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:
Bitcoin rewards app Fold and Visa are expanding their ongoing partnership for Fold’s prepaid debit cards in North America, Europe, Latin America and the Caribbean. The expansion comes at a time when the “demand for bitcoin onramps outside the U.S. is growing,” said Fold CEO Will Reeves. The firms first collaborated in 2020 to launch a debit card with bitcoin rewards, and Fold has since paid out over $30 million in bitcoin. Elsewhere, Argentinian airline Flybondi has expanded its partnership with NFT ticketing company TravelX to offer all tickets as NFTs. The NFTs will be issued on the Algorand blockchain.
Out of State
Binance, the world’s largest crypto exchange by trading volume, accounted for 92% of all bitcoin spot trading market share by the end of 2022, according to new data from Arcane Research. The growth was spurred in part by Binance’s decision to lift trading fees for BTC spot pairs, and increased market share after the collapse of FTX in November. Meanwhile, during a Sushi Swap ask-me-anything call on Thursday “Head Chef” Jared Grey said he no longer felt “inspired” amid a wave of regulatory crackdowns on crypto exchanges. Grey, who manages the decentralized exchange said, “It really feels like over this last cycle that the majority of that feeling [of excitement] is gone now,” and pointed to Senator Elizabeth Warren’s recent formation of an anti-crypto army.
Sun Settings
After facing charges of fraud by the U.S. Securities and Exchange Commission, Justin Sun, founder of the Tron blockchain, was stripped of his status as an ambassador for the government of Grenada. Sun, who was first appointed as the country’s World Trade Organization diplomat in 2021, confirmed in a tweet that his term would end effective March 31. In other news, Sonny Estival, the NFT artist better known as Mason Rothschild who recently lost a trademark dispute with fashion giant Hermès over his “MetaBirkins” token collection, is still looking to provoke, according to an interview with CoinDesk’s Rosie Perper. His latest collection, ”This Artwork Is Subject to Change,” launched as an open edition on the Manifold marketplace last month.
At ETHDenver, Near Protocol co-founder Illia Polosukhin made a major announcement: Near is becoming the industry’s first Blockchain Operating System (BOS). As Consensus approaches, new updates from the team are expected to continue. Near will be present for all three days of the conference, providing an onboarding experience and deep dive into the Blockchain Operating System for all Web3 users. Continue reading.
*This is sponsored content from Near.
The Takeaway: Blockchain, Not Block
On March 23, Hindenburg Research released a lengthy research report alleging in part that the Cash App payments tool created by Jack Dorsey’s Block (formerly Square) has been rampantly abused by criminals, and that Block has not taken sufficient steps to halt that activity.
Hindenburg is a fairly new but widely respected research-based short seller, which has successfully exposed fraud at firms such as Nikola Motor. Observers have so far found Block’s rebuttals of the report unconvincing, and even evasive. The allegations are serious for Block and the fintech sector, and deserve attention from the crypto industry, too. Cash App is a significant bitcoin onramp, for one thing, so there are potentially direct impacts.
But more deeply, the (unsurprising) discovery that Cash App has been a vector for criminal transactions and identity fraud helps cast enduring criticisms of cryptocurrency in a more nuanced light.
These are fun points to make. But as I said, whataboutism is an entry-level critique for crypto advocates. Malfeasance somewhere else doesn’t excuse it in your own backyard.
Instead, the Block allegations, like the persistent endemic corruption at major banks, should invite deeper consideration of the relationship between money, control and profit. Cryptocurrency reshapes that trilemma.
Cash App, like most banks and corporate-owned payments processors, has accepted substantial responsibility for policing its customers in exchange for the right to generate profit from processing payments. The Hindenburg allegations drive home the deep conflict of interest inherent to this dynamic. Whether or not it was a conscious, deliberate strategy, Cash App’s popularity for illicit transactions did, in whatever small way, feed into its bottom line. This is even more obvious and direct when banks cater to criminal customers.
A more generous take would be that it’s unreasonable to expect even the most pure-hearted payments operator to block all criminal activity. They’re dealing with millions of customers, and those looking to evade control systems will always find loopholes.
Even in its attempts to blunt Hindenburg’s allegations, the best Block can do is say that only 3% of activity on Cash App is from unverified users – that is, those whose real-world identity is unclear. While not quite an index of criminal activity, that ratio is vastly higher than the sub-1% proportion of criminal activity on public blockchains, according to Chainalysis.
Neither of these is a good thing. But blockchains have at least two major advantages in the discussion of financial enforcement. The first, and most immediately important, is transparency. Most public blockchains retain records of all transactions, and sleuths can often follow the trail to the really bad guys. Both banks and corporate rails like Cash App are relatively opaque by comparison, their workings only accessible by law enforcement and regulators backed by state power – if then.
But more profoundly, crypto offers a framework that removes both selective censorship and the profit motive from financial infrastructure, cutting the Gordian knot of politicized payments. Bitcoin miners don’t have the individual power to block payments on the network. That puts responsibility for controlling what people do with their money back in the hands of law enforcement where it belongs.
It’s unsurprising that authorities are not fans of this increased responsibility, preferring to have convenient middlemen to lean on. A more mature society would acknowledge that in a capitalist and digital age, open access to digital payments is a human right on par with free speech. So far, that argument has held the most sway when it benefits the already wealthy and powerful.
Our civilization has faced struggles in reshaping itself around freedom of speech since the concept arose alongside the printing press, but there’s little doubt we’re stronger and happier for it. With time, freedom of payments will prove itself just as empowering for us all.
Trump NFT Sales Spike Again With Historic Indictment (Decrypt)
3AC founders’ crypto exchange OPNX is another smokescreen (Protos)
Former Grenada ambassador Justin Sun is entering a world of pain (Protos)
Solana Options Protocol Cega Comes to Ethereum (Blockworks)
‘Choke Point’ is real, Novogratz says after telling Miami crowd ‘we’re under assault’ (The Block)
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.
Anti-Crypto Gang
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.
