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| Hey Insider! Welcome back to the Inside Cryptocurrency newsletter! Today’s issue covers several of the biggest stories from the crypto market, including Brazil’s public consultation plans for crypto regulations, the 76% decline in venture funding to Web3 startups, Nasdaq’s abandoned plans to offer a crypto custody service, and more. Enjoy your reading! Doğa
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| 1 | | A U.S. District Court has accepted a petition from the U.S. state of Nevada's financial regulator, the Nevada Financial Institutions Division (NFID), to put the troubled crypto custodian Prime Trust into receivership. As part of the ruling, the Bank of Nevada's former CEO, John Guedry, has been appointed as the receiver. More: - Guedry will take over the day-to-day operations of Prime Trust and determine the best option to protect clients.
- The receiver will not be able to spend more than $500,000 without a court order.
- The move followed the allegations that the company used customer funds to buy cryptocurrency and cover lost deposits after losing access to digital wallets containing tens of millions of dollars.
- The NFID's petition pointed out that the firm used customer money to satisfy withdrawals from December 2021 to March 2022.
- In June, the NFID also issued a cease-and-desist order against Prime Trust after reviewing the company's solvency to prevent it from accepting funds from existing and new customers.
- Prime Trust currently owes its customers $85M in fiat currencies and $69.5M in crypto, as opposed to $3M in fiat and $68.6M in crypto on hand.
Zoom Out: - Prime Trust held funds in dollars and crypto on behalf of its customers, including FTX, Binance.US, and Celsius Network.
- The regulatory tension around the firm came shortly after digital asset trust company BitGo terminated its acquisition deal with Prime Trust.
- The two firms initially reached an agreement after Prime Trust faced financial difficulties due to its exposure to the bankrupt crypto lender Celsius.
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| 2 | | 
What the numbers say: Venture capital (VC) funding to Web3 startups declined by 76% in Q2 compared to the same period last year. Web3 startups raised just over $1.8B in 322 deals during the second three-month period of 2023. The figure also represents a 51% drop in the number of deals. The latest decrease means that Web3-focused startups experienced a decline in funding for five consecutive quarters. Relevance: The plummet in the Web3 fundings was mainly triggered by the increased number of investors gravitating to AI and more traditional sectors following a prolonged winter in the crypto industry. However, despite a five-quarter drop, several VC firms have managed to raise promising funds over the last few weeks to invest in crypto and Web3 startups. Most recently, crypto-focused VC firm Polychain Capital announced that it secured $200M in funding. Web3 investment firm CoinFund similarly raised $158M in its latest fundraising round to invest in early-stage startups working on the intersection of crypto and AI. The firm initially planned to raise $125M in funding, but the round saw more interest than expected. Brands that should care: On the other hand, Q2 saw only three fundraising rounds securing more than $100M as opposed to 15 rounds in Q2 2022. The firms, which have managed to raise over $100M, were Switzerland-based crypto project Islamic Coin, Vancouver-based messaging protocol LayerZero Labs, and Worldcoin developer Tools For Humanity, with funds of $200M, $120M, and $115M, respectively. | | | |
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| 3 | | Nasdaq, the U.S.-based financial services giant operating three stock exchanges, has abandoned its plans to offer crypto custody service, citing the regulatory environment in the U.S. and a shift in the business. The announcement was made by Nasdaq CEO Adena Friedman during the company's earnings call. More: - The decision came nearly four months after Nasdaq set Q2 as the deadline for the launch of the service.
- At the time, the company said it was working on necessary technical infrastructure and regulatory approvals.
- The financial services giant also submitted an application for a limited-purpose trust company charter to the New York Department of Financial Services (NYDFS), which would supervise the custody business.
- The firm stated that it would continue to support the crypto industry in several other ways, including partnerships with potential exchange-traded fund (ETF) issuers.
- The latest move was considered a hit for the institutional adoption of crypto in the U.S.
Zoom Out: - Some rivals of Nasdaq, such as BNY Mellon and Fidelity, already started offering custody services for digital assets.
- Over the last several months, U.S. regulators have increased their crackdown on the firms operating in the crypto industry, including Coinbase, Kraken, Bittrex, and Binance.
- Most recently, the U.S. Securities and Exchange Commission (SEC) filed two consecutive lawsuits against Binance, the largest crypto exchange by trading volume, and Coinbase, the largest U.S. crypto exchange.
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| 4 | | Third largest French bank Société Générale's (SocGen) blockchain unit, Société Générale Forge, has become the first company to obtain a digital asset service provider license in France under the country's new crypto regulations. The approval was granted by France's market regulator, Autorité des Marchés Financiers (AMF). More: - The license will allow the unit to offer digital asset services to institutional clients.
- The permit covers many crypto-related services like crypto custody, the purchase and sale of digital assets using legal tender, and digital asset transactions through other digital assets.
- The company needed to pass through more complex checks than the registration process to obtain a digital asset service provider license.
- The registration with the local regulators in France only requires the crypto firms to comply with the country's anti-money laundering rules.
Zoom Out: - Over the last several months, France has become an attraction point for many crypto firms, mainly due to President Emmanuel Macron's crypto-friendly approach embracing the industry.
- Several crypto-related companies, including Circle, OKX, Binance, and Crypto.com, have already picked France's capital Paris as their European hub.
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| 5 | | The Central Bank of Brazil has announced that it will launch a public consultation on crypto regulations by the end of the year. The bank said it aims to collect suggestions and feedback from experts and the public before implementing the final rules. More: - The companies already operating in the Brazilian crypto market will have a minimum of six months to comply with the upcoming regulations.
- Measures in the legislation will aim to reduce potential risks from decentralized systems and protect investors from exposure to digital assets without the necessary disclosure.
- The move came a month after President Luiz Inácio Lula da Silva signed new legislation into law, specifying jurisdictions on crypto to provide clarity within the Brazilian digital asset industry.
- The designation authorized the central bank to determine rules to be followed by virtual asset service providers, including the licensing requirements to operate in the country.
- The country's securities commission, the Comissão de Valores Mobiliários (CVM), was also authorized to keep virtual assets qualified as securities under control.
Zoom Out: - Brazil is considered the crypto hub of South America as one of the largest markets in the region.
- The country's central bank is also currently piloting a central bank digital currency (CBDC), or the digital real, with 14 project participants, including several giant firms such as Visa and Microsoft.
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| 6 | | The Pharrell Williams-backed NFT brand Doodles has partnered with Camp, a shop-and-play company providing exclusive experiences for families, to launch a new immersive experience and real-world play area in Chicago. The location will open its doors to families and kids on Aug. 19, and the prices of entry tickets will start at $28. More: - The 3,500-square-foot pop-up retail experience will host activities based on Doodle NFTs on the Ethereum blockchain.
- During the one-hour experience, the visitors will be able to customize their own Doodle character, play games, create crafts, explore locations inspired by the project, and journey through exclusive areas like the Lost Caves and Cosmic Clouds.
- The location's 2,000-square-foot retail space, Canteen, will include toys, clothing, accessories, a slime creation station, a performance space for live events, and party rooms for children's birthdays.
- The attendees will also be able to purchase the Camp and Doodles co-branded products, including hoodies, t-shirts, and backpacks.
- Doodles NFT holders will be able to attend the location's opening event and visit the area with up to five friends or family members when it opens.
- The partnership between Doodles and Camp will see the pair moving the real-world experience to other Camp locations after Chicago in the upcoming months.
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- The Australian Securities and Investments Commission (ASIC), the Aussie securities regulator, has canceled the license of the bankrupt crypto exchange FTX's local arm, FTX Australia.
- U.S. presidential candidate Robert F. Kennedy Jr. (RFK Jr.) has pledged to back the U.S. dollar (USD) with Bitcoin (BTC) if he is elected in 2024 to help restabilize the American economy.
- U.S. Congressman Ritchie Torres has written a letter to the U.S. Securities and Exchange Commission (SEC), urging Chair Gary Gensler to halt the agency's crackdown on the crypto industry.
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INSIDE CRYPTOCURRENCY LEADERBOARD (30 DAYS) |
 | Staff Writer | | Doga is a tech and science editor who has been writing news for nearly 10 years. She worked for leading tech platforms and mainstrem media channels as an editor and presenter throughout his career. Then, she carried her know-how to more than one platform. She is a part-time cat lover and binge-watcher, and also fond of science, space, and emerging tech. She always has a story to tell. She is a bit addict to the laughter and -unfortunately- the '90s culture. | | This newsletter was edited by Aaron Crutchfield | |
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