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A bill that would put a three-year moratorium on cryptocurrency mining in New York has died in the lower house of the U.S. state’s legislature.

A staffer for the bill’s author, Assemblywoman Anna Kelles, confirmed to The Block that the bill had met its end, saying “the roadblock was the unions.” 

Specifically, the International Brotherhood of Electrical Workers wrote a memorandum of opposition (embedded in this report) saying that the bill unfairly “targets the use of a specific technology.”

The union further wrote: “The bill fails to take into account the valid benefits of the technology behind the industry.”

Regarding their position on labor, the staffer said “we don’t think this industry will bring in many long-term jobs, more short-term work for electricians setting up the plants.'”

Kelles’ effort to put a pause on mining operations within New York come as bitcoin miners are moving into old power plants in the state’s more rural north. Many of these coal-fired plants had previously gone offline for most of the year due to advancing environmental regulation. As she told The Block last month:

“The thing that’s frustrating is that not only are they coming in and buying up old peaker plants that are the least efficient of all of the technologies. They are turning them on — where they previously might have run two days out of the year — they are now running 365 days of the year, 24/7.”

It seems that the assembly did not agree with Kelles’ assessment of the problem, or at least did not view it as significant enough to freeze a specific and growing industry.  

But not so fast — two companion bills in the State Senate live on, with the Senate version of the moratorium passing on June 8. While the original bill would block all crypto mining operations, it was, however, recently amended to be friendlier to greener mining. Instead of all miners, the amended version would stop permits going to any: 

“Electric generating facility that utilizes a carbon-based fuel and that provides, in whole or in part, behind-the-meter electric energy consumed or utilized by a facility that uses proof-of-work authentication methods to validate blockchain transactions.”

While this new bill can’t pass into law without going through the Assembly, Kelles plans on accomplishing just that. In a statement to The Block, she said:

“We will work to pass this legislation in the 2022 session, but need to make sure our climate goals are not compromised by rampant energy usage from currency mining in the short term.”

The issue is especially timely as mining operations are setting up shop in the United States for the first time, where they must work to cope with developing regulatory expectations. In particular, this includes environmental concerns over the bitcoin network’s energy use.

IBEW MIO- A.7389B-S.6486B by MichaelPatrickMcSweeney

© 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

• Layer 1 blockchains often have large war chests from token sales and are capable of raising large funding rounds to compete with Ethereum, the de facto smart contract platform today.
• Still, catching up with existing tooling is difficult. The key infrastructure pieces being block explorers, wallets, developer tools, as well as existing (tested) smart contract code.
• Layer 1s are capable of attracting users via token incentives, but differentiation is getting smaller as Rollups improve Ethereum’s scalability.

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The world is finally catching on to what we’ve known for years—that digital assets will play an important role in the future of financial markets. The speed, transparency, and security benefits of digital assets are undeniable, which have led to explosive growth in markets that have only been around for about a decade. Yet we are just starting to realize the potential and application of digital assets.

As familiarity with digital assets grows, many market, policy, and regulatory questions surrounding their use remain unanswered. Globally, policymakers and regulators are taking notice of the size and prominence of digital assets and formulating plans toward solutions that balance consumer protection with continued innovation.

Now is the time to convene leading institutional market participants with key regulators, legislators, and thought leaders so we can grapple with some of the biggest questions facing the industry.

The Association for Digital Asset Markets (ADAM) and Eventus Systems are doing just that—collaborating on a two-day virtual conference this month to bring together digital asset thought leaders. ADAM is a private, nonprofit association of firms that operate in the digital asset marketplace. The association is a standards-setting body, and all of its members agree to abide by a Code of Conduct, which promotes integrity, fairness, and efficiency in digital asset markets. Eventus is a leading global provider of trade surveillance, transaction monitoring solutions, and market risk for digital asset exchanges, along with other asset classes.

Shining a Light on Digital Asset Markets 2021 will feature discussions on the structure of digital asset markets and the evolution of markets from traditional to digital. Market infrastructure will also be in focus—with panels exploring custody, trading, and other issues. Experts will delve into considerations for the buy-side, and other key voices will discuss the potential for a bitcoin ETF.

The conference will feature leading regulators from the Securities and Exchange Commission and the Commodity Futures Trading Commission, as well as foreign governments to offer perspectives on the different and evolving regulatory approaches domestically and globally. Surveillance remains a critically important discussion— as digital asset markets work to ensure the integrity and safety of their markets as they increasingly attract institutional market participants – and co-host Eventus will discuss best practices and elicit feedback from others in this space on what priorities should be for market participants. Lastly, we will host a discussion on SROs and new crypto legislation and oversight developing on Capitol Hill.

With confirmed speakers including MicroStrategy CEO Michael Saylor, Grayscale CEO Michael Sonnenshein, SEC Commissioner Hester Peirce, CFTC Commissioner Dawn Stump, and other thought leaders, individuals in this space should tune into the discussions, which begin at 10AM ET on June 22 and June 23. For a complete list of confirmed speakers and to register to join the conference, click here.

The world of digital assets is here to stay—and will only grow in prominence. Better understand the rapidly evolving landscape from the very players shaping it by attending the Shining a Light on Digital Asset Markets virtual conference.

Michelle Bond is CEO of the Association for Digital Asset Markets (ADAM). Travis Schwab is CEO of Eventus.   

© 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.

InstaDApp, a startup aiming to build what it calls the “middleware” layer for the decentralized finance (DeFi) space, has raised $10 million in new funding.

The $10 million round, which involved the sale of tokens, was led by Standard Crypto. The pool of investors included the DeFi Alliance, Longhash Ventures, along with developer and Yearn founder Andre Cronje. The funding news comes more than a year and a half after InstaDApp raised a $2.4 million seed round from a group that included Coinbase Ventures, Naval Ravikant and Pantera Capital.

In an email, co-founder Sowmay Jain told The Block that the funding will be used to “complete our transition into the middleware layer for DeFi and support the ecosystem project building on top of Instadapp Protocol.” InstaDApp is also gearing up for the launch of its in-house governance token, INST, which was detailed in an April blog post. 

“At launch, the core team will be handing over the management of the protocol to the DAO. We believe it is crucial that we allow the community to self-govern, and the team will focus on building essential extensions and growing the protocol ecosystem,” the team said at the time.” 

The team told The Block that it is aiming for the end of June to launch the governance token.

InstaDApp effectively serves as a portal layer between users and various DeFi protocols, allowing those users to interact with different elements of the ecosystem through the startup’s non-custodial platform. Its expanded protocol plans include features such as layer-2 integrations.

The Block’s Mika Honkasalo recently penned an overview of the growing ecosystem of protocols built on protocols in the DeFi space. 

© 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.

Alex Gladstein, chief strategy officer for the Human Rights Foundation, is excited about the implications of El Salvador’s adoption of Bitcoin.

Last week, Nayib Bukele, president of El Salvador, sparked shockwaves across the bitcoin community with his Miami conference announcement of a proposed bill to declare bitcoin as legal tender in the country and mandate its acceptance as a means of payment. Earlier this week, the bill was formally introduced and then signed into law. 

During a new episode of The Scoop, Gladstein explained what’s happening in El Salvador and the ramifications from a domestic and international human rights perspective. Gladstein pointed out that it’s significant that El Salvador opted for bitcoin versus building a digital currency the government could have more control over. 

“I just wanted to take pains to try to draw the distinction between the domestic human rights situation and that sort of more geopolitical situation with a dollar kind of hegemony and the great powers thing here. I mean, look, they could have gone with China, they could have gone with a digital Yuan, or something like that. I am so happy that they’re going with bitcoin. I mean they could have chosen a coin that they controlled and could surveil and confiscate. And you’ve got to realize how shocking this is, because that is the direction that governments are going in”

Gladstein also unpacked what the move means for bitcoin’s role as a form of money. While major Wall Street firms have invested in bitcoin over the last year in part for its use case as digital gold — an inflation hedge — Gladstein says that bitcoin’s role as a quick, borderless payments vehicle is becoming increasingly important. Developments like El Salvador making bitcoin legal tender and advancements in the build-out of Lightning, a bitcoin scaling project, are fueling that shift, according to Gladstein. 

“Most people don’t think bitcoin is money, but what if it was actually turning into money? What would that look like? What would that seem like?… And that’s literally what we’re watching unfold,” he said during the interview, noting:

“[Bitcoin] has these remarkable properties that allow it to enable connections between people in different places in the world. So I guess my argument is that we’re kind of entering this next narrative phase of Bitcoin, what we perceive it to be, and it being enacted or adopted by a country not as an asset necessarily on the central bank balance sheet, but as legal tender.”

As for what this means for the people of El Salvador, specifically, Gladstein said that it will help bank many unbanked citizens. 

“70 percent of the country doesn’t have a bank account, but more than 50 percent of the country has Internet access. So there is a significant overlap there of people whose lives are being changed as a result of this.”

© 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 rare CryptoPunk has sold for a record-breaking $11.8 million in an auction hosted by popular auction house, Sotheby’s. 

The non-fungible token (NFT) was sold to Shalom Meckenzie, the largest shareholder in daily fantasy and sports-betting company DraftKings. The CryptoPunk was part of a collection of NFTs from pseudonymous collector Sillytuna, who will donate a portion of their proceeds to programs that support the CryptoPunk community as well as COVID relief organizations around the world. 

What are CryptoPunks?

CryptoPunks are widely considered to be the first NFTs ever released on the Ethereum blockchain. NFTs, or non-fungible tokens, are unique, non-interchangeable assets stored on a digital ledger, and represent items like images, video, audio and other digital files. 

In 2017, software company Larva Labs released a collection of 10,000 unique, 24×24 8-bit-style pixel characters. Proof of ownership for each collectible is recorded in code on the Ethereum blockchain. Each character comes with different characteristics, accessories and traits. They vary in rarity, and somewhat accordingly, value. 

A range of CryptoPunks. Image: Larva Labs

This particular CryptoPunk, Alien #7523, is one of nine rare “Alien” tokens. It is the only one in the Alien collection with a mask, and also has an earring and a knitted cap, which are all rare traits. 

Most expensive CryptoPunk sale to date

This isn’t the first time a major auction house has sold a character from the original collection of CryptoPunks. In May, a collection of nine CryptoPunks sold for nearly $17 million in a sale hosted by Christie’s. However, this is the most expensive single CryptoPunk sale to date. 

The auction was a part of Sotheby’s “Natively Digital: A Curated NFT Sale,” where a total of 28 works were auctioned off. According to a press release from the auction house, the sale helped break 14 more artist records and received bids from over 1,300 prospective buyers. But that wasn’t the only unconventional thing about the sale. 

To showcase all the work featured, Sotheby’s partnered with Samsung to create a global exhibition that spanned multiple cities, including its first-ever virtual gallery in the metaverse via Decentraland. Decentraland is an Ethereum-based blockchain platform with a virtual world where users can own the stuff they build and acquire. All ownership is kept track of via transactions on Ethereum.

The virtual gallery, a digital replica of Sotheby’s New Bond Street galleries in London, was located in the Voltaire Art District. The gallery featured five ground-level gallery spaces as well as a digital figure of Sotheby’s London Commissionaire Hans Lomulder, who stood at the entrance to greet buyers. 

A digital version of London Commissionaire Hans Lomulder. Image: Sotheby’s

Although the number of weekly NFT transactions has experienced a decline in recent weeks, auctions and funding rounds involving the digital collectibles continue to take place. 

Popular blockchain company Animoca Brands has partnered with the International Olympic Committee to launch a collection of Olympic-themed NFTs. Data privacy-focused blockchain startup Snickerdoodle Labs has raised $2.3 million to build a platform that uses NFT technology to protect user privacy and data. And, most recently, last week, Binance handpicked 100 artists to spearhead the launch of its NFT marketplace. 

© 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.

India’s Directorate of Enforcement — a law enforcement agency responsible for fighting financial crime in the country — has alleged that local crypto exchange WazirX violated the Foreign Exchange Management Act (FEMA) rules.

The Directorate of Enforcement, known as ED in India, announced Tuesday that it has issued a show cause notice to WazirX “for alleged contravention of Sec 3(a) of Foreign Exchange Management Act, 1999, (FEMA) for transactions involving crypto-currencies worth an amount of INR 2790,74,17,699.” In US dollar terms, that’s around $382 million.

The agency issues show cause notices when it thinks that a company has been party to misconduct. The company is then required to submit its reply to a disciplinary authority as to why action should not be initiated against it.

ED says it has issued a show cause notice to Zanmai Labs Pvt Ltd (a registered entity of WazirX), as well as WazirX co-founder and CEO Nischal Shetty and its co-founder Sameer Hanuman Mhatre.

Shetty told The Block that “WazirX is yet to receive any show cause notice from the Enforcement Directorate.”

How the exchange came on the agency’s radar

For the past several months, ED has been investigating a case of Chinese betting apps in India, where some Chinese nationals have been accused of carrying out illegal online betting and collecting over Rs 1,300 crore (nearly $178 million).

During this investigation, the agency found that WazirX was used to exchange around Rs 57 Crore ($8 million) of proceeds from the criminal activity. The money was swapped from INR to tether (USDT) before being sent on to crypto exchange Binance (which also owns WazirX).

“Hence, a FEMA investigation was initiated and summons were issued under FEMA 1999 to Wazirx Directors and the top traders on this platform,” said ED.

ED highlights ‘glaring problems’

ED says that there are “glaring problems” as to how WazirX is operating. The exchange does not have adequate anti-money laundering (AML) and combating of financing of terrorism (CFT) processes, according to the agency.

“This leaves WazirX in clear violation of the basic mandatory AML/CFT precaution norms and FEMA guidelines which are also applicable to Virtual Currency exchanges,” said ED. It added that cryptocurrencies have value and are being used to make payments, so they count as “money” for the purposes of FEMA.

Shetty told The Block that WazirX “is in compliance with all applicable laws” and is “able to trace all users on our platform with official identity information.”

“Should we receive a formal communication or notice from the ED, we’ll fully cooperate in the investigation,” said Shetty.

Just a first step

The show cause notice “is just the beginning of proceedings,” a lawyer on the condition of anonymity told The Block. “It is not that wrongdoing has been found. It is not a finding of guilt or a finding of penalty,” they said.

As a next step, ED says it would then conduct adjudication proceedings. Adjudication is a legal process by which a judge reviews evidence and argumentation, including legal reasoning by opposing parties to come to a decision. These proceedings would take time and could go on for “at least a year,” the lawyer told The Block.

In the meantime, it is not clear whether WazirX would be able to run its business as usual. The lawyer told The Block that an adjudicating officer “could pass any interim order or seek any attachments” that could affect WazirX.

The news comes at a time when India is reportedly looking to ban the usage of cryptocurrencies. The Reserve Bank of India (RBI), the country’s central bank, continues to have “major concerns” about crypto even after clarifying to banks that they can’t caution their customers against dealing in crypto, citing an old 2018 RBI circular, which was overturned by the Supreme Court of India last year.

But at the same time, the RBI has told banks that they will have to carry out customer due diligence processes in line with regulations, including KYC, AML, CFT, and FEMA.

As The Block has reported previously, India’s crypto fate depends on the country’s government. The government is likely to discuss a crypto bill in the near future, but its contents remain unknown. Meanwhile, crypto is neither legal nor illegal in India.

© 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

• Founded in 2017, Wintermute Trading is a London-based market maker and proprietary trading firm within the digital asset sector
• During the first quarter of 2021, the firm completed a $20 Series B to assist with expansion into Asia and helping with the launch of its derivatives and request for quote (RFQ) business lines
• In total, the firm has invested in at least 20 startups and protocols across seven verticals, which The Block has mapped out below

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Quick Take

• The Block has spoken to more than half a dozen sources close to Howard’s crypto operations.
• The former fund manager has made at least nine investments in crypto-related businesses.
• Elwood, set up by Howard in 2018 as an asset manager, is pivoting to become a software business focused on crypto liquidity.

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British billionaire fund manager Alan Howard has led a $25 million investment in the London-based crypto custodian Copper.

The raise is an extension of Copper’s $50 million Series B raise, led by venture capital firms Dawn Capital and Target Global, which closed in May.

Howard, who set up and, until 2019, was CEO of the hedge fund Brevan Howard, has made a spate of investments in the crypto sector in 2021. His investments include British crypto payments app Bottlepay, Cologne-based neobroker Nextmarkets, recently launched crypto exchange Bullish Global and Komainu, the Jersey-regulated crypto custodian backed by Nomura.

“I am delighted to have the opportunity to support Copper. Their pioneering technology, particularly in the security and speed of cryptocurrency transactions, is essential for the traditional world to offer crypto products to their clients,” Howard said in a statement.

The additional funding will aid Copper in its efforts to help traditional financial institutions adopt crypto and distributed ledger technology (DLT), the company said in a press release.

Dmitry Tokarev, Copper’s CEO, said that big banks and custodians expanding into the crypto sector still face significant barriers, “particularly around the speed and security of trading.”

Copper’s signature product, ClearLoop, is a system that connects cryptocurrency exchanges together in a secure trading loop to enable instant, offline settlement of trades.

© 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.