Issue #44

Market Overview

As of the time of writing (Monday 5pm), the total market cap of the crypto asset market is $US1.18T, down (2.8%) from last week.

Below is the weekly performance of the top crypto and NFT assets. 

News Headline Highlights

• State Street Global Advisors, the manager of the single largest ETF, the SPDR S&P 500 ETF Trust, has expressed interests in tokenizing exchange traded funds (ETFs). “We will be looking at the tokenization of ETFs,” said Matteo Andreetto, head of SPDR EMEA at SSGA, talking at an ETF Stream event. “And then the tokenization of private assets. That for me will be game-changing.”
• On June 5 (Monday US time), Coinbase Derivatives Exchange, a CFTC-regulated futures exchange, will launch BTC and ETH futures contracts for institutions. Contracts will be sized at 1 BTC and 10 ETH.
• Hong Kong announced intentions to accept retails crypto exchange applications for retail customers. Since previous restrictions set in place during 2018, only institutional and professional investors have been permitted to trade crypto. The regulations could allow retail trading as soon as the second half of this year.
• Binance is toying with a proposal to permit select institutional clients to keep their trading collateral at a bank instead of with the crypto platform. The purpose of the proposal is to reduce perceived counterparty risk by using a third party to custody assets (rather than the exchange on which trading is conducted).
• The US Federal Reserve has ordered crypto-friendly bank Silvergate Capital Corp. to act on previously disclosed plans to wind down the lender’s operations, with a 10-day deadline to provide detailed information. Silvergate voluntarily ceased operations and entered wind-down mode earlier in the year.
• Sotheby’s has scheduled the second Three Arrows Capital NFT auction to take place on June 15th. The auction is part of plans to liquidate the insolvent hedge fund and is expected by Sothebys to be the “largest ever live auction of digital art”. This latest auction will feature works from generative pioneers like Dmitri Cherniak and Tyler Hobbs as well as a wider range of artists including Jeff Davis, Kjetil Golid, and Deafbeef.
• Fahrenheit, a consortium of investors including Michael Arrington, US BTC Corp and Proof Group has agreed to purchase the assets of Celsius, the bankrupt crypto brokerage.

 Crypto Asset Project Updates

• Ethereum’s Layer 2 networks experienced a surge in mainnet publishing fees during May, reaching nearly 9k ether (ETH) or $16.m. Arbitrum emerged as the leading contributor in mainnet publishing fees, incurring costs of 4,260 ETH, or $7.6m. zkSync’s Era mainnet followed in second with 2,250 ETH, or $4m.

• Bitcoin miners are producing more computing power than ever due to increasingly powerful hardware (Application specific integrated circuits, ASICs). Mining difficulty, a measure of computing power to earn Bitcoin, reached an all-time high last week.

Regulation Station

• A new draft bill from senior House Republicans in the U.S. Congress (House Financial Services Committee Chair Patrick McHenry, R-N.C., and House Agriculture Committee Chair Glenn ‘G.T.’ Thompson, R-Pa.) seeks to provide a path for a digital token to go from being treated as a security to a commodity.
• During a bilateral meeting held in Abu Dhabi, central banks of Hong Kong and the United Arab Emirates announced plans to strengthen their financial cooperation and work together on regulating virtual assets.
• Markets in Crypto Assets (MiCA), the EU's landmark new crypto regulation, was formally signed into law on June 1st. This makes the EU the first major jurisdiction in the world with tailored rules for the crypto industry.
• The Commodity Futures Trading Commission (CFTC) issued a staff advisory letter to registered derivatives clearing organisations (DCOs) and DCO applicants, reminding them of the risks associated with expanding the scope of their activities. The letter from the CFTC Division of Clearing and Risk (DCR) specifically addressed digital assets.
• U.S. crypto firms, including Coinbase and Binance, increased their lobbying spend in the U.S. last year, following a rise in crypto asset prices and during a series of company collapses. Forex Suggest reported that crypto companies spent $11.9m in 2022, up from $7.7m in 2021.

The Weekly Deal Room

• Magic, a web3 onboarding platform, raised $52m in its latest funding round led by PayPal Ventures.
• The Anoma Foundation, the Swiss non-profit that oversees the Anoma blockchain, raised $25m in its third funding round led by CMCC Global.
• Demox Labs, a privacy-focused cryptocurrency wallet designed for use with the Aleo blockchain, raised $4.5m in a pre-seed funding round led by HackVC.
• Transpose, a blockchain data and infrastructure company, has been acquired by Chainalysis for an undisclosed sum.