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The battle lines were again drawn in the NFT creator royalty debate, as the CEO of NFT marketplace Blur made a case for creators to list on that platform rather than with industry heavyweight OpenSea.

After laying out the different scenarios in a blog post Wednesday night, the recommended conclusion from the pseudonymous CEO, Pacman, was for creators to block the industry’s biggest NFT marketplace, for now. 

“Our preference is that creators should be able to earn royalties on all marketplaces that they whitelist, rather than being forced to choose,” they wrote. “To encourage this, Blur enforces full royalties on collections that block trading on OpenSea.”

“It’s important to note that creators who implement the recommended option will be eligible to receive Season 2 rewards,” Pacman added. 

A screenshot from Blur’s blog post.

Royalty war

Once championed as a prime use case for artists in the NFT space and a golden egg in the creator economy, what OpenSea dubs “creator fees” are generated through taking a cut on the resale of NFTs on the company’s platform. Also known as royalties, they have been hailed as a way for artists to reap recurring benefits as their creations are sold. 

Last year’s shakeout in NFT royalties led to different businesses making their case for creators to list with them and be able to collect ongoing fees from sales of their work. 

As it stands, creators can’t earn royalties on Blur and OpenSea simultaneously. They can only earn full royalties on OpenSea, or Blur — but not both together — due to the configuration of marketplace policies, according to the blog post. 

In November, OpenSea shared a tool to help creators debuting new collections on the platform enforce royalties on-chain. The code in the smart contract restricted NFT sales to marketplaces that enforce creator fees. It also said that month that creators had earned $1 billion through royalty payments that year. 

OpenSea did not immediately respond to a request for comment on Blur’s blog post. 

Blur’s play for dominance

The move comes on the heels of Blur’s token launch, which took place on Tuesday, alongside news that the marketplace was set to close a private round at a billion dollar valuation, as first reported by The Block.

Blur has eaten into the market share of current industry incumbents since it launched in October. In January, it was the second largest Ethereum marketplace by monthly transaction volume, according to The Block Research — perhaps due to its low trading fees and schedule of airdrops to loyal users. 

Trading volume for its token crossed the $1 billion mark in under 24 hours. 

© 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.

Episode 11 of Season 5 of The Scoop was recorded remotely with The Block’s Frank Chaparro and Compound Labs Founder Robert Leshner.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Feedback and revision requests can be sent to podcast@theblockcrypto.com.

US financial regulators are conducting a coordinated front against certain crypto companies in what Compound Labs Founder Robert Leshner says is a “planned set of product takedowns.”

One particular case to watch is the SEC’s potential suit against Paxos over its BUSD stablecoin, which the SEC is alleging is an unregistered security. According to Leshner, this case is of particular importance given the precedent it could set for the billion-dollar stablecoin industry:

“If there’s an argument that USDC and Tether are securities and this winds up being contested over months and years, if it doesn’t go the right way, I think it’s an Armageddon scenario for a lot of crypto.”

During this episode, Chaparro and Leshner also discuss:

• The trade-offs between CeFi vs. DeFi risks
• How to refine decentralized governance
• Why crypto is set to flourish off-shore

This episode is brought to you by our sponsors Circle, Railgun, Flare Network, NordVPN

About Circle
Circle is a global financial technology company helping money move at internet speed. Our mission is to raise global economic prosperity through the frictionless exchange of value. Visit Circle.com to learn more.

About Railgun
RAILGUN is a private DeFi solution on Ethereum, BSC, Arbitrum and Polygon. Shield any ERC-20 token and any NFT into a Private Balance and let RAILGUN’s Zero-Knowledge cryptography encrypt your address, balance and transaction history. You can also bring privacy to your project with RAILGUN SDK and be sure to check out RAILGUN with partner project Railway Wallet, also available on iOS and Android. Visit Railgun.org to find out more.

About Flare
Flare is an EVM-based Layer 1 blockchain designed to allow developers to build applications that can use data from other blockchains and the internet. By providing decentralized access to a wide variety of high-integrity data from other blockchains and the internet, Flare enables new use cases and monetization models. Build better and connect everything at Flare.Network

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© 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.

GSR, the crypto market maker founded by former Goldman Sachs executives, will launch the GSR Foundation with a $10 million pledge the company said will be used to address technological barriers encountered by marginalized communities.

The GSR foundation will support nonprofit organizations around the globe and aims to correct entrenched problems in the philanthropic ecosystem that could be overcome through emerging technologies. Participation barriers disproportionately affect a number of marginalized communities, “including BIPOC communities, women, LGBTQ+, refugees, populations within less-developed economies, and many others,” GSR said.

“We believe that new technologies, like blockchain and crypto, can play an important role in changing this, but this will only happen if no one is excluded from participating,” newly appointed GSR Foundation Executive Director James Newell told The Block.

As GSR branches into philanthropy, its labor force is shrinking. In addition to staff reductions in October, GSR recently saw another 5% to 10% workforce decline amid layoffs and resignations due to a low January bonus, according to sources familiar with the matter.

Where traditional philanthropy fails

“There are too many areas where traditional finance and traditional philanthropy fail communities. For example, look at how many people are un-bankable in Afghanistan, or how difficult it is to make bank transfers to populations affected by conflict,” Newell said. 

Whether communities are facing a lack of hardware or other difficulties, the foundation seeks to better understand “any work that challenges paradigms, uses existing technologies in new ways, or applies new technologies to longstanding problems,” he said.

Programs for small and large grants were formed by the foundation and it is expected that the smaller grant program will be most active in the next two years. The foundation will shift gears to larger grants with “a higher value, lower volume approach once we have established where our funding is most impactful,” Newell said.

© 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.

Bitcoin reached its highest point since Aug. 17, and its drawdown in 2022 might have something to do with it. 

The leading cryptocurrency by market cap was trading at $24,260 by 5:30 p.m. EST, up 9%, according to TradingView data. 

BTCUSD chart by TradingView

Bitcoin plunged 65% in 2022, which makes it an interesting liquidity play, according to Noelle Acheson, former head of market insights at Genesis. 

“BTC is one of the most sensitive liquidity plays right now – its whopping drawdown last year, its lack of cash flows to discount, its strong floor given its various use cases,” she said.

Lower volatility in stocks and bonds, lower oil prices, and a weakening U.S. dollar have benefited bitcoin. The U.S. dollar index — a measure of the U.S. dollar versus a basket of six other currencies — has surrendered a significant portion of its gains from last year. The DXY reached a 24-year high of around 114 in September. 

DXY chart by TradingView

While there are other risk assets sensitive to a liquidity recovery, none has experienced as significant a drawdown as bitcoin — which benefits from “long-term accumulators who see BTC as a store of value.” The cryptocurrency also benefits from having no cash flows to discount, Acheson added, making it less susceptible to higher rates than stocks and less sensitive to adverse economic news coming down the line. 

“What it has is actual, potential, and growing utility, the valuation of which will move more on narrative than data,” Acheson said, adding, “BTC’s narrative is multi-faceted; this also lends its floor strong support. For some, it’s a store of value; for others, an early-stage liquid tech investment; for many, pure speculation, partially based on narratives driven by the first two. Complicated and fascinating.”

© 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.

Iris Energy posted a net loss of $144 million,  mainly due to a $105.2 million non-cash impairment charge related to its equipment financing, and said it mined fewer bitcoin in the quarter ending in December. 

The company posted revenue of $13.8 million, topping the $13.3 million average estimate of analysts compiled by FactSet. 

Shares of Iris Energy were lower in post-market trading after closing up by 67% during the regular session. 

“2022 was a challenging year for the digital assets industry as well as broader equity markets,” said Daniel Roberts, co-founder and co-CEO of Iris Energy. “Looking forward, we believe we are well positioned to capitalize as markets continue to improve.”

The company recently announced plans to scale its hashrate back up after unplugging about 3.6 EH/s worth of machines in November in response to a default notice from a lender on more than $100 million in loans.

After buying 4.4 EH/s in machines using Bitmain prepayments, it now plans to grow its hashrate to 5.5 EH/s as they are installed “over the coming months.”

Iris is debt free after extinguishing its loans at the end of last year. The company is also considering selling any surplus miners over 5.5 EH/s of self-mining capacity “to re-invest in growth initiatives and/or corporate purposes.”

© 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.

Crypto-related stocks soared in trading on Wall Street today. Silvergate, Coinbase, and MicroStrategy led the way with double-digit gains.

Silvergate rose 28.5% to $22.40 at the close, according to Nasdaq data. The crypto-friendly bank has attracted notable investors in recent weeks. BlackRock increased its stake to 7.2% on Jan. 31, while Citadel Securities and Susquehanna Advisors Group reported 5.5% and 7.5% stakes in the firm, respectively, yesterday.

SI chart by TradingView

Despite the interest from Ken Griffin’s firm, it doesn’t change what is fundamentally at play for the bank, said Andrew Defrance, an analyst at KBW. “It could lead to a squeeze short term given how high the short interest is, but there would need to be some sort of clarity to be a thesis-changing event for shorts/longs here,” he added.

Short interest in Silvergate remains high, with around 72% of outstanding shares currently sold short, according to NYSE data via Fintel. 

Coinbase gained around 17.5%, trading just below $70 at the close. The crypto exchange appears to have shrugged off last week’s regulatory woes for now.

COIN chart by TradingView

MicroStrategy jumped 10% to trade above $298 by the close. The software firm, better known in recent years for its bet on bitcoin, is up over 100% year-to-date. MicroStrategy owns over 132,500 BTC, according to The Block data, with the stock considered a proxy for investing in bitcoin by some.

Shares in Robinhood were also higher today, gaining 5.7% to trade above $10. The retail investing platform reported a 95% increase in crypto trading volumes in January to $3.7 billion.

© 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.

Bitcoin mining stocks tracked by The Block were higher on Wednesday, with 18 gaining and one declining.

Bitcoin rose 8.6% to $24,070 by market close.

Here is a look at how the individual miners performed today:

© 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.

Robinhood reported cryptocurrency trading volumes up 95% in January to $3.7 billion from the previous month.

Notional Trading Volumes — which are the primary driver of transaction revenues — were higher in January for equities, options and crypto from December 2022. Equities were $46 billion, up 19% and option contracts were 82.9 million, up 10%, the company said in a statement.

Monthly Active Users (MAU) at the end of January were 12 million, up 600,000 from December. Assets under custody (AUC) at the end of January were $74.7 billion, up 20% from the end of December.

Shares were up nearly 6% at the close.

© 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.

SEC Chair Gary Gensler signaled an escalation to his post-FTX crackdown on the crypto industry on Wednesday, saying that digital asset firms are in broad violation of current custodial rules meant to safeguard customers.

“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,” Gensler told reporters following a 4-1 commission vote to further tighten custodial rules.

“Crypto exchanges today, generally how they’re modelled, do not meet the qualified custodian standards of the current rule” set by the SEC around custody of assets in 2009, he added.

It’s the latest area where the SEC chair plans to expand scrutiny of digital asset firms, raising the regulatory and legal risks for them even more following a high-profile settlement with Kraken that ended its U.S. staking-as-a-service business and a notice to Paxos that the SEC may sue the company over its involvement in the Binance USD (BUSD) stablecoin.

Unsecured creditors

The custodial moves come in reaction to hundreds of thousands of FTX, Celsius, BlockFi and Voyager customers becoming unsecured creditors in the bankruptcies of those firms last year. That status makes it unlikely customers will fully recover assets they parked with those companies, which legally must maximize payments to as many entities and people they owe money to as possible.

Because of Celsius’ terms of use, customer assets deposited with the firm technically belong to the company, not consumers, an issue that Gensler implied led to the decision to tighten custodial rules, and an explicit push toward exchanges keeping customer assets in banks and other traditional financial players rather than holding assets themselves. Gensler noted that current law defining custodians included the words “bank” and “broker dealer,” adding that “state-chartered trust companies, state-chartered banks, federally-chartered banks have in the past provided qualified custodial services.”

The markets regulator noted that other agencies on the state and federal level define what companies constitute a bank.

Industry complaints 

When asked about complaints from the industry that the SEC is effectively trying to ban cryptocurrency in the U.S., Gensler pushed back and called out Kraken in particular for not making an effort to register with the SEC.

“I couldn’t disagree more” he said. “Come into compliance. Provide the time-tested disclosures and protections to their investors.”

Gensler compared digital assets to the peer-to-peer and marketplace lending industry, which the SEC labelled as a securities-based industry in 2009. Those fintech companies came into compliance with securities laws, he noted in comparison to pushback from the digital asset industry.

“Some of the platforms publicly say ‘we’ll never register’,” Gensler said. “Some of them we end up bringing charges against.”

“This runway is increasingly getting short,” he added.

© 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.

Fox Entertainment and its web3 arm Blockchain Creative Labs are unveiling a new token-gated fan experience for the network’s hit singing competition show “The Masked Singer.”

Holders of a non-fungible token, or NFT, called “Masked Singer Stars,” will be able to “watch exclusive content featuring behind-the-scenes and confessionals from this season’s contestants.” The NFTs will cost about $50 and there will be a limited supply of 1,050, Fox said in a statement.

Fans will need to win a chance to purchase the NFTs by scanning a QR code and then participating in interactive initiatives like voting on the contestants they think will advance. By participating, fans will be able to “level up their Loyalty Pass” and become eligible to buy the NFTs which will unlock additional exclusive content. The fan voting will not influence the outcome of the show, the media company said.

Fox and Blockchain Creative Labs’ move is one of the strongest examples of a Hollywood media company combining the popularity of an existing brand, blockchain technology and gamification in order to engage with fans. Fox’s strategy is to increase both fan engagement and the monetization of one of its top intellectual properties.

“The Masked Singer” airs its season premiere Thursday night. Now in its ninth season, the show has been a hit for Fox in the U.S., ranking as the nation’s top unscripted TV show four years running with each episode scoring an average of more than 7 million “multi-platform viewers,” the company said in a statement.

Fox’s Blockchain Creative Labs partnered with crypto infrastructure firm MoonPay to help launch the new token-gated fan experience.

© 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.