White Star Capital Digital Assets Fund - Newsletter #139
PayPal Launches a US Dollar-Backed Stablecoin
PayPal Launches a US Dollar-Backed Stablecoin
In a significant move that has sent ripples through the financial world, PayPal, the global online payments giant, has unveiled its very own stablecoin - PYUSD. The stablecoin will be backed 1:1 by the US dollar, meaning users can always switch between the stablecoin and the equivalent amount of traditional fiat currency. The move is seen as a strategic response to the rising demand for digital assets that combine the stability of traditional currencies with the efficiency and borderless nature of blockchain technology. This comes as the market increasingly anticipates a Bitcoin Exchange-Traded Fund to be issued by BlackRock and other institutional players, reflecting the increasing intersections between cryptocurrencies and traditional finance.
The rationale behind PayPal’s decision is threefold. Firstly, by launching a stablecoin Paypal captures payments that would otherwise be completed through other channels. Paypal is currently a closed loop payments system, meaning it requires both senders and receivers to have accounts for peer-to-peer transactions. PYUSD, on the other hand, enables an open loop system, whereby users could receive or send the stablecoin without having a PayPal account at all. Merchants, meanwhile, who do not have a PayPal account, could provide users who want to pay with PayPal with a blockchain address and PayPal could then issue a PYUSD withdrawal to immediately settle the transaction. Without an open system, the transaction would have been completed through a different payment channel or not completed at all. This thus enables Paypal to expand its user base and still monetise minting and redemption of the coin, as well as investing deposits into other yield-bearing assets like treasury bills.
Secondly, Paypal’s stablecoin could reduce the costs of their global settlement scheme. Paypal currently charges high fees to cover settlement costs between USD and local currencies, but if transactions can be settled in USD then their cost basis and therefore fees would reduce.
Lastly, Paypal can move into the crypto onboarding and on/off ramping space that is currently fragmented and subpar. Given the banking relationships, regulatory framework and infrastructure they have in place alreayd, they are primed to onboard millions of users and wallets into teh space. As both a fiat on-ramp and a stablecoin issuer, Paypal can derive value from multiple points in a the transaction flow.
The motivation underlying PayPal's entry into the stablecoin domain is multi-faceted, driven by a convergence of practical and strategic considerations. The stablecoin's introduction aligns with PayPal's broader mission to innovate within the digital financial landscape while offering users increased flexibility and accessibility. Simultaneously, the stablecoin venture could position PayPal as a pioneer in addressing the complexities of fiat onboarding and global settlements. By embracing the stablecoin trend, PayPal not only diversifies its offerings but also positions itself to navigate the evolving intersection of traditional finance and the dynamic world of cryptocurrencies.
🔦 White Star & Portfolio Spotlight
Meet Ledn's new savings experience
Ledn has responded to industry trust concerns caused by platform collapses by introducing enhanced Ledn Growth Accounts, which provide better control, safety through ring-fencing, transparency via a client dashboard, and continued access to funds in case of losses. BTC Savings Accounts shift to a dual account setup on August 3, 2023, while USDC Savings Accounts transition in September 2023.
Index Coop chooses Oamo for efficient customer acquisition
Index Coop chose Oamo for streamlined customer acquisition as Oamo's unique approach connects with targeted subsets of DeFi holders, such as long-term holders and yield seekers, allowing Index Coop to effectively promote its structured products to potential converters, thus optimizing marketing efficiency and lowering acquisition costs.
Introducing Eyeball Pool Phase 2
Eyeball Pool Phase 2 introduces a multiplayer mode, PvP 8-ball matches with soft in-game currency entry fees and prize rewards. It includes CUE stick assets, an in-game currency named CHIPS, comprehensive matchmaking with AI bots, and the Balldroid All Access Pass. Existing Balldroids will migrate to Immutable X with added benefits. The release is planned for Q3 2023.
Exclusible's founder introduces Doppl.ai
Thibault Launay, the CEO of Doppl.ai and founder of Exclusible, explores the AI future, unveiling a generative technology for crafting digital twins from personal data. Doppl.ai prioritizes responsible AI usage, ensuring privacy, transparency, and accurate interactive Doppls, fostering an exciting journey into AI's potential.
Cometh launches Cosmik Battle on Epic Games Store
Cometh is unveiling its Web3 Trading Card Game, Cosmik Battle, on the Epic Games Store, with the goal of harmonizing web2 and web3 encounters through blockchain-driven user onboarding. This momentous step introduces one of the pioneering Web3 games to the Epic Games Store, extending the game's accessibility to a wider and diverse player base.
🏦 Enterprises & Institutions
Google's AI data usage proposal sparks copyright and ethics concerns
Google aims to utilize online content for its AI models unless explicitly stopped, raising concerns about copyright and ethics. The clash between the company's opt-out data usage proposal for AI training and copyright laws highlights the delicate balance between data access and ownership rights.
PayPal’s real stablecoin strategy: It wants to earn interest on your deposits
PayPal's launch of the PYUSD stablecoin on Ethereum has sparked crypto enthusiasm, but its core incentive seems centered on accruing interest from users' dollars. PYUSD's backing by lucrative assets like short-term U.S. Treasuries positions PayPal to capitalize on interest earnings, altering user interactions with balances and shaping its revenue composition.
Aptos to release Microsoft-powered AI chatbot in bid to boost adoption
Microsoft and Aptos Labs have joined forces to create Aptos Assistant, an AI chatbot to streamline user onboarding and assist in building decentralized apps and smart contracts on the Aptos blockchain. The partnership also aims to explore asset tokenization, payments, and central bank digital currencies, aligning with Microsoft's broader efforts to integrate blockchain into financial services.
Worldcoin's plan to decentralize orb production sparks illicit data harvesting concerns
Worldcoin's co-founder proposes decentralized manufacturing of iris-scanning orbs using Bitcoin-like incentives, but experts caution against open-sourced design leading to fake data-stealing devices. Independent production of these orbs may heighten data security risks due to potential proliferation of counterfeit devices capturing biometric data, according to security experts.
⚖️ Government & Regulation
Why Hong Kong could be crypto’s next ‘center of gravity’
Hong Kong's new licensing program for crypto companies targeting retail traders is drawing industry interest, offering an alternative regulatory landscape compared to the US. HashKey's acquisition of Hong Kong's first license for spot crypto trading with retail customers has ignited interest in establishing operations in the city, potentially positioning Hong Kong as an Asian hub for crypto growth and Web3 development.
France updates crypto regulations in light of MiCA
France's securities regulator, the Autorité des Marchés Financiers (AMF), is revising regulations for digital asset service providers (DASPs) ahead of the European Union's anticipated MiCA implementation by late 2024. Starting January 1, 2024, DASPs offering all four crypto-related services must meet enhanced registration criteria, including security measures, custody provisions, public pricing policies, and conflict management systems, aligning with MiCA's authorization process for crypto-asset service providers.
Fed targets state banks with new crypto rules, but Congress may overrule
The Federal Reserve has issued regulations for state banks, mandating a "non-objection" from the Fed before engaging in stablecoin activities. This follows a controversial stablecoin bill in the House that grants state regulators the power to approve stablecoin issuers, a point of disagreement with the Fed's new rules.
Senators push IRS for crypto transaction reporting rules amidst White House delay speculations
Senators are urging the IRS to expedite regulations on brokers reporting cryptocurrency transactions, amid speculation that the White House might be intentionally causing the delay. The pending tax rule's uncertainty, which could revamp how crypto taxes are reported, poses concerns for the crypto industry and ordinary investors alike.
Russia to commence digital ruble pilot testing with 13 banks
The Bank of Russia will commence a pilot program on August 15 to test real-world transactions with its approved digital ruble, a central bank digital currency. Thirteen banks, excluding Sberbank and Tinkoff, will participate, enabling payments using the digital ruble at designated points of sale across Russian cities. If successful, broader individual and business usage is planned by 2025, with the aim to ensure functionality and user-friendliness before full rollout.
💰 Funding & Exits
Cyber startup SphereX raises $8M to help crypto users block suspicious transfers
SphereX is adapting the practice of blocking suspicious transactions from traditional finance to the blockchain world. With their product, SphereX Protect, they enable blockchain applications to proactively halt potentially harmful transactions, potentially preventing over $2 billion in losses and bolstering cybersecurity in the crypto space.
Cube3.ai raises $8.2 Million in Seed Funding to enhance Web3 security using machine learning
Web3 security startup Cube3.ai has secured $8.2 million in seed funding led by Blockchange Ventures, joined by Dispersion Capital, Symbolic Capital, Hypersphere Ventures, ICLUB, and TA Ventures. Using machine learning, Cube3.ai identifies and halts malicious blockchain transactions in real-time, safeguarding platforms including Ethereum, BNB Smart Chain, Arbitrum, and Polygon.
Orbital raises $6.4M to help Enterprises Realise the Potential of Blockchain Payments
Orbital, a platform facilitating both traditional finance and crypto payments, has secured £5M ($6.4M) in a growth round led by Golden Record Ventures, its inaugural institutional capital infusion. Orbital provides a seamless global enterprise solution, enabling the integration of stablecoins and major cryptocurrencies into payment streams. This addresses cross-border payment complexities and digital asset treasury requirements effectively.
Xverse raises $5M Seed funding for innovative Bitcoin Wallet supporting Ordinal Inscriptions and BRC-20 Tokens
Hong Kong-based bitcoin wallet Xverse has raised $5 million in seed funding, led by Jump Crypto and joined by Franklin Templeton, Alliance, NGC Ventures, and others. Xverse's wallet supports ordinal inscriptions and BRC-20 tokens, and it intends to expand its team and incorporate Bitcoin Lightning Network support for faster transactions.
unshETH raises $3.3M in Seed funding, backed by Soma Capital and ICONIQ Capital
DeFi protocol unshETH has secured $3.3 million in seed funding, with key investors like Soma Capital and ICONIQ Capital. unshETH's approach includes an Omnichain token for seamless transfers between blockchains, and its unshETH Ether token aims to revolutionize Ethereum staking, enhancing decentralization in DeFi.
Privacy-preserving protocol zkPass secures $2.5M Seed funding from Binance Labs and Sequoia China
zkPass raises $2.5 Million in Seed Funding from Binance Labs, Sequoia China, and Others for its Privacy-Preserving Protocol. zkPass utilizes a combination of zero-knowledge proofs, multi-party computation, and three-party transport layer security, enabling confidential data sharing on websites, with potential applications in decentralized identity, healthcare data markets, and DeFi credit protocols.
D8X raises $1.5M for decentralized derivatives trading on Polygon zkEVM
Swiss DEX D8X Raises $1.5M in Pre-Seed Round for Polygon zkEVM Derivatives Trading. D8X offers white-label solutions for decentralized derivatives trading, with backers including Polygon Ventures, Axelar Network, and Swissborg Ventures. The platform's on-chain solutions introduce cost-effective hedging and a variety of perpetuals, bridging centralized and decentralized trading spaces.
🚀 Project Launches & Updates
Nvidia teases new hardware, software, and services for AI
Nvidia has introduced a suite of advanced AI products, encompassing the Grace Hopper Superchip GH200 with cutting-edge AI features, RTX workstation GPUs based on the Ada Lovelace architecture, and the Nvidia L40 data-center scale GPU for enhanced AI training. Additionally, Nvidia unveiled cloud-native microservices for video communications and an AI Workbench platform to streamline the development of generative AI models, all geared towards expediting the integration of AI across diverse sectors.
OpenAI to unleash new web crawler to devour more of the open web
OpenAI's GPTBot, a web crawling bot, gathers online content to train their forthcoming AI system, possibly labeled "GPT-5." The bot compiles public data from websites, unless owners opt out with a "disallow" server rule. This approach sparks concerns about consent and copyright, as OpenAI seeks to boost AI capabilities via broader data collection, potentially altering its previous focus on transparency and AI safety.
Venom Foundation partners with the UAE Government to launch National Carbon Credit System
Venom Foundation and the UAE Government have partnered to establish the National Carbon Credit System, showcasing blockchain's potential for national-scale environmental sustainability. This collaboration supports carbon emission management and the UAE's climate targets using Venom's blockchain technology.
🔥 Other Bits We're Excited About
AI will be one of the most important investment themes over the next decade
Morgan Stanley's research report emphasizes the transformative potential of AI and its technology across industries, identifying it as a significant long-term investment theme for the next decade. Contrary to concerns of a potential bubble, the report points out that the ongoing AI market rally, driven by generative AI like ChatGPT, exhibits distinct characteristics from historical investment bubbles, characterized by widespread adoption and lasting impact.
Singapore Red Cross now accepts crypto donations
Singapore's Red Cross charity has teamed up with Triple-A, a licensed crypto payment gateway, enabling donations in bitcoin (BTC), ether (ETH), USDT, and USDC. This lets tech-savvy contributors use their digital assets, attracting a new wave of supporters, although these crypto donations are presently non-tax-deductible.
You can try on Copenhagen Fashion Week's latest styles in the Metaverse
Drest, a luxury mobile style game, has teamed up with Copenhagen Fashion Week, allowing participants to engage in daily in-game challenges to style avatars and create streetwear outfits. This partnership highlights Drest's shift towards Web3 integration and its plan to enhance user interaction in the metaverse.