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The subject of cryptocurrency was once again on display during a June 30 hearing of a subcommittee of the House Financial Services Committee.

Evocatively entitled “America on ‘FIRE’: Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?” the hearing focused on risks to retail investors who enter the crypto market on a quest for “Financial Independence, Retire Early.”

The legacy of the financial crisis

The emphasis on retail traders brought up numerous comparisons to the financial crisis of 2007-2008, during which subprime debt and “exotic products” undermined huge portions of the financial system.

“I do have some consternation, and my consternation emanates from 2008,” said subcommittee chair Al Green (D-TX) during his closing remarks. He spoke passionately about a $700 billion bailout package he voted against in 2008 at the encouragement of constituents who were later outraged at the same vote. “I learned an important lesson. Do what you think is in the best interest of your constituents, even if they disagree.”

The hearing took place before the subcommittee on Oversight and Investigations. Generally, this is not where any branch of the financial industry wants to end up. The Oversight and Investigations Subcommittee is where the Financial Services Committee sends issues that have become especially problematic.

Outcome for the industry

Sources close to the matter were sounding the alarm on this hearing weeks in advance. The optimal situation for an industry facing the subcommittee is to come away with no new bills targeting it. Will that happen?

Following the hearing, Green told The Block “I hope regulators will see this as an opportunity to prevent a catastrophe.” He was clear that he wanted existing regulators to step up to the challenge:

“It may take some encouragement from Congress to do certain things. And that’s what we are here for. To encourage and if we perceive our encouragement as being ineffective, then we can also legislate that from time to time. Believe it or not, we actually get things past the House and the Senate and signed by the president occasionally.”

The day before the hearing, Representative Tom Emmer (R-MN) told The Block of his team’s strategy: “We’re going to try to identify how, even though the laws aren’t perfect, the laws already exist in the securities area in the commodity area. I think they already exist to protect investors.”

Emmer is a long-time crypto advocate. Today’s hearing was his first as ranking member of the Oversight and Investigations subcommittee.

At least one witness was in his corner. “We don’t need new regulations,” said Coin Center’s Peter Van Valkenburgh in his opening testimony.

In one exchange, Anthony Gonzalez (R-OH) contradicted the comparison with the 2008 bailouts. He referenced notable spikes and drops in Bitcoin price over its history, asking Van Valkenburgh, “At any point, did the government have to step in to prop up crypto markets?”

Van Valkenburgh answered that “cryptocurrency by definition is unbacked. Some people think that’s unwise, but something that’s unbacked doesn’t have promises associated with it. Something that doesn’t have promises associated with it doesn’t need to be bailed up.”

Suggested changes to regulations

Other witnesses had fewer laissez-faire positions but varied greatly. Sarah Hammer, of UPenn’s Wharton School, pushed for the Financial Stability Oversight Board to take charge of crypto markets. Reed Smith’s Christine Parker pushed for the Commodity Futures Trading Commission to roll crypto spot markets into the sort of regulatory regime that, with traditional commodities, is reserved for derivatives.

“Bitcoin is a novel application — as an intangible digital commodity — of these laws that have existed for a hundred years,” she said. 

Maxine Waters (D-CA), who chairs the full committee, joined today’s hearing to call out risks that crypto adoption by hedge funds posed. Alexis Goldstein, who is marking her first day at the Open Markets Institute, agreed with Waters’ concerns, telling her “There’s no formalized way for regulators to know how much hedge funds are [invested] in crypto.”

Outright criticism

Less focused on retail trading or the financial system, Rashida Tlaib (D-MI) echoed recent attacks on proof-of-work blockchains over their energy use.

Even less interested in retail usage, and certainly more inflammatory, were remarks from chronic crypto antagonist Brad Sherman (D-CA), who advocated for investors to put money into the California lottery rather than Bitcoin and argued that Dogecoin was likely to overtake Ethereum. 

© 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.

U.S.-based bitcoin mining firm TeraWulf, which recently announced its plans to go public via a reverse merger, has ordered 30,000 new mining machines from Bitmain.

Bitmain announced the news on Tuesday, saying that the order is for Antminer S19j Pro machines, the latest generation miner. The order cost is estimated at nearly $100 million, according to The Block’s calculations. One Antminer S19j Pro is priced at about $3,000 for future orders versus a spot order price of around $7,000.

Bitmain said it would deliver the 30,000 machines to TeraWulf from January to June 2022. When fully deployed, these machines are expected to increase TeraWulf’s total hashrate by three exahashes per second (EH/s) — around 3% of bitcoin’s hashrate. The firm’s current hashrate is unknown, but it appears to have lofty goals.

Last week, TeraWulf announced a reverse merger plan with Nasdaq-listed imaging technology company IKONICS Corporation to go public in the U.S. At the time, the firm said it would order 60,000 mining machines and expects to have 50 megawatts (MW) of power capacity online this year. By 2025, the firm said it expects to have 800 MW of deployed mining capacity and over 23 EH/s of hashrate.

TeraWulf also claims to be an environmental, social, and corporate governance (ESG)-focused bitcoin mining firm and says it will use over 90% zero-carbon energy for its operations. The firm says it has a target of utilizing 100% zero-carbon energy in the future.

© 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.

Social media platform Twitter has put 140 NFTs up for auction today, featuring seven different designs. The NFTs are being sold on popular NFT marketplace Rarible. 

NFTs, or non-fungible tokens, are blockchain-based tokens that represent anything from audio to video files. In this case, the NFTs are all short GIFs related to Twitter in various ways, including playful animations and characters interacting with some aspect of the platform’s brand.

One NFT called Furry Twitter shows a furry three-dimensional version of Twitter’s logo. Another is called Reply Guy, representing someone who always comes up with the same reply. First Born features Twitter CEO Jack Dorsey’s first ever tweet.

Vitamin T features a number of personalized vitamins. Image: Twitter.

Current bids range from 0.12 wETH (a wrapped version of ether that has the same price), worth $255 up to 1 wETH ($2,130).

According to Twitter’s terms, which are governed by California state law, the owner of the NFT is allowed to display the artwork for their own personal, non-commercial purposes. But beyond that, Twitter retains the right and title to the artwork.

NFT owners cannot use the tokens in connection with any product or service that is not a part of Twitter, or in any way that will tarnish its brand. If NFT owners violate the terms set forth by the social media platform, they will be required to pay a fee of $100.

Twitter joins an ever-growing list of brands, celebrities and companies that are minting tokens and auctioning them off. Last week, musician and entrepreneur Jay-Z set up his first NFT sale at auction house Sotheby’s — and put a CryptoPunk NFT as his Twitter profile picture.

Earlier this week, Twitter and Square CEO Jack Dorsey said music streaming service Tidal (which Square acquired earlier this year) is also interested in exploring NFTs as a way to compensate artists.

Rarible enjoys the NFT boom

Rarible experienced a significant increase in trading activity in tandem with the NFT boom that took place earlier this year. In fact, the platform recently announced it had raised $14.2 million in funding in a Series A, part of which it plans to use to launch a marketplace on the Flow blockchain. 

However, the platform has also encountered its fair share of issues with sales. In November 2020, The Block reported on claims from some Rarible users that verified artists with large followings on the platform were engaging in wash trading — artificially inflating their buying and selling activity to make profit.

Despite this, the platform remains one of the most popular marketplaces in the NFT space.

Image courtesy of Rarible and Twitter

© 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.

Payments giant Visa has expanded its in-house crypto team with five key hires and moves, according to Visa’s head of crypto Cuy Sheffield on Twitter.

This month, the firm brought in two new team members. These included Catherine Carle, who will focus on crypto social impact and community partnerships. She joins the firm from the University of St. Thomas in Minnesota where she worked in healthcare innovation and entrepreneurship. Prior to that, she worked at Monitor Deloitte, a strategy consulting firm that was acquired by Deloitte in 2013.

Visa also added Chike Ukaegbu, founder of New York-based tech accelerator Startup52, which focuses on backing firms that have strong diversity profiles. He will be the team’s head of crypto strategy for emerging markets. Previously, Ukaegbu ran for president in Nigeria where he “spearheaded the leanest and first fully digital presidential campaign in Africa,” according to his LinkedIn profile.

“I’m incredibly grateful to work with such an amazing team and have the opportunity to leverage the power of Visa to help advance the adoption and utility of Bitcoin, stablecoins, NFTs, DeFi, and public blockchain networks,” tweeted Sheffield.

Shifting talent to the crypto team

The payments company has also brought in three employees from the rest of the company to take on key roles in its crypto team.

First, Anuj Bathla, former senior director focused on product commercialization and go to market (GTM), has become the global crypto GTM lead. Bathla will work for AJ Shanley’s global crypto business development team, which connects with crypto exchanges and companies to help them issue Visa cards. Based in California, he has worked at the company for nine years.

Second, product manager Daniel Mottice will shift over from Visa Direct to take ownership of its crypto products. According to his LinkedIn, he will lead “the expansion of Visa’s digital currency settlement capabilities.” This will focus on using stablecoins for cross-border payments.

Third, Alex Chiang, who joined Visa as an associate in its graduate development program four years ago, will be part of its product team. He will focus on growing the adoption of NFTs in e-commerce, according to Sheffield, as well as helping Visa’s clients to leverage decentralized finance (DeFi) protocols.

Visa plans to expand its crypto team even further. Sheffield highlighted that the company has job openings for product management, business development and engineering roles.

Visa’s crypto plans

To date, Visa has provided some insight into its plans for the cryptocurrency space. Such plans revolve around performing similar services for crypto as Visa does for fiat payments — namely enabling companies and consumers to access crypto and move it around. 

While crypto’s nature makes it possible for consumers to “be their own bank” by custodying their own assets and making direct transactions, the relatively complex nature of doing so provides opportunities for the firm to perform that work instead. 

Visa has sought to make it easy for consumers to swap crypto to fiat through its range of crypto debit cards. The firm claims to be working with more than 25 digital currency wallets, enabling their users to spend crypto (kind of) at its 61 million merchants around the world.

It’s also stepping into the settlement game, having started experimenting with using the USD Coin (USDC) stablecoin to accept payments from its partner Crypto.com, a crypto exchange and crypto debit card provider. According to Fortune, this is a major change on the infrastructure side for Visa that will mean crypto wallet firms will no longer need to swap their funds into fiat money to send to the company.

Beyond this, Visa plans to expand support for more digital currencies in the future. But instead of backing cryptocurrencies like bitcoin, ether, it will be focusing on the two types of fiat-related currencies, namely stablecoins and central bank digital currencies

© 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.

In a speech given on his last day as chief economist of the Bank of England — after working for over 30 years at the central bank — Andrew Haldane spent a considerable amount of time ruminating over the possible consequences of Central Bank Digital Currencies (CBDCs).

In a speech published June 30, Haldane said that a widely used digital currency could change the structural properties of banking on a fundamental level.

“It could result in something akin to narrow banking, with safe, payments-based activities segregated from banks’ riskier credit-provision activities. In other words, the traditional model of banking familiar for over 800 years could be disrupted,” he said.

The Bank of England — like many of the world’s central banks — is currently exploring the possibility of launching a so-called “Britcoin,” a digital version of the pound sterling. It has been hiring CBDC experts since late April.

But the Bank has repeatedly stressed that a final decision on whether to proceed with the project remains some way off, and that both the risks and benefits of such a currency should be weighed carefully.

Battle of the banks

This is not the first time commercial banks have been put on notice. The momentum behind CBDCs globally has given rise to fears that the typical bank model of using short-term deposits to fund long-term investments — “maturity transformation” — could be put at risk.

The Federal Reserve Bank of Philadelphia warned of exactly that in a paper published June 2020. The argument goes that central banks have a clear competitive advantage over commercial banks during times of stress, and so would hoover up deposits.

In November last year, the Bank of England’s deputy governor Sir John Cunliffe warned that it is not its job to “protect bank business models.”

But in his farewell speech, Haldane said that any such disruption to commercial banking may come with a silver lining.

“Specifically, this could lead to a closer alignment of risk for those institutions, new and old, offering these services – narrow banking for payments (money backed by safe assets) and limited purpose banking for lending (risky assets backed by risky liabilities),” said Haldane.  

“This radically different topology, while not costless, would reduce at source the fragilities in the banking model that have been causing financial crises for over 800 years. Given the costs of those crises – large and rising – this is a benefit that needs to be weighed,” he added.

© 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 asset manager Valkyrie Investments, which recently applied for a bitcoin exchange-traded fund (ETF), has raised $10 million in a Series A funding round.

There was no lead investor in the round, said Valkyrie, but it was backed by several venture funds and angel investors, including Precept Capital Management, 10X Capital, UTXO Management, Tron founder Justin Sun and Litecoin founder Charlie Lee.

With fresh capital at hand, Nashville, Tennessee-based Valkyrie plans to expand its team, build out a presence in Asia, and strengthen its product and distribution lines, CEO Leah Wald told The Block. Valkyrie’s current headcount is 14 and it is looking to hire staff in research, trading, compliance, marketing, and sales functions, said Wald.

As for expanding its product line, Wald said Valkyrie plans to launch more digital asset trust products and ETFs, as well as a handful of specialized hedge fund strategies. The firm currently offers bitcoin and polkadot trusts. Its products could be compared to Grayscale, the world’s largest crypto asset manager, which has over $31 billion worth of total assets under management (AUM).

Valkyrie’s AUM, however, hasn’t been disclosed. The firm declined to comment on it when contacted but said “there have been significant inflows.” When asked what Valkyrie’s competitive edge is, Wald said the firm’s team has over 40 years of combined experience in traditional asset management from firms like UBS and Guggenheim Partners.

Valkyrie applied for a bitcoin ETF in April, but the U.S. Securities and Exchange Commission (SEC) postponed a decision on the fund to August. According to Wald, the SEC is “mainly concerned about market manipulation and the reliability of pricing/volume data.”

Currently, there are a total of eight bitcoin ETF applications under the SEC’s review and the regulator is yet to approve one. Asked if the SEC would approve a bitcoin ETF sometime this year, Wald said she would hesitate to put any timeline on the regulator’s willingness to approve any investment vehicles.

The Series A brings Valkyrie’s total funding to date to $12.2 million.  The firm has previously raised $1.1 million in a seed funding round and $1 million from XBTO in strategic funding, said Wald.

© 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.

Bitcoin mining company Blockware Mining has raised $25 million to grow its U.S. operations in a second funding round. The firm has now raised $32 million in total.

Launched in 2019, Blockware Mining set up its main base of operations in Paducah, Kentucky. The company is building a 30-megawatt facility in the area, which it hopes will expand to 100 megawatts in the future.

The company currently possesses 300 PH/s of mining power but expects to use the new funding to acquire more hardware and reach 1 EH/s by mid-2022. To put this in perspective, that would equate to about 1% of bitcoin’s current global hash rate.

“The scarcity of rigs creates a significant barrier to entry for companies looking to enter this business and we have allocated significant resources to making more deals and funding our rapid growth,” Blockware Mining CEO Michael Stoltzner said in a press statement.

The great hash rate migration

The firm appears to be taking full advantage of the current global bitcoin mining situation.

China’s crackdown on bitcoin mining — which has caused many miners to shut down or start moving out of the country — has significantly reduced its contribution to bitcoin’s hash rate. Because China was so dominant in this area, this has led to a 50% drop in bitcoin’s hash rate.

While bitcoin’s price drop over the last month or so has made bitcoin mining less profitable, the drop in hash rate has countered that by making it significantly easier to mine. This means there is room on the table for existing miners to expand their businesses.

This presents opportunities for countries around the world.

The U.S., which already has a strong bitcoin mining scene, appears to be taking full advantage, with many mining firms growing their operations. It may also stand to benefit El Salvador, which is planning on using geothermal energy generated from a volcano to mine bitcoin.

“Currently, only an estimated 10% of the hash rate worldwide is generated in the U.S.,” said Stoltzner. “By providing low hosting rates, Blockware Mining will create better worldwide distribution of the Bitcoin network while making the hash rate in the U.S. more globally competitive.”

But the opportunity may not last for so long. Rather than simply shut down, miners in China are moving out of the country to other low-cost jurisdictions. Chief among them is Kazakhstan — the fourth largest bitcoin mining country in the world — which offers cheap electricity and is located not far from China.

© 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.

U.K.-based bitcoin mining firm Argo Blockchain has taken a $20 million loan to build out its facility in Texas, U.S.

The loan is from crypto financial services firm Galaxy Digital and is backed by part of Argo’s bitcoin holdings, meaning the firm won’t have to sell its bitcoin for the Texas expansion. The loan period is for six months. Argo didn’t disclose other terms of the financing.

Argo announced the Texas facility earlier this year, saying it will have a power capacity of 200 megawatts (MW). At the time, the firm said it would raise $17.5 million by issuing new shares and also take a $100 million “pre-negotiated” loan for the Texas facility. Argo currently has three mining facilities in Canada with a total capacity of 35 MW, where it mines bitcoin and privacy-oriented cryptocurrency Zcash, according to its website.

Argo is listed on the London Stock Exchange and currently has a market capitalization of nearly $700 million. The firm’s stock, like most other crypto mining stocks, has outperformed bitcoin, according to The Block’s Data Dashboard. Argo stock’s price has surged nearly 925% since its listing in August 2018, while bitcoin’s price has increased almost 385% during the same period.

© 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.

Enterprise payments company NCR Corporation has reportedly struck a deal with investment services firm NYDIG that will enable 650 U.S. banks and credit unions to offer bitcoin purchases to millions of customers. 

According to a Forbes report published Wednesday, the partnership will provide an estimated 24 million customers the ability to trade the cryptocurrency on mobile applications developed by their payments providers.

NYDIG, which has $6 billion of assets under custody, is a subsidiary of the $11 billion asset management firm Stone Ridge.

The financial institutions that have opted into the deal do not have to actually hold bitcoin for their customers. Rather, they can use NYDIG’s custody services to offer their customers the ability to access the cryptocurrency. In addition to providing custody services, NYDIG will charge cryptocurrency transaction fees and provide additional investment services.

NYDIG’s growing network

NYDIG has announced several business deals in recent weeks, which are mostly geared toward enabling traditional financial institutions to access cryptocurrency. The firm has already announced collaborations with FIS, Fiserv, Q2 and Alkami, all of which are financial service providers and work with numerous local banks and credit unions. 

“The breadth of these partnerships shows both the speed and scale with which the banking industry is changing, and the ubiquity and ease of access to Bitcoin that we are driving with our partners,” Patrick Sells, head of bank solutions at NYDIG, told The Block earlier this week.

NYDIG’s partnership with Fiserv, a payments solutions provider that reaches 40% of all financial institutions, will even enable banks to introduce bitcoin rewards programs.

© 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 Chinese capital city of Beijing has extended the testing of China’s central bank digital currency, dubbed the e-CNY, to its railway system.

The municipal government of Beijing said in an announcement Wednesday that users who have activated the standalone digital yuan mobile app via the Industrial and Commercial Bank of China (ICBC) are now able to pay with the e-CNY across all subways lines in the city.

The Beijing subway system consists of 24 lines and 428 stations and provides travel for over 10 million people per day on average.

Beijing has so far conducted two e-CNY lottery campaigns by giving away 50 million digital yuan to 250,000 lottery winners, who were able to download and activate the standalone e-CNY mobile app.

Even though the test periods for the lottery campaigns have concluded, users can still top up their e-CNY mobile wallets to pay wherever the e-CNY is supported.

Yitongxing is another mobile app dedicated to paying for subway tickets in Beijing but it can also be used for e-CNY payments. To do this, the user has to activate the sub-wallet feature inside the e-CNY app, and then they will find the e-CNY payment option inside their Yitongxing app.

The test roll-out in Beijing comes just a day after the Suzhou government announced that the e-CNY can also be used in the latest line in the Suzhou subway system.

It’s Beijing’s latest effort in widening the usage of the country’s central bank digital currency. Earlier this month, the ICBC enabled its 3,000 automated telling machines in Beijing with a feature that can convert the e-CNY to cash, and vice versa. 

© 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.