Side effects of BTC and ETH upgrades

Digital Asset Intelligence Weekly | Issue 14

Key headlines this week:?Bitcoin network congested; Ethereum stakers turn to DeFi; and Sports Illustrated bets on blockchain ticketing.

Nuant Webinar:?Driving DeFi Adoption and Innovation - The Role of Institutional Capital

As DeFi growth continues to accelerate, it is taking on ever greater importance for institutions. Our CEO Rachid Ajaja recently joined a Blockworks webinar to discuss how institutional involvement is supporting the evolution of the space, and what these investors can do to make the most of opportunities while overcoming barriers to adoption.?View the full recap and recording here.

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Inside Crypto

• Binance briefly paused BTC withdrawals on Sunday as a result of soaring transaction volumes and fees on the?Bitcoin?network. The?congestion?appears to be a result of Ordinals activity but did not have a significant impact on price.
• The US branch of the Bittrex cryptocurrency exchange has?gone bankrupt?after having shuttered operations following a regulatory crackdown last month. Bittrex Global will continue trading.
• On-chain data shows that exchange giants Coinbase and Binance have lost ground since Ethereum’s?Shanghai upgrade, with traders withdrawing around US$700m of staked ETH to reinvest on decentralized platforms.

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Digital Assets

• Declaring that “blockchain is the future of ticketing”,?Sports Illustrated?has launched an NFT ticketing platform on Polygon. Event organizers will be able to use Box Office to provide multiple benefits to attendees, extending from the pre-event phase to long after.
• The first ever?insider trading?case in digital assets has seen a former OpenSea executive convicted by US prosecutors. The charges hinged on wire fraud rather than securities fraud, avoiding the thorny question of whether NFTs are securities.
• The new lending facility from NFT marketplace?Blur?may have fueled renewed interest in the sector. NFT transactions last month fell to their lowest level since June 2021, but Blur’s peer-to-peer lending platform has attracted immediate interest since its launch on May 1. In April Blur already accounted for 84% of all NFT trading.

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Infrastrure and Regulation

• US President Joe Biden has taken an aggressive stance on?crypto mining?with calls for a 30% tax on such firms’ energy costs, while the?Securities & Exchange Commission?has pulled back from a definition of digital assets.
• A proposed?New York law?could introduce stringent requirements for crypto firms, ranging from independent public audits to conflict of interest barriers and protections for customer assets. The CRPTO proposal (Crypto Regulation, Protection, Transparency & Oversight) comes from state attorney general Letitia James, who has sued CoinEx and KuCoin for failing to register.
• Nigeria?has officially approved a national blockchain policy aimed at supporting the country’s transition to a digital economy. The strategy includes strengthening the regulatory framework and creating incentives for blockchain businesses, as well as a national sandbox and more.

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DeFi & CeFi

• As anticipated, Gemini and Coinbase have both launched international derivatives platforms amid the US regulatory clampdown.?Coinbase International Exchange?will serve institutional clients in “eligible non-US jurisdictions” (not yet publicly specified), with all trades settled in the Coinbase-backed USDC, while the?Gemini Foundation?has provided a list of 30 countries where investors can trade using its GUSD.
• Coinbase has also announced the end of its?Borrow?program, which allowed users to borrow cash against their BTC holdings.
• TrueUSD, the only stablecoin currently available for fee-free BTC trading on Binance, has seen volume growth outpace liquidity and as a result briefly lost its dollar peg last week. Price rose to the upside, hitting $1.20 before regaining parity.

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Insight of the Week

Hedge fund bets?against the S&P500 show a bearish mood that could mean good news for risk assets, including crypto. Support for BTC could potentially come from a short squeeze as well as from investors looking for alternatives to banks as a result of the US crisis in the sector.

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