To receive our Insights newsletter you can sign up here.
Ukraine Leaders in Crypto
The month of March saw a resurgence in the crypto market, which was partially driven by hopes of negotiations between Russia and Ukraine. Once again, it has been incredible to see the power of cryptocurrencies in supporting Ukraine. Since the start of the war, crypto donations have surpassed $100m. President Zelensky recently signed the Virtual Assets Bill which creates a legal framework for the cryptocurrency industry in Ukraine and allows foreign and Ukrainian cryptocurrency exchanges to operate legally. Ukraine has also launched an NFT museum to ‘keep the memory of war’, with the intention of preserving a timeline of major events starting with the Russian Invasion on the 24th of February.
Everyone is Getting Involved
March has been a significant month for traditional tech expanding into the blockchain industry. Stripe has re-entered the world of crypto after a 4-year hiatus. They officially launched a suite of products to support crypto businesses including exchanges, on-ramps, wallets, and NFT marketplaces. To facilitate its Web3 services, Stripe also announced partnerships with FTX, FTX.US, Nifty Gateway, Just Mining and Blockchain.com. Additionally, according to the Financial Times, Spotify may also be adding blockchain technology and NFTs to its streaming service. This comes after Spotify released two job ads recruiting people to work on early-stage projects related to Web3. Once again, Meta has been making headlines in the blockchain space. Mark Zuckerberg confirmed Instagram would soon start to support NFTs. It was also reported that Meta has filed 8 new digital asset and Web3 trademark patents, covering about every aspect of the Web3 metaverse. In addition, Google launched a blockchain lab to experiment with decentralized technologies.
The Uncertainty Continues
March has also been an eventful month for regulation. We finally saw the release of Biden's long-awaited executive order on cryptocurrencies. Although the order has since received mixed reactions, it does lay out the necessary steps and coordination needed to create suitable regulation. The order called on federal agencies to take a unified approach to regulation and oversight of digital assets. The measures announced will focus on 6 key areas: consumer protection, financial stability, illicit activity, U.S. competitiveness, financial inclusion and responsible innovation. The report also showed support for research and development of a US Central Bank Digital Currency.
The EU has been advancing its Market in Crypto Assets (MiCA) legislation. This would be a landmark legislation for the crypto industry as it would provide a common license for crypto businesses to operate across borders in Europe. While it is advancing, it has experienced some obstacles. There was initially a proposal to limit Proof of Work (Bitcoin) mining in the EU, but this was quickly rejected by the EU parliament and will not be included in the MiCA regulatory framework. EU lawmakers very recently voted in favor of measures to outlaw anonymous crypto transactions. This proposal’s aim is to extend the current anti-money laundering requirements that apply to conventional payments over EUR 1,000 to the crypto industry. This measure will now require exchanges to identify the recipients of all crypto transfers, no matter how small the payment. Even payers and recipients of un-hosted or self-hosted wallets will be required to identify themselves.
India recently passed a controversial tax proposal, which has caused uproar in the industry. The tax provision will implement a 30% capital gains on all crypto transactions as well as a 1% tax deducted at source, with no ability to take deduction for losses. Many are fearing that this will lead to a brain drain of developers and entrepreneurs from India.
Maturity of Digital Assets
HSBC announced that it has partnered with The Sandbox and plans to buy a virtual plot of land. The partnership aims to promote financial literacy via gamified experiences within the Metaverse. HSBC is the 2nd bank to enter the Metaverse after JP Morgan bought land in Decentraland last month.
Custodial banking giant, State Street, has furthered its involvement in the crypto industry by entering into a licensing agreement with Copper (UK Digital Asset Custodian), to develop and launch an institutional-grade digital asset custody product. Goldman Sachs made history this month by becoming the first major US Bank to complete an over-the-counter trade in crypto. The trade used a non-deliverable Bitcoin related instrument and was done between Goldman Sachs and crypto merchant bank Galaxy Digital.
Yuga Labs Domination
Yuga Labs, the company behind the Bored APE Yacht Club (BAYC) NFT project had a very exciting month. It began with their acquisition of the rights to the intellectual property of Cryptopunks and Meebits collections from Larva Labs. Through this acquisition, Yuga Labs aims to transfer IP, commercial, and exclusive licensing rights to the individual NFT holders of Cryptopunks and Meebits, in the same way they have done for BAYC holders.
Yuga Labs also announced the release of the ApeCoin token and the creation of the ApeCoinDAO, a new Decentralized Autonomous organization created to govern the token and its roadmap forward. Board members of the ApeCoinDAO include Reddit’s Alexis Ohanian and FTX’s Amy Wu. The ApeCoin was initially airdropped to Bored Ape Yacht Club and Mutant Ape Yacht Club NFT holders. Finally, it was announced that Yuga Labs had closed a $450m Seed round at a $4bn valuation, with the round being led by Andreesen Horowitz.
Disclaimer: this newsletter was put together for informational purposes only based on our review and analysis. This should not be construed as a solicitation, offer, or recommendation to acquire or dispose of any investment or engage in any transaction.