Decentralized Diaries For The Week of 5/16/23


By Christopher Hamman

Family offices are taking advantage of sudden movements in the cryptocurrency space. (So it seems).

Rumor has it that CZ and Binance.Us are looking for ways to reduce his majority holdings.

The IRS finally went after the FTX estate and family of companies. 

Plus, Circle adjusted its reserve holdings and doesn’t own any American debt that matures beyond the end of the month.

These are your decentralized diaries!

Bitcoin Remains Bearish at $27k

Bitcoin entered slightly bearish territory, with prices hitting a $28,215.41 high and then slipping to a $26,212.89 low. As of 5/15/23 Bitcoin’s price is at $27,458.29.

In the altcoin space, Ethereum (ETH) is in “sell” territory with prices at $1,833.99, Solana (SOL)at $21.38, Polkadot (DOT)at $5.38, and Avalanche (AVAX) at $15.26.

Bitcoin Transaction Fee Spike Spurred Moves to the Lightning Network

As Bitcoin transaction fees continued to rise sharply, major cryptocurrency exchanges adopted the Bitcoin Lightning Network, a faster and less expensive but secure method of token transfers on the Bitcoin blockchain. Major exchanges, including Binance, have integrated LN with Coinbase’s Brian Armstrong, indicating that the exchange will soon follow. 

Goldman Sachs Report Showed Rising Digital Asset Holdings by Family Offices 

A recent Goldman Sachs report indicated that 32% of family offices currently hold digital assets as a part of their portfolio, with 19% having a belief in the industry, 8% holding tokens for speculative purposes, and 9% invested in digital assets for diversification. 

MetaMask Fully Integrated with PayPal for U.S. Residents

The MetaMask crypto wallet has enabled PayPal-powered Ether purchases for American residents. This completes its initial integration with the payments giant, which started in December last year. 

In related news, PayPal’s SEC 10-Q quarterly performance filing indicated $943 million worth of digital assets in Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) tokens per its balance sheet. 

The IRS Filed $44 Billion in Claims Against FTX and its Related Entities

The IRS waded into the FTX saga and took its pound of flesh with filings worth $44 billion against the estate of bankrupt cryptocurrency exchange FTX and its related entities, including Blockfolio, Ledger Holdings, West Realm Shires, and others. 

The highest claim was against Alameda Research LLC ($20.4 billion and $7.9 billion) and two against Alameda Research Holdings worth $9.5 billion. 

The U.S. Chamber of Commerce Filed an Amicus Brief Against the SEC, Supporting Coinbase

The legal drama between the SEC and Coinbase took an interesting turn with the filing of an amicus brief to support Coinbase in the Coinbase vs. SEC case by the US Chamber of Commerce.

The brief stated, “The Chamber’s members have a strong interest in regulatory clarity, and many of its members are companies subject to US securities laws that may be adversely affected by the Securities and Exchange Commission’s current approach to digital assets.” 

An amicus brief is a filed statement that supports either part(ies) in a case when the filing entity or person(s) has a strong interest in the case or its outcome. 

“Self-Regulatory Organizations” Mulled at Capitol Hill Crypto Hearing

As part of the crypto hearings in Congress, lawmakers considered creating a self-regulatory organization (SRO) for the crypto space with the SEC and CFTC sharing supervision. 

Rep. Stephen Lynch (D-Mass.) asked Timothy Massad about the issue, given discussions that give the CFTC preference. Massad replied, “I would rather see a system where we forced the two agencies to work together, to work through an SRO and that way, the industry could basically have to pay for it.”

On the other side of the aisle, Rep. GT Thompson (R-Pa.) asked Matthew Kulkin, partner at Wilmer Cutler Pickering Hale and Dorr LLP, who testified about the same issue. He replied, “I worry that creating a new SRO from scratch would take time. I think about this in terms of incremental process, and I don’t know that we need to recreate the wheel here.” 

In related news, Rep. Patrick McHenry (NC-10), Chair of the House Financial Services Committee, and six of his colleagues wrote the SEC, objecting to crypto custody rules. 

Metal Blockchain to Integrate with FedNow 

Metal Blockchain, a “hard fork” of the Avalanche blockchain, indicated that integration with the Federal Reserve’s FedNow real-time payments network is in the works. 

The integration will allow instant stablecoin conversions via FedNow’s “send/receive” feature. 

FedNow will launch in July.

Binance.US Has Been Looking to Reduce Changpeng Zhao’s Controlling Stake

Per recent media reports, Binance.US and Changpeng “CZ” Zhao have been looking for ways to reduce CZ’s controlling stake in the US cryptocurrency exchange since last summer. 

Recent regulatory scrutiny by regulators and CZ’s legal issues (with the CFTC most recently) have put the issue on the front burner for Binance.US executives. 

Franklin Templeton Launched Blockchain Fund II

Asset management behemoth, Franklin Templeton, indicated that it was setting up a second blockchain fund after its entrée in 2021.

Per an SEC filing, the “Franklin Templeton Blockchain Fund II” will be a private equity fund with a $100,000 minimum investment sum.

Goldman Sachs, Microsoft, Others Launched Global Financial Blockchain

Microsoft, Deloitte, and several financial and corporate giants announced the launch of the Canton Network, a privacy-focused and smart contract-enabled blockchain that connects and streamlines financial markets and ecosystems together. 

Financial firms will efficiently and securely deploy and transfer assets globally within Canton’s ecosystem Using “Dami”, a smart contract programming language developed by Digital Asset, a Web3 software firm. 

Circle Moved Reserves to Short-Term U.S Treasuries

USDC stablecoin issuer Circle shifted most of its reserves to short-term Treasuries that mature at the end of May as part of moves to avoid the U.S. debt default risk.

The BlackRock-managed “Circle Reserve Fund” shows the last due date of maturity for the ” 912797FG7 ” Treasury bill with a 4.14% yield set to reach maturity on May 30th, 2023.