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In the world of non-fungible tokens, new applications continually test the boundaries of what’s possible. 

One such experiment is Eric’s Orb, a single NFT that tokenizes a personal consulting service. It was released in April at auction, only to now encounter a sudden challenge after its single anonymous holder, who goes by pawle.eth, relinquished ownership after facing a massive 300% annual tax built into the NFT’s contract.

Eric Wall, a noted crypto analyst and investor, launched the Orb as part of his project, Orb Land. The unique NFT granted access to personal consulting services, effectively tokenizing Wall’s time and expertise. 

The premise of Orb ownership is simple yet intriguing, as it grants the holder the right to solicit insights and advice from Wall — a sort of lifeline like the one used in the popular game show “Who Wants to Be a Millionaire.”

Orb tax

Despite the attractive proposition, the Orb came with a heavy financial obligation. The holder was required to pay a 25% monthly tax, or an annual tax rate of 300%, using a so-called “Harberger tax” in which the owner of an asset pays on a self-determined value.

There’s a catch, though, as the system gives anyone the right to purchase the asset at the self-determined value. It essentially encourages owners to value the asset to keep prospective buyers from forcing a sale.

The novel application to an NFT was meant to ensure market liquidity and provide continuous monetary value to the creator. But the cost can be unsustainable for the holder. 

The numbers

Pawle.eth, the holder who relinquished the Orb, had originally purchased it for 10 ether worth about $18,500. They then set the selling price at 8 ether worth around $14,500, and that all worked out to an annual “tax” obligation of 24 ether or a monthly payment of about $3,750 which had to be sent to Wall.

On-chain data shows that Pawle.eth had to continuously top up their wallet to keep up with the tax. However, they eventually ended up relinquishing ownership.

“Harberger taxes are excellent at preventing hoarding,” Orb Land noted. “But what they’re not great by default at is providing someone who bought something at a high price with a soft landing when they want to get out.”

Despite the substantial outlay, Pawle.eth actively used ownership of the Orb to ask Wall about various topics. These discussions included their investment thesis as well as Wall’s views on where the most significant value could be captured in future crypto trends.

Reacting to this turn of events, the Orb Land team said it’s introducing a new feature to the Orb’s mechanism — “relinquishWithAuction.” This addition will allow a holder wishing to dispose of the Orb to Dutch auction it, promoting smoother ownership transitions and maintaining market liquidity. The NFT, after being surrendered, will now have to be re-auctioned after a pause, leading to fresh price discovery.

The future of Orbs

The Orb Land team defended the Harberger tax model and said it prevents passive hoarding and ensures the NFT sees actual use.

“The Harberger tax system ensures that the person who needs it the most obtains the Orb, rather than the person who wants to simply speculate on it. It discourages passive hoarding and ensures that an NFT meant to be used doesn’t go to waste,” Wall told The Block in a prior interview. 

Wall himself believes that numerous crypto consultants could sustain themselves solely by answering one question each week using similar Orbs. Supporting this possibility, Wall suggested that influential figures in the crypto industry might introduce their own Orbs.

He mentioned that he could bring on board other analysts, such as Nic Carter, to join Orb Land. Additionally, he stated that if creators release an Orb, they can determine their own tax rates, whether lower or higher, as they see fit.

© 2023 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 Block’s research team worked with Coinbase to uncover the trends in crypto and blockchain investment and product initiatives across the largest U.S. companies and well-known consumer brands. The research informed a new report that Coinbase published on June 22 called The State of Crypto: Corporate Adoption.

To inform the report, The Block Research team collected, organized, and analyzed a range of primary sources, such as, on-chain data, corporate announcements, earnings calls, and patent filings to understand the nature and size of crypto and blockchain investments, projects, and ventures undertaken by Fortune 100 companies and large consumer brands since 2020.

Here are some of the most compelling insights we discovered while examining the investments and innovations the most successful U.S. companies have made in crypto and blockchain.

• More than half—52%—of the Fortune 100 have pursued crypto, blockchain or web3 initiatives since the start of 2020. About 60% of Fortune 100 initiatives reported since the start of 2022 have been either in the pre-launch stage or already launched.

• Companies in tech, financial services, and retail have led web3 adoption since 2020. In the first half of ’23, growth in retail adoption has compensated for the drop-off seen by financial services firms.

• Crypto financial services and enterprise solutions such as B2B blockchain-related services are the most commonly invested categories, representing more than 50% of all deals.

• Citi Ventures, Google Ventures, Microsoft Ventures and Goldman Sachs have made as many crypto private investments as all other Fortune 100 companies combined.

• NFTs are behind retail’s recent surge in web3 initiatives, and they’re generating revenue. The largest consumer brands accumulated royalty revenue totalling approximately $101.3 million from more than 118K consumers.

There’s a lot more to discover in the full report, which you can download here.

If you would like a deeper dive into the insight contributed by The Block Research, or have questions about our research on web3, crypto, digital assets, blockchain and related topics, please contact sales@theblock.co

© 2023 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.

Securities and Exchange Commission Chair Gary Gensler and Treasury Department Secretary Janet Yellen have both been called to provide analysis on a Republican-led digital asset market structure bill set for a committee vote in the coming weeks. 

House Financial Services Committee leading Democrat Maxine Waters sent letters to the pair, according to a statement released on Monday, urging them to share their thoughts on the Digital Asset Market Structure Discussion Draft. 

Waters asked Gensler how the legislation would impact the SEC’s current authorities. 

“Moreover, if there are recommendations or changes to existing law outside the scope of the bill that you believe would protect investors within the digital assets space, I would welcome those views as well,” Waters said in her letter to Gensler sent on June 23. 

Pathway to commodity status

House Financial Services Committee Chair Patrick McHenry, R-N.C, and House Agriculture Committee Chair Glenn ‘G.T.’ Thompson, R-Pa., proposed the draft bill earlier this month. It seeks to provide a pathway for a digital token to transfer from being treated as a security to a commodity.

Waters has previously said she was concerned about consumer protections in the bill. 

Waters also asked both Yellen and Gensler “to be prepared to brief House Financial Services Committee Members on your views and recommendations, following the submission of your written response to this letter.” Waters said responses are due by June 30. 

Gensler has said existing rules already regulate crypto and that new legislation is not needed. Meanwhile, Yellen said earlier this month that she wants Congress to pass additional crypto regulation, saying she sees some “holes in the system.”

Concern from Democrats

Republicans and Democrats in the House Financial Services committee have shown some divides on the bill, and Waters argued at a hearing this month that the bill could hinder SEC efforts. 

“The bill appears to halt any enforcement actions by the SEC against crypto firms, even when they have committed fraud,” Waters said on June 13. “This provisional registration could reward bad actors with a ‘get out jail free’ card and allow them to continue harming consumers and investors.”

McHenry has said he plans to hold a committee session to vote on the legislation in the second week of July. 

© 2023 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 Swiss National Bank (SNB) plans to pilot a wholesale central bank digital currency (CBDC) on the nation’s SIX digital exchange.

“This is not just an experiment, it will be real money equivalent to bank reserves and the objective is to test real transactions with market participants,” the central bank’s chairman said at a conference in Zurich on Monday.

According to Reuters, chairman Thomas Jordan told the Point Zero Forum the pilot project will start soon and that it will last for a set period. The pilot CBDC will be intended for interbank, wholesale use; a public, retail version will not be included in the present pilot. “We do not exclude that we will never introduce retail CBDCs but nevertheless we are a little bit prudent at the moment,” he said.

Central banks worldwide are exploring the creation of digital versions of their currencies in response to the decrease in cash usage, accelerated in some instances by the COVID-19 pandemic. China leads in the development of CBDCs, with countries like Japan, Brazil, and Australia following suit.

However, there is not the same enthusiasm in the U.S. For instance, Federal Reserve Governor Christopher Waller holds a skeptical view on the need for a CBDC in the United States, believing there’s no compelling reason to develop an official digital dollar at present, referring to it as a solution searching for a problem. “The case for adopting one is not yet convincing to me and many others,” he said during a November 2022 event in Brisbane, Australia.

© 2023 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.

ProShares Bitcoin Strategy ETF (BITO) had its largest weekly inflow in a year, according to data from Factset.

The fund now holds over $1 billion worth of Bitcoin futures, as noted by Bloomberg Senior ETF Analyst Eric Balchunas, who first highlighted the data on Twitter.

BITO Fund Flows Chart. Image: Factset.

BlackRock’s filing for a spot Bitcoin ETF on June 15 saw the world’s largest cryptocurrency by market capitalization rise to over $30,000 and an increase in interest in Bitcoin derivatives. BITO was the first Bitcoin-linked ETF in the US and is one of the most popular among institutional investors, allowing them to gain exposure to Bitcoin-linked returns with a regulated product.

Highlighting the performance of the ETF, Balchunas added: “Interesting thing regarding BITO, even though it got trashed by some because futures roll costs, it pretty much has tracked bitcoin perfectly. It’s lagged spot by 1.05% annually, but its fee is 0.95%, equalling only 10bps of roll, extra costs, which is rounding error, many had predicted over 5% per year.”

The recent surge in Bitcoin prices, reaching a recent high of over $31,000 and marking a 14% monthly gain, appears to be spurred by interest from institutional ETF filings.

© 2023 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 now defunct FTX.com crypto exchange owed customers about $8.7 billion, debtors said in report released Monday, accusing previous management at the company of comingling and misusing customer deposits.

“The image that the FTX Group sought to portray as the customer-focused leader of the digital age was a mirage,” CEO and Chief Restructuring Officer John J. Ray III said in a statement. “From the inception of the FTX.com exchange, the FTX Group commingled customer deposits and corporate funds, and misused them with abandon at the direction and by the design of previous senior executives.”

A review by debtors is ongoing, and the report is part of a series regarding issues that preceded the company’s bankruptcy filing. 

© 2023 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.