This week, Senators took both stablecoins and DeFi to task during a Banking Committee meeting.
Senator and Committee Chair Sherrod Brown started the hearing with prepared remarks, saying, “Cryptocurrencies’ advocates argue that crypto assets are superior to real dollars because they are decentralized and transparent. But stablecoins are neither.” He added, “Stablecoins make it easier than ever to risk real dollars on cryptocurrencies that are at best volatile, and at worst outright fraudulent.”
Senator Elizabeth Warren also chimed in, expounding upon the dangers of stablecoins and DeFi, saying, “Stablecoins pose risks to consumers & to our economy. They’re propping up one of the shadiest parts of the crypto world, DeFi, where consumers are least protected from getting scammed,” She went on to say, “[DeFi] is where the regulation is effectively absent and—no surprise—it’s where the scammers and the cheats and the swindlers mix among part-time investors and first-time crypto traders.”
Not every voice in the room was negative. Senator Pat Toomey took the side of DeFi, citing cross-border payments, programmability, and efficiency as different ways that stablecoins improve upon fiat money. Toomey also emphasized that regulation should not stifle innovation and called for regulators to have the “humility to recognize that many of our views about how financial services are delivered and how investments work are quickly becoming outdated.”
Tuesday’s Senate hearing comes less than a week after the House Financial Services Committee hosted CEOs from six digital asset firms in a meeting deemed positive by FTX CEO Sam Bankman-Fried. It also comes shortly after the President’s Working Group released a report on stablecoins which advised regulators to restrict stablecoin issuers to insured banks.
On Wednesday, the Federal Open Market Committee began its two-day summit to discuss US monetary policy. During day one, Federal Reserve officials acknowledged the threat of inflation, which is currently at a 39-year high, in the wake of Covid-19 induced stimulus packages. “Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation,” the FOMC explained.
However, according to Fed Chair Jerome Powell, “The economy no longer needs increasing amounts of policy support.” With that in mind, the Fed announced that it is looking to cut down on stimulus spending and will taper monthly bond purchases twice as quickly as planned – reducing purchases by $30 billion per month to zero by early 2022. For context, the Fed had originally intended to decrease stimulus spending by $15 billion per month.
On Wednesday, after the FOMC’s statement, crypto prices jumped, with the entire crypto market surging from a low of $2.03 trillion that morning to a high of $2.27 trillion by afternoon.
Token holders of Aave, the fourth-largest DeFi protocol by total value locked, voted to make the code for the upcoming Aave V3 release restricted by a business license. “This vote is essentially a signal on whether or not the Aave community wants to protect its Intellectual Property from unauthorized use, or simply allow anyone to use the code in any way they prefer,” explained the proposal that was passed by a slim majority of 55%.
A business license restricting the use of code in DeFi was first introduced by Uniswap, which most likely instituted such a practice due to being forked and vampire attacked by SushiSwap during 2020’s DeFi summer.
The proposed Aave V3 business license would be similar to Uniswap’s in that it would restrict the usage of code for an initial amount of time – which would most likely be one year. During that time, Aave governance would keep the rights to authorize code forks for projects and teams who have a track record of collaborating with Aave in the past.
The proposal didn’t pass with overwhelming support. Forty-four percent of Aave’s community voted for V3 to be released under an MIT license, which grants, without limitation, the rights to use, copy, modify, merge, publish, distribute, sublicense, and/or sell copies of the code for free.
Cinneamhain Ventures’s Adam Cochran believes that DeFi protocols close-sourcing some of the code is a slippery slope that could lead to crypto applications running into the same issues they are trying to solve. Wrote Cochran:
NYDIG, a New York-based Bitcoin firm, announced a $1 billion funding round at a valuation of more than $7 billion. According to Dove Metrics, this is tied as the largest funding round of 2021 in the crypto space. The capital from the raise will be used to further develop its BTC infrastructure capabilities, including Lightning payments. WestCap led the round, joining existing investors like Affirm, FIS, Fiserv, MassMutual, Morgan Stanley, and New York Life.
On Wednesday, Anchorage, a crypto-focused bank, announced a $350 million raise at a valuation of over $3 billion in a Series D funding round. Anchorage, which launched in 2017 as primarily a custodian for digital assets, has since grown into a full-service bank. KKR, a private equity firm with $459 million in assets under management, led the investment through a technology fund – its first direct equity investment in a crypto firm. Also included in the round are Goldman Sachs, BlackRock, PayPal Ventures, Andreessen Horowitz, and Alameda Research.
On Thursday, The Block reported that Dune Analytics, a crypto analytics company, is raising money at a valuation of $1 billion. The Block says that Dune’s raise would make for 39 crypto Unicorns minted in 2021.
On Thursday, the e-commerce platform Shopify announced the beta release of an NFT marketplace, where businesses can “mint and sell” branded NFTs with Shopify and Shopify payments from their own storefront. The website notes that NFTs will be available on Ethereum, Polygon, Near, and Flow, with customers being able to claim NFTs via email.
RTFKT Studios, an NFT fashion company, has been acquired by Nike. Created in January 2020, the metaverse-native RTFKT is known for creating NFTs of virtual sneakers and other collectibles.
This is not Nike’s first foray into digital goods. Nike has shown interest in tokenized fashion since 2019 – when it filed for a patent regarding “Cryptokicks.” In 2021, Nike has actively pursued virtual fashion, filing for patents on “Nike” and “Just Do It,” along with the Air Jordan, Jumpman, and swoosh logos.
For that reason, Benoit Pagotto, a co-founder of RTFKT, is super excited about the acquisition. “Nike is the only brand in the world that shares the deep passion we all have for innovation, creativity, and community, and we’re excited to grow our brand which was fully formed in the metaverse,” concluded Pagotto.
Notably, the acquisition comes on the heels of a series of metaverse partnerships from Adidas, a Nike competitor.
This week, US Treasury Secretary Janet Yellen received a letter from six Senators asking her to clarify how the Treasury Department will interpret the “broker” definition for crypto tax reporting in the recently passed Infrastructure Investment and Jobs Act.
In the letter, Senators Rob Portman, Mark Warner, Mike Crapo, Kyrsten Sinema, Pat Toomey, and Cynthia Lummis noted that the vague definition of “broker” could pose significant issues for crypto actors and asked Yellen and the Treasury Department to honor the intent of the bill, which they felt was cemented during a conversation between Senators Portman and Warner on the floor of the Senate earlier this year. At that time, they specified the term would only cover brokers who enable the transfer of digital assets, while entities “ancillary” to the process would not be considered brokers.
The senators “urge” the Department of Treasury to provide “information or informal guidance” within the current calendar year. The move from the bipartisan group comes after multiple failed attempts at changing the language in the bill during its time in the Senate.
On Wednesday, Katie Haun, a general partner at Andreessen Horowitz and GP of a16z Crypto, announced her intention to leave a16z to start her own crypto fund focused on crypto and web3 early next year.
The Information reports that Andreessen Horowitz will be an “anchor limited partner” in her new fund and make a large capital commitment upfront, but at least one other institution has made a larger commitment. Additionally, a16z founders Marc Andreessen and Ben Horowitz, and Chris Dixon, her partner GP of a16z Crypto, are all personally investing in her fund.
As the firm’s first female general partner, Haun was hired with the launch of a16z’s first crypto fund in 2018. In the past year alone, she has helped ink 45 deals. The Information reported that she will be the sole GP of her new fund and intends to hire as many as 20 people, with at least six founding team members being women, which is notable in the male-dominated industry. Recently, Haun has been hosting dinners for celebrities, crypto community members, lawmakers and policy makers, drawing together people who intersect with crypto from everything from the NFT to regulatory angles and are all, in various ways, necessary to crypto’s success.
Haun sits on the boards of OpenSea and Coinbase. Before joining a16z in 2018, Haun served at the Department of Justice for over a decade. A16z Crypto will now be helmed by Dixon, Arianna Simpson, Anthony Albanese and Ali Yahya.
According to data from CoinGecko, Dogecoin was at $.15 at 4:00 am ET on December 14th. By 6 am ET, the price of $DOGE had jumped to $.21 – an increase of 40% in roughly two hours.
Why? Because Elon, of course.
At 5:34 am ET on the 14th, the Tesla CEO tweeted:
Now, what does this mean? It means that DOGE holders can order anything from a Tesla Umbrella to a Tesla belt buckle on Tesla’s website – though, after perusing the shop, Dogecoin purchases do not seem to be live yet.
Shrina Kurani is running for a House seat in California and is dropping 2,022 NFTs on Solana representing potential Web3 policies. In a conversation with CoinDesk, Kurani said there is a ton of “misunderstanding” surrounding crypto, and specifically points to tax and accounting rules as areas that can be addressed with new legislation.
South Park did a bit on crypto that pokes hilarious fun at crypto and all its memes, drama and jargon.
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