?? Bitcoin's Rally Post-SEC, ?? U.S. Crypto Tax Turmoil, & Balancer's $1M Exploit ??

Hey There!

Welcome back to another edition of Pocket News. This week, we're delving into Bitcoin's surge following Grayscale's face-off with the SEC and a US tax proposal causing quite a stir in the crypto world. We'll also touch on Balancer's close call with a million-dollar exploit and shed light on ARK and 21shares' keen interest in Ether futures contracts, all while keeping an eye on the market's response to the Grayscale developments.

And as always, gear up for a deep dive with James as we explore the tug-of-war over royalties between platforms and creators in the NFT realm.

Let's get it ???

CRYPTO NEWS

Bitcoin Bounces Back: Grayscale's Triumph ??

After Grayscale successfully appealed against the SEC, Bitcoin saw a significant price boost. The core of the appeal revolved around the SEC's attempt to halt Grayscale's Bitcoin Trust activities, questioning its compliance with regulations. Grayscale's win not only underscores its commitment to navigating the regulatory environment but also reinvigorates the broader market sentiment.

U.S. Crypto Tax Turmoil ??

The crypto community is up in arms over new tax proposals in the U.S. Among the many concerns, key issues include: a proposal to impose stricter reporting requirements for businesses, demands for more comprehensive disclosures for transactions over $10,000, and potential scrutiny on DeFi platforms. These provisions have many fearing that innovation might be stifled, and that the U.S. could lose its competitive edge in the crypto space.

Balancer's near Financial Fumble ??

Balancer, the DeFi protocol, faced a near $1M exploit recently. This breach was due to a smart contract vulnerability which crafty attackers exploited. In response to this significant security lapse, the team has been urging users to swiftly withdraw their funds to prevent further losses.

ARK's Ethereum Ambitions ?

ARK Invest, together with 21Shares, is turning its attention to an Ether futures ETF. The duo plans on leveraging Ethereum's robust ecosystem by potentially creating and launching an ETF that focuses primarily on Ether futures contracts. This initiative emphasizes Ethereum's mounting importance in both traditional and digital finance sectors. The U.S. court’s decision challenges this stance and could set a precedent for how decentralized projects are treated in future legal considerations.

Market Update:

Good news for crypto enthusiasts! Over the past 7 days, both Bitcoin and Ethereum have moved out of the red. BTC is up 2.66% while ETH is up 1.15%riding the good news story of Greyscale winning their ETF case against the SEC.

James's Technical Debrief:?NFT Royalties: The Power Play between Platforms and Creators ????

NFTs (Non-Fungible Tokens) have disrupted the world of digital art and collectibles. Among the many promises of NFTs, a notable one is the ability to provide artists with royalties from secondary sales, ensuring they continue to benefit from the appreciation of their work. However, the mechanics behind these royalties are more intricate than one might assume.

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The Mechanics of Royalties

NFT royalties can be enforced in two primary ways:

• On-chain Royalties: Here, the royalty mechanism is hardcoded into the NFT's smart contract. This ensures that whenever an NFT is sold, the smart contract will automatically distribute the royalty payment to the creator, irrespective of the platform facilitating the sale.
• Off-chain Royalties: Some platforms, notably OpenSea, have introduced their own royalty systems which operate outside the smart contract, handling the royalty payment at the platform level. This is particularly useful for NFTs that don't have royalty mechanisms built into their smart contracts.

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However, this dual system can lead to discrepancies. For instance, an NFT designed with built-in royalties might be sold on a platform that doesn’t recognize these royalties, denying creators their due compensation. Conversely, an NFT without built-in royalties might be sold on a platform like OpenSea, which then enforces its own royalty agreement.

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OpenSea's Game-changing Decision

OpenSea, a leading NFT marketplace, recently made a monumental decision. Starting from March 2024, they've chosen to make royalty fees (termed "creator fees") optional, allowing sellers to decide if they wish to distribute these fees to creators. This move has the potential to disrupt established royalty streams, putting substantial revenue at risk for creators.

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In response, Yuga Labs, renowned for its Bored Apes collection from which they've reaped significant royalties (around $35 million), declared that trading of its newer NFTs on OpenSea will be prohibited as of February 2024.

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The Broader Implications

OpenSea's move and Yuga Labs' subsequent reaction highlight the evolving dynamics between platforms and creators in the NFT ecosystem. For many creators and organizations, royalties signify a consistent and substantial revenue stream. By making these royalties optional, platforms like OpenSea could deter potential creators, who might seek more consistent revenue assurances.

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This situation also reignites debates on fair compensation for creators. If artists aren't guaranteed royalties from secondary sales, it could be seen as reneging on one of the foundational promises of NFTs.

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Yuga Labs' decision to restrict trading on OpenSea exemplifies the leverage creators might wield in this evolving space. Their move sends a clear message: creators value their royalties and are prepared to push back against platform policies they deem unfavorable.

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A Glimpse into the Future

The face-off between OpenSea and Yuga Labs could be indicative of upcoming trends. As the NFT market matures, platforms will be under pressure to strike the right balance: attracting and retaining sellers, ensuring creators receive fair compensation, and preserving their competitive edge.

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It also raises questions about OpenSea's motivations. While trying to attract more sellers by potentially reducing fees is a strategy, the platform might face challenges in terms of reputation and losing the trust of creators.

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As the NFT space continues its rapid evolution, the actions of industry giants like OpenSea and Yuga Labs will play a crucial role in shaping its trajectory. Both marketplaces and creators will be vying for control, benefits, and the future direction of this dynamic industry.

UPCOMING EVENTS: BFF X SPACE

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With guests: Zeneca - Founder, ZenAcademy & The 333 Club, Taylor Lunsford - Tech Customer Success Specialist, Ledger.

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