Fuzenomics Weekly #18

Your route to web3 alpha in the MENA region. Whether you’re a seasoned HODLer or just getting into crypto - we’ve got something for everyone to keep you ahead of the curve. By the community, for the community - Fuzenomics Weekly.

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Birds Eye View (vs Last 7 Days)

?? Overall Crypto Market Cap: $2.15 Trillion (+3.86%)

?? BTC Dominance: 55.98% (+0.26 PPT)

?? Price Snapshot:

?? Bitcoin: $60951 (+4.3 %)

?? Ethereum: $2636 (+0.4%)

?? BNB: $578 (+11%)

?? Solana: $143 (-0.1%)

Abu Dhabi proposes framework for fiat-referenced tokens ????

Abu Dhabi's financial watchdog is set to oversee fiat-referenced tokens (FRTs), a form of stablecoin, following industry requests for their issuance. The regulator has opened a public consultation on a proposed regulatory framework.

The Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) announced that FRT issuers will face operational limits and requirements. The FSRA suggested that the market value of reserve assets should at least match the par value of all circulating FRTs at the end of each business day. FRTs should also undergo daily mark-to-market valuation.

The regulator also recommends that issuers of multiple FRTs maintain separate pools of reserve assets for each FRT and manage them independently. The ADGM's regulatory proposal stated:

"The FSRA is addressing interest from potential applicants looking to issue FRTs from ADGM, and this Consultation Paper should be particularly relevant to them, other individuals and organizations in the stablecoin industry, and their respective professional advisors."

FSRA has set Oct. 3, 2024, as the deadline for feedback on the proposal. After receiving comments, the FSRA will evaluate if changes are needed to the proposed FRT regulatory framework. The ADGM board and the FSRA will then move to implement the final version of the regulatory framework.

After reviewing definitions from other jurisdictions, the FSRA proposes to define an FRT as a digital asset that can be transferred and stored electronically using distributed ledger technology.

The ADGM also suggested that an FRT's value should be tied to a fixed amount of a single fiat currency, allowing the holder to redeem the FRT for that amount of fiat currency from the issuer on demand.

Besides creating a regulatory framework for FRT issuance, the FSRA is reviewing existing regulated activities to consider relevant changes where such activities might involve FRTs. These proposed changes will look at accepting tokens for services or investments, as well as using tokens for payment services. This proposal will be presented in a separate consultation paper.

The UAE is emerging as a crypto-friendly hub, attracting investors with favorable regulations. In May, Singapore-based QCP Capital received preliminary approval from ADGM for regulated digital asset activities, becoming the first crypto market maker and broker from Singapore to obtain such a license in the region.

In June, the UAE Central Bank approved a new stablecoin licensing and monitoring system. This move aims to boost digital transactions, advance the region's digital economy, and encourage innovation in the crypto space.

These developments highlight the UAE's growing reputation as a potential global crypto center, with regulatory bodies actively working to create a supportive environment for crypto businesses and investors.

In other UAE news - the Dubai Court of First Instance has just recognized crypto as a valid salary payment option! Stay tuned for more updates regarding this.

Which other countries do you think can benefit from adopting a future-fit and crypto-friendly regulatory structure such as the UAE? Let us know in the comments below!

Gate.io to launch $100M innovation fund with the Blockchain Center in Abu Dhabi ????

Gate Ventures, the investment arm of Gate.io, has joined forces with Abu Dhabi's Blockchain Center to launch a $100-million fund aimed at boosting Web3 innovation.

On August 19, Gate.io announced the creation of Falcon Gate Ventures, a joint initiative to support Web3 developers. The exchange's venture division stated that the fund is intended to "promote decentralized infrastructure and applications and speed up the adoption of groundbreaking technologies."

The two groups will combine their knowledge and assets to assist talent from key regions including the US, Asia, Europe, and the Middle East and North Africa (MENA).

Abdulla Al Dhaheri, CEO of Abu Dhabi's Blockchain Center, said the partnership aims to nurture and expand "promising" blockchain projects. He noted that Gate Ventures shares their goal of hastening blockchain innovation's adoption and impact in the UAE and globally.

The Blockchain Center in Abu Dhabi officially launched on August 1, marking a key step in the region's dedication to blockchain innovation. The organization seeks to position Abu Dhabi as a global blockchain leader and build an ecosystem supporting academic institutions, businesses, and startups through initiatives and comprehensive services.

Kevin Yang, managing partner at Gate Ventures, stated that through this partnership, they are "investing in the digital future" and will advance blockchain innovation worldwide.

Which UAE projects do you think can benefit from an innovation fund like this? Let us know in the comments below!

All About Stablecoins: Circle proposes capital-risk whitepaper, Tether mints another $1B USDT on Tron

Circle Whitepaper

stablecoin issuer Circle has released a white paper called "Risk-based Capital for Stable Value Tokens," outlining a fresh approach to capital management for stablecoins and similar digital cash tokens.

The paper's writers claim that stablecoins require sufficient capital reserves that exceed current standards set by Basel banking regulations to address risks specific to stablecoins, other fiat-pegged tokens, and their issuers.

The authors point out that these unique risks include potential token price drops due to market trading and secondary markets, possible "runs" on digital tokens from excessive selling, and operational and technical risks.

These special challenges make stablecoin issuers and their digital assets different from traditional banks. The paper's authors suggest adopting what they call the Token Capital Adequacy Framework (TCAF) to address these issues.

Circle's paper explains that current banking rules use fixed-ratio risk standards that may not accurately reflect true risk levels. They mention long-term Treasury bonds, which have high interest rate risk but are considered zero-risk under current banking standards.

TCAF aims to fix this by using a flexible, risk-sensitive model that starts with stress-testing reserves and getting input from stakeholders. The model also considers tech risks like blockchain network performance and cybersecurity.

The paper notes that TCAF's dynamic approach might lead to higher or lower capital requirements than current banking standards, depending on the risk environment.

Circle's new model has five main goals. First, it aims to separate emerging "going" risks from "gone" risks that have been dealt with or are no longer threats.

The model also tries to help supervisors address operational risks while staying "as simple as possible," avoiding the large, expensive risk management departments common in traditional banking.

TCAF's fourth goal is to create a risk management standard that works across different countries and institutions. Lastly, the model aims to encourage and hold accountable those who reduce negative risk impacts.

Tether mints $1B on Tron

Stablecoin provider Tether has created another 1 billion USDT tokens on the Tron network, pushing the total USDT minted in the past year to $33 billion.

On Aug. 20, blockchain records revealed that Tether produced $1 billion of its Tether tokens on the Tron network and moved them to its treasury wallet. The onchain analytics tool Lookonchain reports that the "Tether Treasury" wallet has generated $33 billion in stablecoin tokens over the last year.

The data platform noted that 19 billion USDT tokens were created on the Tron network, while 14 billion tokens were minted on the Ethereum blockchain.

Tether's 1 billion mint on Tron comes after a similar token creation of equal value on Ethereum. On Aug. 13, transaction tracking service Whale Alert spotted a transfer showing that the stablecoin issuer added another 1 billion on Ethereum.

Tether CEO Paolo Ardoino stated on X that the $1 billion transaction was merely a "USDT inventory replenish" on Ethereum. He explained that the transaction was authorized but not issued, meaning it will serve as inventory for the issuer's next round of issuance requests and chain swaps.

In regular businesses, inventory replenishment involves stock orders to meet demand. Similarly, Tether may create USDT to maintain adequate supply and hold them until officially issued. This ensures smooth liquidity management without immediately releasing them into circulation.

While Tether didn't release official statements about the new 1 billion tokens on Tron, it likely serves the same purpose as the recently minted USDT tokens on Ethereum.

According to Tether's Transparency page, the stablecoin issuer's treasury has only $36 million USDT tokens on Tron that are "authorized but not issued" as of Aug. 19. This suggests Tether may be running low on USDT on the Tron network, indicating strong demand for the stablecoin on Tron.

Also - Tether is in currently in the works to launch a stablecoin pegged to local UAE currency!

Stablecoin Exposure in the UAE

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Transforming Institutional Crypto: Ledn ???? secures industry-first $50M Bitcoin-backed syndicated loan

On Aug. 20, Ledn, a digital lending platform, announced it had secured a $50 million syndicated loan backed by Bitcoin.

The Bitcoin backed loan is syndicated by Sygnum, a global digital asset banking group managing $4.5 billion in client assets.

A press release stated that the loan is an industry first and will "support the expansion of Ledn's retail lending operations."

Adam Reeds, CEO and co-founder of Ledn, shared the team's future outlook:

"We see this pilot transaction as the beginning of many syndicated loans as digital assets inevitably become part of mainstream financial markets."

The partnership involving Sygnum's institutional clients will allow Ledn to offer its customers greater flexibility in accessing capital.

In the press release, John Glover, chief investment officer at Ledn, noted that the collaboration with Sygnum is a crucial step in "bringing crypto assets into mainstream financial markets."

"Teaming up with Sygnum to secure the first Bitcoin-backed syndicated loan facility is a milestone achievement for Ledn."

Reeds explained that the loan operates "very similarly" to how Ledn guides its retail clients in managing loans.

"Ledn will need to add more collateral to the loan at certain LTV thresholds."

The partnership signals a move towards "fully regulated institutional-grade services," where BTC is becoming an "increasingly recognized" asset class.

The press release stated that the $50 million loan aims to "set a standard for traditional financial participants."

Benedikt Koedel, head of credit and lending at Sygnum, explained the implications for institutional services:

"With the first Bitcoin-backed syndicated loan from a fully regulated bank, Sygnum is thrilled to support Ledn's future growth and jumpstart a new market for institutional lenders and borrowers as the crypto ecosystem matures."

Katalin Tischhauser, head of investment research at Sygnum Bank, spoke about the benefits of exchange-traded funds (ETFs) for traditional institutional investors.

Tischhauser forecasts that BTC ETF inflows would reach between $30 and 50 billion in the first year of trading, with spot Ether products following suit.

In the interview, Tischhauser noted that Ether mainly derives its value from revenues and cash flows and is "more relatable for traditional institutional investors than the idea of digital gold."

What impact will this have on institutions not yet exposed to crypto? Let us know your thoughts in the comments below!

Report: Crypto firms contributed 48% of all corporate political donations in the US in 2024 ????

A new report from Public Citizen, a consumer advocacy group, sheds light on how cryptocurrency companies might sway the 2024 US elections through financial contributions.

The August 21 report reveals that crypto firms have poured about $119 million into federal elections for 2024, mainly through super political action committees (PACs) like Fairshake. This amount represents nearly half - 48% - of the $248 million in corporate funds directed towards US elections in 2024, with Coinbase and Ripple leading the charge.

Public Citizen's analysis of Federal Election Commission (FEC) filings shows that crypto firms' contributions far surpass those of Koch Industries, a company known for its significant political donations under the leadership of CEO Charles Koch and his late brother David.

The report highlights that Fairshake received around $108 million from "corporations that stand to gain from the PAC's efforts." These include Coinbase, Ripple, Gemini founders Cameron and Tyler Winklevoss, and Coinbase CEO Brian Armstrong.

While Ripple recently faced penalties in its case with the US Securities and Exchange Commission (SEC), Coinbase remains locked in a legal battle with the regulator.

Public Citizen notes, "Fairshake's corporate backing is unmatched. Despite unlimited corporate contributions being allowed since 2010 due to Citizens United, this newcomer is second only to the super PAC focused on electing Republican senators in terms of corporate money received."

The impact of Fairshake and its affiliated PACs, Defend American Jobs and Protect Progress, may already be evident in key US primaries leading up to the November general election. Public Citizen reports that candidates won 36 out of 42 races where crypto super PAC money funded attack ads against "anti-crypto" candidates or supported "pro-crypto" ones.

The 2024 election will determine control of the US Senate, House of Representatives, and presidency. With polls suggesting close races across the board, funding from outside groups could play a crucial role in swaying undecided voters.

Public Citizen warns, "Given the even split in both congressional chambers, the crypto sector's outsized influence in competitive races could potentially determine which party controls Congress."

No industry has ever so openly used corporate funds as a political weapon to sway lawmakers. The crypto sector's approach to political donations is unprecedented in its scale and directness.

The 2024 US Senate races in Montana and Ohio might be the next battlegrounds for crypto super PACs. While Democrats hold a slim Senate majority, thanks to Vice President Harris's tie-breaking vote, seats in these states could be at risk.

Fairshake, a crypto super PAC, planned to invest $12 million to back Republican Bernie Moreno against Democrat incumbent Sherrod Brown in Ohio. In Montana, Democratic Senator Jon Tester faces reelection, and the crypto super PAC indicated it would tap into its resources there as well.

Do you think election day in November will have a huge impact on BTC prices? Let us know in the comments below!

IP Tokenization Start-up PIP Labs raises $80M from A16Z & Polychain ????

Palo Alto-based PIP Labs has secured $80 million in Series B funding, jointly led by a16z Crypto and Polychain Capital. The funds will support the development of Story Protocol, a specialized layer-1 blockchain for managing intellectual property (IP).

The funding round saw participation from various investors, including Hashed, Foresight Ventures, Samsung Next, Mirana Ventures, SparkLabs Global, and angel investors. PIP Labs has now raised a total of $140 million, with a16z Crypto backing the company through three funding stages, from seed to Series B.

Bloomberg reports that this latest round values the startup at $2.25 billion, though PIP Labs has neither confirmed nor denied this figure.

Story Protocol's blockchain allows creators to claim ownership of their IPs through tokenization. This system lets creators officially register their IPs on the blockchain, proving ownership and setting rules for how their IPs can be used, shared, or changed. It's a way for creators to safeguard their work and keep control over its use by others.

"IP is the basic input that large models train on. Simply put, without IP, AI might hit a limit," the protocol stated in a post on the social media platform X.

As AI solutions grow, intellectual property can be used as input data to train models. By using blockchain, the protocol aims to help creators get paid when their work trains AI models while tackling issues like dark data sets.

PIP Labs says the technology is already being adopted, with over 200 teams and more than 20 million IP assets being built on the platform across various sectors, including IP finance (IPFi), AI, and consumer markets.

The Web3 fundraising scene saw a big increase in July, with deal volume rising by 72.9% month-over-month to $1.44 billion, according to Messari data. Venture firms Pantera Capital and Mirana Ventures led major early-stage investments during this time.

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