Welcome to The Node. This is Daniel Kuhn and Prachi Vashisht, here to take you through the latest in crypto news and why it matters. In today’s newsletter:
Cryptocurrency exchanges may not be safe qualified custodians for investment advisers, according to U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler. This pronouncement, made at an advisory committee meeting Thursday, could impact how exchanges are classified as the SEC tightens rules around who counts as, and who can serve, “qualified investors.” Meanwhile, two Republican lawmakers, Rep. Patrick Mchenry, chairman of the House Financial Services Committee, and Sen. Cynthia Lummis criticized a recent SEC bulletin advising companies to change how they account for crypto on their balance sheets as a measure to “deny millions of Americans access to safe and secure custodial arrangements for digital assets.” Meanwhile, three U.S. senators accused Binance of being a “hotbed of illegal activity,” and asked the exchange details of its money-laundering controls, the Wall Street Journal reports. Finally, U.S. Bankruptcy Court Judge Michael Wiles spoke out against the SEC’s attempt to stop Binance.US from purchasing assets from bankrupt Voyager Digital during a court hearing on Thursday. “You come here and tell me … that I should stop everybody in their tracks because you might have an issue,” Wiles said to an SEC lawyer.
Tarnished Silver
On Tuesday, bankrupt crypto lender Celsius Network tweeted about reopening partial withdrawals for certain custody accounts. Celsius, which froze trading in June, previously had permission from the U.S. Bankruptcy Court in the Southern District of New York to distribute 94% of each user’s assets. Elsewhere, business software company MicroStrategy said it does not hold assets at distressed crypto bank Silvergate Capital, but has taken out a loan scheduled to be paid off by 2025. The massive bitcoin holder MicroStrategy is just one among many companies to distance itself from or cut ties with Silvergate after the bank delayed its 10-K filing and disclosed a worrisome financial condition. In other news, bankrupt crypto exchange FTX faces a “massive shortfall” as only $694 million of the $2.2 billion worth of recovered assets is liquid.
Planning Ahead
Leading blockchain software firm ConsenSys is set to roll out a zero-knowledge Ethereum Virtual Machine (zkEVM) public testnet on March 28, becoming one of the first crypto firms to go fully live with technology. The move comes after the launch of its private-beta zkEVM testnet in December, capable of processing over 350,000 transactions per minute so far. Meanwhile, on Friday, Coinbase announced the acquisition of One River Digital Asset Management, an institutional digital-asset manager, to diversify beyond its core retail business. Elsewhere, one of the biggest publicly traded bitcoin miners, Marathon Digital, sold 650 of the 683 bitcoins it mined in February. The company first sold 1,500 bitcoins in January and uses the proceeds to pay for operational expenses.
Sound Bites
“What we’ve tended to see is that it’s [ChatGPT] used in creative applications where I don’t think it’s at all interesting.”
– “Snow Crash” author Neal Stephenson on AI, on CoinDesk TV’s “First Mover”
The Takeaway: Crypto Ain’t Cringe
This weekend marks the culmination of ETHDenver, probably the most important annual gathering for smart contract and DeFi [decentralized finance] developers right now, on Ethereum and beyond. I wish I could be there this year, but frankly I’m still recovering from a pretty intense four months of making cool things and exposing bad guys.
Fortunately, plenty of people are sharing clips from the event, so I can enjoy it vicariously. Unfortunately, many of these posts express something between innocent confusion and sneering takedowns of the supposedly lame ETHDenver goings-on.
But that attitude, to paraphrase the fugitive philosopher-thief Do Kwon, is a great formula for getting rekt. It may look like silliness and disorganization to you, but ETHDenver’s rough edges are actually strong signals that a real community has been drawn together by shared interests to build something together from the ground up. That’s the kind of community that has and will weather slow periods of crypto growth like what we’re going through right now.
Low-key, it’s also a signal that a lot of these people are far too rich to give a damn what you think.
It’s hip to be cringe
It’s true that compared to a lot of crypto conferences, ETHDenver and certain related events can seem just the slightest bit slapdash, and more than the slightest bit bizarre. Take, for instance, the annual contributions from Jonathan Mann, aka. “The Song a Day Guy.” He has created and performed goofy, slightly amateurish tunes for the event for a while now – and every year, people on Twitter take the opportunity to dunk on him.
But let me tell you, a goofy song is barely the only thing at ETHDenver that might make you uncomfortable!
When I attended last year, ETHDenver was held in a refurbished parking garage, where the bathrooms were partly or entirely broken for much of the event. You couldn’t see the main stage from roughly a third of the ground floor seating, and people talking at the back of the room halfway drowned out the speakers. Every once in a while, someone would drop 500 pizzas on an upstairs table, resulting in massive queues that made it nearly impossible to move.
Unleash the Banks in Times of Crisis (WSJ Opinion – paywalled)
Everyone Pivots to A.I., and Bad News for Crypto (NYTimes – paywalled)
A New Crypto Mixer Promises to Be Tornado Cash Without the Crime (Wired – soft paywall)
Dan Harmon’s NFT animated series has already been renewed for a third season (The Verge)
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