FreeCryptoCurrency.Me

Securities and Exchange Commission chairman Gary Gensler is keeping mum on new guidance for crypto tokens.

After a hearing before the Senate Banking Committee in September, the committee’s leading Republican, Sen. Pat Toomey, wrote Gensler a series of follow-up questions on cryptocurrencies.

In responses released on December 3, Gensler stuck to the broad interpretation of existing laws and the Howey and Reeves tests that he has promulgated since taking office. Effectively, Gensler argues that the SEC does not need to specify which crypto assets are and are not securities, as those laws and court cases established broad parameters — an attitude that has ruffled many in the crypto industry.

Following up on questions from the hearing, Toomey asked Gensler to “identify the specific characteristics that distinguish a cryptocurrency that is a security from one that has been deemed a commodity.”

Gensler in turn cited those earlier laws, saying: “Thus it depends upon the particular facts and circumstances, whether any particular financial instrument, including a crypto asset, is being offered or sold as a security.” He likewise avoided a question from Toomey that proposed a hypothetical dollar-backed stablecoin with reserves in FDIC-insured U.S. banks and asked whether that token would also be a security. 

Regarding Gensler’s responses, Toomey said: “Chairman Gensler’s failure to provide clear rules of the road for cryptocurrencies underscores the need for Congress to act.”

Interestingly, Gensler has suggested that he agrees with the need for Congress to act on a regulatory framework for crypto. The SEC during his tenure has, however, been more interested in bringing major trading and lending platforms to heel than in pursuing specific token issuances. Likely, this is because the SEC under his predecessor, Jay Clayton, largely ended the ICO boom. 

© 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.

On this episode of The Scoop, Adam Carson, Operating Partner & Crypto Investment Lead at Point72 Ventures, joined host Frank Chaparro for the company’s first public interview to discuss its investment strategy as well as Carson’s perspectives on the convergence of fintech, Web3 and the metaverse.

Point72 Ventures, an offshoot of billionaire investor Steven Cohen’s Point72 Asset Management Group, was launched in 2016 to initially focus on fintech investing but is increasingly ramping up its focus on the crypto space. Since The Block first reported in May that Steve Cohen was poised to make a big move into the market, the Mets owner has made several bets through various entities. 

In the interview, Carson said that the firm could invest in 5-10 crypto firms next year and might even make some token investments. 

“I hope that we will sort of evolve into doing more token investing,” Carson said. “It’s actually something that I’m thinking about and planning for right now is proposing, like how we can do token investing because right now we don’t have the infrastructure set up to be able to do that.”

On-ramp investments

For now, the firm is looking to invest in infrastructure “picks and shovels” companies that will help onboard incumbent institutions who can then in turn create on-ramps for future consumers to enter the crypto space, according to Carson.

To date, Point72 Ventures has only publicly announced four crypto company investments: Messari, Zero Hash, 24 Exchange, and Massive. However, Carson announced on The Scoop that Point72 Ventures is soon to publicize its investment into a fifth company, which he mentioned was an established DeFi operation.

When tokens?

It’s not clear exactly when Point72 will begin making token venture bets, but Carson said that the firm will have to rethink its existing investing approach to make such a move.

“It’s a different world and it’s totally new and it’s also exciting,” he said, noting that such deals can close in a matter of days versus months, which is more typical in equity deals.

“There’s different operational and technology needs,” he said. “You need to be able to custody these coins. You need to be able to move these coins.”

© 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.

Last month, crypto anons collectively pledged $47 million in order to buy an early, rare copy of the U.S. Constitution. And if it wasn’t for Citadel CEO Ken Griffin, the plan — which was brought together and executed in only a week — likely would have worked.

Now it seems the same strategy is being applied to raise funds for the Free Ross movement, and if it’s similarly effective, it could fund a warchest.

The Free Ross NFT sale

Ross Ulbricht was the founder of the Silk Road marketplace, a place where users could buy drugs online and one of the first major use-cases of cryptocurrencies. In 2013, Ulbricht was arrested and, in 2015, he was sentenced to a double life sentence plus forty years, without any chance of parole.

During his time in prison, his mother Lyn Ulbricht and family friends have been actively campaigning to release him. A petition for him to receive clemency has received 456,000 signatures. And during this time, they have maintained a Twitter account where they share his notes from prison.

The latest fundraising idea is an NFT sale. The Free Ross organization is selling a collection of his writings, ten pieces of his artwork and an animation by NFT artist Levitate as a single NFT. The proceeds from the sale will go to Free Ross and supporting other prisoners along with their families.

‘Uncageable’ by Ross Ulbricht. Image: Free Ross.

“As with everything I do, my mother and fiancée were closely involved with all that went into getting this NFT ready for you. This is their moment as it is mine,” tweeted Ulbricht’s account.

So far, the NFT auction, which is taking place on NFT marketplace SuperRare, has raised 261 ETH, worth $1.2 million. Bidders include such NFT holders as the person who owns CryptoPunk 6529 (who operates pseudonymously under the Punk’s identity). The auction still has more than five days to go. 

DAOifying the sale

Those bidding on the Free Ross NFT have a new bidder to contend with. PleasrDAO, a collective of NFT investors and artists, has launched a DAO that anyone can join with the sole purpose of bidding on the NFT.

DAO stands for a decentralized autonomous organization. The idea is that token holders can vote on proposals and control actions the DAO makes as a group. It’s a mix of crowdfunding and the appearance of running a loosely held together company. 

So far, the DAO has raised 826 ETH ($3.8 million), which is far higher than the current highest bid. Anyone can contribute to the fundraise by sending ETH to its wallet (which is collectively managed by members of PleasrDAO and friends of Ross Ulbricht).

If the DAO’s bid is successful, the plan is to fractionalize the NFT into tokens and distribute them to those who funded the bid. The idea is that token holders will have partial ownership over the NFT. Any funds leftover will be placed into the DAO’s treasury, which will be controlled by token holders.

The DAO’s approach differs from previous bids in that it’s not a winner-takes-all play. Rather than one person outbidding the rest, members group together and take collective ownership over the artifact —which in part explains why DAOs are finding it relatively easy to raise huge sums of money for bidding on items.

Right now, it’s all in good spirits with only one DAO per auction — but perhaps in the future, we could see DAOs bidding against one another in giant bidding wars, with individuals simply left out in the cold.

© 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.

The Securities and Exchange Commission has rejected WisdomTree’s proposal to list a bitcoin exchange-traded fund (ETF), making it the second rejection order to come down in this wave of applications for a spot-based bitcoin ETF.

The Commission cited the lack of surveillance sharing agreements and the subsequent inability to curb fraudulent or manipulative practices in the spot market.

“The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest,'” read the order. 

This reasoning is similar to previous rejections. The SEC rejected VanEck’s application midway through last month, citing the same inability to prevent “fraudulent and manipulative practices” and a failure to meet the burden of the Exchange Act Section 6(b)(5). Still, VanEck told The Scoop podcast this week, “We’ll be back.”

Some have taken issue with this hang-up, since issuers have repeatedly submitted research showing the use of certain pricing indices can mitigate potential market manipulation, and the bitcoin market has grown to a place where fair use far outstrips fraudulent activity.

Grayscale recently sent a letter to the SEC claiming this reasoning could violate the Administrative Procedure Act, since the Commission approved a futures-based bitcoin ETF, which the firm argues is also reliant on the spot price of the bitcoin market. 

The next application awaiting a decision is Kryptoin, with a deadline date of Dec. 24. Others waiting in the wings include Valkyrie, First Trust & Skybridge, Fidelity, 21 Shares and ARK, Global X, Bitwise and Grayscale. 

© 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 Block Research examines the growth of blockchain-related citations in scholarly journals using data from Google Scholar.

• 2021 saw the lowest annual growth rate for blockchain-related scholarly citation.

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

Quick Take

• This is a section from The Block Research’s upcoming 2022 Digital Assets Outlook report
• The nature of decentralized stablecoins became more diverse with the rise of algorithmic stablecoins backed by fractional reserves or endogenous collateral
• Centralized custodians played a pivotal role in bringing Bitcoin into DeFi
• Lido denominated the liquid staking sector with billions under management
• Most miner extractible value originated from arbitrage

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

Crypto finance company Blockchain.com announced Thursday that it is going to be launching its own non-fungible token (NFT) platform, which will be powered by OpenSea. 

While its NFT marketplace is still in the beta stage and requires individuals to sign up on a waiting list, Blockchain.com now joins one of many other crypto firms entering the NFT market. The firm’s forthcoming NFT marketplace will enable individuals to purchase, sell, and store NFTs inside their Blockchain.com wallet. 

“The growth and excitement in the NFT space is undeniable, but we see many of the same challenges to adoption that crypto faced in its earlier days. Specifically, accessing the NFT market is far too complex and unintuitive,” the company wrote in a blog post. “We want to make accessing the NFT market as easy as accessing the crypto market.”

Crypto exchanges Binance and FTX.US launched their own NFT marketplaces in June and October, respectively — with FTX.US’s marketplace becoming the first to support both Ethereum- and Solana-based NFTs. 

Crypto exchange giant Coinbase announced its NFT marketplace on October 11 as well, but it too is still in the beta stage.

In addition to announcing its upcoming NFT marketplace, Blockchain.com recently acquired the Latin America-focused crypto investment firm SeSocio. 

© 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.

On December 2, the Securities and Exchange Commission announced charges against Ivars Auzins over a series of digital asset-related investment schemes that the SEC is calling fraudulent.

The SEC highlighted a 2018 initial coin offering for a token called Denaro, for which Auzins’ allegedly gathered $11 million worth of investments before the project disappeared.

Another scheme, Innovamine, allegedly promised investors the opportunity to mine crypto using cloud computing. Auzins was accused of collecting over $7 million for Innovamine before disappearing with investors’ money. 

The SEC tallied another six similar schemes, featuring a network of aliases and short-lived UK corporate registrations that Auzins used to lend legitimacy to the projects. 

The commission is asking the court of the Eastern District of New York to keep Auzins, a Latvian national, from participating in any future securities offerings. They are also seeking a return of the funds that Auzins has already gained from investors. 

Auzins is only the latest in a long string of ICO operators from the 2017-2018 boom who the SEC has targeted. 

© 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.

Coinbase announced Thursday that is has more than $30 billion worth of crypto assets staked on its platform as of November 2021.

Coinbase holds these assets on its Cloud platform, which it operates along with staking infrastructure firm Bison Trails. Coinbase acquired Bison Trails earlier this year for a reported price of above $80 million. Coinbase says Bison Trails is a non-custodial platform, meaning it does not control clients’ staked assets.

Coinbase clients and non-custodial users have staked the massive amount of assets across 25 proof-of-stake blockchain networks, including Ethereum 2.0 (ETH2) — which is yet to fully launch — Tezos (XTZ), and Cosmos Hub (ATOM).

Since Coinbase takes a 25% commission from staking rewards for its custodial clients, that suggests the firm is making a killing out of this part of its business. Bison Trails, for its part, only takes an 8% cut of staking rewards. It’s unclear how much of the funds are from Coinbase’s clients as opposed to non-custodial funds via Bison Trails.

Staking is a way of earning passive income by locking up proof-of-stake coins. Rewards are provided because these coins are effectively used as collateral by validators or nodes when validating a block of transactions.

Other largest staking platforms include those offered by Coinbase rivals Kraken and Binance. Plus there are staking-focused firms like Blockdaemon, Figment and Chorus One.

© 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.

Latin America fintech Mercado Pago has partnered with Paxos to allow its Brazil-based users to buy, hold and sell cryptocurrencies directly in the app they use to make payments and send money. 

The app will initially support bitcoin, ethereum and Paxos’ dollar-pegged stablecoin, Pax Dollar (USDP). Paxos will be the custodian for the cryptocurrencies.

Mercado Pago is incrementally rolling out the feature to Brazilian users this month, starting with employees. These people will immediately have access to those cryptocurrencies if they wish to use them, without having to take any additional steps in the app. All Mercado Pago app users based in Brazil should have access to crypto by the end of the month.

“Mercado Pago has an installed base, as of the end of last quarter, of 28 million wallets in Brazil, Mercado Pago CEO Osvaldo Giménez told The Block in an interview. “So, 28 million people who don’t need to do anything to start buying crypto.”

Adding crypto to an existing payment app like Mercado Pago is significant for a few reasons, Giménez said. First, he says that having access to crypto directly in a popular payment app will make it easier for people to start trading, as they do not have to go through the process of opening a separate account at another exchange. Additionally, Mercado Pago users can buy crypto with their existing balance of fiat currency in the app, and invest as little as 1 Brazilian real to do so (about $0.18). Integrating the USDP stablecoin is also relevant because it is very difficult for Brazilians to open U.S. dollar-based bank accounts, Giménez pointed out. 

Mercado Pago was originally launched to handle transactions through the online marketplace Mercado Libre, a popular website and app for buying and selling new and used goods that operates in 18 countries. But now, many brick-and-mortar stores also use Mercado Pago to accept payments through QR codes as well as mobile point-of-sale systems. The payment system is also a popular way to pay bills.

“As we start to see stablecoins be integrated into mainstream platforms like Mercado Libre, I think we’re going to start to see new use cases of stablecoins beyond just crypto trading and DeFi, but payments for actual goods and services,” Paxos’ Head of Strategy Walter Hessert told The Block. 

For now, Mercado Pago users would have to sell their cryptocurrencies before using those funds to buy goods with their account balance on the Mercado Libre marketplace, or to pay transactions using Brazil’s instant payment system, Pix. 

Along with Brazil, Mercado Pago offers services in Argentina, Chile, Colombia, Mexico, Peru and Uruguay. However, Giménez said that the company decided to roll out the crypto functionality in Brazil first due to the significance and size of the market there. With a population of about 212 million, Brazil is Mercado Pago’s largest market and represents about half of e-commerce in the region, Giménez said. 

Mercado Libre is not the only company looking to give Brazilian customers the opportunity to use crypto in the same apps they use for everyday transactions. Latin America investment bank BTG Pactual is also planning to launch a cryptocurrency platform for its app users in Brazil called Mynt.

© 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.