🔮 Reg Heavy, Liquid Staking, Solana, Binance

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Binance Back In The Hot Seat

• The US Securities and Exchange Commission (SEC) has filed a lawsuit against Binance, the world's largest cryptocurrency exchange, and its CEO Changpeng Zhao (CZ), alleging violations of federal securities laws. The SEC accuses Binance of operating an unlicensed stock exchange and mishandling customer funds. This lawsuit follows previous charges by the US Commodity Futures Trading Commission (CFTC) regarding the illicit offering of derivatives products in the US. The SEC's announcement had an immediate impact on the market, with Binance experiencing net outflows of $69 million within an hour and rival exchange Coinbase seeing a 10% drop in shares while some DEX's appear to be gaining. Binance executive Richard Teng has been appointed as the new head of regional markets outside the US, potentially positioning him as a successor to CZ.

Gaining From Our Pain

• Coinbase's CEO, Brian Armstrong, has once again urged American regulators to clarify their stance on cryptocurrencies and revise existing policies. He emphasized that failure to do so could result in innovation occurring elsewhere, particularly in countries like China, which aims to challenge the U.S. dollar's role in global commerce. Armstrong highlighted the need for regulatory clarity and expressed concern that other global financial powerhouses are competing to become crypto hubs. Crypto businesses, including Coinbase, have faced regulatory challenges, such as the ongoing battle with the Securities and Exchange Commission (SEC). As regulations are being established abroad, like Europe's Markets in Crypto Assets ( MiCA) rulebook, the importance of clear guidelines for the crypto industry is becoming increasingly apparent.

Token Specific News

Solana's Shifting Landscape: From DeFi to Consumer Applications

• Solana has experienced a decrease in its market share in terms of liquidity, causing it to drop from being the third-largest chain to a position outside the top 10. However, Solana still has its strengths, particularly in its low transaction costs and fast confirmation times. These attributes make it more suitable for consumer products with lower-value transactions rather than financial applications. Despite the decline in liquidity, Solana's developer ecosystem remains strong and continues to actively create new functionalities in the consumer sector, such as programmable and compressed NFTs. The increase in user activity within consumer protocols not only contributes to the growing adoption of Solana but also holds promising potential for its long-term viability. See similar: Solana Launches ChatGPT Plugin

For Financial Advisors, Real World Assets Could Be a Safe(r) Path to Crypto

• Real World Assets (RWA) are emerging as an exciting use case for blockchain technology. According to a report by Boston Consulting Group, the on-chain RWA market is projected to reach a value between $4 trillion and $16 trillion by 2030. RWA involves integrating on-chain databases to track real-world assets, with their performance and valuation derived from outside the blockchain. These assets, represented by tokens on a blockchain, offer benefits such as transparency, efficiency, liquidity, self-custody, and collateralization. Financial advisors should understand RWA as it presents opportunities for clients to diversify their portfolios, access alternative assets, and generate income without the volatility associated with traditional crypto assets. The growth of RWA will likely drive increased network usage, potentially impacting token prices on platforms like Ethereum and Polygon, as transaction fees are paid using native tokens such as ETH or MATIC.

BTC Ecosystem and Ordinals Among May Winners

• NFTs have emerged as a new trend on the Bitcoin blockchain, sparking heated debates. However, the controversy hasn't halted its growth. In May, there were approximately 7 million NFT inscriptions, bringing the total inscriptions to over 10 million. This influx of NFTs, along with BRC-20 tokens and other use cases, has expanded the possibilities for Bitcoin. Surprisingly, it wasn't a surge in Bitcoin's price that attracted the next wave of users, but rather the introduction of NFTs. Similarly... Bitcoin miners experienced a highly profitable month, earning an average of around $2 million per day in transaction fees. The increase in transactions, driven by new use cases like Ordinals, contributed to higher fees for miners, with Ordinals alone accounting for $35 million in fees. The U.S. government's proposed tax on Bitcoin miners, which aimed to impose a 30% tax on their electricity consumption for mining, has been rejected, at least for now. In a remarkable turnaround, Core Scientific, once the largest BTC miner, is making a comeback from bankruptcy, earning it the title of the "Comeback of the Year." Miners play a crucial role as the foundation of the Bitcoin network, akin to the backstage crew at a magic show... More miners = higher hash rate = more security and a “healthier” Bitcoin network.

Source: Dune

zkSync Era Welcomes its First Liquid Staking Protocol

• zkSync Era, a zero-knowledge rollup solution, has integrated Rocket Pool as its first liquid staking protocol. With this addition, there are now 58 projects operating on the layer-2 solution. Users can stake ether (ETH) on Era by holding rETH in their wallets, enabling automatic staking rewards similar to the mainnet. Rocket Pool has faced challenges in maintaining protocol decentralization and permissionlessness while ensuring smooth operations and monitoring protocol compliance and rewards. The team is exploring the use of zk proof technology to enhance decentralized oracle tasks. While currently deployed on optimistic rollups Arbitrum and Optimism, Rocket Pool remains cautious about expanding to new networks, prioritizing shared core values and ecosystem growth.

Regulation

A Potential Win

• House Republicans have introduced new legislation that could classify crypto tokens as commodities, providing a clear definition for when a project is considered decentralized enough for its tokens to no longer be considered investment contracts. The bill, drafted by Chairmen Patrick McHenry and Glenn Thompson, represents another regulatory effort in the crypto space. This move sets the stage for potential conflicts between the executive and legislative branches' oversight of the American crypto sector, as Republicans diverge from the Securities and Exchange Commission's stance on classifying tokens as securities. The legislation aims to facilitate negotiations with House Democrats and Senate counterparts, with the goal of enacting a new law this year to govern digital asset market structure in the US. However, with other pressing matters like debt ceiling and government funding, the fate of crypto regulation remains uncertain.

Can Always Find Krak In Canada

• May marked a particularly brutal month for centralized exchange volumes, dropping to just below $440 billion, the lowest since October 2020. Kraken, a cryptocurrency exchange, has experienced growth in Canada as its competitors like Binance and OKX have announced their withdrawal plans. Following Binance's departure in May, Kraken reported a 25% increase in customer deposits in the country. Additionally, after OKX announced its plans to leave in March, Kraken observed a fivefold surge in downloads of its mobile apps for Canadian clients within a week. The regulatory changes implemented earlier this year in Canada for digital asset trading prompted several major crypto exchanges, including Binance, OKX, Paxos, Blockchain.com, Deribit, and most recently, Bybit, to announce their departures.

Source: Kaiko

Celsius Reaches 0 Degrees Kelvin, Moves To Imperial System

• The crypto consortium Fahrenheit has emerged as the winning bidder in the acquisition of the insolvent lender Celsius Network, according to court filings. Backed by mining company US Bitcoin Corp., Arrington Capital, Proof Group, Steven Kokinos, and Ravi Kaza, Fahrenheit will take ownership of Celsius's institutional loan portfolio, staked crypto assets, Bitcoin mining unit, and other crypto-related investments. They will establish and operate a new public, regulatory-compliant company and provide the necessary capital, management team, and technology. The deal also includes a substantial amount of liquid cryptocurrency and the construction of Bitcoin mining facilities. The agreement is subject to approval from the U.S. Bankruptcy Court for the Southern District of New York.

Other Domestic Regulation Updates

• Gensler Says US Dollar Is Only Digital Currency We Need
• FT Survey Details Lack of Transparency in Governance Disclosures
• Sotheby’s is set to auction off more items from Three Arrows Capital’s once-storied NFT collection
• Not Just a Crypto Issue: PayPal and Venmo Lack FDIC Insurance Too
• Controversial Stablecoin Issuer Tether Plans to Start Mining Bitcoin

Other International Regulation Updates

• EU Watchdog Proposes Stricter Regulations, Reporting
• Bybit is exiting the Canadian market
• Binance Pushes Back Against ‘Broad Inquiry’ From Canadian Securities Regulator
• European Banking Authority Wants to Include Crypto in Money Laundering, Terrorism Guidelines
• European Parliament Considers Laundry List of Areas MiCA Doesn’t Touch

Pain & Gain

Pain

• Fake Musk and Bezos Crypto Ads Appear in 'Celebrity Scam Super League'
• Size of Hacks Plummeted in Q1; Incidents Remain Common
• Memecoin Trading Bot Maestro is Raking in Millions
• Multichain Can't Find Its CEO as Company Loses Access to Its Servers
• Uniswap Fee Feedback Vote Failed Because It Was ‘Structured Incorrectly’

Gain

• M80 Raises $3 Million to Expand 'Web3-Enabled' Esports Organization
• Crypto Tracking Firm Elliptic Is Now Using AI to Catch Hackers
• Arthur Hayes’ Fund Wants to Avoid Regulatory Conflicts With Decentralization

• Ripple Acquires Pantera Stake in Bitstamp
• Foresight Ventures Pledges $10MM More for Web3 Accelerator