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Faced with heightened regulatory interest, crypto has become remarkably fashionable within Washington, DC.

Recent weeks have seen the return of conference season with a vengeance. Within those focusing on government relations, the increasing priority of crypto has been palpable. 

The Chamber of Digital Commerce’s DC Blockchain Summit on May 24, for example, featured three members of the House and four Senators as speakers. 

For comparison, only one member of Congress, Rep. Tom Emmer (R-MN) spoke at the last in-person summit, in 2020. Emmer reappeared at the more recent summit, as did Senator Cynthia Lummis (R-WY), the first Senator to hold Bitcoin publicly. 

But so, too, did more recent figures speak on crypto at the summit, including Senators Cory Booker (D-NJ), Steve Daines (R-MT) and Kirsten Gillibrand (D-NY) — the latter of whom only recently signed on to work with Lummis on a crypto-focused bill. 

“I hear a lot of patronizing things about this crypto space — and I’m with people on the real concerns — but I’m tired of people not seeing the potential and value and genius,” said Booker.

That political popularity brings with it a market for crypto expertise, which has many who work with the government pivoting to crypto or advertising existing crypto businesses with sudden vigor. 

This trend is in part thanks to the recent executive order from President Biden, which mandates a wide range of studies from federal agencies. And for the time being, it seems irrespective of a bear market and the collapse of TerraUST earlier in May. Indeed, those events have also sparked talk of major governmental action. 

Deloitte, for example, has been a long-time sponsor of the DC Blockchain Summit, but this year became a top sponsor along with crypto-native firms BinanceUS and Dapper Labs. The big-four accounting firm hosted a branded lounge and a platoon of staff wearing pins that said “Trust is non-fungible.”

“We have been in this space a long time,” said Rick Rosenthal, a partner at the firm’s regulatory practice, told The Block. Only in the past year, Rosenthal said: “We’ve stood up a strategic, roped off, literally a dedicated unit focused exclusively on coordinating across the firm.”

Rob Massey, a partner at Deloitte’s tax service, put his date of entry into crypto at 10 years ago, as the firm took on a miner, a token issuer and an exchange as clients. 

“For the first couple of years, I think we were very careful about highlighting externally that we were engaged,” Massey said. “And now with the executive branch talking respectfully about blockchain and crypto — I think as more regulators engage thoughtfully and in a balanced tone, it’s easier for us.”

The Block has already noted how this trend has impacted the think tanks that set the tone for policymaking conversations. 

Chainalysis’ LINKS conference last week further highlighted this trend of government interest growing more overt — with some of the more traditionally discrete elements of the government publicly appearing. Those included investigation case studies from law enforcement agencies. 

Moreover, dozens of attendees wandered LINKS with tags that displayed roles not only at traditional government contractors like Booz Allen Hamilton and Lockheed Martin, but agencies including the IRS, DHS, and even the FBI. 

Many others featured “USG,” none of whom would specify which branch of the government when asked by The Block — though one bearded man wore a badge from the US Postal Service Inspection Service on his belt.

© 2022 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.

Tuesday was another difficult day for bitcoin miners, with most stocks falling significantly.

Hive Blockchain’s 5-to-1 share consolidation plan went into effect at market open, bolstering stock prices from C$1.16 on the Toronto Stock exchange and $0.85 on Nasdaq on Monday afternoon to C$4.93 and $3.82, respectively. By market close, on Tuesday, they had dropped by 15% and 10.12%.

The Canada-based company said that the consolidation was meant to make its stock more attractive to investors.

“In speaking to shareholders at the numerous conferences I have attended in the past 60 days, it is apparent that some shareholders are finding it challenging to compare HIVE to its industry peers as we have many more shares outstanding,” said executive chairman Frank Holmes when the plan was announced. 

Here’s how crypto mining companies performed on Tuesday, May 24:

© 2022 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.

Sam Bankman-Fried, chief executive of crypto exchange FTX, said Tuesday that he could spend significant funds during the 2024 election cycle in the United States.

Speaking to host Jacob Goldstein of the What’s Your Problem? podcast, Bankman-Fried spoke about his funding efforts in US elections to date and how that work might evolve in the lead-up to the 2024 presidential election when incumbent President Joe Biden could face former President Donald Trump in an electoral rematch.

When asked about specific numbers, Bankman-Fried said he would “guess north of $100 million” across the cycle.

“As for how much more than that, I don’t know,” he continued. “It really does depend on what happens. It’s really dependent on exactly who’s running where for what.”

Goldstein pressed Bankman-Fried about the upper bound of that figure, floating a possible $1 billion, which Bankman-Fried suggested was possible depending on the specific contours of the election cycle. 

“Yeah, I think that’s a decent thing to look at, as a sort of…I would hate to say hard ceiling, but at least as sort of a soft ceiling, I would say, yeah,” replied Bankman-Fried, who went on to add “[w]ith, again, a lot of caveats on this.”

As previously reported, Bankman-Fried has spent millions in political action committee (PAC) donations during the election cycle. This included funding for Congressional candidate Carrick Flynn’s unsuccessful primary bid.

During the podcast, Bankman-Fried said that “[f]undamentally, I think it was a well-fought race. [Flynn] had a real shot.”

“Going back to this discussion about expected values, if you’re donating political resources on candidates you’re 99% sure will win, you’re doing something wrong,” he continued.

Beyond politics, Bankman-Fried suggested that future public-sector spending could be directed toward pandemic preparedness. His brother, as reported previously by NBC, runs a non-profit group called Guarding Against Pandemics, which “advocates for public investments to prevent the next pandemic” according to its website.

Bankman-Fried previously made a $5.2 million contribution to then-candidate Biden’s election campaign.

© 2022 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.

Venture capital firm Standard Crypto has raised a new $500 million fund, according to a report from Axios.

Axios cites a source familiar with the process. The fund will “invest in both equity and crypto,” according to the report.

In an interview on The Scoop podcast earlier this year, co-founder Alok Vasudev discussed like non-fungible tokens and decentralized autonomous organizations (DAOs) as areas of interest for VC firms like Standard Crypto.

“We’ve always likened ourselves as entrepreneur followers rather than being overly thematic about where things are going and trying to develop too much kind of a fund-specific thesis,” Vasudev said at the time.

© 2022 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.

Almost two years on from its launch Fidelity Investments bitcoin index fund has seen a drop in the growth of in-bound investments year on year, regulatory filings show. 

The Wise Origin Bitcoin Index Fund went public in August 2020, giving Boston-based Fidelity the ability to offer clients bitcoin exposure. Almost nine months later the fund had raised $102 million, according to SEC filings.

According to its latest SEC filing, made on Monday, the fund has now raised a total of $126.5 million as of May 23, signaling a tapering in overall growth compared to the earlier reporting period. While the fund’s size has grown modestly during its second year, the number of investors has increased from 83 to 689, according to the latest filing. 

Fidelity recently announced that it will allow its clients to allocate part of their retirement savings to bitcoin. The asset manager, which looks after about $4.2 trillion in assets, revealed in April that it plans to allow investors to add a bitcoin account to their 401(k)s, once their employers approve.

© 2022 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.

Since its first iteration went live in 2018, Uniswap has seen over $1 trillion in crypto be traded on the decentralized exchange (DEX) protocol.

The decentralized exchange hit this lifetime cumulative trading volume mark on Tuesday, according to an announcement on Twitter from Uniswap Labs.

Uniswap has dominated the decentralized exchange market since last year, in terms of trade volume, according to data compiled by The Block Research.

In April, for instance,  it had a 42.48% share of the market, followed by PancakeSwap (17.21%), SushiSwap (5.47%), Astroport (5.24%), Curve (4.06%) and all others (25.56% combined).

Uniswap’s daily trading volume has been on similar levels to that of centralized exchange Coinbase, yet significantly below Binance, as shown in the following graph.

Uniswap recently announced plans to expand further into the market by introducing computer code that can embed its capabilities into any website.

© 2022 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.

Two big names in the play-to-earn gaming scene are scrambling to come to a compromise after a member of Merit Circle’s decentralized autonomous organization (DAO) proposed ousting Yield Guild Games (YGG) as an investor last week.

The proposal came following a lackluster response to a request for investors to outline their intentions “past and future” towards the DAO. 

Arguably competitors in the space, both Merit Circle (MC) and YGG are play-to-earn-focused DAOs that provide scholarship opportunities for players, as well as making investments in online play-to-earn games.

The spat hints at a growing number of potentially tricky issues investors need to take into account when getting involved with a DAO, as participants seek to find backers that can prove their value beyond merely putting up cash. 

This month marks the start of a 36-month vesting period for seed tokens given to angel investors and venture capital funds in MC’s DAO, representing 14.06% of the total token supply. 

Philippines-based YGG and its co-founder Gabby Dizon invested a total of 175,000 USDC in MC in late September 2021, in what portfolio operations manager Kazuo described as “a high risk, early-stage commitment.” This gave them just under 5.5 million MC tokens overall, which were priced at $0.032 each.

The proposal seeks to reclaim those tokens and refund YGG its initial investment.

The DAOspute

While outlining its contributions to the DAO – the post that sparked this debate – YGG said that it had introduced MC to other early-stage investors, co-invested in projects such as Big Time, Cyball and Fancy Birds, had offered to lend out its own assets if needed and orchestrated a media push.

However, these claims were attacked by DAO member HoneyBarrel. Unlike other investors, who were able to point to specific examples of connections they had facilitated, YGG didn’t make any mention of which new investors it had brought in. 

HoneyBarrel claimed YGG’s outreach consisted of just two articles in Coindesk and Yahoo Finance, one mention on its discord server and five tweets, four of which were posted on the same day from YGG and Dizon’s social media accounts. And despite offers to lend out assets, this never actually happened. 

A spokesperson for YGG didn’t immediately respond to a request for comment. 

The proposal to expel YGG appears to have support; DAO members are largely disappointed with YGG’s contributions. But even some of those that agree with the sentiment behind the proposal are urging caution on the grounds that ousting YGG could have profound implications for the reputation of the DAO, as well as venture capital attitudes towards investing in DAOs in the future.

“Setting a precedent like that for other DAOs can come back to hurt MC with its own investments in the future,” said BambinoValue in response to the proposal. “This is a dangerous precedent full stop.”

The upshot

In a post on MC’s governance forum, MC’s core team said it was in touch with YGG, and had been discussing options internally, but the ultimate decision on its fate would lie with a vote within the DAO – a measure it said it didn’t want to rush. It aims to proceed to the voting stage “in the near future.” A spokesperson for MC declined to comment further when contacted by The Block.

The affair may prove a test case for the power of DAOs and whether there are limits to their ability to enact major decisions. At this stage, the terms of YGG’s agreement with MC – and whether it would have legal recourse – isn’t clear.

Ioana Surpateanu, an advisor for Swash, Poolz Finance and Cryptowalkers, as well as an executive board member at the Multichain Asset Managers Association, told The Block however that removing YGG as an investor may not be as damaging to its reputation as some DAO members fear.

“I think this is somewhat targeted at YGG because there were other seed investors mentioned and their contribution was considered to be better,” she said. “I guess the test will be the vote. Things are in motion in the interim and there is this quest for a compromise, but we don’t know for sure what the community wants until it actually goes through a vote.”

© 2022 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.

South Korea’s financial regulators came together on Tuesday to discuss how to address fallout from this month’s collapse of the TerraUSD stablecoin. 

The Financial Supervisory Service (FSS), the Fair Trade Commission (FTC) and the Financial Service Commission (FSC) shared updates following an emergency meeting held at the National Assembly, according to local news reports. 

TerraUSD, an algorithmic stablecoin on the Terra blockchain known by its ticker UST, de-pegged from the dollar in catastrophic fashion this month, destroying more than $40 billion in value for investors. The Financial Intelligence Unit, the investigations unit of the FSC, referred to the incident — which saw the supply of luna soar in an effort to stabilize UST’s price — as a “vortex of death,” YNA News reported today. 

According to the FIU, there were 100,000 luna holders in Korea before the collapse — and this number increased sharply to 180,000 in the 10 days after UST lost its peg.

The FSS revealed on Tuesday that it plans to inspect the premises of companies that provide financial services related to the Terra blockchain, following its collapse, according to a report by Money Today.

Speaking after the event, Chan-woo Lee, senior vice president of the FSS, said that the possibility of the crisis affecting traditional financial markets was still low and in order to prevent the risk on-site investigations would be conducted. 

These inspections will look at payment services related to Terra, how the services are maintained, the status of withdrawal funds and the standards in place to protect users. 

Exchange compliance

In addition to this the FSS will develop a research service aimed at analyzing the risk of cryptocurrencies and digital assets that circulate on domestic exchanges. The service will then classify these assets according to their risk characteristics. 

South Korea’s FTC announced plans to examine cryptocurrency exchanges compliance with guidance from last year relating to terms and conditions, according to local reports from YNA News. Last year the FTC recommended that 16 domestic exchanges, including Bithumb Korea and Dunamu, should correct their existing terms and conditions as they were unfavorable to users. 

“Starting in June, we will intensively check whether the recommendations for correction of 20 types of unfair terms and conditions are implemented, and issue a correction order if necessary,” it said.

Following the meeting on Tuesday, the FSC announced it was actively reviewing new cryptocurrency regulation relating to stablecoins and decentralized finance (DeFi), YNA news reported. 

“The characteristics of virtual assets such as decentralization, anonymity and transboundary nature make it essential to secure consistency with global regulations and strengthen the cooperative system to secure regulatory effectiveness,” the FSC noted, according to local reports. 

The regulator went on to stress the importance of global regulatory consistency. Noting that consideration must be given to trends discussed by international institutions like the Bank of International Settlements and the Financial Stability Board, as well as the US executive order on crypto. 

Local reports noted that there are 13 bills pending in the National Assembly at present relating to the crypto industry, including the Electronic Financial Transactions Act. 

© 2022 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 Consumer Financial Protection Bureau is replacing its Office of Innovation with a new unit to support a broader initiative.

The new “Office of Innovation and Competition” will replace the previous Office of Innovation, which focused on analyzing areas needing special regulatory treatment for individual companies. That office was tasked with processing applications for No-Action letters and the terms of regulatory sandboxes. 

“After a review of these programs, the agency concludes that the initiatives proved to be ineffective and that some firms participating in these programs made public statements indicating that the Bureau had conferred benefits upon them that the Bureau expressly did not,” said the CFPB in its announcement.

Instead, the new office will “analyze obstacles to open markets, better understand how big players are squeezing out smaller players, host incubation events, and, in general, make it easier for people to switch financial providers,” according to an announcement from the regulator. Instead of focusing on allowances for individual innovators, the new office seeks to broadly promote innovation.

It says it’s encouraging companies, start-ups and members of the public to file rulemaking petitions for greater clarity on particular rules. 

“This will help level the playing field and foster competition by ensuring any actions the CFPB takes will apply to all companies in the market,” said the announcement.

The unit falls under the CFPB’s Research, Markets, and Regulation division, where it will leverage those resources to examine market-structure problems that hamper innovation. The unit is also tasked with identifying how bigger players, like Big Tech, can threaten fair competition for smaller players. 

The announcement makes no specific mention of cryptocurrency, but the office set the stage for more intervention last month when it invoked a largely unused provision from the Dodd-Frank Act, giving it the ability to supervise “nonbanks” engaged in consumer-facing financial services based on potential risks. That rule will take effect this week. 

© 2022 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.

MicroStrategy was trading at 18-month lows on Tuesday as cryptocurrency prices continue to fall in tandem with broader financial markets.

Shares in Michael Saylor’s software company were trading at $188.50 at the time of writing, according to Nasdaq data via TradingView.

This represents a drop of more than 55% over the past month, down from $427.05 on April 25.

MicroStrategy’s massive bet on bitcoin – it and its entities currently hold 129,218 bitcoins –  is now in the red having fallen below the average purchase price of $30,700.

Bitcoin (BTC) was trading at $28,746 dollars, at the time of writing, having fallen below $30,000 on May 12 following the collapse of Terra’s stablecoins TerraUSD (UST). This spread across the crypto market putting downward pressure on all digital assets.

The last time MicroStrategy was trading at these levels was on November 9, 2020, when it was trading at $183. At that time bitcoin (BTC) was trading at $16,410.

However, the software company’s bet on bitcoin is only one mitigating factor for the drop in share price.

Broader financial markets have been rattled by a tough macroeconomic landscape as governments and central banks address rapidly growing inflation flowing the pandemic.

For instance, the US Federal Reserve has promised to begin reducing its $9 trillion balance sheet from next month, as it aims to stem rising inflation.

This has left most major US stock indexes down year-to-date. The S&P 500 lost 18.91%, the Nasdaq Composite is down 29.50% and the Dow Jones slipped 13.99% since January.

© 2022 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.