White Star Capital Digital Assets Fund - Newsletter #154
Binance's settlement: a step towards increased crypto regulation
Binance's settlement: a step towards increased crypto regulation
Amidst the whirlwind of Sam Altman’s departure from OpenAI, another CEO was also forced to step down this week, albeit more welcome news and for more predictable reasons. Following an extensive investigation by the U.S. Department of Justice, Changpeng Zhao (aka CZ) has stepped down as CEO of Binance as part of a $4 billion settlement with U.S. regulators. Binance has also agreed to plead guilty to operating as an unlicensed money transmitting business and for not complying with registration requirements. Despite disappointment in the ongoing revelations, industry participants view this settlement agreement as an important and welcome milestone in regulating crypto exchanges, and allows the industry to move on alongside regulators without the major disruption that others feared.
In a press statement, Binance acknowledged its lack of appropriate compliance controls. ‘When Binance first launched, it did not have suitable compliance controls for the rapidly growing company it was becoming, and it should have,’ the company stated. It also pleaded guilty to violating sanctions laws and will cooperate with the government on all matters related to the conduct outlined in the Plea Agreement.
The settlement included Binance's agreement to have compliance monitors from the Justice Department and Treasury for up to five years. This gives the agencies extensive authority to ensure the exchange complies with Anti-Money Laundering and sanctions rules, among other regulations. Binance's new CEO and the Chief Compliance Officer will certify that the exchange meets the new disclosure and compliance requirements.
The shift toward regulated crypto entities and instruments is beneficial, as increased regulation can attract investors from traditional finance. JPMorgan suggests that this shift will accelerate the expansion of the traditional finance sector, with industry giants like BlackRock and Fidelity entering this space. The agreement reduces uncertainty surrounding the crypto exchange, benefiting its trading and BNB Smart Chain operations. Previously, this uncertainty had led to a loss in Binance's market share.
Changpeng Zhao released a statement that Richard Teng, Binance’s former global head of regional markets, will succeed him as the new CEO of Binance. In his first statement as Binance's new CEO, Teng released that he plans to focus on restoring investor confidence, collaborating with regulators, and driving Web3 adoption, emphasising that ‘the foundation on which Binance stands today is stronger than ever.’
🔦 White Star & Portfolio Spotlight
Ledn's perspective on dollarization and crypto adoption in Argentina
In Argentina, economic instability and hyperinflation have led citizens to adopt U.S. dollars and cryptocurrencies as alternative forms of currency. Meanwhile, presidential candidate Javier Milei is gaining traction with his proposals to officially dollarize the economy and support the digital asset sector. This financial movement comes as Argentina contends with a massive IMF debt, dwindling central bank reserves, and a significant portion of its population living in poverty.
Thala Liquid Staking a two-token model for DeFi
Thala Liquid Staking, available on the Aptos mainnet, employs a two-token model involving thAPT and sthAPT to boost liquidity and rewards within the DeFi ecosystem. Thala's decentralized finance protocol, which runs on the Aptos blockchain, allows for the borrowing of decentralized stablecoins and offers capital-efficient liquidity via a rebalancing AMM.
Safello reintroduces Swish Payments
Safello recently announced the return of Swish as a payment method for their over 334,000 customers. This collaboration aims to enhance their expansion in the digital asset industry, reinforcing their position as Sweden's top cryptocurrency exchange that offers Swish payments.
Exclusible introduces BloxMetrics, a Roblox analytics tool
Exclusible has introduced Bloxmetrics, a comprehensive Roblox analytics tool that provides in-depth insights into the ecosystem. Bloxmetrics provides real-time user activity, ranks top experiences, and offers in-depth analysis for a data-driven understanding of the Roblox market.
Cometh introduces Muster for efficient transactions on Arbitrum
Cometh introduced Muster, a layer 3 rollup, in partnership with Alt Layer to ensure efficient and cost-effective transactions on Arbitrum Orbit. Muster offers affordability, speed, flexibility, and customizability, with all transactions settling on Arbitrum One. Cometh plans to launch the trading card game, Cosmik Battle, on Muster, providing a seamless and secure in-game transaction experience for gamers.
ParaSwap marked a year since the launch of Social Escrow and PSP 2.0
ParaSwap celebrated its first year since launching Social Escrow and PSP 2.0, which led to significant growth and innovation, including changes to $PSP tokenomics. This resulted in over 623 ETH being distributed to PSP stakers, an 800% increase in mainnet TVL to $8M, the launch of PSP staking on Optimism, the processing of $14.6B and over 5.3M transactions, and the addition of over 825k new users.
🏦 Enterprises & Institutions
Coinbase CEO's startup ResearchHub uses crypto to incentivize scientific research
Coinbase CEO Brian Armstrong's startup, ResearchHub, is leveraging cryptocurrency to encourage scientific research and peer review. It provides crypto rewards for activities such as reviewing papers, participating in discussions, and conducting research bounties. By offering an open platform where academics can earn cryptocurrency for their contributions, ResearchHub aims to challenge traditional scientific publishing. This approach could potentially redefine the incentives within scientific funding and publishing.
Ubisoft's 'champions tactics' NFT game is coming to Animoca's 'Mocaverse'
Animoca Brands and Ubisoft are teaming up to feature Ubisoft's upcoming NFT game, Champions Tactics: Grimoria Chronicles, in Animoca's Web3 Frequent Player Program, Mocaverse. Mocaverse offers rewards, including "Realm Points," for completing tasks, aiming to boost user engagement and awareness for Ubisoft's blockchain efforts. Specific details of the collaboration are pending.
Santander Private Bank introduces Bitcoin, Ethereum trading for clients in Switzerland
Santander Private Banking International, a division of Banco Santander, has introduced cryptocurrency trading and investment options, starting with bitcoin (BTC) and ether (ETH), for high-net-worth clients in Switzerland. The service is provided upon client request through relationship managers, and the bank ensures the security of assets by storing private cryptographic keys in a regulated custody model, taking advantage of Switzerland's advanced digital asset regulations.
KPMG Canada teams up with Chainalysis to fight crypto frauds and exploits
KPMG Canada is collaborating with blockchain analysis company Chainalysis to bolster the fight against cryptocurrency fraud and improve compliance with anti-money laundering regulations. This partnership aims to enhance blockchain monitoring and risk management, in response to the increase in sophisticated digital asset crimes and regulatory demands.
⚖️ Government & Regulation
Belgium seeks to reboot EU blockchain infrastructure project
Belgium plans to accelerate the development of a European blockchain infrastructure, named Europeum, during its EU Council presidency in early 2024. This initiative focuses on securely storing official documents, like driving licenses and property titles, using public blockchain technology for verification and potentially supporting the digital euro infrastructure, emphasizing transparency, security, and privacy for citizen data.
Milei presidential victory fuels optimism in Argentina’s Bitcoin community
Javier Milei's win in Argentina's presidential election has raised hopes in the local Bitcoin community, though his stance on cryptocurrency remains uncertain as it's not part of his official agenda. Milei, known for his radical policies like abolishing the central bank and adopting the US dollar, is seen as a potential boost for Argentina's economy, but immediate Bitcoin adoption may not be a priority.
Singapore Central Bank rules to discourage crypto speculation, ease investment qualifications
The Monetary Authority of Singapore (MAS) has released its final set of regulations for crypto service providers, aiming to discourage crypto speculation and ease investment qualifications. The rules include measures to prevent financing for retail customers, disallow locally issued credit card payments, and assess customers' risk awareness, with a phased implementation starting from mid-2024.
South Korea to pilot CBDC with 100K citizens in 2024
South Korea intends to launch a CBDC pilot in late 2024, involving 100,000 citizens who can use CBDC tokens issued by commercial banks for purchasing goods, aiming to address issues like high transaction fees and slow settlement in government grant systems. While China leads in CBDC development, South Korea is an early adopter, having completed testing functions for CBDC issuance and distribution in a simulated environment in December 2021.
City of Lugano integrates Polygon into its crypto payment system
The city of Lugano, Switzerland, is incorporating the Polygon proof-of-stake protocol into its crypto payment app, MyLugano, used by nearly half of the city's population to pay local businesses with digital currencies. Furthermore, MyLugano is introducing a new NFT collection featuring artist Yuri Catania's work, tokenized on the Polygon network, as Lugano plans to enable cryptocurrency tax payments for citizens and businesses, following the lead of Swiss cities like Zug and Zermatt.
💰 Funding & Exits
Blur founder's L2 network Blast raises $20M, backed by Paradigm
Blast, an Ethereum Layer 2 network utilizing Optimistic Rollup technology, has secured $20 million in funding led by Paradigm, with support from other prominent investors. Blast stands out as the only Layer 2 solution offering native yield on ETH and stablecoins, leveraging ETH staking rewards to benefit users and decentralized applications, potentially attracting up to $20 billion in liquidity.
Paradigm leads $18 million Series A raise for web3 infrastructure startup Privy
Privy has secured $18 million in a Series A funding round led by Paradigm, with participation from existing investors such as Sequoia Capital and BlueYard Capital. Privy aims to streamline user onboarding into crypto applications through their SDK, which integrates wallet connectors and self-custodial embedded wallets, simplifying authentication flows. This funding will support the development of their onboarding toolkit and identity platform to drive mainstream adoption of crypto experiences.
Game studio behind Matr1x Fire raises $10M for NFT mobile shooter
Singapore's NFT gaming company, Matr1x, has raised $10 million in funding for its mobile gaming projects. Folius Ventures and SevenX led the A-2 funding round, doubling Matr1x's total VC funding to $20 million. Matr1x is developing Matr1x Fire, a first-person shooter mobile game, with plans for an esports scene, NFT collections, and a membership pass offering governance access and revenue sharing for its creator economy.
Expanso raises $7.5M to pioneer distributed data processing for enterprises
Expanso has raised $7.5 million in seed funding, led by General Catalyst and Hetz Ventures, to further develop its distributed data processing platform, 'Bacalhau.' Bacalhau allows enterprises to process data locally where it resides, reducing the need for complex data transfers and centralization. It has already been used for over 2 million jobs across various use cases, with customers including the U.S. Navy, CalTech, and the University of Maryland.
Panoptic raises $7M to build perpetual options platform for DeFi
Uniswap-based DeFi protocol Panoptic has raised $7 million in seed funding, led by Greenfield Capital, to advance its perpetual options decentralized exchange platform. Panoptic's perpetual options enable continuous rollover without expiry, providing advanced DeFi trading strategies on Uniswap v3. The company plans to launch its mainnet in Q1 2024 and V2 in Q4 2025, building on its previous $4.5 million seed round in December 2022.
OMTrade secures $6M Seed funding for innovative social trading platform
OMTrade, a crypto exchange for social trading, has secured $6 million in seed funding led by Find Satoshi Lab, with participation from Folius Ventures, Meteorite Labs, Incuba Alpha, KSK Fund, etc. OMTrade's goal is to innovate social trading by introducing features like same-batch transactions and monthly high watermark settlement, creating a community where traders and followers can learn and invest together.
🚀 Project Launches & Updates
Solana is having its best month ever
Solana is having a highly bullish month, with decentralized exchanges on the network reaching $5.1 billion in November volume, surpassing the previous peak of $2.8 billion in November 2022. Despite regulatory challenges from the U.S. SEC, Solana's native token, SOL, recently hit a yearly high of $65.42. These positive developments, along with a growing project pipeline, rising Total Value Locked (TVL), and reduced network outages, are driving Solana's strong performance in the crypto market.
Bitcoin rebounds above $37K amid Binance settlement, spot ETF hopes
Bitcoin rebounded above $37,400 despite initial market turbulence caused by Binance's $4.3 billion settlement and its CEO Changpeng "CZ" Zhao's guilty plea. Analysts see this development as potentially clearing the path for the approval of a U.S. spot Bitcoin ETF, as concerns about overseas price manipulation ease with Binance's settlement.
SingularityNET partners with Dfinity Foundation for AI models that run on smart contracts
SingularityNET and Dfinity Foundation are teaming up to integrate the Internet Computer (ICP) blockchain into SingularityNET's AI marketplace, allowing developers to run AI models within smart contracts on ICP. This partnership aims to create a decentralized AI (DeAI) network, leveraging the scalability, security, and interoperability of both platforms, with SingularityNET's reputation system ensuring transparent and trustworthy decentralized AI applications.
Crypto industry goes nuclear with Uranium-linked tokens
Uranium3o8 (U), a uranium-linked token on Uniswap, is backed by Canada's Madison Metals Inc., aiming to create a spot market for uranium. Compliance protocols, including a minimum redemption of 20,000 U tokens, are required to prevent misuse, and Madison Metals CEO Duane Parnham mentioned interest in a $10 million physical settlement order from a licensed uranium broker.
🔥 Other Bits We're Excited About
Tokenization and Real-World Assets take center stage
In 2023, tokenization and real-world asset (RWA) markets have garnered substantial attention from retail and institutional investors due to their professional management and digital asset efficiency. Leading institutions like Goldman Sachs and J.P. Morgan are realizing significant cost savings and efficiencies through digital asset offerings, with projections of multi-million-dollar savings achieved via tokenization and on-chain processes for various financial instruments, including bonds and repos.
Institutional investors see further prices increases, plan to increase allocations
Institutional investors, primarily from the US, have regained confidence in the crypto market after a year marked by crypto bankruptcies. According to a recent Coinbase Institutional report, these investors are now planning to increase their crypto allocations over the next three years, with over half anticipating price growth in the coming 12 months, driven by performance-based metrics. However, concerns about volatility, environmental issues, and regulations persist.