scalable.

MoonPay is dedicated to bringing the next billion people into the crypto economy. So we created MoonPay Concierge as a way to scale up the help many of these artists and creatives were looking for. It was kind of an accident. A really happy accident I’d say. 100% organic.

The Block: Can you reiterate that there is no commercial relationship between concierge clients and MoonPay? In other words, can you confirm clients are not paid in any way — whether that be in cash, crypto, or NFTs — to use the service in order to promote MoonPay?

Soto-Wright: Everyone that uses MoonPay Concierge has a commercial relationship with the company in the sense that this is a commercial service we offer our clients. We provide the support and then we invoice for services rendered.

Building artists and creator excitement and support for crypto and NFTs through MoonPay Concierge has opened the door to other really cool collaborations.

For example, after we helped Post Malone acquire his first Bored Ape NFT, we were offered the opportunity of sponsoring his upcoming music video with The Weeknd and creating a really cool cultural conversation in that way, which we were really excited to do.

The Block: What fees are charged to concierge clients?

Soto-Wright: We’re focused on delivering value to our clients. And I think our growing list of MoonPay concierge clients agrees. But I think the best way to find out how the service works is to use it, which we invite folks to do.

The Block: What is the relationship between MoonPay and NFT42? We note that the latter entity has transferred a lot of ‘free’ apes to MoonPay’s wallet recently?

Soto-Wright: All our NFTs are purchased through OpenSea or private OTC transactions in our network.

The Block: What is the minimum purchase of crypto or NFTs that the concierge will facilitate?

Soto-Wright: We think there’s a tremendous amount of value to the community in having creators educated and excited about NFTs and crypto. So we’re happy to work with them to start this journey and do not currently have minimums in place.

The Block: What is the scope of assets that may be purchased through the concierge?

Soto-Wright: The whole range of digital assets currently provided on MoonPay — from ETH to NFTs, bitcoin, and beyond.

© 2021 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.

Centralized crypto exchanges, which hold customers’ private keys unlike decentralized exchanges, reported more than $14 trillion in trading volume in the year 2021, according to The Block Research.

That figure is a massive 689% increase compared to 2020 trading volumes, based on data as of December 24. Last year, centralized crypto exchanges facilitated over $1.8 trillion in trading volumes.

All these numbers are from The Block’s Legitimate Index, which takes volume data from the largest exchanges that are known to be reporting volumes more accurately.

Binance continues to dominate the centralized crypto exchange market. It facilitated 67% of total volumes this year, i.e., over $9.5 trillion, according to The Block Research.

Both centralized and decentralized exchanges saw a huge growth in their trading volumes this year. As The Block reported yesterday, decentralized exchanges saw more than $1 trillion in trading volumes in 2021, representing enormous 858% growth compared to their 2020 trading volumes.

© 2021 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.

Amber Group, a leading global digital asset platform, has announced that its UK subsidiary, WhaleFin Technologies (UK) Limited, has secured the Financial Conduct Authority (FCA) approval to become the Appointed Representative (AR) of FCA-authorised Strata Global Limited. This marks the beginning of a partnership between WhaleFin Technologies and Strata Global which will facilitate Amber Group’s market entry into the UK.

“Securing the FCA’s approval as an AR is a significant milestone for Amber Group in the UK – a market that is synonymous with a sophisticated financial and regulatory ecosystem, global connectedness, and an intuitive base for crypto demand and innovation in the region,” said Amber Group’s Global CEO Michael Wu. “As we continue to innovate and bring our regulated services to more markets, we are committed to upholding the highest regulatory compliance standards.”

Amber Group first put down its roots in the UK in September 2021, having observed the digital assets market potential in the UK. An FCA study on crypto-assets ownership estimated that there are currently up to 2.3M crypto users in the UK in 2021, an increase from 1.9M in 2020. The study also found that there has been a fundamental attitudinal shift towards cryptocurrency adoption, with more than half of UK users expressing their intention to invest more in crypto-assets as an alternative or in tandem with mainstream investments.

“We are thrilled to be making inroads into the UK alongside our well-established partner, Strata Global Limited. Together, we look forward to strengthening Amber Group’s foothold in one of the world’s leading financial markets while upholding the standards and trust expected of an FCA-approved institution,” added Wu.

“It is an incredibly exciting time for us as we support Amber Group in building a business in one of their key markets from the ground up. We are looking forward to a long and successful partnership,” said Strata Global’s co-founder Nick Andrews.

As an AR for an FCA-authorised firm, WhaleFin Technologies will be able to introduce regulated services compliant with the UK financial market regulations. Furthermore, WhaleFin Technologies is in the midst of applying to the FCA for an e-money licence and registering with the FCA’s Cryptoasset AML/CFT regime. Once granted, WhaleFin Technologies will be able to offer an even wider range of services such as debit cards, cryptocurrency trading and digital asset trading to both institutional and retail clients.

Olaf Ammermann, Managing Director of WhaleFin Technologies UK, concluded: “We are taking a firm step towards becoming a fully regulated and authorised financial services firm in the UK, and to that end, we are committed to building an integrated digital finance company that meets the needs of the UK market for the long term.”

About Amber Group

Amber Group is a leading digital asset platform operating globally with offices in Asia, Europe, and the Americas. The firm provides a full range of digital asset services spanning investing, financing, and trading. Amber Group is backed by prominent investors including Paradigm, Dragonfly, Pantera, Polychain, Sequoia and Tiger Global.

1. Financial Conduct Authority. Research Note: Cryptoasset Consumer Research 2021. https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021; Last access: 16 December 2021

2. Financial Conduct Authority. Research Note: Cryptoasset Consumer Research 2021. https://www.fca.org.uk/publications/research/research-note-cryptoasset-consumer-research-2021; Last access: 16 December 2021

© 2021 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.