The OCC is willing to work with banks interested in custodying crypto, a Russian bank approved a token-backed loan and bitcoin has been sent… from space!
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The Office of the Comptroller of the Currency’s interpretative letter last month allows banks to provide services to crypto companies and custody cryptocurrencies directly – a sea change that could have been months in the making, writes CoinDesk regulatory reporter Nikhilesh De. It doesn’t appear banks have jumped at the news. However, the letter is just the beginning of a longer process. The OCC will interact with banks on their next steps if they do decide to pursue crypto services. These letters help banks interested in crypto determine if it makes sense for them to get involved in the space, the OCC’s Jonathan Gould said.
BTC in space
SpaceChain’s International Space Station-hosted (ISS) hardware secured a bitcoin transfer while floating in Earth’s orbit. Using a multi-signature transaction hardware, the firm’s Chief Technology Officer Jeff Garzik authorized a 0.0099 BTC (about $92 at the time) transfer on June 26, the company disclosed Tuesday. Data can only reach the ISS via the craft’s encrypted ground station links. SpaceChain says this adds security and resilience to transaction authorizations.
Bequant is entering the prime brokerage space by building a crypto exchange, reports CoinDesk’s Nathan DiCamillo. “Prime brokers are facilitators for financing and trading for deep-pocketed institutional investors. While the digital asset space doesn’t have a lot of prime broker options currently, several crypto firms including Coinbase, BitGo and Genesis Trading have announced in recent months their intent to build prime brokerage wings,” he reports.
Expobank, a former Barclays subsidiary in Russia, has issued a loan using tokens as collateral. Terms were not disclosed, but the loan was made to tax consultant Mikhail Uspensky, who bought WAVES in 2018 for a planned initial coin offering (ICO). The tokens are being held by a third-party notary. Expobank’s dabbling in token collateralized loans comes after Silvergate said it had issued a total of $22.5 million worth of loans collateralized by bitcoin in July. The California bank only started offering such loans to clients in January.
Decentralized privacy startup HOPR has released its first “customized HOPR Hardware Node,” which the startup says removes any reliance on cloud servers predominantly controlled by Amazon and Alibaba. HOPR uses a token-incentivized mixnet solution, essentially doing the same for blockchain as Tor (the onion router) or a virtual private network (VPN) do on the internet. The mixnet node combines running an Ethereum node with next-level data privacy.
What’s going on in the world of DeFi? The pace of development in this small corner of the crypto space can be difficult to follow. Since the end of May, total locked-in value exploded past $1 billion and now sits near $6.4 billion, according to DeFi Pulse.
A whole universe of meme-driven and meta-referential projects have launched, grabbed headlines and filled their coffers. Here’s a quick rundown on a few recent projects.
For instance, the governance token for yEarn.finance (YFI) has shot up over 32,000% in about a month, CoinDesk’s Paddy Baker reports. Investors have dropped $645 billion into the application.
yEarn founder Andre Cronje said the price rise likely came from a combination of scarcity – there are only 30,000 YFI tokens – and the fact traders were using YFI in some of the other DeFi protocols.
While yEarn has delivered an actual product – an algorithm that identifies and executes various DeFi trading strategies – with up to 95% ROIs, many projects are to be taken less seriously.
Spaghetti Money, less than a day old, has already attracted $200 million in its protocol, which features a meme coin (PASTA), no public figurehead or governance model – and which has yet to be audited.
Gamblers on the decentralized betting site Prediqt think Spaghetti will attract a total of $500 million TVL within the first 36 hours.
Finally, Binance subsidiary WazirX, the Mumbai-based crypto exchange, announced it is developing a DeFi product with Matic Network, a blockchain scalability platform.
The project promises an automated money market, similar to the popular Ethereum-based Uniswap, to run on Matics’ “high speed” blockchain. The decision to opt for Matic was influenced by high gas fees on Ethereum, fees which are in part being driven northward by DeFi.
Bitcoin’s uptrend since mid-March appears to be running out of steam. “Monday’s breakout of $12,000 was almost entirely short-squeeze driven, and the resultant failure just ahead of larger offers [sell orders] at $12,500 has solidified the price range of $12,000-$12,500 as a key resistance area for an extended period,” QCP Capital said. The cryptocurrency dropped below $12,000 Tuesday, and chart analysis shows signs of bullish exhaustion, according to CoinDesk markets reporter Omkar Godbole.
“Dust” is the technical term given to trace amounts of bitcoin – usually no more than a few hundred satoshis – that are considered too small to send in a transaction because the transaction fee would exceed the amount sent. The dust settles in a wallet, potentially allowing for nefarious actors or blockchain researchers to deanonymize the address. Dave Jevans, the CEO of blockchain analytics company CipherTrace, said that “hackers may use dusting as a strategy for identifying individuals who can then be phished or extorted.” Researchers and developers are working on solutions, including raising “dust limits” or consolidating unspent UTXOs, each with their own drawbacks.
A new internet
Steven McKie, a founding partner and managing director at Amentum Capital, is developing, investing in and calling for others to build the “new internet.” The decentralized web’s development is made all the more necessary considering the privacy leaks, censorship and control centralized internet services exert. “Although the solutions to censorship resistance, lack of privacy and trust are right around the corner, further experimentation and development of the DWeb meme is necessary before the final barriers to the New Internet are sprung open,” he writes.
Race Capital’s Chris McCann joins the latest edition of The Breakdown for a conversation about fintech, low interest rates and how cheap capital changed the face of Silicon Valley.