In this patch of your weekly Dispatch:
- A bit o’ the coin for US politicians
- Troubled times for Binance
- Nexo invests in Qredo’s $16M token sale
The Big Idea
The US Politicians Buying Crypto
We’ve heard of dodgy politicians, but Doge-y? There may be increased regulatory scrutiny in crypto in the US, but that doesn’t mean that politicians themselves aren’t getting orange-pilled into the crypto space. Two different disclosures this week showed that the set of crypto holders in DC was expanding.
Pennsylvania Senator Pat Toomey invested between $1,000 and $15,000 in both the Grayscale Bitcoin Trust and the Grayscale Ethereum Trust. It appears he likes his crypto exposure through the public markets.
Alabama Congressman Barry Moore got even more exotic, purchasing Ethereum, Dogecoin, and Cardano during the recent bull market. Like Toomey, the purchases were between $1,000 and $15,000 each.
The disclosures were mandated as part of the terms of the "Stop Trading on Congressional Knowledge Act," or STOCK Act. This seems particularly relevant as regulators like Nancy Pelosi come under scrutiny for recent stock purchases and Elizabeth Warren is pushing the SEC for clarity on its authority vis-à-vis crypto.
The Latest In…
The Global Regulatory Shuffle
Binance has not had an easy time lately. Seriously, even for a company and an industry that are used to significant regulatory hurdles, the last couple of weeks have been rough. Thailand filed a criminal complaint. Japan issued a warning notice. So too did the UK’s Financial Conduct Authority. After that warning, major banks like Barclays and Santander started blocking payments for UK customers around Binance. The company also had to unplug from the EU’s SEPA network, so all in all, it’s been rough. Binance CEO CZ took to the company’s blog to discuss what a lot of folks seem to turn a blind eye to – that “…compliance is a journey” and, boy, has Binance’s journey been one hell of a ride… We can’t stress enough that regulating crypto will take a continuous and probably arduous dialogue between regulators and the industry and not unilateral and arbitrary action.
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A couple of exciting crypto and crypto adjacent initial public offerings have been announced. First, the much anticipated Robinhood IPO is in the works. That big $70M FATF fine they paid was just to clear the way. Interestingly, however, Redditors are rallying to try to keep people away from the stock. Even more relevant for the crypto markets, Circle, one of the companies behind the USDC stablecoin, will go public via a SPAC merger that will value them at $4.5B. This is quite a turnaround for a company that has pivoted numerous times since its founding in 2013, and which took a $150M+ loss on their acquisition of the Poloniex exchange. At the same time, the success of USDC – now with more than $25B in circulation – is undeniable.
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Nexo in Qredo’s $16M Token Sale
One of our goals at Nexo has always been to make crypto market participation accessible to a wider array of investors. Part of that is about innovating products and services that make crypto more useful, like our Instant Crypto Credit Lines™. Another part of it is infrastructure. Issues like private key management make innovative financial areas like DeFi feel challenging and inaccessible to institutional investors. Qredo has an opportunity to better connect the experiences of CeFi and DeFi and we’re thrilled to have backed their $16M private token sale alongside other investors including Coinbase, Figment, and Ledger Prime.
The Week’s Most Interesting Data Story
Miners Are Already Recovering Post Difficulty Adjustment
One of the most elegant parts of Bitcoin’s design is its difficulty adjustment. Every 2016 blocks – roughly two weeks – the system automatically makes it more or less difficult to win the block based on how much competition among miners there is. When there is a sudden drop in the amount of hash power being used to mine the network (such as happened with the recent China mining bans), the difficulty adjusts down. Last week saw the biggest difficulty adjustment in history - nearly 28%. The point is to allow more miners to successfully compete and win block rewards. And here’s the amazing thing about it: the system works. In the four days following the adjustment, mining revenue is up about 50%.
What the Community Is Discussing
Need more indicators that DeFi is moving mainstream? It’s now on the Bloomberg Terminal.
Tons of great content and discussions on the implications of the GBTC Nav Trade unwind.
More data on Circle’s pitch to public market investors.
@AntoniNexo This Week
- You’re used to seeing Antoni’s most important media appearances in this section. They are now beautifully wrapped up in our In the Media recap.
- Antoni has his hopes high for big listing moves in crypto and believes that crypto-native companies, such as Coinbase and Circle, are laying the groundwork for the rest of us. We can’t help but think of his words back in April: “[a] Coinbase-style listing for Nexo would come later on, hopefully with a higher valuation.”
- Our co-founder’s shoutout to the entire Nexo team which turned a lot of dreams into reality this past quarter. What does the future hold, you may ask? Spoiler alert.
What to Watch for Next Week:
- Can the Circle listing get public markets back on track?
- Will another country go after Binance?
- Can DeFi Summer 2.0 gain some momentum?