White Star Capital Digital Asset Fund - newsletter #38
Continued strengthening of ecosystem fundamentals
Crypto web traffic hit an all-time high, CBDC developments, and bitcoin’s recognition as legal tender in LatAm
With summer in full swing, we see no signs of the digital asset ecosystem slowing down despite market volatility. There have been a plethora of new funding announcements along with increased signs of enterprise and government adoption from the likes of Standard Chartered, Sotheby’s, Square, the EU, and China.
What is equally as exciting is the web traffic and activity we are seeing on crypto exchanges with web traffic hitting a record high of 638.2m visits in May, pointing to continued adoption of cryptoassets!
Traffic to crypto exchanges grew 20.4% in May compared to April's figure. May’s 638.2m in crypto exchange traffic drew 108m more hits than the last all-time high, which occurred in January 2018: 531.7m hits. The crypto exchange receiving the most visits in May was Binance with 39.4% of the traffic, followed by Coinbase with 19.1%.
Further to the all-time high in web activity, decentralized finance (DeFi) protocols built on Ethereum produced all-time high revenues in May, with $370m in revenues, with $154m coming from Uniswap alone.
Strong fundamentals amid rocky (market) waters!
🔦 Portfolio Spotlight
Interview: Ledn aims to bolster crypto industry with $30m Series A funding
Mauricio Di Bartolomeo, Co-founder & CSO of Ledn, discusses lending in a volatile crypto market, the future of regulation of digital assets in North America, and where Ledn plans to spend more time post their most recent funding round.
A creator currency for the creator economy: an interview with Rally’s Bremner Morris
Forbes featured a Q&A with Rally’s Bremner Morris regarding crypto’s role in evolving the creator economy.
Alethea AI and artist Robert Alice launch Sotheby’s auction of the ‘first intelligent NFT’
The move is groundbreaking, as Alethea AI has created a virtual being named Alice using AI technology. She can have rich conversations with people, based on the personality that Robert Alice made. And they used NFT technology, which is based on the transparent and secure blockchain digital ledger, to ensure that she is a one-of-a-kind creation.
🏦 Enterprises & Institutions
Standard Chartered to launch institutional crypto brokerage and exchange in Europe
British banking giant Standard Chartered plans to launch an institutional crypto brokerage and exchange for the U.K. and European clients. To that end, Standard Chartered's innovation and ventures unit SC Ventures has partnered with BC Group, the parent company of the Hong Kong-regulated crypto exchange OSL.
Sotheby’s opens virtual replica of its London galleries in Decentraland
Sotheby’s, the 277-year-old British auction house, is launching a digital replica of its London New Bond Street Galleries in the metaverse using the platform Decentraland.
Sotheby is claiming its stake in the metaverse with the launch of its very own virtual gallery. The auction house has chosen the social platform Decentraland as its destination for artists, collectors, and viewers to engage. The virtual gallery is located in Decentraland’s Voltaire Art District and can be found using map coordinates 52,83.
Guggenheim creating listed ESG-friendly crypto fund
Guggenheim Investments filed for a new fund called the Guggenheim Active Allocation Fund which may actively seek out investment in the digital assets space according to SEC filings. Filings show that the fund “may seek investment exposure to cryptocurrency” via cash-settled derivatives such as what’s traded on the Chicago Mercantile Exchange (CME) and Cboe Global Markets. The filings also noted that the fund may invest in publicly traded securities, other investment funds that hold crypto, as well as income securities both in the US and emerging markets.
Animoca Brands subsidiary to launch a collection of Olympics-themed NFTs
The International Olympic Committee is partnering with nWay, a subsidiary of Animoca Brands, to launch a collection of Olympic-themed NFTs. The tokenized physical badges celebrate posters, mascots, and more from the Games’ 125-year history and will be available for sale starting June 17.
Square is considering developing a bitcoin hardware wallet
Twitter CEO Jack Dorsey tweeted Friday that his other company, the payments firm Square, is considering making a hardware wallet for bitcoin, adding that bitcoin is for everyone, and it is important for his team to build an inclusive product that brings a non-custodial solution to the global market. Dorsey said there are plans to integrate the wallet with Square's Cash App.
Square partners with Blockstream to build a solar-powered Bitcoin mine in the US
Digital payment firm Square has partnered with Bitcoin technology startup Blockstream to launch a 100% solar-powered Bitcoin mine in the United States. The new initiative is a part of Square's pledge to be carbon neutral in its Bitcoin activity by 2030.
Amazon looks to hire blockchain staffers with experience in DeFi
The blockchain product lead is part of Amazon Managed Blockchain, which recently added support for Ethereum. Amazon Managed Blockchain started out as Amazon’s version of an enterprise blockchain cloud offering.
MicroStrategy boosts note offering to $500m as it seeks to buy yet more bitcoin
The company originally planned to offer $400m in senior secured notes.
Our overall takeaway
Institutional adoption truly spans the gamut from traditional financial institutions to trillion-dollar behemoths like Amazon.
⚖️ Government & Regulation
European Union to reveal plans for digital wallet
The European Union (EU) is set to announce plans for a digital wallet to store payment details and identity credentials among other information. The plans follow requests from member states to offer a secure way for citizens to access public services.
China launches new copyright protection blockchain
The Copyright Society of China (CSC), a public, government-tied institution under the National Copyright Administration of China, launched the China Copyright Chain. The new blockchain can document proof of digital assets, monitor infringement activities, collect evidence online, issue notices to remove piracy products, and help courts settle copyright-related disputes and process lawsuits.
El Salvador's president announces legislative proposal to declare bitcoin legal tender
Nayib Bukele, El Salvador's president, announced that he planned to submit a legislative approval that, if and when passed, would grant bitcoin the status of legal tender in his home country.
Basel Committee says it will study crypto-asset rules
The Bank for International Settlements’ Basel Committee plans to hold a public consultation on the treatment of crypto-asset exposures. It plans to canvas the views of external stakeholders on banks’ exposures to crypto assets, and a consultation paper will be published this week.
Hong Kong to study e-HKD potential in retail central bank digital currency
The Hong Kong Monetary Authority (HKMA) has said it is looking into the prospects of having a local, retail central bank digital currency. HKMA, the de facto central banking authority in the Hong Kong Special Administrative Region, revealed its “Fintech 2025 Strategy" which included a high-level strategy for driving financial technology development in the city.
World Economic Forum releases policy toolkit for DeFi regulations
The WEF’s policy toolkit for decentralized finance seeks to promote, fair, efficient, enforceable regulations for the emerging digital-asset marketplace.
IRS seeks millions in fresh funding to expand crypto tax enforcement and hire outside experts
In practice, the increased funding will be used to award more contracts to firms that can assist the tax regulator in its enforcement of crypto-based tax evasion.
Mexico lawmakers aim to follow the example of neighboring countries with proposed bitcoin legislation
Several Mexican lawmakers indicated their support for crypto with their intention to submit a similar proposal to El Salvador to recognize bitcoin as legal tender.
Our overall takeaway
The inroads to crypto adoption by governments worldwide seem to only be picking up!
💰 Funding & Exits
DeFi risk assessor Sherlock raises $1.5m in pre-seed funding
Sherlock, a risk-analysis system for decentralized finance (DeFi), raised $1.5m in a pre-seed funding round led by IDEO CoLab Ventures, with participation from A.Capital Ventures, Scalar Capital, and DeFi Alliance.
Pontem Network, a dapp for the upcoming Diem blockchain raises $4.5m in seed investments
Pontem Network, a decentralized application that seeks to connect Facebook’s Diem to public blockchains like Ethereum, has raised $4.5m in seed investments, from over 30 notable investors, including Kenetic, Mechanism Capital, Delphi Ventures and Alameda Ventures, setting the stage for continued development of the ambitious digital currency project.
Impossible Finance raises $7m for multi-chain DeFi incubator
Impossible Finance, a Defi protocol built on Binance Smart Chain, has completed a $7m seed funding round with the funds going towards the development of a multi chain DeFi incubator. The seed round was led by True Ventures, Alameda, Hashed and CMS Holdings.
DeepDAO secures $3m for expansion even as DAO treasuries halve in one month
DeepDAO, a website aggregating data on decentralized autonomous organizations (DAOs), has raised $3m for future expansion in a round led by venture capital firms Hypersphere and DFG.
Data privacy-focused NFT startup raises $2.3m in seed funding
Blockchain startup Snickerdoodle Labs has raised $2.3m in a seed funding round led by Hong Kong-based blockchain investment firm Kenetic, with participation from venture capital funds Blockchain Capital, Struck Ventures, Zilliqa Capital, FTX, Sam Bankman-Fried, Tribe Capital, and Zinal Growth.
Bitfinex now owns a stake in no-KYC bitcoin exchange Hodl Hodl
Bitfinex, one of the largest centralized crypto exchanges, is now a shareholder in a decentralized exchange (DEX) that doesn’t conduct know-your-customer (KYC) checks.
Jack Dorsey’s Square Inc. to invest $5m in Blockstream bitcoin mining facility
Square is planning to invest $5m in a solar-powered Bitcoin (BTC) mining facility for Blockstream Mining, offering further insight into Jack Dorsey’s continued support for blockchain infrastructure.
Smart contract platform Flare raises $11.3m in a funding round
Hong Kong-based blockchain firm Kenetic Capital led the funding round, which included participation from Digital Currency Group, Coinfund and LD Capital.
Bitcoin financial services firm Unchained Capital raises $25m in Series A funding
Unchained Capital, a bitcoin-focused financial services firm, has raised $25m in a funding round led by NYDIG and its parent company, Stone Ridge with participation from Ecliptic Capital, Starting Line, Stronghold Resource Partners, TVP Bitcoin Venture Fund, Ten31 and Platform Ventures.
Blockdaemon raises $28m in a round led by Greenspring
Blockdaemon, a firm that creates and hosts the computer nodes that make up blockchain networks, raised $28m from lead investor Greenspring Associates as well as from Goldman Sachs.
BlockFi is raising $500m at a $4.75bn valuation
The Series E raise is being co-led by Third Point — the hedge fund run by Dan Loeb — and London-based venture capital firm Hedosophia.
Solana is raising up to $450m to challenge Ethereum
The upstart blockchain Solana, which some have dubbed a potential "Ethereum killer," has raised a large amount of money to scale up its ambitions, which include becoming a go-to home for decentralized applications. Solana is raising between $300m and $450m from top tier investors.
Union Square Ventures values crypto publishing tool Mirror at $100m
Union Square Ventures, an early backer of the cryptocurrency exchange Coinbase, has invested in crypto publishing tool Mirror.xyz at a $100m valuation. The one-year-old startup has raised at least $10m across two recent seed financings from investors including USV and Andreessen Horowitz.
Mike Novogratz's Cryptology to invest $100m in crypto venture funds
Cryptology Asset Group, an investment firm co-founded by billionaires Mike Novogratz and Christian Angermayer which is listed on various German stock exchanges, has committed to invest $100m in crypto-related venture funds over the next two years.
Solana launches $20m fund to advance ecosystem in Korea
Solana Foundation launched a $20m fund to further the ecosystem’s expansion in Korea with blockchain fund ROK Capital. ROK Capital hopes to spur Solana-based infrastructure projects in Web 3 and DeFi. The fund is also backed by blockchain consulting firm FactBlock and Korean accelerator DeSpread.
Spartan Group, buoyed by institutional interest, closes a $110m DeFi fund
The new fund — which originally targeted $30m — will focus on the market for decentralized finance (DeFi), with a specific focus on the application layer.
Master Ventures launches $30m Polkadot fund
Asia-based private venture capital firm Master Ventures launched a $30m fund for crypto projects aiming for a parachain slot on Polkadot. The Master Ventures Polkadot VC Fund is the first of its kind and will invest in the most promising projects on Polkadot and its canary network Kusama.
Borderless Capital to launch $25m Miami blockchain fund with Algorand and Circle
Borderless Capital is to launch a $25m fund for blockchain investment in Miami harnessing Algorand and the technology of stablecoin USDC operator Circle.
Borderless. Miami will help local companies build platforms for payments and capital markets leveraging Alogrand technology. Features of USDC and Circle Business Services built on the Alogrand blockchain will also be part of the venture.
Nasdaq-listed The9 to buy control of mining company Montcrypto
Chinese gaming company The9 agreed to buy control of Montcrypto, a Canadian carbon-neutral crypto mining company. The9 plans to invest $6m for the controlling stake. The money will help fund construction of a 20MW supply of electricity in Calgary, Canada, enough to power more than 6,000 S19j Antminers. Montcrypto aims to provide a carbon-neutral infrastructure for cryptocurrency mining by using natural gas bought from oil companies for power generation.
BlockTower acquires rival crypto hedge fund Gamma Point for $35m
Gamma is a San Francisco-based investment manager specializing in neutral strategies, investing in everything from coins to derivatives and decentralized-finance applications-related strategies.
INX closes Openfinance acquisition
INX received approval from the Financial Industry Regulatory Authority to close its acquisition of U.S. broker-dealer and alternative trading system (ATS) Openfinance Securities. The purchase of Openfinance means INX can offer investors a digital securities trading platform in addition to a crypto exchange.
Our overall takeaway
Funding announcements have a way of never slowing down these days! The new fund entrants will continue to support innovative projects in the ecosystem.
🚀 Project Launches & Updates
Crypto market maker GSR goes carbon neutral, including for its bitcoin mining business
Hong Kong based crypto market making GSR, has committed to making its whole business carbon neutral through carbon credits. Half of its bitcoin mining operations are already powered by hydroelectricity; it will use carbon credits to offset the other half.
Anchorage rolls out ETH-backed loans with America's 10th oldest bank
Anchorage Digital is enabling ETH-backed loans via a new partnership with BankProv, a nearly 200-year-old US bank. The partnership is specifically for institutions that work with the firms. Anchorage CEO Diogo Monica said the crypto lending space could rapidly accelerate towards supporting a wide variety of assets in addition to Bitcoin.
The introduction of Miami Coin
Miami Coin is a new way for the city to potentially raise funds. And it appears to have Mayor Frances X. Suarez’s approval.
Our overall takeaway
Even in the midst of broader market volatility, new project launches continue to excite us!
🔥 Other Bits We're Excited About
DeFi protocols generated more than $370m in revenue during May
Decentralized finance (DeFi) protocols built on Ethereum produced all-time high revenues in May, with $370m in revenues, with $154m coming from Uniswap alone.
Top White House adviser Tim Wu holds millions in bitcoin
Tim Wu, one of the White House’s top technology advisers and anti-trust experts, currently holds millions in bitcoin, according to a report by Politico on Monday.
Web traffic for cryptocurrency exchanges hit all-time high in May
Crypto exchange Web traffic hit a record high of 638.2 million visits in May.
Our overall takeaway
Ecosystem fundamentals seem to only get stronger week over week!