Hello, I hope you've had a good week. Supporters of League Two Crawley Town aren't impressed with being an experiment exploring whether crypto bros can run a football club. Signature Bank's board member Barney Frank of Dodd-Frank fame, says the US government is more interested in sending a message when it closed the bank over the weekend.
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
[tl;dr]
U.S. regulators shut down crypto-friendly Signature Bank, sparking accusations of a broader crackdown on DeFi;
The EU parliament has voted in favour of a regulation that might, critics say, make it much harder for DeFi smart contracts to be deployed;
Meta is abandoning its NFT programs, but Salesforce is launching a service to help brands market and monetise digital assets.
[Signature Bank’s closure a “conspiracy”]
New York regulators shut down Signature Bank on Sunday, hours after President Biden met with his Treasury Secretary, Fed vice-chair, and a White House economist. It came two days after the Silicon Valley Bank collapse and raised questions about the motivation behind the closure and its impact.
Many in DeFi see an anti-DeFi conspiracy, among them Signature board member (and former congressman) Barney Frank, who said the bank could have survived but that regulators "wanted to send a message to get people away from crypto."
Deliberate or not, the crackdown has reduced crypto firms' options in the US banking system. Crypto firms are now looking to banks outside the US, with limited success, although some point out that there are still numerous US banks that have crypto businesses as customers. Whether the US will allow them to replace Signature and Silvergate is unclear.
USDC stablecoin, issued by Circle, briefly lost its dollar peg on news that it could not withdraw $3.3bn of its $40bn reserves from SVB. USDC also depended on Signature’s real-time payment rail and has some $240 million in corporate cash in the bank.
Sources:
Joel Khalili of Wired; Joshua Franklin and Stephen Gandel of the FT; Lionel Laurent, Suvashree Ghosh, Sidhartha Shukla and Sarah Zheng of Bloomberg, Savannah Fortis of Cointelegraph; Amy Castor and David Gerard, Jen Wieczner of New York Magazine, Cathie Wood of ARKInvest.
[EU has smart contracts in its sights]
The European Parliament has voted in favour of new data controls that could require that smart contracts be reset, potentially undermining the immutability that makes smart contracts what they are. When the Act is approved, there will be a 12-month implementation period.
The regulation is part of a larger Data Act intended to protect people's data used in smart devices. The act requires that parties in a contract be able to cancel it or alter its terms.
Until this change, those in DeFi and web3 viewed the law positively, as earlier drafts indicated the EU might drop some requirements of technical compliance. Some of those elements have since been restored.
While some believe the impact will be limited, some believe most smart contracts would not be compliant, likely spurring a fresh wave of innovation to fit the new regulations.
Sources: Jack Schickler of CoinDesk, Pymnts, Tim Fries of The Tokenist, GTG, Assad Jafri of CryptoSlate, Inbar Preiss of The Block.
Data: Data Act
[NFTs enter the relegation zone]
Non-fungible tokens still haven't found a natural fit in the real world, and some are giving up. Others believe it's more a question of providing better plumbing to help brands integrate NFTs into existing approaches, such as loyalty programmes.
Meta has abandoned NFTs after less than a year, a victim of a broader scaling back of projects within the Facebook giant.
At the other end of the scale, the takeover by American NFT investors of a club in the lower tiers of the English football league is not going well. While NFTs allowed fans to vote on what players to buy, raising some $5 million for the club, it hasn't translated to success on the pitch.
CRM heavyweight Salesforce has launched a web3 service that, among other things, allows companies to build, manage, and integrate NFTs into their business. Salesforce has been experimenting with blockchain since at least 2018.
Sources: Cam Thompson of CoinDesk, Samuel Haig of The Defiant, Zac Larkham of Vice, Nick Miller and Joey D'Urso of The Athletic.
[Tidbits]
Arbitrum, the biggest player in Ethereum layer 2 scaling, will launch a governance token via airdrop, making it a decentralised autonomous organisation (DAO) and leaving decision-making in the hands of token holders. (Sam Kessler of CoinDesk)
Lending protocol Euler was hacked on Monday, losing almost $200 million, the biggest successful attack so far this year. (Shaurya Malwa of CoinDesk)
Ethereum developers have set a target date of April 12 for the Shanghai hard fork, marking the completion of Ethereum’s transition to Proof of Stake. (Margaux Nijkerk of CoinDesk)
FTX: SBF’s inner circle received $3.2 billion, mainly from Alameda (Jesse Coghlan of Cointelegraph), while Alameda co-chief Caroline Ellison got 75% less in bonuses than her male counterpart. (Protos)
[Tweet of the Week]
[Events]
GDC San Fran | March 20th - 24th 2023 | San Francisco, California, USA
Wow Summit HK | March 29th - March 30th 2023 | Hong Kong, China
[DeFi Definitions]
An occasional segment exploring one particular aspect of DeFi.
This week "DeSci (Decentralised Science)" by Celina Chu.
DeSci, short for "Decentralized Science," refers to a scientific approach where information and data are shared openly and transparently, allowing for a more collaborative and democratic approach to scientific research. This can enable more people to participate in scientific discovery, including those who may have been traditionally excluded from the scientific community due to factors such as geography, economic status, or education level.
By creating an ecosystem where research is open and transparent, information can be rapidly shared and disseminated across multiple networks and communities. This ultimately leads to faster and more efficient scientific discovery that can help to address important societal challenges, such as climate change, public health, and environmental sustainability.
DeSci is not centrally controlled or directed by a single authority or institution. Instead, it involves a network of individuals, communities, and organizations collaborating and sharing knowledge to produce scientific insights and discoveries.
The team: founder Samantha Yap and consulting editor Jeremy Wagstaff, Sam O'Donohoe, Ewan Brewster, Tiffany Mac Sherry, Becky Corbel and Delon Chan. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and Web3 brands through impactful storytelling. Find out more about us here.