MARKET OVERVIEW BY JOSH BURKE, DEFI TRADER
Crypto Crossroads: Navigating the Market with Unpredictable Developments
The crypto markets are experiencing a state of flux as we enter the week, with little movement amidst low weekend volumes. The past week has been brutal for risk assets, as negative sentiment surrounding regulatory actions continues to weigh on investor sentiment. The upcoming release of US Consumer Price Index (CPI) data this week has many market participants on edge.
Binance's BNB chain has come under fire as Jump Trading has revealed a critical vulnerability that would allow the minting of an unlimited amount of arbitrary tokens. This is a major concern for Binance and its users and could have far-reaching consequences for the platform.
Long traders have felt the brunt of the market downturn, with Bitcoin and Ether's recent slide spurring $220 million in liquidations. Meanwhile, NFTs are making headlines as Rihanna's NFTs allow holders to earn royalties when her songs play, and the first NFT to upload the bytes of Ethereum CryptoPunks onto the Bitcoin chain, Bitcoin Punks, have been fully minted.
The Optimism token (OP) has fallen following the surprise airdrop of 11.7 million of its OP governance tokens to more than 300,000 wallets. This news is coming at a time when regulators are putting more reporting rules into effect, and PayPal has paused its work on stablecoins amid regulatory scrutiny of the crypto space.
Uniswap's BNB deployment has passed with 66% "yes" votes, despite rejection from a16z. The crypto markets are marginally weaker as risk assets decline in early Asia trading, with the focus this week on macro data, particularly the release of the CPI.
Legal developments continue to shape the crypto landscape, with Nexo shutting down its US Earn product a month after settling with regulators. Mississippi State Senate has passed a bill defending crypto miners' rights, while the SEC has told Paxos Trust Co. that it plans to sue the company for violating investor protection laws.
The circulation of USDC has decreased by 1 billion in the past 7 days, 2.2 billion in the past 30 days, and 10.4 billion in the past year. This trend is worth watching, as it could indicate a shift in the crypto markets.
As the crypto markets continue to be a rollercoaster of activity, the next few weeks are sure to bring more developments.
NFT MARKET NEWS BY MATTHEW LINARES, SENIOR ANALYST
NFT Collection "MetaBirkins" Loses Landmark Lawsuit Against Hermès
MetaBirkins, a collection of 100 digital handbags that resemble the original Birkin bag, recently lost a trademark infringement case against the luxury brand Hermès, creating a historical precedent for the future copyright implications of digital assets. MetaBirkins creator Mason Rothschild lost the case to Hermès after a federal jury determined that he indeed violated the brand's trademark rights. Rothschild's digital assets very closely mimicked the design of the French handbag maker's physical product, which typically sell for hundreds of thousands of dollars. Despite the negative outcome, leaders across web3 offered a nuanced appraisal of the federal jury's decision.
Wave Financial's Co-Founder & Chief Strategy Officer, Les Borsai, said that big brands will ultimately aim to protect what sets them apart, stating "Fashion companies...their whole game is protecting the things they create." It is his opinion that artists who want to create derivative works should try and strike a deal beforehand. Les notes that much of art and music takes inspiration from other art, quoted in The Block as claiming “Art has always been connected to other derivatives. You can say we wouldn’t have the music market we have today without samples.”
While MetaBirkins may have lost its trademark case over Birkin bags to Hermès, some professionals in web3 do not see this as bad news for NFTs. In fact, they argue that the court's decision is the beginning of a deeper and much-needed conversation around how we legally categorize NFTs and what protections these digital collectibles and their creators should have in a court of law.
LATEST NEWS BY SAM EISNER, ASSOCIATE
WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking this metric in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:
Banco do Brasil (BB), Brazil’s largest public bank, has enabled the payment of taxes with cryptocurrencies.
Wirex, a crypto payments app, has signed a long-term global partnership with Visa to expand its footprint in Asia-Pacific (APAC) and the U.K. The announcement builds on the two companies' existing relationship of a crypto-linked visa debit card in the U.S. and Wirex holding principal membership status with Visa in Europe. With this expansion Wirex, which has over 5 million customers, will now be able to directly issue crypto-enabled debit and prepaid cards to over 40 countries.
The central bank of the United Arab Emirates (UAE) is planning to issue a central bank digital currency (CBDC) for domestic and cross-border payments as part of a new project to accelerate digital transformation.
REGULATORY ROUNDUP: We're living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and exerting political influence.
The crypto exchange Kraken will pay $30 million to settle the SEC allegations that it broke the agency’s rules with its crypto staking products. Kraken has discontinued related services in the US as part of the agreement with the regulator.
The Mississippi Senate has passed a bill to protect cryptocurrency miners from discrimination. The bill would legalize home digital asset mining and the operation of mining businesses in areas zoned for industrial use, and prohibit the Public Service Commission from imposing discriminatory electricity rates on mining businesses.
Stablecoin issuer Paxos will stop minting new Binance USD (BUSD) tokens at the direction of the New York Department of Financial Services (NYDFS), with the news coming just after a report of the threat of legal action from the U.S. SEC. It was previously reported that the SEC intended to sue Paxos for selling BUSD as an unregistered security.
Steve Bullock, the governor of Montana, has signed House Bill 584 into law earlier this month, recognizing utility tokens and exempting them from being considered as securities under local rules, with caveats.
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