The European Parliament updated proposed rules requiring banks to disclose their exposure to crypto and secure those holdings with collateral. The parliament’s Economic and Monetary Affairs Committee suggested imposing a possible 1,250% risk weight to back banks’ crypto. Separately, in France, the parliament has plans to tighten registration conditions for crypto firms beginning January 2024. Though less onerous than a previous proposal from the Senate, which must still approve the regs, firms will have to impose stronger cybersecurity, capital and conflicts of interest protections. Elsewhere, the United Arab Emirates’ central bank is looking into issuing a “digital dirham” CBDC for domestic and cross-border payments as part of a new project to accelerate digital transformation, while Banco do Brasil, Brazil’s largest public bank, will allow tax payments in crypto through a partnership with Bitfy, a startup in which the bank’s VC wing invested.
Sidechains, Sidelined
Arbitum-based decentralized exchange GMX logged fees of over $5 million in a 24-hour period over the weekend, temporarily making it the largest revenue generator in DeFi, ahead of even the Ethereum blockchain. This added to the $120 million in total fees accrued from GMX since September 2021 compared to Ethereum’s $4.7 million over that period (not including ETH-based applications’ fees). Meanwhile, Clearpool is opening a whitelisting process for institutional borrowers for a new lending protocol built on Polygon. That comes as a gaming-focused platform Avatar has grown to become the fifth-largest holder of Polygon’s MATIC token – accumulating some $22.5 million of the token. The project has been described as a Ponzi-like multi level-marketing (MLM) scheme due to a staking program involving “magic boxes” that generates user rewards for referrals. Finally, Wirex, a payments company with a crypto debit card, has signed a deal with Visa to expand its footprint across Asia and the U.K. while digital asset platform Bakkt will discontinue its two-year-old consumer-facing rewards app to focus on business-to-business tech services.
Sound Bites: Kraken Whips
“With some better regulatory clarity upfront, [Kraken] would have done exactly what the SEC needed them to do.”
– Algorand Foundation CEO Staci Warden, on CoinDesk TV’s“First Mover”
The Takeaway: No Cash? No Sportswashing
(Peter Casey/Getty Images)
There weren’t any crypto commercials during this year’s National Football League (NFL) Super Bowl. At least not on the U.S. broadcast I watched, although I apparently missed the Limit Break NFT free giveaway promo that clearly achieved its desired effect of onboarding a mass of users. Let’s see if Limit Break can keep the users they gained entertained with its Web3 games, not just ads.
After the year crypto has had, full of spectacular failures of trust, ethics and corporate responsibility (never mind the equally spectacular market crashes), it’s really not so sad crypto took a break from commercial breaks. In fact, it’s a good thing. With bitcoin’s price less than half what it was a year ago, any crypto company even substantially in the green is preoccupied with surviving. Big, flashy marketing spends can wait. So too can the sportswashing.
Sportswashing describes groups using the global popularity of sports to improve their reputations by proxy. Think most recently of how Qatar hosted the 2022 FIFA World Cup, the biggest sporting event in the world and how China hosted the 2008 Summer Olympics and 2022 Winter Olympics. In these situations, glitzy spectacles are all designed to shine a favorable light on those groups to mask otherwise unfavorable realities. Super Bowl commercials can have the same flattering effect.
To be sure, I’m not implying that the crypto companies who had Super Bowl commercials last year are hiding human rights atrocities or something like that. But as we’ve learned since the last Super Bowl, many of them were hiding something not great. And in the year ahead, perhaps the crypto companies that are able to gain ground without the benefit of these high-profile commercial spots will be more fairly evaluated. At the very least, this time around their reputations won’t have been boosted by borrowed glory. Does this mean the next FTX won’t use sports to garner favor? Unlikely. But for this year at least, we’re off the hook.
Less crypto executive hubris
The top of the market in any industry is marked by the overreaching hubris and ambition that characterize the industry’s executive class. Splashy and fancy advertisement spots like the Super Bowl are just as much about the ego boost of being seen on television by others and nurturing the “I’ve made it” feeling as it is about a savvy marketing spend. It might be more about the ego even.
Crypto executives are no exception, especially given the still-not-quite-mainstream acceptance of the industry as a whole. An association with the most recognizable brands in the world – Coca-Cola, Budweiser and Toyota? Sign them up. Where that desire becomes hubris is when we consider if they even belong. Sure, the companies were flush with money last year, they were expanding and hiring at a breakneck pace, and they were being invited to the tables of the rich and powerful – in government, industry, investment, media – so maybe they did.
But if your company’s very foundation is built on eternal promises of a new paradigm or an untested new frontier of untold riches or, in some cases, a massive outright fraud, do you really belong?At the very least we should thank our lucky stars: Crypto company executives can’t emerge from this year’s Super Bowl with boosted reputations (and associated egos) because of a loose association with a big event. They’ll have to stick with earning it instead.
PayPal is halting plans for a stablecoin developed alongside Paxos (Bloomberg – paywall)
MetaMask users targeted in Namecheap email scam (Protos)
Tether nears 50% of stablecoin market, highest in 14 months while Dexes heat up (Blockworks, x2)
Nouns NFT project just debuted an animated TV series, with a token gate. And what’s up with the Super Bowl NFT ad (Decrypt, x2)
CEO Brian Armstrong says Coinbase will “defend [staking] in court,” heads to Washington DC (Twitter, The Block)
Due to increased user activity, a substantial amount of TRX was burned on Tron in Q4 (Messari)
Lazarus hackers use new mixer to hide $100 million in stolen crypto (Bleeping Computer)
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