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| Hey Insider! Happy Friday, and welcome back to the Inside Cryptocurrency newsletter! The week has closed with a sudden price decrease in the leading cryptocurrency, Bitcoin (BTC), which caused strong market volatility. Today's issue covers the potential reasons behind this tumble and some of the other biggest stories in the industry, including Mastercard's new central bank digital currency (CBDC) partner program, OpenSea's decision to lift a tool enforcing NFT creator royalty fees, Coinbase's suspension for Tether (USDT) trading in Canada, and more. Enjoy your reading, and if you find this newsletter useful, please share it with your friends and colleagues! Doğa
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| 1 | | U.S. Judge Robert Pitman has denied a motion seeking summary judgment in a case regarding the controversial coin mixing service Tornado Cash. The motion argued that the U.S. Treasury Department exceeded its authority while sanctioning the service. More: - Tornado Cash made it harder to trace the digital asset transactions.
- Last year, the Treasury Department's Office of Foreign Assets Control (OFAC) accused the service of laundering more than $7B of crypto assets since its launch in 2019.
- As part of its allegations, the agency blocked crypto wallets associated with Tornado Cash and smart contracts to eliminate financial transactions benefiting foreign terrorists.
- In response, the plaintiffs in the lawsuit funded by the U.S. crypto exchange Coinbase claimed that the OFAC's actions entrapped U.S. citizens conducting legitimate commerce through a privacy-focus service by following laws.
- However, Judge Pitman said the office was right in its determinations.
- Coinbase's chief legal officer, Paul Grewal, stated that they would seek an appeal to the decision.
Zoom Out: - Earlier in 2023, blockchain analysis firm Chainalysis revealed that North Korean hacker groups stole nearly $2B of the total crypto assets stolen last year, using mostly Tornado Cash to launder the funds.
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What the numbers say: Bitcoin (BTC), the largest cryptocurrency by market cap, recently retreated to two-month lows in price, with more than an 8% decrease. The popular cryptocurrency's value fell to as much as $25,409, down from the $27,600 level within an hour. Before the sudden drop, the token's price stayed flat at around $28,000 level. With the latest decline, the token saw the $25,000 level for the first time since mid-June, though it later experienced a slight recovery. The price decrease also caused Bitcoin's market cap to retreat under $500B for the first time in two months. Still, the leading cryptocurrency is 60% above the levels it saw at the beginning of the year. Relevance: The sudden price drop in Bitcoin was mainly attributed to more than $1B of positions liquidated in the centralized crypto exchanges (CEX) over the last 24-hour period. The tumble also followed a recent report from The Wall Street Journal claiming that Elon Musk-led SpaceX sold off its Bitcoin holdings after reporting $373M of BTC for the previous two calendar years. The move was predicted to steer the market since Musk and his companies have long played a key role in the crypto industry and traditionally caused ups and downs in leading tokens' prices. However, SpaceX neither denied nor confirmed the news since it first broke. Brands that should care: Elon Musk's electric vehicle (EV) company, Tesla, also sold off 75% of its Bitcoin holdings for $936M in Q2 last year, more than a year after it first invested in the leading cryptocurrency. At the time, the firm cited concerns about its cash flow and the uncertainty related to the crypto market while explaining the move. | | | |
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| 3 | | Popular NFT marketplace OpenSea has announced that it would stop enforcing NFT creator royalty fees for traders on secondary sales. As part of the decision, the platform will lift its royalty enforcement tool, Operator Filter, which allows creators to prevent their collections from being sold on rival platforms where the royalty fees are optional. More: - The feature will be disabled on OpenSea as of Aug. 31, eliminating the option to require buyers to pay a royalty fee for creators listing new projects on the platform.
- However, the fees will be enforced until Feb. 29, 2024, for the collections already using the tool and the existing collections on blockchains other than Ethereum.
- OpenSea founder and CEO Devin Finzer said the tool could not succeed as much as they expected and failed to take the needed support from the NFT ecosystem.
- The move will see the NFT royalty fees becoming fully optional on OpenSea.
- Buyers will still be able to continue to contribute to the NFT artist with tips through the preferred creator fees indicated by artists themselves.
Zoom Out: - NFT royalties refer to the payments made to the original creator of an NFT for every secondary sale of the digital collectible.
- Royalty fees usually account for a certain percentage of the sales amount, typically 2.5% to 10%.
- NFT royalty payments have long been a source of tension between marketplaces and creators as the leading trading platforms, such as OpenSea and Blur, adopted policies that make higher creator payouts optional for the collectors.
Q: Do you think the creator royalty fees should be mandatory for buyers on secondary sales in the NFT market? Share your thoughts with us in the comments box. | | | |
| 4 | | The U.K.-based credit card payment processor Checkout.com has announced that it cut ties with Binance, the largest crypto exchange by trading volume, as of Aug. 17. The company cited increased regulatory actions against Binance and inquiries from its partners while explaining the decision. More: - Binance said it disagrees with Checkout.com's reasons and is considering a legal response.
- A Binance spokesperson also stated that the termination of its relationship with Checkout.com would have no impact on its services.
- The two companies first entered into a partnership in 2020.
- Checkout.com's infrastructure allowed Binance to process billions of dollars of funds through the 3-D Secure system that protects customer data and is mandatory under European laws.
- The termination of the partnership came several days after Binance shut down its fiat-to-crypto payment platform Binance Connect, previously known as Bifinity, which allowed merchants to accept payments in crypto.
- Binance Connect was operated in collaboration with Checkout.com and Paysafe.
- In June, Paysafe Payment Solutions, Binance's European banking partner, also announced that it would halt supporting the crypto exchange as of Sept. 25.
Zoom Out: - Checkout.com's and Paysafe's moves came amid a time when Binance faced increased scrutiny by regulators worldwide, including the U.S., Australia, France, and Belgium.
- The platform also recently had to withdraw from several markets in the West, including Canada, Austria, the Netherlands, Cyprus, the U.K., and Germany, mainly due to compliance issues.
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| 5 | | Coinbase, the largest U.S. crypto exchange, has announced that it would suspend trading for Tether (USDT), Dai (DAI), and RAI Reflex Index (RAI) stablecoins in Canada as of Aug. 31. The move came several days after the company officially started its operations in the country. More: - In an email notice, the platform said it regularly monitors the assets on the exchange to ensure that they meet its listing standards, and it decided to suspend trading in these tokens based on its most recent reviews.
- Canadian users will be able to continue to deposit and withdraw USDT, DAI, and RAI after the Aug. 31 deadline.
- Coinbase's decision was mainly attributed to a notice published by the Canadian Securities Administrators (CSA) in February.
- The notice requires crypto exchanges to sign legally-binding commitments while waiting to be registered with the regulatory body, confronting them with the risk of potential enforcement action if they do not comply with the new rules.
- The rules include a new stablecoin regulation that bans crypto exchanges from allowing users to buy or deposit stablecoins, which it classifies as a security, in the country without obtaining prior approval from the CSA after passing the due diligence checks, alongside several other tough requirements.
- The Ontario Securities Commission (OSC) also banned USDT in 2021 without explaining any reason.
Zoom Out: - Earlier this year, rival crypto exchange Crypto.com similarly had to delist USDT for Canadian users.
- Due to the new regulatory framework, some crypto companies, including Bybit, Binance, OKX, Deribit, Blockchain.com, dYdX, and Paxos, decided to withdraw from the Canadian market.
- Coinbase was one of the crypto exchanges that signed the pre-registration undertaking with the Canadian regulators to continue operating in the country along with Kraken.
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| 6 | | The payment processing giant Mastercard has launched a central bank digital currency (CBDC) partnership program with seven prominent blockchain and payment services providers. Initial partners of the program include Ripple, Consensys, Fireblocks, and Fluency. More: - The new CBDC program will help central banks understand how to develop a CBDC that adds something new and valuable to the traditional economy.
- Mastercard's head of digital assets and blockchain, Raj Dhamodharan, also said the program is designed to boost collaboration with key players in the CBDC space.
- In addition, the project aims to create a greater understanding of the benefits and limitations of CBDCs.
- The program partners already have their own projects regarding the digital currency space and collaborations with central banks.
- Mastercard has yet to disclose its specific plans for the partner group.
Zoom Out: - Mastercard has accelerated its plans toward the crypto industry over the last years, partnering with many crypto-related firms, including Bitso, Gemini, and Binance, to make crypto mainstream.
- In September 2020, the company also launched a testing program for central banks to work on CBDC systems.
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| 7 | | Quick Hits: - The AWS Cookbook — packed with practical insights and hands-on examples — is a must-have for your cloud toolkit.*
- NFT marketplace Magic Eden has launched a $1M fund to support creators building NFTs on the Polygon blockchain.
- U.S. Judge Analisa Torres has approved a request from the U.S. Securities and Exchange Commission (SEC) to appeal to her ruling that payment protocol Ripple's native token, XRP, is not a security when sold to the general public.
- The Federal Reserve (Fed), the U.S. central banking system, has ordered Farmington State Bank to halt its operations, accusing the bank of secretly engaging in stablecoin activities without notifying supervisors or gaining approval.
- IPOs are a rare chance to invest in VC-backed startups, but this AI company opened its round to retail investors. Invest and learn more about Jurny.*
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Term of the Day Hypergrowth: Hypergrowth is a phase of rapid expansion where companies scale at a compound annual growth rate (CAGR) of 40% or greater for more than a year. Question of the Week Do you share details about your salary with your coworkers? Join the conversation |
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 | 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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