Sunday Review 21/04/2024

Crypto conferences Token 2049 and Blockchain Life were disrupted this week as roads turned into rivers and building facades into rumbles in their host country of Dubai. A large storm traversing the Arabian Peninsula brought flooding rainfalls and devastating winds to the usual sunny destination. The unseasonal and extreme climate also affected the neighboring countries of Oman, Pakistan, Afghanistan, and Iran.

The severe and destructive weather wasn’t the only event distressing the region last week. The geopolitical crisis involving Iran and Israel immediately propelled risk-averse behaviour from investors across the globe, leading the financial markets into turmoil. In crypto, the prices of all tokens in the market fell sharply.

Bitcoin went from $67 to $62 thousand in the first hours after the attack. As the situation unfolded during the week, it dipped so much that it scrapped $60 thousand on Wednesday, passing the long-awaited halving day at around $63 thousand mark.

As the Bitcoin block reward halved from 6.25 BTC to 3.125 BTC, bitcoin maximalists claim that the king cryptocurrency will become rare and thus more valuable. But what made other digital assets more attractive this week?

Surprising to many, Ethena Labs' recently launched “synthetic dollar,” USDe, maintained its peg despite the financial turbulence. Due to the protocol’s promise of high yields to investors, market observers were skeptical that the stablecoin would withstand instability.

The price of Solana native token was also negatively impacted by the Iranian-Israelian conflict. More so than it did due to the congestion bugs affecting the network during the first two weeks of the month. With the beta phase of the layer one blockchain nearing the end, failures such as this are expected to stop happening. But so far, the community still supports Solana’s developing modus operandis of trial-and-error.

As meme coins and NFTs' investors have their favourite blockchains, so do gamers. The network created to host only Axie Infinity, Ronin Chain, had lost its popularity during the bear market. However, after implementing a successful diversification strategy by partnering with the browser-based RPG game Pixels and other third-party projects, the activity on the platform began to surge last November. With 3.1 million active users (2.3 million due to Pixel), Ronin was the most popular gaming chain during March.

The also popular Pi Network, which allows users to mint crypto through their phone with minimum effort, has found the first use case for their platform with P2P know-your-customer (KYC) authentication. Since the project’s launch, 10 million people have confirmed their identity.

Ripple, too, is trying to create a service where investors can use the XRP token by delving deeper into DeFi. The blockchain is turning the page from the poor performance of the last couple of years with a semi-centralized new lending protocol.

The ups and downs, successes and failures, eureka developments, and cruelsome hacks happening in Web3 are nerve-racking to some, but to German composer Hanz Zimmer, they are also inspiring. The notorious songsmith, known to produce the soundtracks of movies such as Dune, Interstellar and Gladiator, latest creation is an anthem for Justin Sun’s blockchain Tron aimed to reflect the wild spirits of decentralization at the heart of Web3.

While some outsiders venture into the crypto world, insider Chaopeng Zao ventures out. Forced out of his post as Binance’s chief operating officer by the U.S. Securities and Exchange Commission, CZ is occupying its retirement time by developing a blockchain-based education platform to provide free basic education “to all”. Looking quite childish, the first “testnet” lesson of Giggle Academy was launched on April 17.

Meanwhile, the company he left behind is implementing changes to its organizational structure as demanded by the SEC. Now that a board of directors has been appointed, CEO Richard Teng revealed that the crypto exchange is looking for a country where to establish its first formal headquarters.

Unlike the relationship between SEC and Binance, which is now moderately peaceful, the market regulator’s affairs with other crypto exchanges and the crypto markets remain conflictual.

Gary Gensler’s agency’s open lawsuit against Kraken is on fire. In February, several U.S. attorney generals filed an amicus brief supporting the argument set forward by the exchange that the SEC was acting beyond its powers. On April 16, NGO Democracy Forward did the opposite and filed a similar legal document supporting the regulator’s enforcement actions.

The Commission’s stance against crypto is opposed by millions of U.S. citizens and their representatives. This week, lawmakers from both parties of the country got together to announce a bill that would regulate stablecoins. The senators behind the legislative proposal are concerned about how stablecoins negatively impact the dollar and North American consumers.

It is improbable that the bill will pass as most U.S. governmental apparatus is still too defensive about crypto assets, often insisting on the old stereotype that crypto is a mechanism for international organized crimes, gangsters, and rough state hacker groups.

Ethereum’s co-founder, Vitalik Buterin, is unafraid to challenge the establishment. This week, he transferred 100 ETH (around $300 thousand) to privacy-preserving protocol Railgun, boldly stating, “Privacy is normal.”

When the crypto industry begins to be regulated in the world's largest economy, governments from countries with less power but much more willing to embrace technology will already be running dynamic crypto hubs. One example is the U.K., where authorities revealed this week that by summertime, there would be clear regulations for stablecoin issuers and staking services.

In Asia, Hong Kong is also establishing itself as a destination for crypto businesses and investors. On Monday, the country’s financial market regulator approved asset management firms to launch Bitcoin and Ethereum spot ETFs, allowing traditional investors a mediated exposure to crypto assets.

Crypto owners in Russia are keeping an eye on the legislative developments regarding crypto. After losing access to markets and their assets following the U.S. sanctions on their mother country, Russians are finding alternatives for suitable payment methods in minor and non-western services.

Hugely popular messaging application in Russia and beyond, Telegram and its sister blockchain project TON, announced collaboration with Tether this week. USDT and XUSD will be traveling on TON now and will be made available to Telegram users via the messenger's in-app wallet bot.

Finally, we observed more back-and-forth discussions around the CBDC use by the representatives of European, New Zealand, Israeli, and South Korean central banks, as well as consolidation of UK banking community around the Regulated Liability Network in our weekly banking and CBDC roundup.