Crypto custodian BitGo will not be buying rival Prime Trust after reaching a preliminary agreement to acquire the cash-strapped firm earlier this month. Prime Trust has been reportedly losing clients and deposits in recent weeks amid mounting concerns over its business. Earlier this month Prime Trust subsidiary Banq filed for bankruptcy protections. Meanwhile, a South Korea crypto yield platform Haru Invest is laying off 100 employees, CoinDesk Korea reported Thursday. The platform paused withdrawals and deposits earlier this month, citing issues with service partners. In more positive news: decentralized exchange Vertex Protocol has received a strategic investment from Wintermute Ventures, the investment arm of crypto market maker Wintermute, which will also join as a Vortex liquidity provider. That comes as AI startup Kaito closed its Series A funding round with $5.5 million in fresh capital and a valuation of $87.5 million. The company is building a chatbot tailored to the crypto industry, the firm told CoinDesk.
Credit and Bonds
Mastercard has invited several crypto firms to join its Engage program, which could accelerate bringing more crypto-connected credit cards to market. Among the cohort are crypto firms: Baanx, Credencial Payments, PayCaddy, Paymentology, Pomelo and several others. Elsewhere, stablecoin issuer Circle is once again buying U.S. Treasury bills as a reserve asset for its $28 billion USDC stablecoin after ditching all hzzoldings amid fears of a U.S. debt default last month. The Circle Reserve Fund, overseen by asset manager BlackRock, held $2.2 billion of T-bills (compared to $24.7 billion in “repos”) as of June 20. Finally, Crédit Agricole and Santander’s joint asset servicing arm, CACEIS, has been registered by financial regulators in France to provide crypto custody services. CACEIS, which has 4.6 trillion euros ($5.1 trillion) in assets under custody, follows Societe Generale’s Forge and AXA Investment Managers in seeking a custodians license following the passage of the comprehensive MiCA regulations.
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Proof-of-stake network Algorand reduced its block time in a protocol update Thursday, which developers hope will make application development on the network faster and more cost-efficient. The devs said the upgrade will reduce block time to 3.3 seconds from 3.8 seconds, which is the “largest reduction of block time on a percentage basis,” Algorand Chief Product Officer Paul Riegle said. Separately, stablecoin issuer Raft’s three week-old stablecoin crossed $55 million “total value locked” (TVL) on Wednesday. The stablecoin is collateralized solely by Lido’s staked ether (stETH), a popular “liquid staking derivative” that allows holders to use their capital while also earning Ethereum staking fees. Elsewhere, NFT platform Zora has launched its own layer 2 network aimed at “creatives” that will shrink minting costs below 50 cents. Zora CEO Jacob Horne said the company is looking to “experiment with economic mechanisms” to subsidize fees for creators and integrate the L2 across its product stack. Finally, what’s said to be the first animated movie funded by a DAO (“The Rise of Blus: A Nouns Movie”) got the go-ahead from Nouns DAO.
The Takeaway: Artificial Learning
Noelle Acheson, today’s guest writer, is the former head of research at CoinDesk and Genesis Trading. This article is excerpted from her Crypto Is Macro Now newsletter, which focuses on the overlap between the shifting crypto and macro landscapes.
We’ve seen this before. A radical technological breakthrough spins off applications that promoters insist will revolutionize whatever industry they happen to be targeting. Breathless conferences promise that nothing will ever be the same again. Funding floods in at back-of-the-envelope valuations based on exponential growth. I could be talking about the crypto circuit circa 2016-17. But today, I’m talking about artificial intelligence (AI).
It’s hard to not be mesmerized by the attention AI is getting, and perhaps motivated by the inflated promises. The impact, even at this early stage, is exciting: The ability to interface with computing power using natural language is a massive productivity unlock, and the creativity boost through almost instant images and prose is both helpful and entertaining. And that’s just scratching the surface.
But the hype we’re hearing around AI now is reminiscent of the hype we heard around crypto and blockchain years ago. That was misplaced, as is today’s. The impact of crypto and blockchain is real and will continue to evolve; it’s just not what some tried to sell the public in the early days. The same will happen with AI – the impact will be considerable, but the hype is setting the field up for disappointment. Here are just a few choice examples:
AI will “permanently disrupt” education. The internet arguably did this, but are people happy with the state of education these days?
AI willpredict medical problems before they happen. Obviously, this would be amazing, but would better predictions improve diagnoses, or could they introduce more risks? If AI-powered medicine can save even one life then I’m all for it, but I worry about the general anxiety cost and the missed diagnoses because the predictive algorithm didn’t flag anything.
AI canhelp fight climate change. Faster information processing can deliver useful maps of trigger areas that could help focus prevention efforts. But what about all those guzzling data centers?
AI combined with nuclear fusion will make usa super-species. And facilitate intergalactic travel.
We will never have to worry again. This is from Sam Altman, the CEO of OpenAI.
Perhaps I sound like a crypto enthusiast who hates the idea of another hot technology stealing our ecosystem’s thunder. Far from it – I hated the early-stage crypto hype as well, the promises that “blockchain will change everything!” and “everything will be tokenized!” In fact, I’m excited for the future of AI.. But want to be mindful.
I’m also supportive of the migration of VC attention. You’ll probably have seen comments from prominent Silicon Valley representatives saying things like “If you’re in crypto, pivot to AI.” By all means, those venture capitalists that chase the latest technology should definitely do that. This would significantly reduce funding in the crypto ecosystem, but the crazy money that was being flung around a couple of years ago led to unrealistic valuations, unsustainable structures and some really bad behavior.
A tighter funding environment will hopefully mean that those startups or later-stage operations that do get funding will have a stronger product/market fit, run a leaner operation and as a result have a better chance of survival while not burning through easy VC cash.
The AI field is welcome to the hypesters as well: the techno-utopians convinced that technology brings out our better natures, the visionaries that believe funding should be based on faith rather than utility, the consultants that want to frighten you into paying for their services.
If AI deflects the “hot” funding, diverts the hyperbole and siphons off those that were only in it for the money, the crypto ecosystem will be stronger for it. Blockchain promises will become more focused. The expected value can get more real.
The crypto ecosystem will also benefit from potential overlaps, and there are many. Easier coding for blockchain-based apps, decentralized storage for vast pools of data, shared incentives for sustainable power solutions for data centers are just the tip of an exciting pyramid of possible synergies.
I venture that another overlap could be applying lessons learned from the crypto hype. Vast opportunity is exhilarating, and if we don’t reach high, we’ll never know how high we can go. But too many broken promises weakens credibility, disillusions investors and gives detractors plenty of fuel.
The AI field probably has to go through the process, though, and learn this for itself. I applaud genuine excitement for the motivation it spreads and the hope it delivers. My concern is when that excitement becomes opportunistic and manipulative. Those who care about our collective future, with all the solutions and risks technology can bring, deserve better.
If we’ve learned one thing about the crypto space in the past year, it’s this: Trust matters.
One way to earn trust is to get vetted by a reputable financial institution. Which is why it’s notable that Alchemy Pay, a gateway between fiat and crypto, has been given the stamp of approval, of sorts, by a trusted brand in finance: Mastercard. Continue reading
