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:
The Arbitrum Foundation caused an uproar this weekend following a disastrous first DAO vote. The decentralized organization began selling recently minted ARB tokens for stablecoins before the community “ratified” the organization’s nearly $1 billion budget, according to a company blog. The foundation has been portioned 7.5% of all ARB tokens which it would use in part to fund “special grants.” The move sparked outrage among ARB holders, who are unable to choose how the nearly $1 billion sum is distributed because the centralized foundation does not subject its grant allocations to “full on-chain governance.” The Arbitrum Foundation eventually reversed course and will now break up a controversial governance package into a series of separate votes. ARB fell as much as 10% amid the governance dispute.
Lost and Found
Bots on Ethereum programmed to perform controversial “Maximal Extractable Value” (MEV) transactions were attacked resulting in the loss of almost $20 million in crypto. Experts say the particular attack may “reshape” the MEV industry, due to the way it exploited an Ethereum validator to front-run the MEV bots designed to front-run other users. Meanwhile on Monday, decentralized exchange PancakeSwap introduced Version 3 on the Ethereum and BNB Chain networks.
Global Moves
The Japan Financial Services Agency (FSA) has warned four cryptocurrency exchanges – ByBit, BitGet, MEXC Global and Bitforex – to cease offering services in the country until they obtain the right licenses. The agency sent a warning letter Friday alerting the exchanges they had violated the country’s financial laws and were “conducting crypto asset exchange business without registration.” Elsewhere, payments provider Alchemy Pay has received a $10 million investment from market maker DWF Labs to expand business in South Korea. The move comes as the firm aims to capitalize South Korea’s “high level of crypto acceptance.”
Core – a free and comprehensive suite of tools by Ava Labs – supports Avalanche, Bitcoin, Ethereum and all EVM-compatible blockchains. It allows users to self-custody their assets, ensuring complete control over their funds without relying on third-party intermediaries. In addition, Core provides an integrated platform across a mobile app, Chrome extension and web portfolio that enables users to manage their assets, NFTs and more, all while keeping track of real-time price movements through the Watchlist feature.Continue reading.
*This is sponsored content from Ava Labs.
Sound Bites
“Mass adoption is not going to happen…with Web3 niche applications.”
– Polygon co-founder Sandeep Nailwail, on CoinDesk TV’s “First Mover”
The Takeaway: Warren’s War
We’re heading into an election year and crypto’s moment on the campaign circuit seems imminent.
On March 20, Florida Gov. Ron DeSantis (R-Fl.) announced legislation to prohibit the use of a federally controlled central bank digital currency (CBDC) in the state. Soon after, Sen. Ted Cruz (R-Texas) introduced legislation to prohibit the Federal Reserve from developing a direct-to-consumer CBDC which could be used as a financial surveillance tool by the federal government with two other Republican co-sponsors.
Then last week Sen. Elizabeth Warren (D-Mass.) tweeted from her campaign account that she was building an “Anti-crypto Army.” So if you were under any suspicion that crypto wasn’t political, then I’m sure that suspicion is now shattered. Crypto is politicized.
Gov. DeSantis made it about political parties with his office announcing that the legislation is an attempt to protect “Floridians from the Biden administration’s weaponization of the financial sector through a CBDC.” He said “a centralized [sic] bank digital currency is about surveillance and control.”
Senator Cruz didn’t make it about political parties and instead leaned into the importance of financial privacy and the global dominance of the U.S. dollar as a matter of national security. This itself is interesting because that’s exactly the point at the center of Senator Warren’s anti-crypto stance, which includes new anti-money laundering bills and tamping down on sanctions evasion.
Hence the perceived effectiveness of Warren’s anti-crypto army. She has allies across the aisle like Senator Roger Marshall (R-Kansas) making her anti-crypto campaign less of a left-leaning campaign and more of a this-is-for-the-good-of-the-country-leaning campaign.
Senator Warren will likely get other Republicans on-board with this type of campaign since it is positioned around preventing money laundering and it’s probably pretty difficult to be a member of Congress and appear to support money laundering.
Where crypto’s politicization will get more interesting is specifically on the topic of CBDCs and Bitcoin in the shadow of the current banking crisis.
“Instead of Bitcoin we could be talking about digital currency, that’s something totally different, because that’s a government-backed electronic transfer … but that has something that backs it up.” Adding later, “If you think: We can improve that in a digital world? The answer is sure you could but in that case let’s do a CBDC.”
If history is a guide, if CBDCs enter the political discourse this coming election cycle it’ll become a red-blue issue. Conservatives have already begun coming out as anti-CBDC because its introduction could allow the government to surveille and potentially censor regular, law-abiding Americans.
Liberals could then align as pro-CBDC because private (meaning non-government) cryptocurrencies enable money laundering and don’t offer the same government-assured backstop a CBDC would.
Of course, the conversation around CBDCs should be bipartisan: If a CBDC enables unfettered surveillance of financial transactions then all Americans should make it a priority to block that. Privacy, of course, is incredibly important.
Consensus is less than a month away! Join us to hear from some of the industry’s most sought-after thought leaders, including Yuga Labs CEO Daniel Alegre, CFTC Commissioner Christy Goldsmith Romero, Circle CEO Jeremy Allaire, Edward Snowden and hundreds more. Don’t have a ticket yet? Register today and take 15% off with code NODE15. Learn more and register.
Wait A Sec
Kudos for making it this far! On occasion, we’ll give our loyal Node readers the opportunity to claim DESK, our social token, which is a mechanism for returning the value of engagement directly to the users who create it.
