Break barriers with NFTs, not “band-aids”

Dear member,

The rise of crypto derivatives volume against a drop in spot trading activity may indicate short to mid-term uncertainty among investors. Could the current market volatility lead to an increase in speculation or hedging and risk aversion? Tether seems to think so.

The market’s largest stablecoin issuer holds physical gold and Bitcoin in its reserves, with the majority of its assets held in U.S. Treasury Bills, indicating a cautious approach toward the volatile crypto market.

Institutional funds and venture capital investment have slowed down in recent months, but promising projects and household Web3 names are still receiving funding. Several recent notable raises include:

Web2 stalwarts are fast embracing the Web3 narrative, with many focusing on NFTs. Panini, the sports trading card giant, plans to build a private blockchain marketplace for digital NFTs, while Barbie and Boss Beauties have partnered to release NFTs aimed at bolstering female participation in Web3. This mainstreaming of NFTs signals that, despite the initial hype subsiding, the real potential of its real-world applications is just starting to surface.

The regulatory landscape, however, remains a mixed bag. While Hong Kong and the EU are laying the groundwork for embracing crypto, the UK tax authority and IRS are cracking down on tax evasion related to crypto. Meanwhile, Canada is exploring the digital dollar.

Serious regulatory battles are being fought in multiple jurisdictions while, in a curious paradox, we witness instant millionaires being made off the back of Pepecoin’s sudden meteoric rise. Growing tensions between China and the U.S. have led to a shift in the global cryptocurrency market; Asia is becoming the dominant region for Bitcoin mining and trading.

We live in fascinating times where order and chaos intersect, where old systems are being questioned, and new ones are emerging, as aptly expressed by OKX's CEO in a recent PSA video. Since there are no rule books to guide us in such tumultuous times, could AI lend a hand? It’s too early to tell, but it’s exciting to think about the potential role of AI in driving mass crypto adoption.

Best regards from the Future,
RFTF.ai 

Market Intel

BRC-20 tokens reaching $1b market cap, accounted for 65% of Bitcoin transactions, causing network congestion and temporarily halting Bitcoin withdrawals on Binance.

Crypto derivatives market share reaches all-time high of $2.15t while spot trading volume drops by 23.3%. Binance commanded lion share of the crypto derivatives trading in April.

Tether holds Bitcoin and gold among its $8.18b in total assets, majority of which is invested in US Treasury Bills. The leading stablecoin issuer reported a net profit of $1.48 billion in Q1 2023.

Bitcoin fees sinks by 95% as its price recovers from false rumors of US government sales of seized Bitcoin. Big drops in on-chain transaction fees are often seen as a bullish development.

Funding Trends

Artifact Labs, a Web3 company spun off from SCMP, raised $3.25 million in funding to expand its operations and increase the number of developers.

Zero-knowledge privacy startup Webb Protocol raised $7 million in a seed funding round to expand its team and develop privacy-focused tools.

Fedi, a Bitcoin-focused startup, raised $17 million in a Series A funding round to empower users to regain control of their digital lives.

Pudgy Penguins secured $9 million in a seed funding round to support its expansion, team growth, and the enhancement of offerings to its community.

Blockworks, a crypto media outlet, raised $12 million in a funding round to support the expansion of its Blockworks Research investment platform.

Popular file-sharing service Limewire raised over $16 million for its revived platform, which is now focused on becoming an NFT platform for music artists.

Web2 → Web3 Immersion

One of the world’s biggest sports trading card companies Panini plans to create digital markets and collectibles by building a private and controlled blockchain marketplace that will allow collectors to buy and sell digital NFTs, among its other plans.

Mysten Labs is partnering with 11 gaming companies to launch immersive games on its Sui protocol starting May 15th. The games will be built on Sui's Layer 1 blockchain, which is designed to be scalable, secure, and easy to use.

Alibaba Cloud and Avalanche collaborated to create Cloudverse, a blockchain-based launchpad for deploying metaverses. Riding on rising popularity of the metaverse in APAC, it aims to offer businesses an easy-to-use platform for customizing, launching, and maintaining their metaverse spaces.

Deloitte Consulting and BOTLabs have integrated KILT blockchain technology to issue reusable digital credentials for KYC and KYB processes. The credentials have multiple applications, including regulatory compliance in banking and DeFi.

Xapo Bank will add support for Tether (USDT) deposits and withdrawals, catering to growing interest in stablecoins. The new tether service will be fee-free.

ZebPay partnered with TaxNodes to simplify tax filing for virtual assets in India, offering tools for calculating and filing crypto taxes, providing clarity on tax implications.

PayPal held almost $1b worth of customer-owned cryptocurrency on its balance sheet by Q1 2023, which includes Bitcoin, Ethereum, Bitcoin Cash, and Litecoin.

Goldman Sachs, Deloitte, Microsoft, and Cboe Global Markets are collaborating to launch Canton, a blockchain platform connecting institutional applications. It aims to offer scalability and meet financial industry standards while streamlining processes and reducing costs.

Barbie and Boss Beauties partnered to release a series of NFTs in a bid to encourage more female participation in Web3. The NFTs will be available on the Flow blockchain and will feature digital versions of Boss Beauties' signature dolls.

Franklin Templeton Investments is set to list a $100m blockchain fund targeting institutional investors. Called Franklin Templeton Blockchain Fund, it will invest in companies involved in the development and use of blockchain technology.

Regulatory Round-up

APAC

Hong Kong aims to lead global fintech. Christopher Hui, the city's fintech chair, stated that Hong Kong is taking steps to attract fintech businesses through initiatives like a regulatory sandbox, funding for startups, and collaboration with universities to train future fintech talent.

South Korea investigates a lawmaker over crypto transfers. Kim Byung-joon, a lawmaker, is accused of profiting from insider information on government policies by transferring millions of dollars worth of cryptocurrency between 2017 and 2022.

Hong Kong's SFC permits cryptocurrency exchanges under stringent conditions, which include fulfilling certain criteria like robust risk management systems and customer identification. The move is favorable for Hong Kong's crypto industry, yet the number of exchanges meeting the regulator's standards is uncertain.

EU

UK tax authority seizes £1 million worth of crypto, citing significant victory in combating tax evasion. HM Revenue and Customs (HMRC) confiscated the cryptocurrency from a tax evader alleged to have used crypto to evade VAT while purchasing goods and services.

EU launches blockchain platform for data management called the European Blockchain Service Infrastructure (EBSI) to facilitate secure and efficient data sharing among businesses, developed in collaboration with private sector partners. EBSI aims to transform data management using blockchain technology.

US

Canada explores digital dollar and discussing the launch of a central bank digital currency (CBDC). CBDCs are being considered worldwide to modernize monetary systems and enhance efficiency.

IRS pursues $44 billion in taxes from FTX creditors. The IRS alleges that FTX failed to pay taxes on crypto transactions, while FTX denies the claims and is contesting the tax bill.

The Raven Also Spotted

Latest memecoin Pepecoin briefly hits market cap of $1 billion after a meteoric rise in part due to listing on Binance, the world’s largest cryptocurrency exchange.

60% of institutional investors are now interested in investing in cryptocurrencies, up from 30% in 2022, in a survey by Goldman Sachs. The rising interest in cryptocurrencies among institutional investors is a sign that the asset class is maturing and becoming more mainstream.

Investors in Asia have been net sellers of Bitcoin since the start of the year, while investors in America have been net buyers, according to a report by CoinShares. The report attributes this trend to the different regulatory environments in the two regions.

ChatGPT and other AIs could play a big role in driving more users to crypto by using it to create more educational content about crypto, answer user questions, and even help users trade crypto. Though these AI tools are still in their early stages of development, they have the potential to make crypto more accessible to a wider audience.

OKX releases a PSA video, its CEO says “we can’t keep putting band-aids on the current system.” His comments come at a time when the industry is facing a number of challenges; regulatory tightening in the U.S., high fees, slow transaction speeds, and others.