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PayU, the payments business of the investment group Prosus, has formed a partnership with decentralized payments protocol Celo.

The pair plan to launch new stablecoin payment options for PayU’s 450,000 merchant customers using cUSD, Celo’s dollar-pegged stablecoin. Together, PayU’s clients serve millions of people across Latin America, Africa, and Southeast Asia.

To kickstart the deal, PayU has announced a “significant purchase” of CELO, the utility and governance token native to the Celo blockchain. PayU has also partnered with infrastructure firm First DAG, which operates a platform that connects merchants with their bank of choice to ease the technical burden of accepting stablecoin payments.

Mario Shiliashki, CEO of Global Payments Organisation at PayU, said the move aligns with the company’s vision for “a world without financial borders.”

“As digital transactions become the norm, it is important that we equip merchants and customers with the latest payments solutions. Working with First DAG and Celo to offer a new payment option creates new opportunities for e-commerce merchants and creators, and will open new doors for users to transact freely,” he added.

Joining the Celo Alliance

Celo operates a decentralized, proof-of-stake blockchain which serves as the underpinning for mobile-first payment applications.

Over 150 organizations — including the likes of Andreesen Horowitz, Coinbase and Deutsche Telekom — are members of the Celo Alliance For Prosperity, which helps facilitate collaboration on the Celo platform. Both PayU and First DAG are joining the group as part of today’s deal.

“This ecosystem built between First DAG, PayU, and Celo is the perfect example of how digital assets can deliver in practice on its promise to democratize access to money anywhere in the world,” said Chuck Kimble, head of the Celo Alliance for Prosperity.

CELO has a market capitalization of roughly $609 million, according to CoinMarketCap.

The organization secured the services of Morgan Beller — a former co-creator of the stablecoin project Diem — as an advisor in February this year.  

© 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

• After The Summer of DeFi, both the protocols’ userbases and the number of tokenholders have grown
• On average, about 7% of unique addresses are both users and tokenholders
• Among projects with an airdrop, the percentage of loyal users is 10%+

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Silvergate posted another round of strong quarterly results on Tuesday morning — and the market took notice. Silvergate stock jumped 15% since today’s opening, currently sustaining around $97.60.

The firm nearly doubled pretax income compared to last quarter, according to CEO Alan Lane. 

“Our success continues to be driven by strong demand for our digital currency solutions powered by the Silvergate Exchange Network, or SEN,” said Lane. 

Indeed, the transfer service generated more than $239 billion in volume during the second quarter of 2021, equating to a 44% increase from Q1 2021. That also drove average deposits from digital currency customers to new heights, according to Lane. Average deposits jumped from $3.5 billion to $9.9 billion during the most recent quarter.

“We are prudently deploying these deposits into interest-earning assets, including the purchase of $4.5 billion of both short- and long-duration securities during the quarter while ensuring we have ample liquidity to support our customers as they transact on the SEN,” he said.

Though SEN is its main driver, it also appears to be an overall good time to be a crypto-friendly bank. Signature Bank also posted its earnings on Tuesday, disclosing it now has nearly $20 billion in deposits coming from the digital assets industry. Crypto drove about 50% of its quarter-to-quarter growth.

Silvergate’s digital currency fee income rose 59% since last quarter to $11.3 million. This can be attributed to increased volume on the SEN and related cash management for foreign exchange services from digital asset customers, according to the bank.

Despite Silvergate’s interest in building out so-called “stablecoin infrastructure,” transaction fees for minting and burning stablecoins didn’t play a role in the growth. 

“Transaction fees for minting and burning stablecoins were immaterial this quarter,” said CFO Antonio Martino. “But as Alan [Lane] mentioned, we are well-positioned to benefit from the growing use cases for stablecoins over time.”

Silvergate is hoping one such avenue is its deal with Diem, the stablecoin project out of Facebook. The project left Switzerland for the U.S. in May of this year, announcing it would work with Silvergate to issue its long-awaited USD-backed token. 

Diem — formerly known as Libra — has infamously moved in fits and starts, and with an eventual stablecoin delayed thanks to an array of regulatory concerns coming from every stage, global and stateside. Lane said the collaboration is still in the “very early innings” and “novel products like this often require regulatory dialogue.”

Still, Silvergate believes it will be a fruitful endeavor, saying the bank is “well-positioned to benefit from multiple levers for monetization.” This can come from minting and burning, generating a yield on reserve deposits. Silvergate also plans to add traditional banking services for SEN customers. It’s still too early to nail down details surrounding how exactly that monetization will occur, according to Lane, but Silvergate plans to hold the reserves on balance sheet, meaning the bank would also earn a yield on the reserve itself in addition to other income generators. 

Silvergate may have made the Diem deal, but it isn’t the only one getting in on the stablecoin game.

Mastercard announced Tuesday that it partnered with Circle to trial USDC settlements. Earlier this year, Visa inked a partnership with the stablecoin company. Lane said as the field of providers grows, Silvergate actually stands to benefit from the competition due to the SEN. 

“Specific to the SEN, we don’t really see these types of announcements as having any negative impact on what we do specifically because our use case here with the SEN is specific to providing liquidity, capital efficiency, reducing the banking friction for exchanges and institutional investors,” said Lane. 

© 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 House of Representatives subcommittee held a hearing focused on ransomware on Tuesday, honing in on a growing policy issue in recent months.

Contrary to recurring fears among some industry observers, talk of a clampdown on cryptocurrency activities was fairly muted before the Oversight and Investigations subcommittee of the House Energy and Commerce Committee.

Indeed, multiple witnesses noted the importance of good actors in the crypto space. Kemba Walden, a lawyer for Microsoft who testified, noted the role that bitcoin and its pseudonymity played in many ransomware attacks.

“This technology does not cause criminals to commit these crimes,” continued Walden. “Compliant stakeholders within the crypto industry are just as eager as victims to eliminate the threat of ransomware.”

While Philip Reiner, CEO of the Institute for Security and Technology told the subcommittee that “the cryptocurrency sector must be better understood and more closely regulated,” he also noted the findings of a ransomware task force on which he served were “not necessarily that cryptocurrency is a problem.”

The necessary expanding regulation, according to Reiner, was likely “expanding application of KYC and AML rules that are already available.”

“Cyber hygiene”

But just because crypto itself didn’t seem to be in the crosshairs doesn’t mean that the subcommittee wasn’t on a mission.

For starters, there was a lot of talk of so-called “cyber hygiene.”

Broadly, witnesses defined the term as some combination of the basics: multifactor authentication, employee training on identifying phishing attempts and segmenting of networks. From a policy standpoint, this included the need to expand cybersecurity spending within the private sector — a proposal that emerged with seeming bipartisan favor was a requirement for firms receiving government grant funding to spend a certain percentage of their budgets on cybersecurity.

These concerns were especially concentrated on health care and energy. “I’m here to tell you that healthcare is not prepared to prevent or respond to cyberattacks,” said Christian Dameff, a professor in medical cybersecurity.

In addition to highly public attacks like the one against Colonial Pipeline, hospitals routinely find their systems bound up by ransomware.

Beyond internal considerations, cybersecurity has become a major area of international concern.

The White House began this week by spotlighting China as a malicious actor in cyberspace. The administration and many throughout Congress have spent the past several months associating the Putin regime in Russia with many of the world’s biggest ransomware gangs.

“While the Russian president Putin may not be directly connected to these attacks, he refuses to crack down on them,” said Cathy Rodgers, ranking member of the full committee. “We know the Chinese government engages in malicious cyber behavior too.”

© 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 FTX has officially closed its Series B funding round, drawing in $900 million from an array of investors.

Launched in 2019, FTX has grown to become one of the most publicly visible exchange venues, with its headline-catching sponsorship deals with the likes of Major League Baseball and e-sports team TSM, among others. 

The fundraise brings names to its cap table from across the crypto investment spectrum. Participants include SoftBank, Sequoia Capital, Paradigm, Lightspeed, Third Point, Alan Howard, Izzy Englander and the Paul Tudor Jones family, among others. In total, 60 investors participated in the FTX raise.

The $900 million fundraise gives FTX a postdeal valuation of $18 billion, according to the firm. It represents the biggest crypto investment round to date, dwarfing Circle’s $440 million deal from earlier this year—which was previously the largest crypto VC deal. 

The Block first reported in May that FTX was moving toward the completion of a major funding round of as much as $1 billion. 

“In the end I am pretty excited with it,” CEO Sam Bankman-Fried said in an interview with The Block. “It took some time to explain the vision of the company to some of these investors that are not crypto native. But the business model is pretty simple.” 

FTX makes money from trading fees from crypto trading. It has also expanded into other areas, including stocks and commodities via derivatives contracts. This month, the firm has clocked in $19.3 billion worth of volumes, according to The Block’s Data Dashboard. 

And with the fresh capital in hand, FTX is looking to break into a business line that is common on Wall Street: white-labeling software. 

Bankman-Fried, a former Jane Street trader, said that the firm has already been introduced to potential clients. “Whether it is a neo-bank looking to offer crypto trading or a payment portal, everything we have is available via API,” he told The Block. 

The fresh capital will also allow the FTX to strengthen its existing endorsement deals. Bankman-Fried said it’s unclear at this point the extent to which those deals are impacting its bottom line, but anecdotally he said that “50% of how people hear about FTX” is from those deals. 

© 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 FTX has officially closed its Series B funding round, drawing in $900 million from an array of investors.

Launched in 2019, FTX has grown to become one of the most publicly visible exchange venues, with its headline-catching sponsorship deals with the likes of Major League Baseball and e-sports team TSM, among others. 

The fundraise brings names to its cap table from across the crypto investment spectrum. Participants include SoftBank, Sequoia Capital, Paradigm, Lightspeed, Third Point, Alan Howard, Izzy Englander and the Paul Tudor Jones family, among others. In total, 60 investors participated in the FTX raise.

The $900 million fundraise gives FTX a postdeal valuation of $18 billion, according to the firm. It represents the biggest crypto investment round to date, dwarfing Circle’s $440 million deal from earlier this year—which was previously the largest crypto VC deal. 

The Block first reported in May that FTX was moving toward the completion of a major funding round of as much as $1 billion. 

“In the end I am pretty excited with it,” CEO Sam Bankman-Fried said in an interview with The Block. “It took some time to explain the vision of the company to some of these investors that are not crypto native. But the business model is pretty simple.” 

FTX makes money from trading fees from crypto trading. It has also expanded into other areas, including stocks and commodities via derivatives contracts. This month, the firm has clocked in $19.3 billion worth of volumes, according to The Block’s Data Dashboard. 

And with the fresh capital in hand, FTX is looking to break into a business line that is common on Wall Street: white-labeling software. 

Bankman-Fried, a former Jane Street trader, said that the firm has already been introduced to potential clients. “Whether it is a neo-bank looking to offer crypto trading or a payment portal, everything we have is available via API,” he told The Block. 

The fresh capital will also allow the FTX to strengthen its existing endorsement deals. Bankman-Fried said it’s unclear at this point the extent to which those deals are impacting its bottom line, but anecdotally he said that “50% of how people hear about FTX” is from those deals. 

© 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 FTX has officially closed its Series B funding round, drawing in $900 million from an array of investors.

Launched in 2019, FTX has grown to become one of the most publicly visible exchange venues, with its headline-catching sponsorship deals with the likes of Major League Baseball and e-sports team TSM, among others. 

The fundraise brings names to its cap table from across the crypto investment spectrum. Participants include SoftBank, Sequoia Capital, Paradigm, Lightspeed, Third Point, Alan Howard, Izzy Englander and the Paul Tudor Jones family, among others. In total, 60 investors participated in the FTX raise.

The $900 million fundraise gives FTX a postdeal valuation of $18 billion, according to the firm. It represents the biggest crypto investment round to date, dwarfing Circle’s $440 million deal from earlier this year—which was previously the largest crypto VC deal. 

The Block first reported in May that FTX was moving toward the completion of a major funding round of as much as $1 billion. 

“In the end I am pretty excited with it,” CEO Sam Bankman-Fried said in an interview with The Block. “It took some time to explain the vision of the company to some of these investors that are not crypto native. But the business model is pretty simple.” 

FTX makes money from trading fees from crypto trading. It has also expanded into other areas, including stocks and commodities via derivatives contracts. This month, the firm has clocked in $19.3 billion worth of volumes, according to The Block’s Data Dashboard. 

And with the fresh capital in hand, FTX is looking to break into a business line that is common on Wall Street: white-labeling software. 

Bankman-Fried, a former Jane Street trader, said that the firm has already been introduced to potential clients. “Whether it is a neo-bank looking to offer crypto trading or a payment portal, everything we have is available via API,” he told The Block. 

The fresh capital will also allow the FTX to strengthen its existing endorsement deals. Bankman-Fried said it’s unclear at this point the extent to which those deals are impacting its bottom line, but anecdotally he said that “50% of how people hear about FTX” is from those deals. 

© 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.

Officials at the European Commission, the European Union’s executive branch, made public Tuesday draft legislation that, if approved, would apply the FATF’s so-called travel rule for crypto assets.

The EU has for months been solidifying its stance on regulating various aspects of the crypto industry, including rules around stablecoin oversight. With today’s release, the EU is setting the stage for closer supervision of crypto asset transactions as part of a broader overhaul of anti-money laundering/know-your-customer rules. Still, any changes are subject to deliberation in the European Parliament and will likely take years to go into effect. 

As the draft text explains:

“The proposal extends the scope of Regulation 2015/847 to include transfers of crypto-assets made by Crypto-Asset Service Providers (CASPs) in addition to the current provisions on transfer of funds. It aims at reflecting in EU law amendments made in June 2019 to Financial Action Task Force (FATF) Recommendation on new technologies to cover ‘virtual assets’ and ‘virtual asset service providers’, and in particular new information obligations for the originator and beneficiary CASPs at the two ends of a crypto-assets transfer (the so-called ‘travel rule’).”

Under the rule, so-called virtual asset service providers, or VASPs, must share information about the senders and recipients involved in VASP-to-VASP transactions larger than $1,000. The EU refers to these entities as crypto asset service providers, or CASPS. 

As noted in the EU’s press release on the matter, what’s effectively happening is that the bloc is pushing service providers in the EU space to ensure that they know who their customers are and that information about them moves between companies.

Officials noted:

“At present, only certain categories of crypto-asset service providers are included in the scope of EU AML/CFT rules. The proposed reform will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers. Today’s amendments will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will allow for prevention and detection of their possible use for money laundering or terrorism financing. In addition, anonymous crypto asset wallets will be prohibited, fully applying EU AML/CFT rules to the crypto sector.”

The intent of the initiative was further established in a section on a proposed €10,000 limit on “large cash payments.”

“Limiting large cash payments makes it harder for criminals to launder dirty money. In addition, providing anonymous crypto-asset wallets will be prohibited, just as anonymous bank accounts are already prohibited by EU AML/CFT rules,” the release stated.

However, possible technical solutions to ease the burden of this process have yet to be fully realized. The draft legislation makes note of this, stating that “some European Union VASP representatives27 claimed that the absence of a standardised global, open source and free, technical solution for the travel rule could lead to the exclusion of small actors from the crypto-assets market, with only important players being able to afford compliance with the rules.”

© 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.

Circle revealed on Tuesday that the majority of the stablecoin USDC’s reserves are held in cash or cash equivalents.

As per a breakdown of USDC reserves in an attestation report from mid-July, 61% of USDC is backed by cash and cash equivalents. The attestation report notes that “[c]ash includes deposits at banks and Government Obligation Money Market Funds. Cash Equivalents are defined as securities with an original maturity less than or equal to 90 days in accordance with generally accepted accounting principles (US GAAP).”

Thirteen percent of the reserves are in the form of Yankee CDs and a further 12% is in the form of US Treasuries. Commercial paper and corporate bonds comprise 9% and 5% of the reserve’s allocations, respectively.

The attestation report was prepared by Grant Thornton.

In a blog post, Circle CEO Jeremy Allaire said that the new attestation is part of the firm’s goal to become more transparent ahead of its previously reported SPAC to go public. 

“As we continue our journey to becoming a public company, we will have increasing opportunities for greater transparency, accountability and disclosure around our broader business and operations,” Allaire said. “Altogether, this expanding public accountability can help to strengthen trust in Circle, USDC and companies building on the standards and market infrastructure that we have been delivering over the past several 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.

Asset manager Viridi Funds has launched its first product: an exchange-traded fund (ETF) focused on the crypto mining sector.

Dubbed the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF, the fund will invest in publicly traded crypto mining and infrastructure companies that are environmentally focused. The ETF is listed on the New York Stock Exchange’s (NYSE’s) Arca platform with the ticker symbol RIGZ and has an expense ratio of 0.90%.

When asked how specifically the fund will select crypto mining companies focused on clean energy, Viridi Funds CEO Wes Fulford told The Block that the firm has an internal proprietory screening algorithm that will help select companies based on their current and planned energy source.

Besides that screening, Viridi will analyze companies from the financial metrics perspective, said Fulford, who is a former CEO of crypto mining company Bitfarms, which is listed on the Toronto Stock Exchange’s (TSX’s) Venture Exchange and recently received approvals to trade on Nasdaq.

Notably, Bitfarms is the second-largest holding of the RIGZ ETF, with nearly 10% of the fund’s net assets in the stock, according to its website. Other top holdings of the fund include Marathon Digital Holdings, Hut 8 Mining, Samsung Electronics, Nvidia, AMD, and others.

“We’re trying to be a pure-play crypto infrastructure offering” by investing in companies associated with the entire spectrum of crypto mining, said Fulford. The ETF will also likely have indirect exposure to bitcoin and other cryptocurrencies as publicly listed mining companies often have these digital assets on their balance sheets, said Viridi.

The RIGZ ETF was filed in mid-April when bitcoin was trading at around $64,000. The world’s largest cryptocurrency is currently trading below $30,000.

When asked if the launch timing of the ETF concerns you, Fulford said: “I’d rather be buying at these levels than I would be back in February and March, just given how inflated some of the equities were at that point. It’s a better ground zero or entry-level for a new fund to be deploying capital into the sector.”

Indeed, several crypto mining stocks were trading at higher levels and even outperformed bitcoin’s gains earlier this year, according to The Block’s Data Dashboard. Since then, stock prices, as well as bitcoin’s price, have dropped sharply.

Viridi Funds is backed by several investors, including CoinShares, Alameda Ventures, Luxor Technology, Fundamental Labs, and Mechanism Capital. Fulford declined to share how much the firm has raised from these investors.

Looking at the future, Viridi plans to launch more “thematic products” focused on the crypto ecosystem, said Fulford.

© 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.