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The move comes as U.S. regulatory scrutiny of the crypto industry has intensified, Bloomberg reported.

Epic Games CEO Tim Sweeney, a titan of the video game industry, isn’t holding back from poking fun at the suggestion the metaverse is already dead.

The executive took to Twitter on Tuesday to jokingly suggest that users of popular digital platforms gather virtually in memory of the metaverse’s passing.

“The metaverse is dead!” he posted. “Let’s organize an online wake so that we 600,000,000 monthly active users in Fortnite, Minecraft, Roblox, PUBG Mobile, Sandbox, and VRChat can mourn its passing together in real-time 3D.”

Abandoned metaverse?

Sweeney’s comments were tweeted in response to a news story published by Insider earlier this week that asserted the metaverse had been abandoned by the “business world.”

The top boss at Epic Games taking issue with the gist of the story comes as no surprise, considering that many people’s view of the metaverse has often been confined to the parameters laid out by Meta CEO Mark Zuckerberg. In late 2021, he changed the name of his company from Facebook to Meta while declaring the metaverse was the future of digital interactions, with his version being largely played out in virtual reality.

Meta’s own efforts to lure users to its version of the metaverse have largely been disappointing, if not tragic, despite billions of dollars spent. Blockchain-based platforms like The Sandbox and Decentraland have also struggled to achieve mainstream adoption.

But some technology thought leaders have argued that the metaverse existed long before Facebook’s historic pivot. Many believe that platforms like Roblox, Fortnite and Minecraft, and their tens of millions of users, are all working versions of the metaverse, even if people are not yet able to seamlessly leap from one to the other using the same avatar.

Fortnite, one of the most popular video games in recent memory, was created and released by Epic Games. In 2022, Epic Games joined several companies including Microsoft and Meta to create an organization called the Metaverse Standards Forum.

© 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.

President Joe Biden took a dig at “wealthy crypto investors” on Tuesday, seeking to tie Republicans to the digital asset industry as he knocks the GOP’s proposed federal budget cuts.

“We think Congress should cut tax loopholes that help wealthy crypto investors ($18 billion),” Biden said on Twitter. “MAGA Republicans think Congress should cut food safety inspections ($15 billion).”

Biden’s knock at “wealthy crypto investors” comes as a potential debt crisis looms. Treasury Secretary Janet Yellen warned last week that the U.S. could run out of cash as soon as June 1 “if Congress does not raise or suspend the debt limit before that time.” 

“We don’t have to guess what MAGA House Republicans value. They’re telling us,” Biden said in comparing the GOP’s proposed spending cuts to his own.

The White House did not immediately respond to a request for comment.

Biden floats new tax treatment for crypto ‘wash sales’

Biden’s 2024 proposed budget suggests changing tax treatment for “wash sales” of digital assets, which would eliminate tax deductions on losses incurred on selling and quickly rebuying the same or similar crypto investment. The budget also floats a 30% tax on energy used in crypto mining operations. 

The president met with Congressional leaders on Tuesday to address the debt limit and possible budget cuts. Biden said he is open to “cutting wasteful spending,” but disagrees with many of the GOP’s proposed reductions.

Some Republicans have grown closer to the crypto industry over the last several years. The conservative Club for Growth, for example, launched two crypto-focused super PACs in the last election cycle.

The White House, too, has been active on crypto policy, releasing a series of digital asset reports last year. 

© 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 organization alleged investors including Arca were mounting a 51% attack.

The U.S.-based miner is teaming with Zero Two, a digital assets infrastructure development company focused on supporting the power grid of Abu Dhabi.

Abu Dhabi, the capital of the United Arab Emirates, will host the first large-scale bitcoin mining operations in the Middle East with a complex being developed by a joint venture between Marathon Digital Holdings and Zero Two.

Dubbed Abu Dhabi Global Markets JV Entity, the venture will develop and operate two digital asset mining sites that will have a combined capacity of 250 megawatts, the companies said in a statement. 

A larger 200-megawatt site will be located in the Masdar City sustainability hub, and a smaller 50-megawatt facility will be placed in the port zone of Mina Zayed.  

Marathon and Zero Two said they intend to leverage excess energy in Abu Dhabi and will offset any non-sustainably produced electricity with clean energy certificates. 

A rendering of the Masdar City sustainability hub in Abu Dhabi.

Bitcoin mining in Abu Dhabi’s desert climate

Zero Two will have 80% of the venture, and Marathon will hold the remainder. Capital contributions in the 2023 development period are expected to reach $406 million. Assets mined will be distributed twice a month in accordance with equity ownership. 

Until now, the hot desert climate has made bitcoin mining unfeasible, but the companies developed technology to cool the equipment. Both sites should begin operating before the end of the year, with a combined hashrate of 7 EH/s.

“For this project, our team successfully co-developed and implemented a full immersion solution, as well as developed proprietary mining software from the ground up to provide flexibility, resilience, and optimization,” Marathon Chairman and CEO Fred Thiel said in the statement. 

The UAE has seen a flurry of recent crypto-related activity, especially as regulatory uncertainty in the U.S. has pushed some to look for more favorable jurisdictions. Coinbase’s executive team, including CEO Brian Armstrong, was in the country this week to meet with policymakers in the region. 

© 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.

Transaction fees on the Bitcoin blockchain have hit a two-year high due to the growing popularity of so-called BRC-20 tokens.

Venture capital firm Andreessen Horowitz complained to the U.S. Securities and Exchange Commission that proposed new regulations around custody requirements for registered investment advisers could effectively prevent them from ever using centralized exchanges to hold crypto or make trades for their clients.

Coinbase, the largest U.S.-based centralized exchange, has also written to the SEC to protest the proposed new regulation.

The comments come after the SEC proposed tweaking its custody rule in February to broaden what it covers, in part due to the growth of the crypto industry and major firm failures, and their impact on customers. If approved by the commission, the rule would expand requirements for investment advisers to safeguard “any client assets of which an adviser has custody” beyond the current custody rule that covers funds and securities. The rule would affect 15,000 investment advisers in the U.S. who manage $128.4 trillion in assets of all kinds for 64.7 million clients.

Gensler singles out crypto exchanges

Though crypto is not the only field affected by the proposed rule change, it clearly was top of mind for the commission when it proposed the tweak.

“The current model in the crypto field is a model that takes control, one would say ownership, of those funds, and commingles that with thousands, and often hundreds of thousands or even millions of other customer funds,” SEC Chair Gary Gensler told reporters following a vote to move the proposed rule forward. He singled out crypto exchanges, due to how they’re modeled, as not meeting current standards for qualified custodians, whether or not the proposed rule change passes. 

The SEC’s proposal is intended to safeguard the way that investment advisers handle crypto for clients. The SEC wants investment advisers who have “custody” of client assets to hold them in “properly segregated” accounts. “These protections are designed, among other things, to ensure client assets are properly segregated and held in accounts to protect the assets in the event of a qualified custodian bankruptcy or other insolvency,” the SEC said in a statement announcing the rules review.

In the last year or so, clients of bankrupt firms like Celsius and FTX have discovered to their horror that the funds in their accounts are actually assets that belong to the bankruptcy estate, and not to them, due to commingling of assets and terms of service that handed control of assets deposited to companies that subsequently failed. 

In order to preserve customer accounts in the event of company failure, crypto firms could park customer assets with banks or broker-dealers that provide custodial services, Gensler said. National bank BNY Mellon, as well as crypto-friendly state-chartered Paxos and Custodia, already offer crypto custodial services. 

Coinbase pushes back

Parts of the crypto industry argue that prohibiting commingling of funds is a problem for centralized exchanges like Coinbase which operate non-segregated or commingled crypto wallets, which the exchange owns and controls. The exchanges make all the necessary trades and credit the customers’ accounts. The bottom line, however, is that “custody” of all customers’ funds is maintained by the centralized exchange, not in a wallet that is solely controlled by the customer or their investment adviser.

“We fear that absent a suitable self-custodial exception, the proposed Rule would effectively ban RIAs [registered investment advisers] from holding and transacting in crypto assets for clients,” a16z wrote to the SEC. “The Safeguarding Rule would not permit an RIA to trade a crypto asset on a centralized trading platform, because such platforms are not qualified custodians, and trading the asset would entail moving it out of custody.”

A16z has dedicated a $7 billion-plus fund to investing in crypto, which includes backing for Coinbase.

Coinbase Chief Legal Officer Paul Grewal echoed the venture firm’s concerns.

“The proposal would ban RIAs from trading on non-QC [qualified custodian] crypto exchanges,” he said in a tweet early this morning. “This wouldn’t benefit RIAs or their clients and would in fact harm them. Thus the SEC should allow limited non-QC exposure so RIAs can trade crypto for their clients.”

“The Commission uses the requirement to justify banning RIA client trades on crypto exchanges that are not qualified custodians,” Grewal continued. 

The criticism is a notable reversal for Grewal, who told Bloomberg two months ago that the proposal would not affect Coinbase.  

The SEC’s comment period closes this month.

© 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.

According to Coinbase’s customer support, “Our systems currently do not support deposits to Coinbase ETH addresses from external validators… Funds may be stuck until we are able to support these transactions.”

Bittrex, a popular exchange during the initial coin offering (ICO) boom, offered users and the crypto industry invaluable lessons in economics and regulatory affairs.