Issue #52

Tether report $1b of profit in Q2, US House Committee vote in favor of 2 crypto bills, Sequoia shrink crypto fund, CME volumes reach yearly highs & more...

Market Overview

As of the time of writing (Monday 5pm), the total market cap of the crypto asset market is $US1.23T, down (-0.6%) from last week.

Below is the weekly performance of the top crypto assets. 

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News Headline Highlights

  • Tether, the issuer of the largest crypto stablecoin (USDT), announced >$1b in operational profits during Q2. The primary source of profits was interest earned on the $72.5B of Treasuries held in reserves. Further, Tether announced they hold excess reserves (i.e. reserves above the required 100% collateralisation rate) of $3.3b. Magnet quick take: It's astonishing to us that Tether holds more treasuries than UAE, Australia, Mexico, Thailand, Philippines, Spain, etc.  
  • Amazon added new tools to Amazon Web Services designed to make it easier for developers to build blockchain-based Web3 software. The tools, called "Access" and "Query",  were added to Amazon Managed Blockchain (AMB), a managed service that lets users build applications faster using provision blockchain infrastructure.
  • Sequoia Capital has reduced the size of two of its major venture funds, including its crypto fund, in an effort to downsize. Sequoia has slashed its crypto fund by 65.8% to $200m, down from $585m, citing limited ways to deploy the original capital given the state of the market.
  • The Bank of Italy’s innovation hub is exploring mechanisms to help financial institutions tokenise real world assets, leveraging Ethereum scaling network developer, Polygon Labs, and crypto infrastructure provider, Fireblocks,  to do so.
  • Quam Securities, a Hong Kong-based securities firm, announced its first successful crypto trade, fueling the bullish narrative of crypto adoption in China’s Special Administrative Region (SAR). 
  • A&G Funds, a subsidiary of the Spanish private bank A&G, launched an actively managed cryptocurrency fund. The fund will primarily invest in other financial instruments such as exchange traded notes or products rather than directly in cryptocurrencies. “We believe that it is an optimal solution for any professional European investor who wants to get closer to the world of cryptocurrencies, without forgetting that it is a very high risk fund,” said Diego Fernández Elices, Director General of Investments at A&G.
  • Vladimir Putin, the President of Russia, signed the digital ruble bill into law last week, allowing the country's central bank to issue its own digital currency. The Bank of Russia digital ruble will be used for payments along with other methods, according to the new amendments to Russia's Civil Code.
  • Department of Justice prosecutors filed to revoke Sam Bankman-Fried's bond after the disgraced FTX founder shared private diaries of former Alameda Research CEO Caroline Ellison with the New York Times.

 Crypto Asset Project Updates

  • Worldcoin (WLD), a crypto project founded by OpenAI CEO Sam Altman, launched last week. The company’s offerings include an eyeball scanner, a World ID to provide “proof of personhood,” as well as a new WLD crypto token. Magnet quick take: It feels rather dystopian to scan your iris to generate an ID and access an economy…
  • Curve Finance has been confronted with a reentrancy vulnerability, a critical security flaw that arises when a contract's external call is interrupted and called back before its completion, potentially allowing attackers to maliciously drain funds or exploit the contract's logic. This vulnerability led to significant outflows across various associated pools, amounting to over $26m.

Regulation Station

  • The U.S. House Financial Services Committee voted in favour of two crypto-related bills, sending crypto legislation to the House floor for the first time.
    • The Financial Innovation and Technology for the 21st Century Act, H.R. 4763, passed committee with bipartisan support (35 to 15), and would clarify the crypto oversight remit of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), which has been a point of contention for some time. The bill also seeks to define the standards for when a crypto is a security or a commodity.
    • The Blockchain Regulatory Certainty Act, H.R. 1747, which passed along party lines, would exempt blockchain developers and blockchain service providers from specific financial reporting and licensing requirements, if they do not control customer funds, according to the bill description.
  • Binance has become the first exchange to receive the Operational Minimum Viable Product (MVP) license from Dubai's Virtual Asset Regulatory Authority (VARA). The license enables Binance to offer services including exchange and broker-dealer services, initially to institutional and qualified retail investors, in Dubai.
  • The US Securities and Exchange Commission (SEC) asked a federal judge to ignore parts of a recent ruling in the regulator’s litigation with Ripple Labs, saying the decision doesn’t square with existing securities laws and that it may appeal. The ruling in the Ripple case concluded that sales of Ripple’s XRP token directly to institutional investors violated the SEC’s rules, but offerings to retail investors on exchanges didn’t, delivering what was widely seen as a victory to the digital asset industry.
  • Singapore's High Court deemed crypto as property in a recent case ruling that involved crypto exchange Bybit. The judgement declared crypto assets are property capable of being held on trust.

The Weekly Deal Room

Metric of the Week

Despite relatively low volumes on cryptocurrency spot trading venues, CME Group clocked its highest monthly volumes of the year in July. 

CME's bitcoin futures market saw volumes for July top its previous high in April, with the exchange clocking in volumes of $53.3b with one day left in the month. In April, the firm saw $53.1b worth of contracts trade hands.

Source: The Block

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