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Brex, the San Francisco-based fintech firm, which was recently valued at $7.4 billion, has expanded into the cryptocurrency sector through the launch of a crypto rewards program.

The Brex platform helps businesses to manage their financial products — like corporate credit cards and expense management systems — in one place. Previously, customers such as Airbnb and Carta were able to earn rewards points on Brex and the companies could redeem them for flight miles, cash or travel.

“And now instead of redeeming them for cashback or miles you can also redeem them in crypto, in bitcoin and [ether], and we’re really excited about it,” Henrique Dubugras, Brex’s co-founder and co-CEO, told The Block.

“A lot of businesses have all these unredeemed points that just stay there doing nothing forever. So instead of having them in points, have them in crypto, a possibly appreciating asset,” he added.

Brex’s rewards partner Travelbank will support the new crypto functionality. Travelbank itself has a partnership with crypto exchange Coinbase, which will provide the wallets needed to store, hold or exchange any crypto accrued by Brex’s customers.

Brex may put crypto on its balance sheet

More than the recent crypto bull run, the acceleration in corporate adoption of bitcoin as a treasury asset persuaded Brex to take the plunge into the sector. Companies such as Square, Tesla and MicroStrategy have been at the vanguard of this movement.

“We were always personally big believers in crypto but we didn’t know when crypto would cross to the business world. And I think when big corporations like Square and Tesla started buying crypto on their balance sheet is when we said, ‘ok, this is now getting into our world and it’s time to make a move,’” said Dubugras.

Asked whether Brex itself holds any exposure to cryptocurrency, Dubugras told The Block, “Not yet, but coming soon.”

“We’re still figuring out our options but it’s something we’re definitely considering,” he added. A spokesperson would not elaborate further on Brex’s plans to acquire crypto exposure.

Brex came out of the Y Combinator accelerator program in 2017 and has since grown to employ more than 600 people. The startup raised $425 million at a $7.4 billion post-money valuation in a Series D round led by Tiger Global in late April. Other investors in the business include Durable Capital Partners, Dragoneer Investment Group, GIC and Ribbit Capital.

© 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 U.S. Federal Reserve is weighing the potential risks and rewards of a digital currency beyond the technological implications, according to statements from the president of the Boston Fed made Wednesday.

According to a report from Reuters, Boston Fed Bank President Eric Rosengren indicated that issues such as privacy and financial stability will play a key role in any potential decision to move its slow-moving central bank digital currency (CBDC) work from the laboratory to the launch pad.

“It is important to highlight that this is exploratory work, and any decision to move forward with such a currency would depend on a variety of factors beyond the technological feasibility and implementation,” Rosengren said, per the report, during an appearance at a Harvard Law School virtual event.

Rosengren reiterated that the Fed plans to make public its initial research in the third quarter, including software prototypes. The Fed is working alongside MIT’s Digital Currency Initiative as it pursues its research. Per Reuters, “later phases of the research project will focus on privacy, anti-money laundering and other issues” according to Rosengren.

Rosengren seemed to indicate that the Fed would take a deliberative approach as it considers CBDC-related issues. 

“It is important to understand what problems a central bank digital currency is being designed to solve, and whether other technologies could more cheaply or efficiently address those problems,” the Boston Fed president said.

A paper published by the Fed in February laid out some of the implementation considerations for a digitized dollar, including the need to bolster public-private coordination as well as clear policy objectives.

© 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.

Ethereum creator Vitalik Buterin has proposed that Uniswap’s UNI should become an oracle token for a successful decentralized finance (DeFi) ecosystem.

Posting the proposal on Uniswap’s governance forum on Tuesday, Buterin said several areas of DeFi, including algorithmic stablecoins such as DAI, synthetic assets, and collateralized loans, depend on a price oracle, and Uniswap and UNI should step in to provide such an oracle.

Price oracles are data feeds that connect Ethereum to off-chain, real-world information so that data can be incorporated into smart contracts. Data is needed for DeFi protocols to function correctly. For example, prediction platforms may run a market that asks users to bet on the next president of the U.S. They will need an oracle to confirm the outcome and pay out to the winners.

Chainlink is the most famous oracle in the market currently. Buterin said Chainlink is “great,” but there’s room for an alternative solution.

Chainlink’s incentives, for instance, are not as clean as they are in Augur, a decentralized oracle, said Buterin. Specifically, Chainlink doesn’t have an automated mechanism by which participants who provide incorrect data get penalized, he said.

So Buterin has suggested that Uniswap models its oracle after the Augur or UMA design for more robust data.

Overall, it seems “desirable to complement Chainlink with a more minimalist alternative that’s more laser-focused on optimizing incentives and maximizing cost of attack,” said Buterin.

Why UNI would be a suitable token

UNI is in an “excellent position” to be a token for a decentralized oracle, according to Buterin, because of its high market capitalization.

A decentralized oracle must be based on a token with a large market cap, said Buterin, because that would make attacks costlier. Put simply, if the market cap of a token is high, getting the necessary amount of tokens to launch an attack becomes extremely difficult. UNI’s current market cap is nearly $22 billion, according to CoinGecko.

“Efficiency of an oracle is not important,” said Buterin. “An inefficient oracle can always be augmented with a game where one party claims a value and only if another party disagrees is the oracle actually called.” Cost of attack, on the other hand, “is absolutely essential to maximize, and thus market cap is key,” he said.

In all, the move would also benefit Uniswap, according to Buterin.

“Uniswap heavily benefits from the existence of a more robust stablecoin ecosystem,” he said. “Uniswap v3 is heavily optimized toward ultra-high capital efficiency for stablecoin <-> stablecoin trades, and is likely to earn very high amounts of fee revenue from these trades.”

“If we start to also see high-volume and robust synthetic assets emerge on-chain, then this is even more valuable for Uniswap,” Buterin concluded.

© 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.

© 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.

Ethereum miners have been making more revenue than Bitcoin miners over the past few days.

According to The Block’s Data Dashboard, Ethereum miners are now making $77 million in daily revenue, as of Monday, compared to the $67 million that Bitcoin miners are earning. The data is a 7-day moving average (7MDA), meaning it is the average of the last seven days and indicates a short-term trend.

This has happened a few times over the last few months. Ethereum miners saw higher revenues than Bitcoin miners in early February and late April. What’s noticeable is that this is starting to happen more frequently, when it has been a rare occurence over the last few years.

One of the reasons that Ethereum miners are seeing higher revenues is that the price of ether has risen significantly over the last few months. It has continued to rise in the last few weeks while bitcoin’s price has stagnated. After starting the year at $730, one ether is now worth $4,300.

Another key reason is the network’s soaring transaction fees. Ethereum miners earn revenue in a mix of transaction fees — known as gas and paid in ether — and block subsidies for generating new coins.

Currently, 40% of Ethereum miners’ revenue comes from gas fees. But with the Ethereum Improvement Proposal (EIP) 1559 coming into force this July, a portion of the fees will be sent to the network itself instead of miners.

From July, there will be two fees, per the EIP 1599: A base fee and an inclusion fee or a tip for miners. The base fee will be burned, and only the inclusion fee will go to the miners. The overall goal of the EIP is to reduce transaction fees for users.

© 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 collection of nine CryptoPunk non-fungible tokens (NFTs) sold for $16.9 million at auction house Christie’s on Tuesday.

CryptoPunks are a collection of 10,000 pixelated heads. They come in the form of humans, apes, zombies and aliens.

The nine separate and rare NFTs were sold by Larva Labs, the creator of CryptoPunks itself, from its own collection. Christie’s hasn’t yet disclosed the buyer.

While Christie’s said the sale made history, it appears to be dissatisfying. Earlier this year, a single alien CryptoPunk was sold for $7.6 million.

This was Christie’s second NFT sale. The auction house sold a Beeple NFT for $69 million in March. Its third NFT sale by American model Emily Ratajkowski will go up for auction on Friday.

NFT activity has been on the decline over the past few weeks. According to The Block’s Data Dashboard, weekly NFT trading volumes have dropped significantly from their peak in February. Weekly users and transactions of NFT platforms have also declined.

© 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 Xihu District Court in the Chinese city of Hangzhou has started the trial of a criminal case against well-known crypto over-the-counter (OTC) trader Zhao Dong and several others.

According to the live stream page of the trial on Wednesday, Zhao was charged with a crime called “assisting internet criminal activities.”

Under China’s codified laws, the crime is defined as providing someone with information technology, such as internet access, network storage, telecommunication, advertisement promotion and payment settlements, when they know that person is committing an internet-based crime. If convicted, the penalty is up to three years in jail depending on the severity as well as a monetary fine.

To be sure, the nature of an “assisting internet criminal activities” crime is not the same as “concealing and hiding criminal proceeds.” In China, more than 100 people have been convicted for the latter, which involves directly laundering proceeds for criminals using crypto assets. Per China’s codified laws, the conviction of a crime for “concealing and hiding criminal proceeds” could see up to seven years behind bars.

But the case is part of a systematic crackdown by Chinese law enforcement on crimes such as telecommunication fraud, Ponzi schemes and cross-border gambling as well as any entity that may have facilitated the money laundering process for such criminals.

Zhao’s case has drawn widespread attention given his prominent status as one of the most well-known figures in the Chinese crypto community since the early 2010s. For several years, Zhao was running one of the largest OTC desks in China. He is also known for his association with crypto exchange Bitfinex as a minor shareholder and for founding RenrenBit, a crypto lending startup. 

The trial comes nearly a year after Zhao was taken into police custody and formally arrested amid a wider probe by the Chinese police into the involvement of some OTC desks in allegedly knowingly helping criminals launder illegal proceeds. 

Although China’s Court Trial Online website has a page to live stream the Wednesday hearing, the actual recording hasn’t been uploaded as of press time. But a news team under the crypto exchange OKGroup appeared to be present in the court house on Wednesday and said in a news alert on Weibo that the case against Zhao is tied to a 50 billion yuan ($7 billion) money laundering platform.

“Day Day Up”

Per the Wednesday hearing, Zhao’s case is due to him and his OTC team allegedly being a transactional counterparty for a money laundering scheme in Hangzhou called “Day Day Up.” 

Day Day Up is one of many such schemes in China that’s called a Paofen platform, which, in literal translation, means Point Scoring.

It works like this: a team behind a Paofei platform sets up an app. Users can join the app but will need to provide their AliPay, WeChat Pay and bank accounts. They can earn commissions by letting the platform use their accounts to send and receive fiat transactions and can also make additional rewards by inviting more people to the platform.

The purpose of such a scheme is to use lots of payment accounts to reshuffle transactions and launder money for criminal activities. Thus anyone who joins the app is potentially liable for providing assistance to an internet-based crime.

According to Xinhua’s report in February, the team behind the Day Day Up scheme started the operation in 2019 and laundered more than $7 billion for their upstream activities like online gambling within five months through payment accounts provided by over 70,000 registered users. 

In the second half of 2019, the team started using tether (USDT) to “upgrade” the reshuffling process in an attempt stay under the law enforcement’s radar. But the report didn’t specify who was the crypto counterparty or how many of the proceeds were laundered through USDT. 

Overall, the report said the Day Day Up platform provided the “Paofei” service for 1,900 cases of online gambling and telecommunication fraud. In the process, 30 billion yuan ($4.6 billion) of proceeds were sent overseas. The Hangzhou police arrested 85 people in May 2020 including the team behind the Day Day Up platform and their crypto trading counterparties. 

© 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 Crypto Rating Council has published its rubric for appraising whether or not a cryptocurrency is a security. 

The Crypto Rating Council, or CRC, is an industry group uniting many of the biggest names in crypto to put together standards for deciding which tokens are securities. Members include Coinbase, Anchorage, Kraken and Circle.

The newly publicized rubric aims to provide an objective means of scoring tokens. It is based on a series of questions, the answers to which yield numerical ratings that are supposed to quantify how likely it is that a given digital asset is a security. The CRC has published ratings for 27 tokens, but this is the first time the group has made its methodology public.  

The CRC says it has updated the rubric in response to changing legal realities, specifically “to take into account those facts which, in its view, seem to be most relevant in concluding whether an asset is likely to be viewed as a security in a court of law.”

The CRC originally made headlines upon its launch in fall of 2019 by aiming to put together a united front for the crypto industry to assemble standards to comply with the Securities and Exchange Commission (SEC).  But the group hasn’t been very active lately, at least in its public-facing work. Its most recent set of token reviews happened in early 2020. 

Arguments over whether a given asset qualifies as a security have frequently pitted token issuers against the SEC. SEC enforcement actions against development firms and issuers of tokens like EOS and GRAM were in large part responsible for ending the ICO boom of 2017-2018. 

Many in the industry have called on the SEC to release its own standards for determining which cryptocurrencies fall under the commission’s jurisdiction. In its own legal battle with the SEC, Ripple has, for example, pressed for the release of commission communications leading up to its determinations that Bitcoin and Ether are not securities, while XRP is. 

The CRC, for its part, found XRP to be a 4 out 5, with a score of 5 meaning that the asset is most likely a security. 

© 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

• Disclaimer: The Block Research team has, is, and will be experimenting with the various protocols, projects, and applications mentioned in this series. The projects mentioned in our reports are not recommendations from our team and should not be misconstrued as investment advice. Many projects that appear in this series are highly experimental and, as such, will come with risks. Readers should evaluate their own risk tolerance before experimenting with these projects.
• DeFi Digest is a weekly look at newly launched DeFi projects
• This week’s digest looks at Gearbox and Automata

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The online sales platform eBay is now permitting the sale of non-fungible tokens (NFTs) for digital collectibles. The company told Reuters that beginning Tuesday an “NFT inventory will be provided to sellers who meet eBay’s standards.”

Users can bid on NFTs as they would for a physical item. All payments will be made in U.S. dollars — unlike other prominent NFT platforms, which usually accept ether (ETH) for NFT payments.

Many of the NFTs currently available for sale on eBay appear to be on the WAX blockchain, with sellers stipulating that buyers create a WAX wallet in order to receive their NFT. 

The move to allow NFT sales comes a week after the e-commerce firm’s CEO Jamie Iannone told CNBC that the company was looking at ways to incorporate NFTs on its platform.

It also appears to be part of a larger plan. “In the coming months, eBay will add new capabilities that bring blockchain-driven collectibles to our platform,” Jordan Sweetnam, senior vice president and general manager for eBay’s North America market, told Reuters.

© 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.