Fintech
Weekly Blockchain Blog – May 2024 #2 | Baker Hostetler
Crypto and Web3 Companies Announce Fintech Integrations
A major US fintech company recently announced a product integration with MoonPay, a Web3 infrastructure company, “enabling MoonPay users in the US to seamlessly purchase cryptocurrency” using their account at the fintech company. According to a press release, the integration allows MoonPay users to fund cryptocurrency purchases using their account balance at the fintech company, direct bank withdrawals, or debit cards, “all without manually entering the necessary information.”
In another product integration, cryptocurrency exchange CEX.IO announced the launch of a crypto debit card backed by the payment network of a major financial services company. According to a press release, the CEX.IO card “allows users to seamlessly spend their crypto assets on everyday purchases” and “shop with millions of merchants… in over 150 countries.”
In one latest noteworthy article, a major US fintech company recently released its Bitcoin Blueprint for Corporate Balance Sheets. The document provides an overview of the “strategy for company-owned bitcoins held for investment purposes… including… historical purchase execution, storage mechanisms, and insurance and accounting considerations.”
For further information please refer to the following links:
Data released on stablecoin usage, financial industry pilot explores tokenization
From Joanna F. Wasick
Data platform Allium Labs, together with a major US payments company, recently launched an “Onchain Analytics Dashboard” that “shows how fiat-backed stablecoins move across public blockchains globally.” According to the Onchain Analytics Dashboard website, the dashboard “can be accessible to anyone to better understand how fiat-backed stablecoins are moving across blockchain networks globally and demonstrate the volumes and participants involved in the process.” According to a report, data presented in the dashboard indicates that less than 10% of stablecoin transaction volumes come from real people. Of approximately $2.2 trillion in total transactions in April, only $149 billion came from “organic payments activity,” the report said. The report said its analysis removed transactions made by bots and large-scale traders to “isolate those made by real people.” The report also notes that the stablecoin market supply is currently valued at approximately $150 billion, with tether (USDT) and USD Coin (USDC) dominating the market with shares of 75% and 22% respectively.
Last week, members of the US regulated financial industry announced a Regulated Settlement Network proof-of-concept (PoC) that will explore the feasibility of shared ledger technology to settle tokenized commercial bank money, the central bank money of all wholesale, US Treasuries and other tokenized securities. resources. According to a press release, the PoC reflects a collaborative effort by a diverse group of banks and other regulated financial industry participants to gain further consensus on the use of shared ledger technology in the U.S. financial system. A PoC project manager said: “This exploration of shared ledger technology is an important initiative to explore innovations that work with digital forms of USD cash and securities, as market participants continue to innovate to support capital markets efficient and resilient”.
For further information please refer to the following links:
Crypto VC fund publishes token launch guide
A major US venture capital firm recently published a series of blog posts providing guidance on the launch of blockchain network tokens. The guide seeks to address issues such as “[l]launch tokens with productive use cases, tied to products and services that people can use” and “establish the point at which a project is reasonably positioned to overcome the legal, commercial and operational challenges that come with launching a token.”
The first post in the series addresses how to develop product-market fit, an actionable plan for decentralization, compelling symbolic economic models, a solid organizational structure, and operational readiness. The second post discusses how to address the risks of launching tokens, including legal, commercial, and operational risks. The third post addresses operational guidelines for launching tokens, including coordinating with custodians, conducting security audits, allocating and distributing tokens, ensuring blocks are enforced, and enabling staking and governance.
The fourth and final post sets out and discusses the following “five rules for token launching”: (1) “Never publicly sell tokens in the United States for fundraising purposes”; (2) “Making decentralization the North Star”; (3) “Communication is everything. Govern yourself accordingly”; (4) “Attention to secondary market prices and liquidity”; and (5) “Always ensure that token holds apply for at least one year after token launch.” In related news, according to recent reports, in April, venture capital funding in the cryptocurrency market and Web3 surpassed $1 billion for the second consecutive month this year.
For further information please refer to the following links:
Cryptocurrency Trading Platform Receives SEC Wells Notice and Responds
From Isabella Sterling
According to a press release from a major financial services company, the company has received a Wells Notice from the U.S. Securities and Exchange Commission (SEC) regarding cryptocurrencies traded on its platform. The SEC issues Wells Notices to inform a company that it is the subject of an investigation and that the SEC may take enforcement action against the company. In the press release, the company’s chief legal officer (CLO) said: “We strongly believe that the assets listed on our platform are not securities and we look forward to working with the SEC to clarify how weak any case against [the company] would be.” According to reports, the CLO expressed disappointment that the SEC would issue a Wells Notice after the company made a good faith attempt to register with the SEC as a limited-purpose broker-dealer. Based on reports, the company has not listed some tokens and has not provided some products that the SEC deems to be securities.
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Actions against cryptocurrencies announced by the DOJ, the Australian Tax Office
The United States Department of Justice (DOJ) recently issued two press releases announcing enforcement actions related to cryptocurrencies. A press release announced that a Russian citizen, Alexander Vinnik, pleaded guilty “to conspiracy to commit money laundering related to his role in running the BTC-e cryptocurrency exchange from 2011 to 2017.” According to the press release, “From its inception around 2011 until its shutdown by law enforcement around July 2017 at the same time as Vinnik’s arrest, BTC-e processed over $9 billion worth of transactions and has served over one million users worldwide.” , including numerous customers in the United States.”
Another Department of Justice press release announced that the former CEO, CFO, and CCO of Cred LLC were charged with “conspiracy to commit wire fraud and related crimes in connection with their respective roles in an alleged scheme to defraud customers and investors in Cred , LLC (Cred) allegedly causing losses of client cryptocurrency assets with a market value that may have exceeded $780 million.” According to the press release, “Cred, a San Francisco-based financial services company specializing in cryptocurrency investments, filed for Chapter 11 bankruptcy on November 7, 2020.”
In foreign law enforcement news, the Australian Tax Office (ATO) is seeking cryptocurrency exchange account details in a bid to identify cryptocurrency traders who have failed to report earnings on transactions, according to reports. The ATO is reportedly seeking details of up to 1.2 million cryptocurrency exchange accounts.
For further information please refer to the following links:
Senators’ letter to Biden administration warns against Iranian cryptocurrency mining
From Christopher Agnello
A recently released letter from Senators Elizabeth Warren and Angus S. King Jr. urged the Biden administration to increase its efforts to combat cryptocurrency mining in Iran. According to the letter, cryptocurrency mining is allowing Iran to circumvent US and international sanctions and is potentially linked to “$165 million in crypto transactions over the past three years that may be linked to Hamas.” The letter states that “Iran has raised millions of dollars through cryptocurrency mining,” allowing it to fund terrorist organizations. The letter cites estimates that Iranian bitcoin mining may have produced as much as $1 billion in revenue in 2021, allowing Iran to monetize energy resources the country may have been unable to export due to sanctions . The letter also states that Iran uses cryptocurrency to launder funds. According to the letter, Iran’s largest cryptocurrency exchange, Nobitex, “provides guidance on its website on how to avoid sanctions” and most of “Iranian cryptocurrency transactions worth $8 billion over a four-year period ” have passed through the exchange during that time period.
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