Crypto exchanges are beginning to relist Ripple’s XRP token following a verdict in the company’s longstanding legal battle with the U.S. Securities and Exchange Commission, which found that XRP is not necessarily a security. U.S. exchanges Coinbase and Gemini among others are planning to relist XRP or expand its trading functionality, as are several international exchanges that delisted the token shortly after the SEC sued Ripple in 2020. While some of Ripple’s sales of XRP to institutions were found to represent an “investment contract,” the judge clarified the sale of the tokens on exchanges and through algorithms did not violate the SEC’s so-called “Howey Test.” Coinbase (COIN) shares rose over 24% Thursday after the U.S. District Court dismissed part of the SEC’s case, and XRP rallied upwards of 70%.
Real Assets on Polygon
Ondo Finance has launched its tokenized U.S. Treasuries called OUSG tokens on the Polygon network, expanding from Ethereum. OUSG tokens are a blockchain-based version of BlackRock’s short-term U.S. government bond exchange-traded fund (ETF), not dissimilar to Franklin Templeton’s tokenized offering also on Polygon. The move comes amid rising demand for on-chain “real work assets,” aka RWAs, as yields in decentralized finance (DeFi) have declined relative to the wider economy. Wealth management firm Bernstein forecasted the RWA market could grow to $5 trillion in the next five years. Ondo plans to bring its tokenized money market fund called OMMF, which is a yield-generating stablecoin alternative, to Polygon soon. Separately, Polygon developers are mulling a token upgrade that would replace the network’s MATIC token with POL, which would function as the base token across Polygon, Polygon zkEVM and various application-specific “supernets” that sit atop the network.
Multichain Shuts Down
Multichain, one of the largest crypto bridging protocols, is halting operations months after China authorities apprehended CEO Zhaojun, thereby confiscating wallets and key phrases associated with the protocol. On Thursday, police arrested Zhaojun’s sister who was helping the Multichain team maintain day-to-day operations. Remaining employees announced the protocol would close “due to lack of alternative sources of information and corresponding operational funds.” Assets Zhaojun’s sister had transferred off the network in a “preservation action” are allegedly inaccessible. Multichain was exploited for $130 million last week.
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NOWHERE TO HIDE? “Eventually, everyone’s blockchain identity will be linked to their real-world identity,” Arkham Intelligence predicts. (Library of Congress/Interim Archives/Getty Images) (Getty Images)
Depending on your perspective, this week brought a double dose of black pills for those who held out hope of salvaging cryptocurrency users’ privacy – or white pills for those seeking greater transparency for a $1 trillion market.
“Deanonymization is destiny,” the company declared in a “white paper” (really a marketing brochure, printed in the same academic-looking font and layout as Satoshi Nakamoto’s original proposal for anonymous digital cash). “Eventually, everyone’s blockchain identity will be linked to their real-world identity.” (Emphasis mine.)
Descriptively and directionally, Arkham may be correct – but its project of accelerating that outcome understandably rubbed privacy advocates the wrong way. The subsequent revelation that Arkham had inadvertently leaked its customers’ personal data offered comic relief.
Blockchains are one kind of fishbowl; regulated exchanges are another. The Arkham kerfuffle was followed by an illuminating report about asset management giant BlackRock’s proposed spot bitcoin exchange-traded fund (ETF) from CoinDesk’s Ian Allison. He learned of an information-sharing agreement between BlackRock’s partners, the Nasdaq (which plans to list the ETF’s shares) and crypto exchange Coinbase. The arrangement would go further than surveillance-sharing agreements (SSAs) in previous bitcoin ETF applications. Rather than Coinbase just pushing trade data to regulators, to BlackRock and to the Nasdaq, the latter parties would be allowed to pull data from the crypto exchange, “up to and including personally identifiable information (PII), such as the customer’s name and address.”
To be fair, there’s a reason the U.S. Securities and Exchange Commission (SEC) asks ETF applicants to obtain SSAs with regulated markets for the underlying assets, and it’s not some covert ambition to become another NSA. The regulator aims to deter market manipulation.
Arkham’s intel exchange might serve a similarly salubrious purpose. “Transparency about what market players are doing is good for everyday traders and investors and helps to level the playing field,” the company noted in an FAQ. “This kind of widely available market transparency is missing in TradFi, which privileges bigger, well-resourced players at the expense of everyone else.”
All this is well and good, as long as you think of cryptocurrency strictly as a trading asset, and not as, you know, a currency. Indeed, trading – put more bluntly, speculation – has historically been crypto’s main use case.
The danger is that blockchain identity bounties could be weaponized against the weak.
Two years ago, a data breach at a crowdfunding website exposed the identities of donors to a legal defense fund for a defendant who one side of the culture war had already found guilty without a trial. An international newspaper saw fit to amplify the names of several “public officials” who donated, including a police sergeant who gave a whole $25 and a fire department paramedic who kicked in all of $10. Not to be outdone, a local television reporter contacted the paramedic’s employer and reported, with a whiff of incredulous disappointment, that the city had not placed this obscure individual, who was not accused of breaking any laws, on administrative leave. (The defendant, for the record, was acquitted by a jury of his peers.)
Unlike crowdfunding websites, decentralized networks can’t be pressured into blocking transfers to politically disfavored recipients. There’s no “CEO of Bitcoin.” But you don’t need to “breach” a cryptocurrency network to see where the money is moving – it’s all out there in the open. Pseudonymous blockchain addresses are the only fig leaf available to participants.
Take those away for everyone, not just the high rollers, and you won’t just give retail traders a leg up; you’ll also arm the internet’s stalkers, sadists and scolds with a new set of “receipts.”
