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In a letter dated August 5 but publicized on August 11, Chairman of the Securities and Exchange Commission Gary Gensler says the commission needs additional authorization from Congress to regulate cryptocurrency exchanges. 

Gensler’s letter is a response to Senator Elizabeth Warren, who wrote to the SEC chairman last month asking for his input on what congressional authorization the SEC needs to handle crypto.

“I believe we need additional authorities to prevent transactions, products, and platforms from falling between regulatory cracks,” wrote Gensler. “In my view, the legislative priority should center on crypto trading, lending, and DeFi platforms.”

The SEC, as per its name, has regulatory authority over exchanges offering securities. While tokens that have been classified as commodities do not fall under its purview, Gensler implicated the majority of cryptocurrency exchanges:

“While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities.”

He further denied that the question of securities status is unclear.

“Certain rules related to crypto assets are well-settled. The test to determine whether a crypto asset is a security is clear,” wrote Gensler.

Gensler’s comments fall much in line with earlier public statements. In a speech on August 3, he similarly spotlighted DeFi and lending platforms. More broadly, Gensler been calling for more SEC oversight over crypto exchanges for years.

© 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 commodity-focused fund managed by Neuberger Berman, a multi-billion-dollar asset manager, has opened the door to exposure to bitcoin and ether derivatives and investment vehicles, according to a regulatory filing on Wednesday.

Per the filing:

“Neuberger Berman Commodity Strategy Fund’s (the “Fund”) investment strategy will permit actively managed exposure to cryptocurrency investments and digital assets through (i) cryptocurrency derivatives, such as bitcoin futures and ether futures, and (ii) investments in bitcoin trusts and exchange-traded funds to gain indirect exposure to bitcoin.”

Such actions will take place via a subsidiary firm, according to the document.

The wider commodity fund itself is broad in scope, with investments in derivatives tied to agriculture, livestock, energy and precious metals, among other areas. The CFTC first deemed bitcoin and other cryptocurrencies to be a commodity in 2015, opening the door to U.S.-based derivatives.

The new filing comes soon after Neuberger Berman disclosed a “Hedged Cryptocurrency Volatility Fund” in an SEC Form D filing.

The so-called Neuberger Berman Hedged Cryptocurrency Volatility Fund LLC had, as of July 29, made no sales to investors, per the filing. The filing notes a minimum investment of $5 million.

Previous commentary on bitcoin

Neuberger Berman’s blog featured an article on bitcoin this spring, entitled “The Bitcoin Experiment,” which noted: “From our perspective, the Bitcoin phenomenon is worth watching closely.”

The post concluded by noting that “[f]rom our perspective, as a fundamentals-driven asset manager, an investment in cryptocurrency should not be considered part of a standard asset allocation.”

“Instead, we’d rather view it as an option that pays off when expectations for an uncertain, inflationary future increase, and make the finite, non-human controlled supply dynamics of cryptocurrencies valuable,” the post’s authors wrote.

Steve Eisman, managing director for the firm and author of The Big Short, said earlier this year that he was staying out of bitcoin. “I stay out of it. I don’t understand it,” he told Bloomberg in January.

Hat tip Unfolded

© 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.

Decentralized exchanges have been one of the DeFi platforms incurring massive gains and driving greater financial revolution, especially automated market making (AMM) DEXes that trade automatically using liquidity pools replacing buyers and sellers. 

According to statistics from DeBank, one of the AMM-based DEXes, MDEX.COM created an uproar in the market back in late February by recording the highest 24-hour trading volume historically, surpassing USD 4.64 billion. The cumulative number of wallet addresses for MDEX on both the HECO and BSC chains, stands at 1,007,884. In terms of users, it ranks amongst the top 3 DEXes, after Pancakeswap and Uniswap and ahead of Sushiswap.

Low Fees or Zero Fees

A main reason for the popularity of the platform is directly linked to the low or zero fees on MDEX, which touts a dual mechanism of liquidity and transaction mining, the latter of which allows users’ BTC transactions to cost almost nothing in terms of handling fees. The fee model adopted by MDEX can drive massive activity, especially for traders who execute numerous trades daily.

Leveraging HECO (Huobi Eco-chain) and BSC (Binance Smart Chain), the platform has been able to offer low fees and a high level of efficiency enabling fast transactions of approximately only 3 seconds each. As the first DEX app on HECO, MDEX is the biggest AMM in the HECO ecosystem, accounting for about 80% of the entire HECO TVL.

An Intuitive User Experience

The platform has also been upgrading consistently to improve user experience for its traders. It recently launched a new version of the ‘quotation’ function which allows users to fetch price quotes in real-time, certainly a welcome utility for traders.

The aim is to be a simple and user-friendly interface, a move to cater to more users, especially those who are more familiar with trading in a centralized exchange (CEX) environment. These users can retain their old trading habits while transitioning over to DEX trading to enjoy a more decentralized and secure environment. 

Room for Growth

Comparing statistics across the top DEXes in the space, MDEX.COM seems to have been overlooked. 

The platform is a relatively young DEX, compared to its peers Uniswap, Sushiswap and Pancakeswap. Its initial explosive growth in terms of trading volumes, combined with its expansion over to the BSC networks from HECO-chain, not to mention the continuing development of the platform to be a multi-chain ecosystem encompassing DEX, DAO and IDO/IMO capabilities, are definitely strong indicators of the looming potential of the project. 

© 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

• In May 2021 alone, DeFi project users lost $210M.
• First of all, the damage was suffered by BSC projects, which often inherited similar vulnerabilities through forks.
• Later, due to the ease of deployment of forked contracts, DeFi exploits also took place on other EVM chains.

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The attacker of the $611 million Poly Network exploit has started returning the stolen crypto assets, less than a day after their ID information was reportedly obtained by blockchain security firm Slowmist.  

So far they have sent back $1 million in USDC on the Polygon blockchain, with more transactions likely to come.

The attacker’s move came less than a day after the initial exploit, which was the largest DeFi hack to date. The stolen assets included $273 million of Ethereum tokens, $253 million in tokens on Binance Smart Chain and $85 million in USDC on the Polygon network.  Since then, Tether was the only entity that was swift enough to blacklist the stolen USDT on Ethereum worth about $33 million.

But hours after the heist, blockchain security firm Slowmist claimed that they already tracked down the attacker’s IP and email information while the investigation on other ID intel relating to the attacker continued. Slowmist’s Weibo post on Tuesday suggested that the attacker used a little known Chinese crypto exchange Hoo when putting together the funds for the attack, hinting at how their digital footprint was trailed at the beginning. Other crypto sleuths also found details relating to other exchanges that may help to identify them.

Around 4:00 UTC time on Wednesday, the attacker wrote “Ready to return the fund!” in an Ethereum transaction that was sent from the PolyNetwork Exploiter address to itself. That message was followed by another one that reads: “Failed to contact the Poly. I need a secured multisig wallet from you.”

About 20 minutes later, the team behind the Poly Network responded to the exploiter address through a transaction that it is “preparing a multi-sig address controlled by known Poly addresses.” In a follow-up transaction, the Poly Network team identified three addresses that they hoped the attacker returns the funds to. The money is currently being sent to these addresses.

© 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.

Five publicly listed North American bitcoin mining firms have churned out a total of 1,802 bitcoin in July – on average 58% more than what they did in June.

Marathon Digital, Riot Blockchain, Argo Blockchain, Bitfarm and Hut8 have all been through a significantly productive month in July even though they did not materially increase their hashing power, according to each miner’s July production updates released until Tuesday.

That was largely due to the fact that the bitcoin network witnessed the biggest bitcoin mining difficulty drop ever last month after China issued shutdown orders to local bitcoin mining operations in June. As a result, the market shares of both non-Chinese bitcoin mining pools and mining operations outside China have increased significantly.

Although it’s expected that every bitcoin mining operation outside China that was not disrupted would enjoy a bigger share of bitcoin mining’s daily cake, the updates from the five publicly-listed firms offer a look into how much exactly they have benefitted from the shutdown of their Chinese rivals.

The table below breaks down their monthly mined bitcoin based on financial disclosures and their month-over-month growth.

Nasdaq-listed Marathon and Riot Blockchain have recorded a growth of over 50% among the five even though they barely expanded their mining fleet in July compared to the operations in June.

As of July 30, Marathon had about 19,000 units of the newest generation of bitcoin ASIC miners – the same with what it had as of June 30. Riot also said that due to its infrastructure upgrade, the installation of its recently received hardware has extended into August.

“Due predominantly to favorable changes in the global hash rate, July proved to be an immensely productive month for our mining operations,” Marathon’s CEO Fred Thiel said in a statement. 

In a similar note, Peter Wall, CEO of London-listed Argo, attributed the July growth to his firm being “able to capitalize on the reduction in global hash rate and mining difficulty.” Argo’s mining fleet is based in its facilities in Canada and it’s applying to be listed on Nasdaq as well.

Canada-listed Bitfarm, on the other hand, noted that the recent macroeconomic events in China have positioned itself to “accumulate more bitcoin on its balance sheet than previously anticipated.” 

But not every U.S.-listed bitcoin mining firm has made the most out of China’s policy change.

BIT Mining, BIT Digital and The9 City, which previously had mining operations inside China, have been materially affected and are on track of shipping out the machines to regions like Kazahkstan, Russia, and the U.S.

© 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 list of hedge funds breaking into the crypto market continues to grow, and it appears that Coinbase is winning a significant share of their business, according to the company’s second-quarter earnings release. 

Coinbase, which operates an array of business lines that cover both institutional and retail clients, reported $2 billion in net revenue for the second quarter of the year, smashing Wall Street’s expectations.

The company also appears to be cozying up to the hedge fund world. Coinbase said Tuesday said that 10 out of the top 100 hedge funds by assets under management are customers of the exchange.

“Adoption continued at a rapid pace throughout the quarter despite market volatility,” Coinbase said. “We are encouraged by the progress we made over the past year as we build our institutional suite of products and service offerings.”

“In recent months, we have formed partnerships with industry leaders including Elon Musk, PNC Bank, SpaceX, Tesla, Third Point, and WisdomTree.”

This is the firm time Coinbase has made public mention of its relationship with Tesla. The Block first reported in February that Coinbase was behind the electronic car maker’s headline-driving bitcoin purchase. 

Hedge funds have been warming up to the space. Point72, which has been looking for its own crypto unit head, made its first crypto venture bet last week, backing Messari’s $21 million raise. A source close to Point72 told The Block that it is also looking to hire a crypto lead.

© 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.

FalconX, one of the several platforms seeking to draw major investors to the cryptocurrency market, announced Tuesday a Series C funding round that clinched its unicorn status with a valuation of $3.75 billion.

The firm, which raised $50 million in a Series B round in March, said the round will help it further scale its business. The Series B round valued the firm at $675 million. 

Investors in the round included participation from Tiger Global and Amex Ventures. Silicon Valley investment firms Alimeter Capital and Sapphire Ventures led the round.

The firm is facilitating $10 billion in monthly volumes and now needs the wherewithal to help its clients adjust to operating in the 24-7 market and explore new opportunities in decentralized finance and stablecoins. 

“Institutions were coming in with bitcoin as an inflation hedge,” CEO Raghu Yarlagadda said in an interview with The Block, referring to the environment when it raised this past spring. Since then, clients have expanded their scope, according to Yarlagadda.

“They are going a lot deeper. There is new interest in Ethereum…Definitely a lot of questions on DeFi and yield generation,” he said.

Yarlagadda told The Block in March that he expects large hedge funds, which top $500 million or larger in size, to comprise as much as 30% of its customer base. FalconX now says it is trending towards that goal. 

The firm is looking to carve a specific niche in the crypto credit market, offering its clients access to financing. A beefed-up balance sheet will allow it to expand its delayed settlement product, which lets its clients delay the timeframe which they need to settle a trade to 20 days after the point of execution. 

“There is massive demand for that and so we have to expand the balance sheet,” Yarlagadda said. 

© 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.

Crypto exchange Coinbase said Tuesday it’s working with PNC Bank, the fifth-largest commercial bank in the U.S. by assets, on a crypto project.

“In recent months, we have formed partnerships with industry leaders including [Tesla CEO] Elon Musk, PNC Bank, SpaceX, Tesla, Third Point LLC and WisdomTree Investments,” a letter from Coinbase to its shareholders read. When asked about the partnership by CoinDesk, the crypto exchange declined to elaborate.

A source had previously told CoinDesk that PNC Bank is expected to unveil a crypto jawn in the coming quarters.

The service would give the Pittsburgh-based national bank more seamless access to cryptocurrency investments for its customers, the source said. It’s just one facet of PNC’s broader digital assets and blockchain strategy.

Read more: PNC Bank Planning Crypto Offering With Coinbase

PNC is the latest mainstream megabank to dip its toe into digital assets, and perhaps the largest to do so with Coinbase. PNC is already plotting a more crypto-centric future and months ago began hunting for someone to lead its innovation push.

That gig – a crypto product manager – will consider how PNC might leverage blockchain technology as it explores crypto’s “innovation cycle,” the source said, cautioning the role was about more than just investments.

A since-removed job description for the Philadelphia-based position was more explicit:

“The role will work on scaling operations for our cryptocurrency investment capability as well as managing all operational aspects pertaining to new cryptocurrency initiatives.”

PNC Bank didn’t return requests for comment.

Coinbase brought in roughly $2 billion in second-quarter revenue, with the vast majority of that amount coming in the form of transaction revenue from its retail customer base.

Per a shareholder letter published Tuesday, Coinbase said it made $1.82 billion in retail-oriented transaction revenue and $102 million in institutional-oriented revenue for a total of $1.93 billion. That compares to a total of $1.54 billion in Q1 of this year and $467.4 million in the last quarter of 2020.

Other revenue sources included $31.7 million custodial fees, $39 million in “blockchain revenue”, and $16.9 million from Earn campaigns. “Subscription and services revenue” accounted for a total of $102.6 million, per the letter. 

In terms of volume, Coinbase said it saw $462 billion in volume during the second quarter. The split was $317 billion for institutional and $145 billion for retail. That compares to Q1’s $335 billion, divided between $215 billion and $120 billion for institutional and retail, respectively, during that period.

“Growth in retail Trading Volume was driven by higher MTUs, a strong crypto market environment, product innovation, and our ability to support more assets for trading. Institutional Trading Volume was $317 billion, an increase of 47% compared to Q1. Institutional volume comprised 69% of total Trading Volume, up from 64% in Q1. In the quarter, Institutional onboarding to the Coinbase platform increased rapidly as well as higher capital allocations into crypto,” Coinbase said.

In terms of assets on platform, Coinbase reported a total of $180 billion — $88 billion from retail and $92 billion from institutional during the second quarter. Of that amount, 47% of it was in the form of bitcoin, with ether making up another 24% of the amount.

“As of June 30, 2021, Assets on Platform totaled $180 billion. Crypto assets on the platform represented 11.2% of the total market capitalization of crypto assets. Despite price movements, we saw billions of dollars of net asset inflows and new customers added throughout Q2,” Coinbase said. 

Coinbase reported growth in the number of monthly transacting users or MTUs, up from Q1’s 6.1 million to 8.8 million in the second quarter. 

“Q2 MTU growth was driven by the crypto market environment, product launches, 
 our marketing efforts, and the growing number of crypto assets we support,” Coinbase said.

Coinbase’s stock closed Tuesday at $269.67, according to Nasdaq data. The firm went public via a direct listing in April. 

© 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.