Binance v. Coinbase v. SEC, The Art of DEX, Arbitrum, Bye Bitgo

Token Specific News

As You Learned In High School Health Class, There's No Such Thing As Safe CEX, Choose Abstinence On A DEX

The crypto community is becoming increasingly aware of the undeniable truth: there are no truly secure centralized exchanges (CEXs) in the crypto space. Enter the decentralized exchange (DEX) – a beacon of hope in the world of crypto trading. In recent times, the trading volume on DEX platforms has witnessed a remarkable surge. Take, for instance, the period between June 5 and June 7, where we observed a staggering increase in trading activity across the top three DEXes: Uniswap on Ethereum, Uniswap on Arbitrum, and PancakeSwap. This surge amounted to an impressive surge of approximately $800 million, representing a mind-blowing 444% growth. Moreover, another popular DEX, Curve, experienced an extraordinary spike of 328% in its trading volume during the same period. These statistics highlight the growing trust and reliance on decentralized exchanges as a viable alternative to their centralized counterparts. With the inherent security and transparency offered by DEX platforms, traders are increasingly flocking to these decentralized havens to protect their assets and engage in seamless, trustworthy trading experiences. See similar: A key metric tracking crypto market liquidity tanked sharply over the weekend, leaving paper-thin order books that could amplify price swings.

Arbitrum Catches A Bug

Arbitrum stands as one of the most favored Layer 2 solutions, offering reduced fees, faster transactions, and even a recent token airdrop. halt in transaction processing. The issue stemmed from a software bug. Arbitrum collects transactions off the blockchain and defers their completion to Ethereum at a later time, employing a software component known as a "sequencer." This sequencer requires funds to cover transaction fees, with an "auto-refill" mechanism ensuring an adequate balance. Unfortunately, a bug caused the sequencer to deplete its funds until the Arbitrum team (Offchain Labs) rectified the situation. During the outage, $2B+ in assets were stuck on Arbitrum. And it’s the 4th time this has happened. Consequently, the Arbitrum network experienced delays for several hours. It also highlights how centralized a lot of these projects still are. Luckily, the Arbitrum team says that “eventually, sequencing affordances could be given to a distributed committee of sequencers”.

Polygon Won't Bend

Polygon's core team has revealed plans for Polygon 2.0, an initiative to build a network of Layer 2 blockchains utilizing zero-knowledge technology. Currently, Polygon operates two networks: Polygon POS, a proof-of-stake sidechain network running alongside Ethereum, and Polygon zkEVM, a ZK-Rollups-based Layer 2 network. With Polygon 2.0, the team aims to develop additional Layer 2 chains using ZK-Rollups that can securely communicate with one another. The ultimate objective is to facilitate instant and secure cross-chain interactions without the need for additional trust assumptions, paving the way for the establishment of the "Value Layer of the Internet."

Stacking Up Outperformance

In Q1'23, the crypto market experienced a rebound, but network usage did not show a corresponding increase. Stacks performed well compared to other Layer-1 (L1) platforms, leading in market cap, revenue, network usage, DeFi TVL, and DEX volume growth. Ethereum remained the leader in financial and ecosystem metrics. The temporary depeg of USDC and BUSD issuance change benefited TRON, increasing its stablecoin market cap. The financial analysis revealed that the market cap of featured L1s increased by 83% QoQ, but was still down 58% YoY. Ethereum generated the highest revenue, while Hedera saw the most significant revenue growth. TRON had the highest P/S ratio. BNB and ETH were deflationary tokens. In terms of network analysis, transaction and address activity did not grow significantly during the market rebound, except for Stacks. Ethereum had the lowest stake-weight limit, and Cardano, Solana, and Avalanche had the most validators. The ecosystem analysis showed Ethereum as the dominant player in DeFi TVL, followed by BNB Chain and TRON, while Stacks and Cardano showed significant growth.

The Buzz: AI X Crypto Use Case

The convergence of AI and crypto presents a solution to challenges in the AI landscape and offers innovative opportunities. Utilizing decentralized compute networks can help address the GPU shortage. Integrating AI into blockchain technology enables smart contracts to make decisions based on on-chain data, opening up new functionalities. AI has the potential to drive the adoption of decentralized networks, with AI agents utilizing crypto infrastructure for payments and access to digital resources. Incentivizing intelligence contributions through tokens, reinforcement learning, and data collection can accelerate AI's development. See similar: Generative AI Will Have 'Enormous Impact' on Business, Execs Admit—But Not Right Away

All The more Reason to DEX

Uniswap, the leading decentralized exchange (DEX), has announced the upcoming release of Uniswap v4, introducing customizable features and releasing the draft core code for community development. The new version aims to provide endless possibilities by involving the community in its development. Uniswap is a decentralized exchange platform that allows users to trade cryptocurrencies without intermediaries, enabling self-custody of tokens. With $3.87 billion in Total Value Locked (TVL), Uniswap is currently the largest decentralized exchange by volume. Uniswap v3, launched in 2021, introduced Automated Market Makers (AMM), multiple fee tiers, and real-time on-chain price oracles. In the upcoming Uniswap v4, users will have the ability to build their own features using a new type of smart contract called "hooks." These hooks allow developers to expand on existing liquidity pools, offering customization options such as time-weighted average market makers (TWAMM) and dynamic fees based on volatility. Additionally, Uniswap v4 aims to reduce gas costs for pool creation by 99% through the use of "singleton" contracts, enhancing efficiency and improving the user experience. The possibilities and potential innovations that can be built upon Uniswap v4 are vast and still largely unknown.

Regulation

It's Been One Week Since You Sued Me, Threw Your Arms In The Air And Said, "You're Crazy" - SEC x Bare Naked Ladies

Chickity China, the Chinese chicken, the SEC gets bored and they just start suin'. Binance.US, the U.S.-based branch of global crypto exchange Binance, is halting USD deposits and delisting USD-based trading pairs due to pressure from the U.S. Securities and Exchange Commission (SEC). It plans to temporarily transition into an "all-crypto exchange." Robinhood, another popular trading platform, will also stop supporting certain tokens involved in SEC lawsuits against Coinbase and Binance, including Cardano, Polygon, and Solana, starting June 27. The SEC has filed a lawsuit against Binance.US, Binance Global, and Binance CEO Changpeng Zhao, alleging compliance and control failures, including claims that Zhao had undisclosed access to customer funds. Binance assures users that their assets are safe and will strongly defend against the allegations. (See More: Kevin O’Leary: Binance Will Be 'Starved of Oxygen' by SEC’s Lawsuit) (See Similar: Crypto.com to suspend US institutional exchange)Coinbase is also engaged in a legal battle with the SEC, with the SEC charging the platform for violating license rules and offering unregistered securities through its staking service. Coinbase has countersued the SEC to seek clarification and has urged lawmakers to establish clear rules distinguishing digital assets as securities or commodities. Additionally, the SEC has been given a seven-day deadline by a U.S. court to clarify its position on Coinbase's rulemaking petition, which seeks clarity on the classification and regulation of digital assets. Coinbase CEO Brian Armstrong differentiates the lawsuits against Coinbase and Binance, highlighting that Coinbase's case primarily focuses on the classification of securities, while Binance faces more complex allegations of fraud and market manipulation.While both SEC lawsuits target staking services, they differ in the specific violations alleged. Coinbase is accused of operating as an unregistered exchange and offering unregistered securities, while Binance faces allegations of unregistered sales of crypto asset securities and internal fraud. Both Binance and Coinbase contest the lawsuits and disagree with the SEC's allegations. See more: eToro will delist a selection of crypto tokens for its U.S. customers

A Win For Crypto?

Ripple Labs, the for-profit company associated with XRP, has seemingly gained a victory as the U.S. Securities and Exchange Commission (SEC) has disclosed numerous documents pertaining to a former agency director's speech regarding the status of ether (ETH) as a security. These documents were released as part of an ongoing lawsuit in which the SEC asserts that XRP is a security. The disclosed materials reveal internal disagreements among SEC officials regarding the classification of cryptocurrencies, as well as a potential conflict of interest involving the ex-SEC official William Hinman. It has come to light that Hinman had a financial stake in a law firm supportive of Ethereum at the time he delivered the speech favoring ETH's status. This development adds an interesting twist to the legal proceedings surrounding Ripple Labs and the SEC.

BitGo Wants Prime Trust

Cryptocurrency custody company BitGo is reportedly in the early stages of acquiring Prime Trust, a regulated crypto custody specialist based in Nevada. The agreement is still subject to regulatory approval. Prime Trust, which secured $107 million in funding in 2022, faced rumors of bankruptcy after downsizing its workforce and ceasing operations in Texas. In other news, Robinhood Markets' chief compliance lawyer disclosed to lawmakers the challenges the popular trading firm encountered while attempting to register with the Securities and Exchange Commission (SEC). The lack of established protocols for becoming a special-purpose broker for digital assets hindered the SEC staff's ability to provide assistance, despite their apparent willingness to help.

“To be (a Security), or not to be, that is the question”

The U.S. Securities and Exchange Commission (SEC) is investigating whether cryptocurrency tokens should be classified as securities or commodities, particularly in the cases of crypto exchanges Binance and Coinbase. A research report by Bernstein highlights that the SEC's action against Ripple will likely provide the first legal clarity on the matter, with a judgment expected later this year that will have implications for the industry. The SEC has recently filed lawsuits against Binance and Coinbase, accusing them of violating federal securities laws. The regulation of cryptocurrencies has become a politically charged issue between Republicans and Democrats. The report suggests that the aim is to establish a regulatory framework for digital commodities and stablecoins, giving the Commodity Futures Trading Commission (CFTC) more authority than the SEC. Despite the regulatory actions, Bernstein believes that the negative impact on the cryptocurrency market is already priced in and not an existential risk. Following the news, the prices of Bitcoin (BTC) and Ethereum (ETH) both saw a modest increase of around 3%

Tax implications: The Organization for Economic Cooperation and Development (OECD) has introduced a new tax standard called the Crypto-Asset Reporting Framework (CARF) for cryptocurrencies. CARF aims to combat tax evasion in the digitalized and globalized world economy by collecting relevant tax information, establishing a multilateral authority for enforcement, and facilitating information exchange among authorities. Additionally, amendments have been made to the existing Common Reporting Standard (CRS), which promotes tax transparency for financial accounts held abroad. The CRS now includes provisions for Central Bank Digital Currencies (CBDCs) and specifies tax compliance requirements for digital representations of fiat currency. While enforcement may pose challenges, the OECD's tax framework underscores the intention to tax entities and individuals involved in cryptocurrency transactions.

Banking On The Metaverse

Financial institutions are starting to show interest in the metaverse, recognizing its potential to connect with a young, tech-savvy, and financially-inclined user base. The metaverse, defined as a blockchain-powered virtual world with diverse experiences, allows for a seamless user identity across different applications. Major traditional finance players like JPMorgan, HSBC, Kookmin, and DBS have already established a presence in the metaverse, either by setting up virtual branches or offering metaverse services. This move not only allows banks to engage with a digitally native consumer base but also enables them to tap into a talent pool for future recruitment.

Other Domestic Regulation Updates

• Lummis Renews Commitment to US Crypto Regulation: ‘The Fight is Far From Over’
• Circle’s public listing plans undeterred by latest SEC actions
• Did the SEC Just Label Everything On Coinbase’s Front Page a Security?
• Binance's lawyers, meanwhile, have called for SEC chair Gary Gensler to recuse himself from the agency's case against the company, citing a conflict of interest due to Gensler's alleged prior involvement with the exchange.
• Ten U.S. States Issue “Show Cause” Notices to Coinbase Over Staking Program
• Circle, the company behind stablecoin USDC, has appointed former U.S. Commodities Futures Trading Commission Chairman Heath Tarbert as its new chief legal officer.
• SEC Chair Gensler Says Crypto Is Rife With ‘Hucksters, Fraudsters, Scam Artists’

Other International Regulation Updates

• U.K. Parliament Group Calls for Crypto Tsar and Immediate Regulation
• Bank of China investment arm issues tokenized notes on Ethereum
• Bybit Exchange Exits Canada, Citing New Regulatory Requirements
• North Korean Hackers Suspected in $35MM Atomic Wallet Heist
• Crypto.com Becomes Licensed Payments Institution in Singapore
• Polygon Onboards Germany’s Deutsche Telekom As a Validator

Pain & Gain

Pain

• Coinbase shares ‘uninvestable in the near term,’ analyst says
• Lone Star State ‘Will Be Silicon Valley’ of Crypto: Texas Blockchain Council President
• SEC should ‘withdraw’ exchange definitions proposal: Paradigm
• Moody’s Drops Coinbase Outlook From Stable to Negative Over Medium Term
• Tuberville bill would block Chinese ownership of US crypto companies

Gain

• Louis Vuitton Selling $41K NFTs That Can’t Be Resold
• Swiss Non-Profit Anoma Foundation Raises Another $25MM for Blockchain Infrastructure
• Web3 Payments Firm Transak Raises $20MM Series A
• Novogratz says crypto retail is the market’s ‘silver lining’
• Google now offering $1M crypto mining attack protection