🔮 PayPal Stablecoins, Following the Lite, Ethereum ETFs, Leaving the US

Token Specific News

PayPal Enters the Stablecoin Arena

PayPal is launching its own stablecoin called PayPal USD (PYUSD), which is issued by Paxos Trust Co. Backed by short-term treasuries, dollar deposits, and cash equivalents, the stablecoin will operate on the Ethereum network as an ERC-20 token. PayPal's CEO, Dan Schulman, envisions PYUSD becoming a part of the broader payments infrastructure. The stablecoin will allow eligible U.S. customers to transfer funds between PayPal and compatible external wallets, engage in person-to-person payments using PYUSD, and convert supported cryptocurrencies to and from PayPal USD at vendor checkout points. Paxos will provide public monthly reserve reports and third-party attestations for PYUSD's value. The stablecoin aims to facilitate frictionless payments in virtual environments and promote the expansion of digital assets into mainstream usage.

Web3 Payments: Catalyzing Crypto’s Next Wave of Application Innovation

Messari underscores the transformative role of Web3 payments in fueling the next wave of crypto application innovation. It delves into how decentralized finance (DeFi) and non-fungible tokens (NFTs) are being revolutionized by these payment mechanisms, reshaping traditional financial models and creating novel digital interactions. The report emphasizes the potential for cryptocurrencies to disrupt conventional systems, with insights into the integration of crypto into everyday transactions. Despite the promising landscape, the report also outlines challenges like scalability and regulatory considerations that need to be addressed. It provides a comprehensive overview of the evolving crypto payment ecosystem, highlighting both its opportunities and complexities.

Tether's Own Attestation

Tether released its Q2 Attestation Report, revealing significant developments. The issuer of USDT, the leading stablecoin, reported a remarkable 30% surge in operating profits, reaching over $1 billion during the quarter. Notably, 85% of its reserves are classified as "liquid," mainly held in cash and equivalents. Tether's total excess reserves now stand at $3.3 billion, akin to a rainy-day fund. The company's exposure to U.S. Treasuries has soared to $72.5 billion, surpassing holdings of countries like Australia, the UAE, and Spain. This achievement has positioned Tether as the 11th largest Bitcoin holder globally, with around 55,022 BTC worth approximately $1.6 billion, sparking both interest and speculation. Concerns arise over the potential risks tied to Tether's significant bitcoin holdings, given the cryptocurrency's volatility. Experts suggest that Tether's pivotal role in the crypto market makes it crucial to maintain stability, considering the potential repercussions on bitcoin and the broader cryptocurrency market in case of unfavorable events. Despite criticism for lacking formal audits, Tether's continuous advancements and strategic positioning shape its influence within the evolving crypto landscape.

Source: DeFi Llama

More BTC Bulls?

Institutional investors have stopped bearish Bitcoin bets, per CoinShares' recent report. Short Bitcoin outflows halted after fourteen weeks, signifying major digital asset funds are adopting new strategies. The report includes Grayscale Investments' GBTC fund and Bitwise's 10 Crypto Index Fund. Despite this, institutional investors have actively sold, with over $111 million from Bitcoin-related funds sold last week, the largest weekly outflow since heightened regulatory scrutiny. This pause comes amid ongoing lawsuits against Coinbase, Binance, and labeling tokens as unregistered securities. Closed banks in the digital asset sector and record holdings by long-term Bitcoin holders (14.599 million BTC) characterize the landscape. These holders control 75% of Bitcoin's supply, signaling confidence in its value. Bitcoin's realized volatility is at historic lows, reflecting a calmer period post-bear-market phases. See similar: KPMG Bitcoin Report Marks 'A Milestone The Bitcoin Ecosystem Should Celebrate'

Source: Glassnode

I Can See The Lite

Litecoin, the second-oldest blockchain network, recently underwent its third block reward halving, reducing rewards to miners from 12.5 LTC to 6.25 LTC per block. This halving occurs every 840,000 blocks, and Litecoin's total supply is projected to reach its limit by 2142. Despite the halving, LTC has decreased by nearly 6% in the past 24 hours following a 30% rally in the six weeks leading up to the event. Similar to Bitcoin, halvings aim to manage coin supply and inflation. Litecoin founder Charlie Lee expects on-chain activity to subsidize miners' income through transaction fees. A partnership between the Litecoin Foundation and Ballet has produced collector cards loaded with 6.25 LTC, with sales revenue supporting development and adoption. While Litecoin's halving has occurred, it has not generated a significant price surge thus far, reflecting complex market dynamics.

Source: IntoTheBlock

Zero Sum Gain

Polygon Zero, a branch of the Polygon project, has accused Matter Labs of appropriating significant code without proper attribution for its Boojum proving system. Polygon alleges that Matter Labs' Boojum incorporates a substantial portion of code from their Plonky2 open-source library for optimizing zero-knowledge-proof systems. Polygon further claims that Matter Labs misrepresented the origin and performance of Boojum, with Matter Labs rejecting the allegations. Alex Gluchowski, Matter Labs' co-founder, explained that only about 5% of Boojum's code is based on Plonky2's, and proper attribution was provided. The dispute highlights the importance of maintaining open-source integrity within the crypto ecosystem.

Regulation

The Race For Digital Asset ETFs

Six asset managers have submitted applications to the U.S. Securities and Exchange Commission (SEC) for exchange-traded funds (ETFs) based on ether (ETH) futures. The Volatility Shares Ether Strategy ETF led the way on July 28, with five more swiftly following suit: Bitwise Ethereum Strategy ETF, VanEck Ethereum Strategy ETF, Roundhill Ether Strategy ETF, ProShares Short Ether Strategy ETF, and Grayscale Ethereum Futures ETF, all submitted by August 1. Notably, Grayscale, managing over $3 billion in assets through the Grayscale Ethereum Trust (ETHE), has experienced a 41.5% trading discount to its net asset value.

Source: Ycharts

Worldcoin Already on the Naughty List

Kenya's Ministry of the Interior has suspended the operations of Worldcoin, a blockchain-based digital identity startup co-founded by OpenAI's Sam Altman. The suspension comes as the government investigates the legitimacy and data protection of the project, particularly its collection of biometric data through iris scans. Worldcoin aims to create a global identification mechanism using iris scans, but the collection process has drawn criticism for potential exploitation. This move makes Kenya the first country to suspend Worldcoin's operations during an investigation, and it follows similar investigations by European regulators.

Huobi Starts to Draim Amidst Probe

Cryptocurrency exchange Huobi experienced net outflows of over $73.3 million in the past week, coinciding with reports that some of its executives were taken into custody by Chinese police for investigation. In the same period, Huobi saw an outflow of $505.9 million and an inflow of $432.5 million, resulting in a net outflow, according to blockchain analytics firm Nansen. Outflows have accelerated, with a net outflow of $32.9 million in the last 24 hours. Additionally, Huobi's stablecoin balances decreased by 33% to $99.47 million over the past seven days. Despite these challenges, Huobi aims to break even in the current quarter and return to profit in the fourth quarter.

RevolOUT of the US

Fintech firm Revolut is discontinuing its cryptocurrency services for users in the United States due to challenges posed by the regulatory environment. Starting September 2, U.S. customers won't be able to place buy orders for cryptocurrencies, and from October 3, they won't be able to buy, sell, or hold any cryptocurrencies through the platform. The decision is a result of uncertainties in the U.S. crypto market and evolving regulations. This move does not affect Revolut users outside the U.S. and impacts less than 1% of its global crypto customers. Revolut's U.S. banking partner is Metropolitan Commercial Bank.

Coinbase Moves to Dismiss SEC Lawsuit, Alleging Crypto Falls Out of Regulator's Oversight

Coinbase has requested the dismissal of the Securities and Exchange Commission's (SEC) case against it, arguing that the regulator has overstepped its jurisdiction by suing the crypto exchange. The SEC filed a lawsuit in June, accusing Coinbase of violating federal securities laws by operating as an unregistered broker, exchange, and clearing agency for certain cryptocurrencies. Coinbase countered that the SEC is not alleging the existence of investment contracts in its examples and stated that the transactions on its platform are commodity sales, not contractual undertakings. Coinbase also referred to the recent Ripple case ruling and reiterated its belief in its ability to win the case.

Other Domestic Regulation Updates

• Uniswap delists HEX token from interface after SEC alleges it’s an unregistered security
• Coinbase pushes to dismiss SEC lawsuit
• IRS Rules Staking Rewards Are Immediately Taxable, Web3 Advocates Push Back
• Democrat senators want Treasury, IRS to pick up the pace on new crypto tax rules
• 'Razzlekhan' and husband pled guilty to charges related to Bitfinex hack
• Federal Judge in Terra Case Rejects Ruling in Ripple Case

Other International Regulation Updates

• Ukraine Asks Local Crypto Businesses to Provide Financials
• FTX Submits Plan to Restart Offshore Exchange for the Benefit of Some Customers
• South Korea Launches Interagency Team to Investigate Crypto Crime
• BlockFi inching closer to customer refunds, locks down conditional court approval
• Japanese Prime Minister: More Policies to Promote Web3 Coming

Pain & Gain

Pain

• Curve Finance’s $62M exploit exposes larger issues for DeFi ecosystem
• Curve Finance exploiter returns stolen funds, teases 'I'm smarter than all of you'
• Elon Musk: 'We Never Will' Launch a Twitter or X Crypto Token
• DeFi Lenders Spooked By Curve Exploit
• Over $70MM Stolen From DeFi Protocols Via Vyper Code Bug
• Sequoia Capital Slashes $585MM Crypto Fund to $200MM Amid Downsizing

Gain

• Binance counts China as its largest market
• Offchain Labs makes BoLD moves with new permissionless validation protocol
• Metaverse Giant Animoca Brands Plunges $30M Into Crypto 'Super App' hi
• Starbucks' New NFT Collection Holds Up Amid Depressed Market
• Coinbase Q2 earnings exceed estimates, signaling potential market recovery
• Bitcoin, Ethereum Futures on CME Saw Record Participation in Q2
• MicroStrategy, filed to raise up to $750 million in share sales, with plans to use the proceeds to in part buy more bitcoin