Happy June! This week: US Bitcoin miners get a reprieve, Hong Kong citizens begin trading crypto, and Binance may be cutting staff.
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]
US politicians seemingly scrap Bitcoin mining tax in debt-ceiling agreement
Hong Kong retail investors can finally trade crypto
Binance is reportedly cutting staff
[Bitcoin Mining Tax May Be Scrapped 🚫]
As US President Joe Biden and House Republicans worked out a deal over the weekend to raise the country’s debt limit, 🙌 the negotiations were supposed to center on spending cuts. But, to the pleasure of Bitcoin miners, a tax on Bitcoin mining was one of the casualties of the deal.
What Columnists Said 🔎: “The tax was initially floated by the White House in early May under a proposed law titled the Digital Assets Mining Energy excise tax,” wrote Fortune editor Jeff John Roberts. “Known as the DAME Act, the bill called for a 10% tax on the electricity used by Bitcoin and other crypto miners beginning in 2024, with that figure rising to 30% by 2026.”
What Politicians Said 👔: Not too much, as the 99-page debt-increase bill was still working its way through the House and Senate as of Wednesday. But Congressional Blockchain Caucus member Warren Davidson tweeted that “one of the victories is blocking proposed taxes.” The White House and Treasury haven’t confirmed the deal, said Blockworks’ Shalini Nagarajan.
Why It Matters: The dropping of the tax, which Decrypt’s Andrew Asmakov notes has been met with hostility since its introduction, may encourage continued investment in US Bitcoin mining.
[Hong Kong Crypto Regs Go Into Effect 🇭🇰]
New crypto regulations from Hong Kong’s Securities and Futures Commission (SFC) go into effect on June 1. On that day, the city’s citizens can start buying and selling Bitcoin, Ether, and other large tokens on SFC-regulated exchanges. 🌆
What Financial Media Said 💬: This has been a long time coming, but a final decision was confirmed last week, reported Bloomberg’s Kiuyan Wong and Annabelle Droulers: “The framework seeks to woo crypto firms while safeguarding investors and is part of Hong Kong’s effort to restore its status as a cutting-edge financial center. But any embrace of digital assets is controversial after a market rout in 2022 that sparked a spate of bankruptcies like the collapse of FTX.”
What Crypto Media Said 🧑💻: “There’s a catch,” warned Savannah Fortis of CoinTelegraph: “The SFC has yet to approve any virtual asset trading platform to provide services to retail investors.” According to the agency, 152 applications are on its desk.
Hong Kong’s move appears to have stirred mainland China, which all but banned crypto in 2021, noted The Block’s Yogita Khatri: “But with the release of [a] web3 white paper, it appears to be opening up to the industry in some form.”
Why It Matters: The crypto industry isn’t going away. It’s more a question of where the jobs and financial activity end up.
[Binance Looking to Streamline Staff 〰️]
Binance confirmed that it is going through a regularly scheduled “talent density audit,” after a report broke that the exchange would be laying off staff.
What Reporters Said 🔎: Colin Wu, a China-based independent journalist, tweeted that “multiple sources” had confirmed that “Binance has started layoffs.” He said he’s hearing rumors that it could lay off 20% of its approximately 8,000 employees.
What Binance Said: There’s no 20% target, said Binance Chief Communications Officer Patrick Hillmann — and, besides, we reevaluate staffing needs every year: “There is no specific number, just direction on where we need to streamline.”
Why It Matters: Binance keeps getting in the news for the wrong reasons. Last week, it was for allegedly commingling customer funds with company assets. This week for potential cuts.
[Tweet of the week]
[Tidbits]
Singapore state investor Temasek “said it cut compensation for the team that recommended investing in the now-bankrupt FTX cryptocurrency exchange and for senior management.” Story by Reuters.
Bali government “authorities have warned that tourists who attempt to use crypto as a means of payment will be ‘dealt with firmly.’" Story by Decrypt.
Stablecoin issuer Tether will begin Bitcoin mining operations in Uruguay “in partnership with with an unnamed ‘local licensed company’. Tether also intends to produce renewable energy to fuel its new initiative, which comes a week after the stablecoin giant announced it would invest 15% of its net profit into bitcoin. Story by The Block.
[Events]
TLV Blockchain Week | 3rd June 2023 | Tel Aviv, Isreal
Gateaway to Cosmos | 3rd - 5th June 2023 | Prague, Czech Republic
UTXO | 4th - 5th June 2023 | Prague, Czech Republic
Web3Privacy Prague | 5th June 2023 | Prague, Czech Republic
BUIDL Asia 2023 | 6th - 7th June 2023 | Seoul, South Korea
Brussels Blockchain Week | 7th - 8th June 2023 | Brussels, Belgium
Non-Fungible Conference (NFC) | 7th - 9th June 2023 | Lisbon, Portugal
Solana Hacker House | 7th - 11th June 2023 | New York City, NY, USA
BTC Prague | 8th - 10th June 2023 | Prague, Czech Republic
DEFI Summit | 8th - 9th June 2023 | Prague, Czech Republic
ETHPrague | 9th - 11th June 2023 | Prague, Czech Republic
Epic Web3 Conference | 9th June 2023 | Lisbon, Portugal
FANS LOVE IT! Web3 Football and Sports Conference | 10th June 2023 | Istanbul, Turkey
[DeFi Definitions]
A new occasional segment exploring one particular aspect of DeFi.
This week: “Tokenomics” by Imogen Searra.
Tokenomics refers to the economic principles and rules governing a blockchain-based system or cryptocurrency. It encompasses the distribution, functionality, and value of tokens within the network.
Key aspects of tokenomics include the initial token distribution, token utility and purpose, token supply dynamics, governance mechanisms, and incentives. Tokenomics aims to align the interests of participants, incentivize desired behaviors, and foster community engagement.
It involves determining how tokens are distributed, how they are used within the ecosystem, and how token supply is managed. Tokenomics also incorporates mechanisms for decentralized governance and decision-making, allowing token holders to participate in shaping the system's future. By carefully designing tokenomics, blockchain projects strive to create sustainable ecosystems that drive growth, innovation, and value for participants.
The team: founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Andrew Wickerson, 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.