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CMB International, a wholly-owned subsidiary of China Merchants Bank, and the China-based Nervos Foundation have jointly launched a $50 million blockchain fund.

The fund, dubbed InNervation, will invest in projects that are developing decentralized applications, decentralized finance (DeFi) protocols, blockchain platforms, non-fungible token (NFT) marketplaces, and more.

Specifically, the fund would target projects that are either building on the Nervos blockchain or have plans to integrate Nervos into their offerings.

InNervation will deploy the capital over three years with average investments between $200,000 and $2 million. Besides providing capital, CMB International and the Nervos Foundation look to also offer access to Nervos’s tools, including a decentralized exchange, an Ethereum-compatible layer called Polyjuice, and a permissionless rollup framework called Godwoken.

The fund was raised in U.S. dollars and is a for-profit fund similar to other venture funds, a spokesperson of the Nervos Foundation told The Block.

As for CMB International’s participation in the fund, the company is already an investor in Nervos via its native CKB token. The two parties partnered in October 2019 to jointly develop and launch decentralized applications for financial services. 

Besides Nervos, CMB International is also an investor in other crypto projects, including dForce Network, blockchain firm Cryptape, and crypto wallet provider Bitpie.

© 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.

Crypto custody firm BitGo has added a New York Department of Financial Services (NYDFS) veteran as its chief operating officer.

The firm announced Tuesday it has onboarded former BitLicense compliance head Cassandra Lentchner. Lentchner previously oversaw the BitLicense framework during her time with the NYDFS. She solidified the licensing framework before focusing on areas of the law related to cybersecurity at Pillsbury Winthrop Shaw Pittman LLP. 

Lentchner will act as COO across BitGo’s trust companies, which are licensed in South Dakota and New York. The firm is also waiting for approval of a federal charter from the Office of the Comptroller of the Currency (OCC). On Tuesday, acting U.S. Comptroller of the Currency Michael Hsu announced it would be reviewing pending actions related to crypto. Hsu said he plans to include more stakeholder feedback in the staff review of OCC actions. 

Prior to the announcement of the OCC’s staff review, Lentchner said in an interview with The Block that she encourages industry participants to give feedback to the many branches of government weighing in on the issue of bank charters and qualified custodianship. Members of Congress have already vocalized their intention to bring stakeholders into the conversation. 

“Having been a regulator and having developed these rules in the state of New York, I can just emphasize that the amount of input that you get from the industry to understand the financial services and products that are available and that can be provided — it’s critical to have that understanding when making these rules,” she said. 

Lentchner is onboarding amid BitGo’s merger with Galaxy Digital. After months of reportedly looking for a buyer, the custody firm announced Galaxy would acquire it by the end of Q4 2021.

Lentchner said the move will create “a real full-service financial institution for digital assets for the whole ecosystem,” and open both up to a variety of new clients.

© 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.

Under former comptroller Brian Brooks, the Office of the Comptroller of the Currency (OCC) made considerable strides related to cryptocurrency regulation. Now, Acting Comptroller of the Currency Michael Hsu is requesting a staff review of those actions.

“My broader concern is that these initiatives were not done in full coordination with all stakeholders,” said Hsu in prepared remarks released today ahead of a House of Representatives hearing on Wednesday. “Nor do they appear to have been part of a broader strategy related to the regulatory perimeter. I believe addressing both of these tasks should be a priority.”

To that end, Hsu has requested a review of pending regulatory actions, including the interpretive letters Brooks issued during his tenure.

That interpretive letters clarified that federally chartered banks could custody stablecoins as well as hold reserves for issuers. 

Hsu’s review also covers pending licensing decisions. Applications from some crypto firms, including BitGo and BitPay, will be subject to the review. It’s unclear how firms that have already gained conditional approval, like Anchorage, Protego and Paxos, fit into the review process. 

Hsu’s comments come just before his testimony before the House Financial Services Committee on Wednesday. He will join other U.S. banking regulators at a hearing entitled “Oversight of Prudential Regulators: Ensuring the Safety, Soundness, Diversity, and Accountability of Depository Institutions.”

© 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.

Computing hardware maker Nvidia is reducing the possible hash rate production of its GeForce graphics cards to discourage their use for mining.

In an announcement from the firm Tuesday, it said the new, lower hash rate cards will start shipping in late May.

The chipmaker sells GeForce model gaming computers (GPUs) in addition to separate, dedicated mining hardware. However, the GeForce chips feature programmability, and some found the graphics cards had enough hash power to mine cryptocurrency. This led some to utilize their dedicated gaming computers for Ethereum mining, which in turn drove up hardware prices and created shortages, making the product less accessible to those looking to use it for its intended use. 

Ethereum miner revenue reached an all-time high in April of this year, and Nvidia reported $150 million in revenue from mining-specific sales in Q1 2021. 

As of February of this year, Nvidia unveiled a dedicated Ethereum mining product. With that announcement, Nvidia also committed to differentiating the two product lines by making the GPU less useful for crypto mining. 

The fix is lowering the hash rate found in the graphics cards, according to Nvidia. GeForce RTX 3060, 3070 and 3080 will also feature graphic cards with reduced hash rates. They’ll be labeled with “Lite Hash Rate” or “LHR” to further differentiate the products. Ethereum’s hash rate has continued to expand in recent months.

“We believe this additional step will get more GeForce cards at better prices into the hands of gamers everywhere,” the firm said in its announcement. 

© 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

• Investment in DeFi accounted for 26% of the $3.18 billion that private investors poured into crypto and blockchain projects in the first quarter of 2021.
• Backing DeFi projects requires venturing into uncharted waters relative to traditional equity investing.
• The Block spoke with a half dozen VCs to learn about how they are approaching the new field.

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MicroStrategy has made yet another addition to its growing stockpile of bitcoin.

On Tuesday, the publicly traded company bought 229 BTC for $10 million at an average of roughly $44,000 per BTC, according to an 8-K form filed with the Securities and Exchange Commission. 

MicroStrategy has purchased an additional 229 bitcoins for $10.0 million in cash at an average price of ~$43,663 per #bitcoin. As of 5/18/2021, we #hodl ~92,079 bitcoins acquired for ~$2.251 billion at an average price of ~24,450 per bitcoin. $MSTRhttps://t.co/fU6LN4WbKI

— Michael Saylor (@michael_saylor) May 18, 2021

MicroStrategy now owns 92,079 bitcoins worth $2.25 billion total for about $24,000 per BTC.

The Virginia-based company has more than doubled its BTC holdings since December 4, 2020 when the company held about 41,000 BTC. In six months, the company purchased bitcoin lots worth $650 million in late December, $10 million in January, twice in February for $10 million for February 2 and $1.02 billion three weeks later, and $15 million in March. 

© 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.

Crypto exchange Coinbase reportedly has plans to launch its own media arm.

Axios reported that the exchange is looking for a media editor to helm the operation, which would report to Coinbase’s marketing team.

Coinbase declined to comment on the existence of such plans when reached, but the idea is still in its early stages, according to Axios. Sources told the outlet the exchange is looking to hire a team led by a vice president for content & editorial. No hires have been made, and the team would produce content for those who use Coinbase’s platform. 

The move may be part of a bigger picture to sustain revenue from a strong first quarter after going public. On the Q1 2021 earnings call, CFO Alesia Haas said historically, revenue has been strongly linked to price cycles. 

“Historically, there’s a lot of volatility in our revenue as our revenue is influenced by trading volume on our platform, which in turn really reflects the overall crypto economy conditions, price of Bitcoin and crypto asset price volatility,” she said.

In the past, Coinbase has spent about 5% of its net revenue on marketing, but to gain more consistency in its revenue and grow over the long term, it plans to spend 12-15% of this year’s net revenue on marketing efforts. Coinbase reported $1.6 billion in net revenue last quarter, meaning it could look to spend more than $192 million of that on marketing. 

Though the media arm would report to the marketing team, it’s unclear if it would fall under those spending plans. Coinbase declined to comment on questions related to a potential media team.

© 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.

Three Chinese self-regulatory organizations have published a statement to reiterate the country’s stance on crypto businesses.

The National Internet Finance Association of China (NIFA), the China Banking Association (CBA) and the Payment and Clearing Association of China (PCAC) jointly issued a note on Tuesday night China time, telling their member financial and payment institutions not to engage in or provide services to crypto-related businesses.

The three industry bodies are all self-regulatory organizations under the supervision of several Chinese ministries including the People’s Bank of China (PBoC) and the China Securities Regulatory Commission. The SROs themselves are not regulatory agencies but are responsible for ensuring their member institutions to follow the regulatory direction of their superior government entities. 

“Financial and payment member institutions shall not provide insurance services that relate to virtual currencies or directly and indirectly offer crypto-related services for their clients, including but not exclusive to: crypto-related trading, custody, lending and settlement; accepting virtual currencies as a payment tool; exchanging virtual currencies with the Renminbi,” the statement read.

The statement also directed member internet technology companies not to offer any advertising or promotion services for crypto-related businesses.

The statement was issued under the context of “continuing the execution of the PBoC’s notices on preventing the risks of bitcoin and initial coin offerings,” which were announced as a notable policy change in China towards the crypto space in 2017.

The 2017 notice prohibited any type of initial coin offering activities and banned Chinese crypto exchanges from offering centralized fiat-to-crypto order books. Since then, Chinese financial institutions have already suspended providing banking services for crypto exchanges as their fiat on- and off-ramp channels. 

In fact, the 2017 ban already had the same requirement where the PBoC said financial institutions and non-banking payment organizations shall not directly or indirectly provide trading, settlement or insurance services for virtual currency businesses or crypto-based fundraising activities.

The Tuesday statement reiterated China’s stance towards crypto trading-related activities inside the country amid the recent market volatility, which the SROs deemed as “severely damaging the safety of people’s property and disrupting financial stability.”

© 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.

Media and entertainment house Fox is launching a non-fungible token (NFT) company, Blockchain Creative Labs, and a blockchain-based animated series, “Krapopolis.”

Krapopolis is an upcoming comedy set created by Dan Harmon, who created the animated science fiction show Rick and Morty. It’s centered on a “flawed family of humans, gods and monsters that tries to run one of the world’s first cities without killing each other” and is being produced by Fox subsidiary Bento Box Entertainment.

As for its NFT business, Fox will launch a marketplace for Krapopolis that will offer a range of digital items, from NFTs representing character, background art and GIFs to tokens designed to reward fans who engage with the service.

Fox hasn’t disclosed many details about its NFT business yet, including what blockchain network it plans to use to create and sell NFTs. “Not to go too far into it today, but as an advertiser-focused, artist-first and animation-obsessed company, Fox is going to take advertisers into the world of blockchain-powered tokens, including NFTs,” Fox Entertainment CEO Charlie Collier told advertisers during the company’s Upfronts presentation on Monday, reported The Hollywood Reporter.

“And Dan’s series, currently entitled Krapopolis, will be the first-ever curated entirely on the blockchain. And just as we’re doing this for our own animation, we will also help your brands connect directly with fans and enthusiasts through NFTs,” he said.

NFTs are unique digital items on a blockchain. They have soared in popularity lately, but their weekly volumes, users and transactions, have all declined from their peak in February, according to The Block’s Data Dashboard.

© 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.

London-based crypto custodian Copper has raised $50 million in a Series B round led by Dawn Capital and Target Global.

The startup will use the money to grow internationally, with plans to open two new regional offices in the U.S. and Asia. It aims to triple headcount by the end of 2021 after increasing assets under custody more than 40 times since the third quarter of last year.

Copper now claims to support more than 200 exchanges, trading firms, private banks, crypto funds and payment processors globally.

“It is rare to find a team that so expertly understands not only traditional asset management, but that of digital assets and how to marry the two worlds to provide institutional-grade infrastructure that truly meets investors’ requirements,” said Josh Bell, general partner at Dawn Capital.

Crypto custodians have been raising money at a frenzied rate in recent months. San Francisco-based Anchorage bagged $80 million in a round led by GIC, Singapore’s sovereign wealth fund, in February. Since then, PayPal and Mike Novogratz’s Galaxy Digital have announced plans to buy Israeli crypto security firm Curv and crypto custodian BitGo, respectively. 

Founded in 2018, Copper’s last raise was an $8 million Series A round in February 2020, with participation from Target Global, LocalGlobe and MMC Ventures.

Copper’s product is built using multi-party computation (MPC), a method of splitting private keys to help guard against cybercrime. The company also offers payment settlement and prime brokerage services.

© 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.