• The biggest U.S banks have been mostly unresponsive to crypto customers who recently lost their banking services due to the collapse of Silvergate, Signature and Silicon Valley banks.
• KeyBank, a regional lender based in Ohio, is not taking on crypto clients as they do not meet its “moderate risk profile”.
• Other major U.S banks such as JPMorgan Chase (JPM), Citigroup (C), Bank of New York Mellon (BK) and Morgan Stanley (MS) have either declined to comment or stated that they are not comfortable taking on crypto clients.
No Crypto Banking Port Has Really Opened Up in the US
As Silvergate, Signature and Silicon Valley banks imploded, crypto customers grabbed assets and ran, but those hoping to land at major U.S. banks have been mostly disappointed. Jesse Hamilton explores why this is the case and what this could mean for the future of cryptocurrency banking in the US.
CoinDesk asked the top 20 U.S banks by assets if they were taking on crypto customers, especially those businesses that recently lost their banking homes in the recent carnage. Most of them remained silent on the question with some – including JPMorgan Chase (JPM), Citigroup (C), Bank of New York Mellon (BK) and Morgan Stanley (MS) – declining to comment altogether or stating that they are not comfortable taking on crypto clients. KeyBank (KEY), a regional lender based in Ohio, is between Silicon Valley and Signature in scale but a spokeswoman there said that it is focusing on those that meet its „moderate risk profile“. This means that „crypto-focused firms do not fall within this category at this time.“
Implications for Crypto Companies
The lack of response from major US Banks regarding offering services to crypto companies implies that cryptocurrency businesses will continue to struggle when it comes to traditional banking solutions for now. This could mean decreased access for these businesses when it comes to capital investments or loans which can be critical for growth and development within any business model. Additionally, companies may also face even more stringent regulations than before if any financial institutions decide to work with them as well as higher fees associated with accounts or services offered by smaller financial service providers who specialize in cryptocurrency companies due to their perceived higher risk profiles by traditional lenders.
One potential solution could be an increase in non-banking financial service providers such as Coinbase Custody or Fidelity Digital Assets which offer custodial solutions specifically tailored towards cryptocurrency businesses without needing access to traditional banking channels which could provide more options for these companies while they wait for larger financial institutions to come around regarding offering services directly related to cryptocurrencies or blockchain technology products/services more broadly speaking.
It appears clear at this point that most large US Banks remain hesitant when it comes offering services related directly or indirectly with cryptocurrencies meaning that these companies may need alternative solutions until these institutions become more open minded about working with them in some capacity going forward if at all possible given current regulatory environments both domestically as well as internationally across various jurisdictions globally where many of these businesses operate out from currently today!
• $70 million in USDC positions are at risk of liquidation if the stablecoin depegs by 10%.
• The panic was caused by Circle, the company that issues USDC, tying up $3.3 billion in troubled Silicon Valley Bank (SVB).
• USDC regained its peg on Monday, but traders can still face eight-figure liquidations if it falls below 99 cents or 93 cents.
Risk of Liquidation
Traders using decentralized finance (DeFi) protocols to bet on a USDC revival over the weekend are at risk of eight-figure liquidations if the stablecoin loses its $1 peg again this week. According to data from DeFiLlama, there are $70.8 million in positions that can be liquidated between $1.00 and 90 cents, with two recently filled positions on interest protocol Compound being worth $20.7 million and $15.4 million, respectively.
Cause of Panic
The panic was caused by Circle, the company that issues the stablecoin, announcing it had $3.3 billion tied up in troubled Silicon Valley Bank (SVB). This resulted in USDC slumping to a low of 88 cents on Saturday.
Relief After Regaining Peg
Circle revealed Sunday the $3.3 billion would be available at U.S. banks on Monday, quelling fears over a potential suspension in redemptions and allowing USDC to regain its peg on Monday .
Downside Risk Still Remains
However there is still downside risk for traders as the first of two Compound positions worth $20.4 million will be liquidated if USDC hits 99 cents; the price point for the other position is at 93 cents .
Traders betting on a USDC revival are currently in healthy profit but remain exposed to significant losses should another depeg occur this week .
• Neal Stephenson, author of the science-fiction novel „Snow Crash,“ shares his thoughts on artificial intelligence and its applications.
• Stephenson believes that AI-generated tools, such as ChatGPT, are not interesting when used in creative applications.
• Rather, he says that works of art or books offer a communion with the artist who made thousands of decisions in creating them.
The Author’s View on Artificial Intelligence
Neal Stephenson, author of the science-fiction classic novel „Snow Crash“ where he coined the term „metaverse“ and gave new meaning to the word „avatar,“ sees artificial intelligence in general, and ChatGPT in particular, as underwhelming.
When asked about boundaries on AI technology he said: “Mostly what we’ve tended to see is its use in creative applications, which I don’t think is at all interesting.“ He believes that when engaging with a painting or book, one enters into a „kind of communion with the artist who made thousands of little micro decisions in the course of creating that work of art or writing that book.“ In contrast to this sort of experience a decision generated by an algorithm is simply not interesting according to him.
Stephenson’s Response To The Possibility Of An AI Writing His Novel
When asked if an AI could have written his novel he responded: “Well maybe one did. But if that were the case then you would be reading only output from an algorithm and if that’s interesting to you then fine“. He also went on to say that there are rules and regulations for using AI technology but it depends on how it is used and ultimately should be determined by humans rather than machines making those decisions for us.
In conclusion it appears Neal Stephenson has reservations about ChatGPT (an algorithm-based tool) being used for creative applications due to his belief that real people create works which resonate emotionally whereas algorithms lack sentimentality.
Ultimately it seems as though Stephenson does not believe machines can compete with human creativity as algorithms cannot replicate emotion within their output. Therefore for something truly special we must leave it up to people rather than machines.
• The European Commission is preparing to set out its policy on virtual worlds in May.
• The EU wants to ensure that the developments in virtual worlds are consistent with European values such as inclusion, privacy, non-discrimination and safety.
• A senior European Commission official said that the EU needs to consider issues such as discrimination, user safety and data privacy when considering how to regulate the metaverse.
European Commission Plans to Set Out Virtual World Policy
The European Commission plans to set out policy on virtual worlds in May. It has lately set out sweeping regulations to control the ability of big companies like Google and Amazon to dominate the online space. With this new policy, the EU wishes to ensure that developments in virtual worlds are consistent with its values such as inclusion, respect of privacy, non-discrimination and equality.
Safety is Paramount
A senior European Commission official noted that it was important for people feel safe in virtual worlds just like they do in real life and perhaps even safer. Hence, when considering how to regulate the metaverse, issues such as discrimination, user safety and data privacy need to be taken into account.
Data Controls Important
Data privacy is a major concern for many people when using these virtual spaces. The EU needs to ensure that there are proper controls put in place so users can have confidence about their data not being misused or abused by third parties who may have access without their knowledge or consent.
Discrimination Must Be Avoided
Non-discrimination is also an important part of any regulation governing these environments; all users must feel welcome regardless of gender identity, race or religion. This will help create an inclusive atmosphere where everyone feels comfortable expressing themselves freely while still feeling safe from harm or discrimination of any kind.
May Release Date For Final Policy Document
The final policy document detailing all aspects of regulation for metaverses will be released by May this year according to officials from the European Commission’s digital department DG Connect. This document should provide a comprehensive framework for regulating these spaces while ensuring fairness and protection for all users involved within them.
• Japan is launching a pilot program in April to test the use of its version of a central bank digital currency (CBDC) known as the digital yen.
• The pilot program aims to test the technical feasibility and utilize private businesses for designing a CBDC ecosystem.
• This comes after more than two years of proof-of-concept experiments by the BoJ, even as China’s digital yuan continues to lead the CBDC race globally.
Japan Will Launch Pilot for Issuing Digital Yen in April
The Bank of Japan (BoJ) announced on Friday that it plans to launch a pilot program in April to test the use of its version of a central bank digital currency (CBDC), known as the digital yen. The move comes after more than two years of proof-of-concept experiments by the BoJ around the digital yen, even as China’s digital yuan continues to lead the CBDC race globally.
Objectives Of The Pilot Program
According to BoJ Executive Director Shinichi Uchida, „The aim of the pilot program is twofold: first, to test the technical feasibility … and second, to utilize the skills and insights of private businesses in terms of technology and operation for designing a CBDC ecosystem in the possible event of social implementation“.
Leadership Transition At The BoJ
The move also comes at a time when the BoJ is set for leadership transition, with Kazuo Ueda expected to take over from Haruhiko Kuroda when his second five-year term ends in April.
FTX Japan Customers May Get Their Money Back
FTX Japan customers may be able to withdraw their funds as soon as mid-February according to Liquid by FTX blog post which would make them some of the first customers of collapsed crypto exchange get their money back. CoinDesk executive director Emily Parker discusses how Japanese regulatory framework made it possible.
In conclusion, Japan’s decision to launch a pilot program for testing its version of central bank issued digital currency will have far reaching implications on global financial markets economy given that almost 95% countries are already partaking in this race via their own versions. In addition, FTX Japan customers may be able to withdraw their funds very soon which marks an important milestone towards restoring confidence among crypto investors across world.
• Ajuna Network, a decentralized gaming platform, has raised $5 million in a new private funding round.
• The startup will use the new capital and its previous seed round to fund its expansion.
• Ajuna offers a product suite that makes it possible for developers to use leading game development engines – Unreal and Unity – to create decentralized games.
Ajuna Raises $5M in New Private Financing
Ajuna Network, a decentralized gaming platform, has raised $5 million in a new private funding round led by blockchain-focused venture capital firm CMCC Global. This announcement coincides with the Friday launch of the startup’s „Awesome Ajuna Avatars“ non-fungible token (NFT) game collection, which is inspired by the company’s flagship game, BattleMogs. The funding will help Ajuna add support for additional game engines, build out trusted execution environments (TEEs), and continue expanding on Polkadot, Ethereum and Polygon.
Previous Seed Round
The gaming platform previously raised $2 million in seed round led by Fundamental Labs back in February 2022. Other investors for that funding round included OKX Blockdream Ventures, Signum Capital and Animoca Brands – which investment in Ajuna’s parent company BloGa Tech AG.
Web3 gaming is an umbrella term to describe games that use cryptocurrency, non-fungible tokens (NFT) or blockchain technology to augment the user experience. The goal of these blockchain-based projects is to empower players and offer them more control over their digital identities and assets.
Ajuna offers a product suite that makes it possible for developers to use leading game development engines – Unreal and Unity – to create decentralized games, making it easier for both traditional developers and gamers to enter Web 3 gaming landscape. These game engines are run in off-chain TEEs linked to the Polkadot blockchain to reduce latency according to the statement seen by CoinDesk on Friday.
The funding will help Ajuna add support for additional game engines, build out TEEs and continue expanding on Polkadot, Ethereum and Polygon as well as helping support projects building launching on its network according to the company statement seen by CoinDesk Friday.
• Avraham Eisenberg, a crypto trader and alleged Mango Markets manipulator, is attempting to negotiate bail following his first hearing in New York.
• Eisenberg has admitted to draining $116 million from the crypto exchange and is being sued for $47 million.
• He is currently charged with commodities fraud, commodities manipulation, and wire fraud.
Avraham Eisenberg Attempts to Negotiate Bail
Avraham Eisenberg, a crypto trader and alleged Mango Markets manipulator, is attempting to negotiate bail following his first hearing in U.S. District Court in New York on Thursday. The 27-year-old will stay in jail until at least Feb. 14th while he attempts to resolve his legal issues.
Eisenberg Admits To Draining Crypto Exchange
In October of 2020, Eisenberg revealed himself as part of the group that exploited the Solana-based decentralized finance (DeFi) lending protocol Mango Markets for $114 million. After executing what he described as a “highly profitable trading strategy” he returned $67 million to preempt the Mango Markets decentralized autonomous organization (DAO) from suing him in civil court; however, he is still facing a lawsuit for the remaining $47 million dollars taken from the exchange.
Charges Faced By Eisenberg
Eisenberg was arrested December 26th and has been indicted on three criminal offenses including commodities fraud, commodities manipulation, and wire fraud.
McMillan LLP Partner Benjamin Bathgate Discusses Legal Developments
McMillan LLP Partner Benjamin Bathgate has commented on the legal developments since Eisenberg’s public admission of exploiting funds from the crypto exchange.
Eisenburg Remains In Jail Until At Least Feb 14th
Until further negotiation can take place regarding bail or other matters related to his case; Avraham Eisenburg remains in jail until at least Feb 14th while trying to resolve this issue through legal channels available to him
• Japan is revising policies to welcome crypto, with a focus on stablecoins, NFTs, and DAOs, as other global regulators become wary of crypto.
• CoinDesk Executive Director of Global Content Emily Parker discusses the difference in the U.S. and Asia’s approach to crypto regulations, and what can be learned from regulatory frameworks in Singapore, Hong Kong, and Japan.
• Insights on FTX users in China are also provided.
The crypto industry has been making strides all over the world, and this is especially true in Asia. As U.S. regulators and lawmakers become more wary of crypto, Asian countries have been revising policies to welcome crypto with open arms. Japan, in particular, has recently been working on policy and guidelines for stablecoins, NFTs, and DAOs, recognizing the ever-increasing importance of crypto in the global economy.
CoinDesk Executive Director of Global Content Emily Parker recently discussed the difference between the U.S. and Asia’s approach to crypto regulations, citing the implosion of FTX and other similar stablecoin regulations. She noted that Japan, in particular, had already put tight regulations in place that helped insulate FTX Japan and its investors from heavy losses.
Parker also discussed what can be learned from the various regulatory frameworks in place in countries like Singapore, Hong Kong, and Japan. She identified the differences between these countries’ approaches to crypto and noted that all three have been successful in adapting to the quickly changing crypto landscape. Additionally, she provided insights on FTX users in China, noting that they are highly active and knowledgeable about the crypto market.
All in all, it’s clear that Asia is leading the way when it comes to crypto regulation. With Japan’s stringent policy in place, and other countries following suit, the crypto industry can look forward to a future of continued growth and innovation in Asia.
• CFTC Commissioner Kristin Johnson is calling for Congress to expand the CFTC’s authority to review crypto acquisitions.
• Johnson is concerned that existing regulation may not be enough to prevent future crypto crises.
• She is advocating for regulation that formalizes the obligation to separate customer property, ensure financial resource requirements, and introduce effective governance and risk management controls.
The recent collapse of FTX, a crypto derivatives exchange, has sent shockwaves through the cryptocurrency industry and has caused many to question the level of oversight and regulation of the space. In light of this, CFTC Commissioner Kristin Johnson has urged Congress to expand the agency’s authority to review crypto acquisitions in order to prevent any future crypto crises.
During a speech at Duke University on Wednesday, Johnson proposed that the U.S. agency should be able to conduct due diligence on any company – domestic or foreign – that seeks to purchase a minimum 10% share of the equity interest in a CFTC-registered market participant. She believes this would help ensure that customer property is properly separated, financial resource requirements are met, and effective governance and risk management controls are in place.
Johnson also noted that existing antitrust legislation may not be enough to protect investors from the risk of another crypto crisis. She argued that Congress should consider revisiting the existing regulatory frameworks in order to ensure that the CFTC is able to effectively oversee crypto acquisitions and provide proper protection to investors.
In the wake of the FTX collapse, Johnson is hoping that Congress will act quickly to expand the CFTC’s authority and ensure that proper oversight is given to crypto acquisitions. She believes that this is an important step in preventing future crypto crises and providing investors with the protection they deserve.