Crypto adoption has been accelerating lately despite the recent market turns proving that the industry may already be beyond the point of return. As such, large financial institutions previously objecting to legalizing crypto technology are slowly warming up to it, with the likes of Goldman Sachs, Bank of America, and JP Morgan Chase Banks even offering custodial services.
German Banks are offering crypto services to institutional investors
Crypto is still young and thus yet to be legalized in most nations, including Germany. However, the narrative is now changing slowly but at a steady pace. Germany is exploring the potentially game-changing abilities of the crypto industry due to concerns about missing out as other nations are doing the same.
In March 2023, Deutsche WertpapierServiceBank (Dwpbank) introduced its wpNex crypto trading platform that exposes 1,200 banks and financial institutions in Germany to digital assets. However, how well the banking institutions will receive innovation over time remains to be seen.
In other reports, several banking organizations already offer crypto services to institutional investors. Deutsche Bank majorly owns the asset management group DWS, which has been looking for a way of getting into crypto and exposing its investors to digital assets.
In April, DWS announced that it was working with Galaxy Digital to develop exchange-traded products linked to cryptos that will be available in the European markets. Its CEO posted a statement on Linked In saying that though cryptos are most fraudulent, some innovations will disrupt international markets.
Other banks like Commerzbank and Dekabank are among the growing entities seeking crypto licenses from Germany’s financial watchdog, the Federal Financial Supervisory Authority (BaFin). However, their plans are geared towards institutional investors and not retail.
Though there are still limits on who can use German banks to access crypto assets, crypto adoption is seemingly taking root. However, only time will tell where the government will stand regarding crypto adoption there.
Select U.S. banks spearheading crypto adoption
Though the U.S. SEC is vehemently going after crypto ‘troublemakers, banks in the country are not stopping or slowing down crypto adoption. The number of banks warming up to the industry is slowly rising, showing signs of possible total crypto adoption.
Goldman Sachs, a major banking institution in the U.S., began providing cryptocurrency trading in the U.S. in 2018 but had to discontinue it as investors began becoming wary. However, the 2021 bull market brought more pressure from investors to access major crypto assets like Bitcoin, which made the bank start offering crypto trading again. Now, it allows for the trading of both Ethereum and Bitcoin.
Metropolitan Commercial Bank is another U.S.-based financial institution allowing crypto trading via partnerships with major crypto exchanges like COinbase and Gemini. It also provides wire transfer services with Bitcoin firms and other crypto-related financial services.
JP Morgan Chase is one of the largest banks in the world and is based in the U.S. It has been gearing up to offer crypto services even with its CEO actively despising the assets on a personal basis. Now, his bank allows its users to connect to Coinbase exchange to buy and sell crypto assets. It has also built a private blockchain and crypto known as JPM coin to facilitate international payments.
Bank of America, one of the largest banks in the U.S., has shown itself to support crypto adoption, though it still doesn’t allow its customers to invest directly into crypto assets. It uses one of its subsidiaries, Merrill Edge, an electronic trading platform launched in 2010 to allow its customers to trade Exchange-traded funds (ETFs) that provide exposure to crypto assets.
In 2021, the Bank of America also introduced a new executive position, head of digital trading. Mark Donoghue will be helmed and tasked to deal with investment questions regarding digital assets.
HongKong banks exploring how to take part in spearheading crypto adoption
Chinese banks are readying themselves to offer banking services to offer crypto startup services in Hong Kong as the China ban still ensues but does not extend to the break-away city. As major crypto banks like Signature and Silvergate have already collapsed, these chines banks are scrambling to replace them.
Hong Kong-based ZA Bank is one such bank. It is already allowed to serve as a settlement bank for regulated Web 3 companies in the city. The online bank will now offer crypto-fiat conversions with two licensed digital assets, exchanges HashKey and OSL.
Other Hong Kong banks like Bank of Communications Co., Bank of China Ltd., and Shanghai Pudong Development Bank have also started to offer financial services to local crypto firms or, in other cases, offered to help. These developments foreshadow a growing acceptance of digital innovation, likely boosting crypto adoption in Asia.
On May 24, 2023, Binance CEO revealed that China State TV had covered crypto news long after the country enacted a blanket ban against investing in crypto assets in September 2021 and jailed the ‘lawbreakers’ on this front. However, things did not cool down as Bitcoin registered an all-time high price in November of the same year.
CCTV (China Central Television) just broadcasted crypto. It's a big deal. The Chinese speaking communities are buzzing. Historically, coverages like these led to bull runs.
Now, the narrative of nations against crypto adoption seems to be changing into nations protecting investors against being taken advantage of by regulating digital assets. This journey has been joined by banks, which shows that the crypto industry is still here to stay and most likely thrive. However, only time can tell how regulation will factor in the development and growth of the industry.
Keep watching Fintech Express for updates on this and other related stories. No part of this article should be regarded as financial advice. Do your research and use caution if you choose to invest in the crypto space.
Crypto regulations in the U.S. have been a hot discussion point in the past months, with specialists citing harsh regulation. In under 6 months, the U.S. regulators, including but not limited to SEC and CFTC, have charged numerous high-profile individuals and organizations in the U.S.
While some of these organizations went against the common banking rules in the U.S., there is an outcry that regulators, specifically the Securities and Exchanges Commission, are using enforcement measures before introducing a binding regulatory framework first which might affect the interest of crypto organizations in the U.S.
SEC’s recent efforts
Kraken charged
On Feb. 9, 2023, the SEC held a closed-doors meeting coming out with information that it had charged Kraken crypto exchange $30 million for violating some of its regulations via offering crypto staking services in the U.S. Additionally, it asked Kraken to cease offering these services in the U.S.
Coinbase legal battle
Coinbase seems to be the next high-profile truffle with the SEC after XRP’s parent company Ripple. The exchange’s CEO, Brian Armstrong, has taken a strong stand against the regulator’s tendencies to charge crypto organizations without a fitting regulatory framework.
On May 16, 2023, the SEC asked courts to reject a recent request by Coinbase that sought to compel the authority to introduce clear rules of the road regarding regulating crypto. The exchange filed the motion on Apr. 27, 2023, also revealing that it had initiated legal proceedings against the SEC after receiving a Well’s Notice from the regulator.
The exchange’s Chief Legal Officer Paul Grewal expressed the company’s frustration with the regulatory stance in the U.S. last month, saying:
“Coinbase does not take any litigation lightly, especially when it’s with one of our regulators,” he noted. “Yet we, like other companies in the industry, are facing potential punitive actions from the SEC without clear understanding of how the SEC interprets the law in relation to our business.”
Budget increase
In March, the SEC Chair Gary Gensler revealed to Congress that his authority required an extra $2.4B in funding. He said the authority lags in monitoring and regulating upcoming markets like cryptocurrencies. He said the extra funding would help arm the authority with the right tools and personnel to flush out bad actors from these markets.
Gary Gensler says a vast majority of cryptos are securities
One of the most controversial statements to ever come from Gary Gensler regarding cryptocurrencies is that Ethereum is a security asset. He also said that many cryptos should be classified as securities.
These statements were not welcomed by the crypto community and other regulators like CFTC, who believe that some crypto products are commodities. However, some experts never agreed with either; they stated that cryptos are digital assets and should be bound by new regulations and classified distinctly from traditional finance products.
Planned attacks?
Dr Thomas Hogan
DR Thomas Hogan, Senior Research Faculty at American Institute for Economic Research (AIER), released a video on Youtube in April discussing how the U.S. was attacking crypto via Operation Chokepoint. He also addressed the possible resurgence of this planned attack in the form of Operation Chokepoint 2.0, which aims to cripple the crypto industry.
In the video, Hogan states that the regulators’ power over the crypto industry has increased exponentially over time, with unelected bureaucrats getting heavily involved in the making and enforcement of new regulations which circumvent the democratic process as their core aim is safeguarding their wealth or making new fortunes off of the new regulations that they are bringing.
Coinbase CEO Brian Armstrong claims the SEC wants to do away with crypto staking
Coinbase CEO Brian Armstrong has repeatedly revealed that the US SEC has hidden agenda regarding the crypto industry. He has come out to say that SEC’s plan is to cause destabilization of the industry in a bid to control it internationally, which might not work, leaving the U.S. behind in the innovation.
On Feb. 9, 2023, he tweeted that his office had received rumors that the SEC sought to eliminate crypto staking for retail customers.
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
Lax regulation witnessed in the traditional U.S. financial sector
Silicon Valley Bank sinks pulling international customers down with it
Republican lawmakers are accusing top bank regulators of sitting back while big banks like Silicon Valley Bank went down in flames. The collapse of this regional banking institution in the U.S. was the second largest of its kind in U.S. history.
Regulators closed the bank on March 10 and FDIC announced that it would bail out customers using the money paid to it. However, new information has surfaced that international customers did not benefit from this act of ‘kindness and responsibility’ by regulators.
As if foreigners didn't have enough incentives to dump their U.S. dollars, the FDIC just gave them another. Foreign customer's of #SVB weren't extended the same protection as domestic customers and will take heavy losses. The message to foreigners is clear. Don't bank in the U.S.
Treasury Chair Janet Yellen has confessed that lax regulations by the US government are to blame for the industrial collapse of 2008. We never saw any major changes in the way that the banking system is run in the U.S. even after the collapse meaning loss of income for millions of citizens.
Additionally, a big number of officials of wrongly managed financial institutions of the era were never charged or barred from ever participating in similar offices ever again. For instance, an executive at SVB was the CFO of LeMahns Brothers which collapsed in 2008. Should regulators bar such individuals from ever participating in the financial sector ever again? You tell me.
Banks are issuing risky residential mortgages under regulator’s watch
Banks have been issuing residential mortgages that are risky and hurting U.S. citizens due to a lack of enough oversight from governing bodies. Some types of mortgages like the ones with variable prices are risky as they squeeze a big number of people down their social classes when an economic crisis happens.
Unluckily, the U.S. regulators are not talking about this issue as banks continue to siphon money from innocent citizens who never participated in the process of passing bad financial policies that have brought inflation rates up necessitating high bank rates from the federal reserve.
Now in May 2023, the prices of varying mortgages was up by 7%, and have to be serviced by the same citizens who are battling a 6% total inflation against the US dollar.
Harsh crypto regulation is not good for innovation…
Several crypto and financial analysts have called out the SEC for its regulation methods citing that it won’t be good for innovation. Here is what some of them have to say:
Brian Armstrong
Coinbase CEO Brian Armstrong has become one of the greatest forces in the blockchain industry following his readiness to challenge the SEC in court regarding its poor regulatory framework and its tendency to capitalize on it.
On Feb. 9, 2023, he condemned the US SEC for seeking to ban crypto staking, stating that it would affect the U.S. markets by driving crypto companies offshore. He stated that the operation of companies away from the U.S. is the real reason for increased fraudulent activities, like in the case of FTX and Terra ecosystems.
5/ Regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX.
Armstrong also led his team in building an international exchange last month to move away from the U.S., which foreshadows growing displeasure among crypto entities in the U.S.
Tim Tully- CEO, Zelcore Technologies
In an interview with Fintech Express, CEO Timothy Tully of Zelcore Technologies, a Web 3 company offering secure and simple-to-use ‘control center’ for cryptocurrency wallets, digital assets, and blockchain data, insisted on the U.S. having a uniform crypto regulatory framework.
He referenced the FTX, Kraken, and Paxos’s BUSD cases, saying that regulators are not making the rules clear yet insist on enforcing their mysterious interpretation of TradFi rules.
In his words, he said:
“Though regulation is necessary at this point, some of the steps that the U.S. regulators are taking may only make things worse. For instance, the branding of BUSD as a security, introduction of CBDCs which will be used as tools of surveillance is wrong and will most likely push crypto innovation away from the U.S.”
He explained that the noise witnessed in the crypto space is most likely a trojan horse from the U.S. SEC looking to stifle crypto innovation globally.
Joe Lubin, CEO, ConsenSys and Ethereum co-founder
In March, Joe Lubin, Consensys CEO, and Ethereum co-founder, hit back at claims that Ether is security. He said that he feels Ethereum is not a security after Gary Gensler labeled it so, and a subsequent lawsuit from the New York Attorney General against crypto exchange KuCoin also named it so.
Lubin said that Ethereum is more of a commodity like oil other than a security citing that people often buy oil anticipating a price rise. He stated that crypto industry participants are generally frustrated with how regulators handle their job. However, he added that it’s a good thing that some regulatory efforts have brought more light to the crypto space.
“I think some of us believe that many of the actions are right and reasonable,” he said, adding “more clarity” was needed. “We’ve seen focus on things that should see real scrutiny and we’ve seen misunderstandings.”
Oliver Linch, CEO Bittrex
Oliver Linch’s Bittrex Inc. was charged by the US SEC on Apr. 17, 2023, on allegations that it was operating as an unregistered securities exchange, broker, and clearing agency in the U.S. The regulator further accused the exchange’s international branch, Bittrex Global GmbH, of failing to register with them, claiming that both exchanges shared a single order book.
“We’ve not really seen an explanation as to what the SEC’s thinking is there, why that is of significance,” Linch said, referring to allegations of a shared order book. “Suffice to say, we think that they’re mistaken in the way they conceive of it legally and in terms of facts.”
Oliver Linch hit back at the regulator’s claim that they did not get any notice of an ongoing investigation until the SEC sent a notice saying they had reached a preliminary conclusion. He explained that the SEC did not serve justice as they ignored their right to have a chance to explain facts about how their exchanges operated.
He, however, praised the regulatory efforts in Lichtenstein, Bermuda, saying that it’s great for regulators to identify the risks associated with crypto and move to managing them rather than discouraging service providers.
“What we’re seeing is a growing realization that the most successful regulatory regimes are ones that have created a framework for crypto on a bespoke basis,” Linch said. “Now, that’s why we’re regulated in Liechtenstein in Bermuda, because what those jurisdictions did really early on is really get to grips with crypto, what the product is, what services, what the risks are, and say to people, ‘OK, well, we can identify and manage. Here’s how you do it safely.’”
Linch asked the U.S. Congress to help sort out the crypto regulatory mess and ensure that if the country wants to regulate the industry, it starts with developing a workable framework
Keep watching Fintech Express for more finance-related updates.
LG Electronics, a leading technology company, has recently made a significant move into the world of non-fungible tokens (NFTs) by filing a patent for its Smart TV.
LG’s innovative NFT trading Technology
LG Electronics filed a patent application with the aim of integrating blockchain technology into its Smart TVs, enabling users to engage in NFT trading. This groundbreaking advancement has the potential to transform the way individuals interact with digital assets and broaden the accessibility of NFT trading. LG’s commitment to embracing this emerging technology is further emphasized by the recent publication of the patent application in the World Intellectual Property Organization’s global database.
The patent filed by LG provides an overview of the technological framework underpinning their Smart TVs, which facilitates seamless transactions by establishing connections with cryptocurrency wallets and NFT market servers. Once connected to an NFT market server, the Smart TV displays QR codes on the screen, enabling users to finalize transactions conveniently using their cryptocurrency wallets. By integrating blockchain technology into their Smart TVs, LG aims to enhance the convenience and accessibility of NFT trading, appealing to a wider range of users.
The LG Art Lab Marketplace
LG’s venture into the world of NFT trading extends beyond a single initiative. In September 2021, the company introduced the LG Art Lab Marketplace, an innovative platform operating on the Hedera network. This marketplace revolutionizes the buying and selling of high-quality digital artworks by enabling users to directly engage with it from their Smart TV home screens.
Moreover, the LG Art Lab Marketplace presents “LG Art Lab Drops,” which showcase artist profiles and provide exclusive previews of forthcoming works. Although it remains uncertain whether the Smart TV will support additional wallet apps beyond LG’s own Wallypto, which is also utilized on the Art Lab Marketplace, this NFT platform underscores LG’s dedication to embracing the realms of digital art and blockchain technology.
LG’s dedication to Web3 solutions
LG Electronics has been proactive in integrating Web3 solutions into its range of devices. In January 2022, the company established strategic partnerships with technology platforms Oorbit and Pixelynx to offer its Smart TV users an immersive metaverse experience. Through this collaboration, LG customers gain the ability to delve into virtual worlds and even participate in virtual concerts, all from the comfort of their own living rooms using their Smart TVs.
Even before filing the NFT patent, LG had introduced the LG Art Lab Marketplace, which operates on the Hedera network. These initiatives exemplify LG’s unwavering commitment to exploring and implementing state-of-the-art technologies, pushing boundaries in the industry.
Potential expansion into cryptocurrency and blockchain trading
Aside from its endeavors in NFT trading and the metaverse, LG Electronics is reportedly contemplating the possibility of entering the crypto exchange market. While a definitive resolution has yet to be reached, a spokesperson for LG has affirmed the company’s intentions to broaden its scope into these domains. Notably, LG’s competitor, Samsung, has also made strides in the NFT and metaverse arenas via its venture capital arm, Samsung Next. Samsung has integrated an NFT marketplace into its lineup of smart TV products, showcasing cutting-edge technologies like Micro LED, The Frame, and QLED.
LG’s NFT and Web3 impact
LG Electronics recent patent application, focusing on NFT trading functionality integrated into its Smart TVs, showcases the company’s dedication to embracing blockchain technology and providing novel avenues for users to engage with digital assets. By seamlessly incorporating cryptocurrency wallets and NFT market servers into their Smart TVs, LG aims to streamline the NFT trading process and enhance accessibility for a wider user base.
Through its introduction of the LG Art Lab Marketplace and strategic collaborations with Web3 platforms, LG is firmly establishing itself as a prominent participant in the rapidly evolving realms of NFTs and the metaverse. These initiatives demonstrate LG’s proactive approach to pioneering advancements in these emerging fields. As LG continues to explore the potential of crypto and blockchain-based solutions, the technology landscape is poised for remarkable developments that have the potential to redefine digital interactions in the future.
The introduction of the DRC-20 token standard has caused a surge in daily transactions on the Dogecoin chain, surpassing Bitcoin and Litecoin at its peak.
Surging Dogecoin transactions outshine Bitcoin and Litecoin
Dogecoin transactions skyrocketed to a record-breaking 650,000 on May 14, as reported by Mishaboar, a prominent figure on Twitter. The surge in activity has been linked to users swarming the Dogecoin network in order to mint the newly introduced tokens. Fueling the hype surrounding DRC-20 tokens are various Twitter accounts that tout their potential and draw comparisons to the popular BRC-20 tokens, which have recently suffered from a market decline.
Cryptocurrency enthusiasts and investors have been captivated by the sudden surge in Dogecoin transactions. On May 14, the daily transactions on the Dogecoin chain reached a peak of approximately 630,000, outperforming Litecoin’s roughly 350,000 daily transactions and falling just short of Bitcoin’s numbers. Subsequently, Bitcoin and Litecoin transactions have displayed an upward trajectory, while Dogecoin’s daily transactions have experienced a slight decline.
The rise of DRC-20 tokens fuels Dogecoin transaction surge
The surge in activity on the Dogecoin network can be attributed to the adoption of the DRC-20 token standard. Users have eagerly embraced these tokens, leading to an upsurge in transactions. Mishaboar, a prominent Twitter user who shed light on the increase in Dogecoin transactions, stated, “Over the past two days, many individuals have been rushing to mint these ‘tokens’.”
Introduced on May 9, DRC-20 tokens share a similar technical framework to BRC-20 tokens. These tokens enable the recording of digital assets on the smallest units of Dogecoin, known as elons. With 100,000,000 elons per Dogecoin, users can inscribe arbitrary content, allowing for the creation of Dogecoin-native digital artifacts. This includes both fungible and non-fungible tokens (NFTs), all without the need for a separate token or sidechain.
A notable factor driving the interest in DRC-20 tokens is the narrative propagated bynumerous Twitter accounts. These accounts assert that DRC-20 is the next big thing after BRC-20, with tokens minted on this standard having the potential to experience 100-fold growth. It is important to note that BRC-20 tokens reached a peak market valuation of $1 billion on May 8 due to the frenzy surrounding meme coins. However, the market cap valuation has since declined.
Concerns arise as market value of BRC-20 tokens declines
The decrease in market value of BRC-20 tokens, along with a significant 61% drop in thevalue of Pepe, an ERC-20 token that played a significant role during the meme season, has sparked concerns regarding the momentum of meme coins in the present cycle. Speculation has arisen suggesting that the excitement surrounding meme coins may be waning. As a result of this downturn, investors have begun to venture into alternative opportunities, including the emerging DRC-20 tokens.
DRC-20 tokens drive Dogecoin transaction boom
The introduction of DRC-20 tokens has ignited a surge in daily transactions on the Dogecoin chain, although it is still in the early stages. Users are capitalizing on the minting possibilities offered by these tokens, and their appeal has been heightened by drawing parallels with the widely popular BRC-20 tokens.
Elon Musk to the rescue? Uncertain future for DRC-20 tokens
As the market for meme coins undergoes fluctuations and investors search for fresh avenues, the future of DRC-20 tokens remains uncertain. Nevertheless, their influence on Dogecoin’s transaction volume exemplifies the potential for innovation and expansion within the cryptocurrency realm. Notably, if Elon Musk were to become involved, the prominence of DRC-20 tokens in the crypto-sphere may skyrocket.
A new report published by Reflexivity Research highlights the rapid pace at which the financialization of non-fungible tokens (NFTs) is progressing. It urges more caution when dealing with the industry as it is still arguably young but very promising which makes it a target for scammers.
Insights and Caveats: The Growth of NFTs as financial products
Reflexivity Research’s report sheds light on the expansion of NFTs asfinancial instruments, offering valuable insights while refraining from providing investment advice. The report emphasizes the importance of considering specific considerations when exploring the financial potential of NFTs and highlights the pivotal role that market factors play in propelling the financialization of NFTs.
The burgeoningpopularity of NFTs as a lucrative avenue for artists to monetize their assets is accompanied by a notable surge in their complexity and intricacy, encompassing diverse interactions such as trading, lending, and borrowing. Nevertheless, the report also expresses apprehension regarding the potential reputational and environmental ramifications linked to the growing financialization of NFTs.
BLEND and Blur: Driving the financialization of NFTs
The report highlights the emergence ofBLEND, an NFT loan platform, as a significant factor in the financialization of NFTs. BLEND, an innovative platform that integrates the concepts of “borrowing” and “lending,” enables users to utilize their valuable blue-chip collections as collateral when seeking loans.
Furthermore, the report acknowledges the rapid ascent of Blur, an NFT marketplace that strives to deliver a top-tier user interface and seamless experience for spot trading, catering to institutional-grade standards.
Beyond expensive JPEGs: NFTs transforming traditional assets
Contrary to the prevailing notion of NFTs as mere extravagant JPEGs for profile pictures, the report illuminates their ability to introduce financial dynamics into traditionally non-financial or illiquid assets. This groundbreaking potential extends to realms such as artworks, real estate, private equity investments, and film and media rights. NFTs achieve this transformative feat by digitizing one-of-a-kind items and facilitating their seamless trade on a blockchain.
Anthony Georgiades, co-founder ofPastel Network, passionately underscores the revolutionary impact of NFTs within the art market. He emphasizes the urgent need for an innovative model of patronage that transcends the realm of NFT drops. This transformative approach aims to reshape various facets of the art world, encompassing artist selection, financial support, and the very process of art commissioning and creation. Georgiades further highlights the positive ripple effects of NFTs on well-established financial processes, including loan collateralization, insurance, and debt management.
Skepticism and challenges: Debating the role of NFTs
Despite the prevailing optimism surrounding NFTs as a vehicle for enhanced financial inclusivity, there are skeptics who cast doubt on their potential. Mark Lurie, CEO of Shipyard Software and a director of The Foundation forArt &Blockchain (FAB), expressed reservations concerning the transformative impact of NFTs within the art market. Lurie contended that achieving a genuine revolution would demand more than the mere adoption of NFT drops; it would necessitate fundamental changes in artist selection, financial backing, and the overarching process of art creation.
NFT Financialization: Opportunities, concerns, and the way forward
The Reflexivity Research report illustrates the swift progression of NFTs’ financialization, underscoring its continued advancement. While NFTs present novel prospects for artists to monetize their creations and possess the capacity to instigate transformative changes across multiple industries, apprehensions concerning environmental consequences and reputational concerns remain.
The escalating intricacy and interplay of NFTs serve as a testament to theirmounting importance within the financial domain. As the world wrestles with the implications brought forth by the financialization of NFTs, stakeholders face the task of navigating these developments while carefully considering the wider ramifications for both the art market and the financial sector.
NFTfi, a leading NFT lending platform, has announced the launch of Earn Season 1, the next phase of its loyalty program, NFTfi Rewards.
NFTfi launches Earn season 1: Fostering responsible NFT lending
The objective of the program is to encourage responsible lending in the expanding NFT market and cultivate a robust credit environment. During Earn Season 1, participants have the opportunity to accumulate exclusive reward points by engaging in borrower-friendly loans and displaying responsible lending behavior.
Stephen Young, the Co-Founder and CEO of NFTfi, expresses the platform’s conviction that NFT lending holds significant influence over the trajectory of the NFT space. In order to establish an environment that promotes responsible practices and avoids predatory lending,NFTfi has launched this loyalty program. Young underscores the significance of incentivizing responsible lending behaviors within the NFT ecosystem.
Incentivizing responsible behavior
The calculation principles of Earn Points are designed to incentivize responsible conduct among lenders and borrowers. Points are exclusively earned through repaid loans, which encourages lenders to mitigate default risks by utilizing conservative loan-to-value ratios (LTVs) while discouraging borrowers from acquiring excessive debt. Additionally, higher points are awarded for larger and longer loans, granting borrowers greater flexibility in terms of loan sizes and durations. Loans with lower interest rates (APR) are also prioritized, motivating lenders to provide borrower-friendly rates and risk-appropriate LTVs.
Earning, securing, and winning: The journey of earn points in NFTfi
By fulfilling the obligation of repaying qualifying loans, participants accrue Earn Points. Initially, these points are classified as “unsecured points” and can be accessed in the NFTfi Rewards cockpit for review. Once the loan has been fully repaid, these points undergo a transformation, becoming “secured points.” Both unsecured and secured Earn Points are showcased on the NFTfi Leaderboard, which provides visibility to users. As Season 1 draws to a close, the 500 wallets that have accumulated the highest number of secured points will be granted a multiplier of 2.5x, boosting their final balance.
NFTfi: empowering NFT holders with decentralized lending
NFTfi.com is a highly successful decentralized lending platform that operates on the Ethereum blockchain, fostering peer-to-peer transactions. This platform empowers NFT holders to borrow ETH, USDC, and DAI cryptocurrency, leveraging their non-fungible tokens as collateral. The utilization of smart contracts ensures secure and transparent interactions directly between borrowers and lenders. NFTfi provides NFT holders with the means to unlock the value of their assets, accessing liquidity, while enabling lenders to earn interest on their funds. Since its establishment in May 2020, users have engaged in transactions exceeding $400 million on the NFTfi smart contracts.
According to a report by MarketsandMarkets, the global NFT lending market is undergoing rapid expansion and is projected to reach a valuation of $13.6 billion USD by 2027. NFT lending offers notable advantages, including the provision of liquidity to NFT holders who can employ their assets as collateral for loans. Moreover, it addresses crucial concerns such as the limited availability of traditional financing options for NFT holders and the necessity for a robust credit market within the realm of NFTs.
Proceed with caution: Assessing the risks in NFT lending
NFTfi is dedicated to recognizing and rewarding authentic users while actively discouraging wash loans through a range of measures. Loans characterized by APRs below 2% or durations shorter than 3 days, as well as associated wallets, are ineligible for earning points. It is important to emphasize that, although Earn Points are presently non-transferable and cannot be redeemed, they serve as an indication of the loyalty level exhibited by NFTfi users. Additionally, it should be noted that certain individuals, including US residents and those situated within the US, are not eligible to participate in the NFTfi Rewards loyalty program.
Nevertheless, users are strongly advised to exercise caution and diligently assess their risk tolerance and investment objectives before embarking on loans. It is crucial to recognize that investments in loans inherently carry risks, and the value of NFTs can be exceedingly volatile.
Bitcoin was created in the aftermath of the 2008 financial crisis and was meant to be a digital monetary system that is independent of centralized control. However, as the mining rewards are getting squeezed due to multiple halvings and most of the coins being mined new BTC ‘products’ like Ordinals NFTs and BRC-20. But what are the implications of the new ‘innovation’ on the network
Tick tock tick!
It’s May 7, Binance, the largest cryptocurrency exchange network, goes to Twitter to announce a halt of BTC withdrawals citing network congestion. Binance reinstates the withdrawals about 1.5 hours later.
A few hours later, Binance halts BTC withdrawals again, citing the same reason as before, network congestion. This is the first time that the largest crypto exchange halted withdrawals of the largest crypto asset. But why is this ‘impossible occurrence’ happening now?
Blameshifting began, with some even selling some FUD about the Binance exchange. However, the biggest share of this blame was against new technologies arising on Bitcoin. What new technologies?
The Dawn of Bitcoin Ordinals
Ordinals NFTs are a unique class of non-fungible tokens based on the BTC blockchain. Since its launch in early 2023, Ordinals NFTs have received massive hype within social networks.
Ordinals leverage a protocol that numbers Satoshis with unique serial numbers helping trace them amid transactions. The creator of Ordinals discovered that it’s possible to inscribe some data, including images, videos, and others, on Satoshis.
Simply put, Ordinals are NFTs based on the Bitcoin network. Ordinals reside fully on the blockchain and do not require a sidechain or separate token.
BRC-20: A New Token Standard
When you see BRC-20, what rings in your mind? You probably recall a popular Ethereum standard, ERC-20. But no, it’s BRC-20. What is BRC-20?
BRC-20 includes DeFi-like tokens on the Bitcoin network. Essentially, BRC-20 stands for ‘Bitcoin Request for Comment’ and introduces a new class of tokens inscribed on Bitcoin’s Satoshis.
Domo, an anon on-chain data specialist, first pioneered this system. The user claimed that the general idea of BRC-20 was derived from a Twitter conversation.
Satoshi Dream: Creating the Future of Finance
It’s impossible to 100% visualize what Satoshi thought when creating BTC. However, the whitepaper paints a slightly blur picture of BTC as the future of finance.
Ils impriment les €uros comme si c'étaient des billets de Monopoly 💶
Imprimons TOUS une version FR du Whitepaper #Bitcoin et remplissons TOUTES les boîtes à livre de toutes les villes de France 📃🇫🇷 pic.twitter.com/nQ2x3073ag
— Kaeru 🐸 Meme Crypto (@MemeCryptoFR) May 10, 2023
The practical applications of Bitcoin in the past indicate that Satoshi wanted a decentralized, peer-to-peer, and transparent yet anonymous payment system. At the heart of Bitcoin’s creation was empowering true value exchanges.
Satoshi invented the Bitcoin network with the ultimate aim goal of ensuring there is complete financial freedom. With this system, the rich and poor would have equal chances of storing funds and making payments.
However, Satoshi’s dream also included providing an efficient operating network. So, the real question is, how will new technologies like BRC-20 and Ordinals NFTs affect Satoshi’s original dream?
New sub-Technologies Killing Satoshis Dream?
The new technologies have created a risky scenario on the Bitcoin network leading some to speculate that doom is facing BTC. The risky scenarios are as below;
Overcrowding Issues Face the Future of Money
Satoshi’s money for the future has been suffering slow settlements. Bitcoin’s decentralized nature indicates that Satoshi wanted users to enjoy unfathomable speed. However, owing to possibly a slight miscalculation, BTC could only deal with seven transactions every second. The lightning network was later introduced to improvise BTC’s transaction processing mechanism.
The emergence of new technologies has been a source of congestion in Bitcoin. How? Owing to the rise of these technologies, there has been a massive increase in transactional activities in Bitcoin. The surge has caused congestion within the network.
As mentioned earlier, between May 7 and 8, 2023, Binance halted BTC withdrawals twice. This is because of congestion.
We've temporarily closed $BTC withdrawals as the #Bitcoin network is experiencing a congestion issue.
Our team is currently working on a fix until the network is stabilized and will reopen $BTC withdrawals as soon as possible.
Data from Mempool indicated that the number of unconfirmed transactions stood at over 454 thousand. This number ranged between 400k and 500k pending transactions at a time.
Mempool’s data showing Bitcoin’s unconfirmed transactions
The congestion in Bitcoin is mainly attributed to the new technologies, i.e., BRC-20 and Ordinals. Bitcoin receives thousands of transactions every minute based on Mempool data. Bitcoin maximalists have similar sentiments about the current source of BTC congestion.
Bitcoin Fees Jump Higher Than The Daily Wage of Over 4 Billion People
The new techs on Bitcoin have caused a fee surge on the network. Of course, Bitcoin fees have been troubling for years, especially in times of bull markets. The highest Bitcoin fee was reported in 2021 at over $60 when the coin’s value was over $60k.
It’s surprising that the recent fee upsurges are occurring amid a bear market— or is it really surprising? The recent flooding of transactions created a fee problem. Reports indicate that Bitcoin’s transaction fees surged to a 2-year high.
There have been reports of fee issues in countries like El Salvador, which use BTC as a legal tender. A crypto enthusiast posted a tweet noting how the Bitcoin fees affect the average user.
I’m in El Salvador 🇸🇻 right now. Just witnessed a cash withdrawal via #btc
This individual now had to pay $20 in fees for getting $100 out in a country where the avg. salary is $300-350
I want you to think about this when enabling gambling on fkn jpegs or meme coins.
In this tweet, Marce Romero mentioned that she witnessed a transaction where a user paid $20 in fee for a transaction of $100 BTC. The average monthly salary in El Salvador is $350. If someone has to pay $20 per $100 transaction, an average El Salvadoran uses 20% of their salary as a fee.
Another article on Ethereum fees indicates that the average daily wage for about 4.2 billion people globally is $21. If someone has to pay $20 per transaction on Bitcoin, they spend all their wages on transaction fees. Well, can anyone do that? Of course, No! So, where does this leave mainstream crypto adoption? It’s ultimately slowed.
Are Miners Extraordinarily Benefiting at the Users’ Expense?
As the fees surge, a small group of Bitcoin stakeholders becomes the biggest beneficiary. Who? Miners
Mining companies have been major beneficiaries of network congestion. The stocks of Bitcoin mining companies effectively surged in the days preceding and following the BTC fee surges. Hopes of higher fees drove all this. The mere fact that miners are now benefiting extremely at the expense of average users exposes the crisis in Bitcoin.
Note: The Bitcoin dream was to foster fairness and equality, not enrich some at the expense of others.
Harper from Luxor Technologies, a mining company, noted that the BRC-20 standard doubled their miner revenue. He also noted that the fee would eventually revert to their original averages. Based on Harper, investors should expect to see similar occurrences in the future when new mints and inscriptions use Bitcoin.
Another mining company spokesperson Nazar Kan of TeraWulf mentioned that BTC fees would slow down in the long term.
Executive Chairman of MicroStrategy, @saylor, on the impact of Ordinals on Bitcoin mining and the power of inscriptions.
“What happened with Ordinals and NFTs is we crossed this chasm from what was a bearish scenario to a bullish scenario. If I was a miner I would be ecstatic.” pic.twitter.com/UDIGN5C08I
The CEO of MicroStrategy, Michael Saylor, even publicly said, “If I was a miner I would be ecstatic.”
Another Bitcoin maximalist, Clark Moodie, highlighted that “high fees are good for Bitcoin.” However, many respondents claimed that high fees only benefit Bitcoin miners.
The positive: Developments create a Decentralized Economy
Despite having a dark side, the recent developments on Bitcoin have a lighter side too. The Bitcoin network can now be home to a new decentralized economy.
Now, Bitcoin is earning more use cases in NFT and DeFi. DeFi and NFT are what mainly constitute a decentralized economy in Ethereum. As we see the rise of DeFi-like tokens in Bitcoin, this is great for the future of this network.
Den Held, a Bitcoin enthusiast, recently tweeted that “Bitcoin DeFi is just getting started,” highlighting examples like Ordinals, DLCs and Lightning.
Bitcoin DeFi is just getting started:
– Ordinals (Bitcoin NFTs/other coins) – Lightning/Taro (other coins) – DLCs (Options on Bitcoin) – And many many more🔥
The growth of NFTs and DeFi tokens will dawn a world of opportunities within the Bitcoin network. Creators in the artistry industry can use Bitcoin’s technology and reputation to build trustworthy NFTs.
Another fascinating aspect of the new technologies in Bitcoin is the possibility of the emergence of layer two solutions. Several Bitcoin network enthusiasts lightly highlighted this.
Muneeb.btc, a Bitcoin network enthusiast, highlighted that recent events that triggered high fees could drive the creation of layer two solutions for the network.
High gas fees on Ethereum started an entire industry around L2s, rollups, and other scaling R&D. High gas fees on Bitcoin can do the same for improving Bitcoin infrastructure and L2s.
When Ethereum faced such a crisis, several layer two solutions like Polygon, Arbitrum, and more were created. As the largest crypto network, Bitcoin’s developments will likely attract attention faster, creating layer two options.
Another Bitcoin enthusiast, the Wolf of all Streets, had similar sentiments about recent developments within Bitcoin. The user highlighted the vitality of L2s, especially when L1 blockchain fees become unbearable.
There are so many people advocating for an increase of the #Bitcoin block size limit to fit Ordinals inscription data and lower transaction fees.
These people probably just haven't been here long enough to know that an increase in block size was already attempted in 2017. The… pic.twitter.com/X7I1MMmouQ
Calls to increase Bitcoins blocksize have also been quite prevalent within the blockchain ecosystem owing to recent problems. Some community members believe boosting the blocksize will help cater to the ordinals’ inscription data. However, the technological adjustment has already been tested in BTC, leading to the rise of Bitcoin Cash.
Finally
This guide has looked into the new technologies on the Bitcoin blockchain, including BRC-20 and Ordinals NFTs. It is clear that while the tech has some negative impacts, it’s also great for ascertaining the future of BTC by adding new use cases and more developments.
Bank of England boss, Andrew Bailey, announced that the bank expects a fall in UK’s inflation this year but pushed its 2% target to the Q4 of 2024. Thus, price surges might continue but the economy will not plunge into recession as previously predicted. This unprecedented shift from BoE’s previous forecast follows the growth of the UK economy by 0.1% in Q1 of 2023.
Bailey vows to “stay the course” as BoE battles UK’s worst inflation in almost five decades
The warning came as the BoE boss announced the 12th straight interest rate hike, increasing its benchmark by 0.25% to 4.5%. He reiterated that the central bank was keen on maintaining its firm stance against inflation until it achieved the 2% target. The country’s inflation remained over 10% in March, and the central bankers expect it to fall more slowly than anticipated.
Consequently, Bailey announced the hike as BoE scrambled to curb the crippling inflation hurting its citizens. He owed the high inflation rates to a persistent rise in food prices and unrelenting wage growth, which will keep inflation high for a while.
Even so, he claimed that the central bank was not signaling its next moves and would rely on future data. Economists predict two more interest rate hikes before the BoE enforces a pause like Jerome Powell, the Fed chairman, did.
In his briefing, Bailey noted that the bank’s decision to hike rates would impact households within the UK adversely, particularly the lower-income ones. In his explanation, the lower income families spend more on food and are thus more prone to be affected by over-the-roof food prices.
In addition, Chancellor Jeremy Hunt pointed out that even with the evasion of recession, the BoE’s announcement would be bad news for families paying mortgages. The central bank explained that the high rates have not yet affected mortgage holders. However, with a scheduled expiration of mortgages belonging to 1.3 million households before the year ends, an average of £200 will be added to their monthly expenses.
UK economy infers a positive outlook as GDP grows in Q1 by 0.1%
The UK economy showed signs of recovery as its GDP grew by 0.1%, in line with forecasts for Q1. Bailey affirmed that contrary to the central bank’s prediction of “a shallow but long recession six months ago,” the revised growth forecast indicates “modest but positive growth.”
He attributed the growth to a fall in energy prices, “better than expected” economic activity, and “lower unemployment.” Even so, the unprecedented March shrinkage by 0.3% underscores its fragility. This fall was a result of widespread decreases within the service sector.
Despite having one of the highest living costs within any major economy due to out-of-control inflation, Bailey claimed, “The economy has turned out to be more resilient than we expected it to be.” He added that were it not for strikes and the recent coronation of King Charles, which led to an extra bank holiday, the growth would have been +0.2% in Q1 and Q2 of 2023.
The Prime Minister, Rishi Sunak, had vowed to halve the inflation earlier this year. Therefore, the government aims for about 5.3% inflation by the end of the year. With the continued rate hikes, households may be affected more by efforts to curb inflation than by modest economic growth.
British lawmakers launch a probe into the country’s food supply chain as inflation remains high
According to official data, the UK saw a 19.1% increase in food prices in March compared to last year. Thus, UK residents are experiencing some of the highest food prices since the 70s. Questions have been raised regarding the continued rise in wholesale food prices within the UK when there is a global decrease.
Because of this, legislators from the Environmental, Food, and Rural Affairs (EFRA) have expressed dissatisfaction with the situation. Additionally, they investigated the country’s wholesale food supply chain on Friday to understand the root cause of the 4-decade high prices. EFRA aimed to examine the sharing of profits and risks along the supply chain from “farm to fork.”
UK inflation has been around 10% since last summer. Source: Bank of England
Moreover, lawmakers will also consider the level of regulation and impacts of external factors like the Russia-Ukraine war and the unprecedented OPEC oil production cuts. The chair of EFRA, Robert Goodwill, expressed that his committee knew the pain felt by UK consumers but was still determining if the inflation affected the other parties up the chain or if they were benefiting from it. He added that EFRA sought to “get to the bottom of what’s going on” and give households within the UK “reasonable prices.”
One Union blamed retailers for excessively “profiteering” from the high prices by “fueling inflation.” However, in his announcement, BoE’s Bailey dismissed the claims that the central bank did not think such manipulation was going on. The central bank chief emphasized that the BoE was not directing blame on workers or enterprises but on the COVID-19 pandemic and the Russian invasion of Ukraine, which are the primary causes of UK inflation.
In addition, supermarkets across the UK have defended their high prices claiming that there is a lag of three to nine months (about the global price change) before the lower prices reflect in shops.
Keep following Fintechexpress.news to get updates on this and other Fintech-related stories as we work around the clock to keep you informed.
The U.S. Chamber of Commerce has just filed a brief in Coinbase v. SEC case, calling out the SEC for acting “unlawfully” in the digital asset space.
Coinbase case to save crypto from unfriendly regulation?
The U.S. Chamber is a highly influential organization representing companies in all industries across the U.S. making it a force to reckon with in the preservation and fostering of innovative financial technology.
It has now intervened in the Coinbase vs SEC case where the crypto exchange decided to stand ground and face the regulator with confidence that it had met all operating requirements therefore shouldn’t be served notices regarding its already vetted products or charged.
“As it stands today, nobody knows for certain which digital assets, if any, are ‘securities’ under federal law.”
In the brief, the Chamber makes 3 arguments.
1. Regulatory uncertainty is killing innovation in the U.S.
2. The SEC is destabilizing the digital assets regulatory environment.
3. The SEC is violating Constitutional Due Process and Fair Notice rights.
The Chamber goes ahead to declare:
“The SEC’s actions are not just harmful policy; they are unlawful…”
Coinbase CEO Brian Armstrong has been condemning the SEC for poor regulation. Most people took it as a pr stunt or a losing battle as the SEC has been notoriously cracking down on crypto. Now, the new statement from the Chamber of Commerce will add more weight to the matter and stand strong in court.
However, only time will tell where the direction of the case will be headed but the involvement of the most influential innovation fostering authorities in the U.S will make it interesting. Keep watching fintech express for updates on this and other fintech-related stories .
Brits to endure more pain as leaks reported by Fintech Express yesterday prove right as 25 basis point interest hike gets announced in the U.K. Now, the Bank of England has made it official, which marks a record 4.5% range which was last seen 15 years ago. At the moment, these hikes are already causing pain among Brits as many can now not pay their debts in time.
BoE announces the expected 25 basis points hike
The cost of living in the U.K. is set to rise again following an announcement by the Central Bank that it is raising the interest rates further to help fight inflation. It has announced a 25 basis points hike, the 12th consecutive bump, and a peak since 2008.
As expected, the Monetary Policy Committee voted for the hike by a margin of 7 to 2, saying that the inflation, particularly food costs, has failed to fall as fast as previously anticipated. The MPC also suggested that PM Rishi Sunak is on the edge of missing his target of halving the rate of the price rise by the end of Q4 2023, as CPI is projected to be 5.1 percent by that quarter.
However, BoE has upgraded its views on the market, saying that GBP is projected to be higher by 2.25 percent by the end of the three-year forecast period than predictions made in their February meeting.
More pain to already struggling Brits
Though raising interest rates is calming down inflation, it is heavily impacting the lives of British Citizens. At the end of April, over 700K homes could not pay their mortgages. It is predicted that the new raise will immediately impact the bills of around 2.2 million people signed into variable mortgages.
MPs who condemned the biggest high street banks for stepping off the loyal savers via financing plans like variable mortgages have noticed this continued trend of inflicting pain on citizens.
Keep watching Fintech Express for updates on this and other macro finance stories.
