#61 The Context: Crypto’s flagship bank goes under 💸
No lifeboats for Silvergate, sunk in FTX’s wake 🪦
Hi, hope you've had a good week. Silvergate Bank tops the headlines this week, a small community-turned-crypto bank fatally entwined with FTX. Amazon is reportedly about to jump into NFTs, connecting them to real-world assets and its existing payments and marketplace platform.
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 Global and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
[tl;dr]
Silvergate Bank is the latest casualty of the FTX implosion, its decision to wind down ending a decade-long ride as banker to crypto.
Amazon is the latest player to enter the non-fungible token fray, reportedly launching a marketplace as early as next month.
There aren't enough women in web3 as founders or regular investors. Are things changing?
[Silvergate's wind-down]
Silvergate, a key player in providing banking services to crypto companies for the past decade, is no more. The news has prompted a broader sell-off in crypto.
Silvergate Bank said it would "voluntarily liquidate" its assets and wind down operations. It comes a week after announcing it would delay filing its annual 10-K report. Under the winding down, all deposits will be repaid in full, the company said.
Silvergate lost more than two-thirds of its deposits from crypto customers late last year, leaving only $4 billion — a sum which will have fallen much further by the time it voluntarily liquidated.
Silvergate was under heavy scrutiny by U.S. regulators, with U.S. senator Elizabeth Warren accusing "crypto-friendly" banks of leaving the banking system vulnerable to "crypto collapse."
The collapse removes another on-ramp for converting fiat currency into crypto in the U.S., further reducing flows into the crypto market, according to Morgan Stanley analysts.
Sources: Stories by Jesse Hamilton, Will Canny, Shaurya Malwa of CoinDesk, and Jason Nelson of Decrypt.
[Amazon's NFT gambit]
Trading volumes of non-fungible tokens surpassed levels not seen since 2022, even allowing for wash-trading, and are continuing to attract outside interest.
Amazon will soon allow customers to buy NFTs tied to real-world assets bought with a credit card. The service will be first rolled out for the company's 167 million U.S. Prime customers.
The back-end technology would likely be a private blockchain and may or may not involve an Amazon token.
Amazon launched a digital assets enterprise earlier this year, and CEO Andy Jassy said last year that the company was considering selling NFTs and may, at some point, integrate crypto payments into its platform.
Cognac brand Hennessy, which has been selling limited edition bottles as NFTs, has launched a web3 brand, H3NSY, which it hopes will become a hub for creators. So far, both the Twitter feed and Discord server are quiet.
NFT marketplaces fighting for shares like OpenSea and Blur have alienated creators by reducing or waiving royalty payments, prompting some to consider launching their own community-based marketplaces and other options.
Sources: Stories by Michael Bodley of Blockworks, CNBC Squawkbox, William M. Peaster of Bankless; Jacquelyn Melinek of TechCrunch, Ledger Insights, Stefan Stankovic of Crypto Briefing, TheBigWhale, Samuel Haig of The Defiant.
Tweets by Rarible
[Women and web3]
International Women's Day focused attention on how many, or how few, women there are in crypto, DeFi and web3.
Only 13% of web3 startups include a female founder, according to a BCG study.
This is a problem beyond web3: When Susan Wojcicki steps down after nearly a decade as CEO of YouTube, she will leave all of the major social media and entertainment platforms in the management of men.
But crypto has long had a reputation for something else: "male speculators and a bro culture", and overcoming that will require the industry to shift "old tropes into new and inclusive narratives."
Women, perceived as more risk averse than their male counterparts, have been less likely to invest in crypto, though this is changing. A report last year by Australian crypto exchange BTC Markets found that "[t]he rate of growth for women opening trading accounts is almost twice that for men and women are, on average, investing larger amounts."
Some women in the industry see hope in what DeFi offers in making financial services more accessible, affordable and secure for women in developing countries. But supporting data is scant.
Sources: Stories by Gerrit De Vynck and Naomi Nix of The Washington Post, Judith Bannermanquist of Cointelegraph, Maia Naor and Itai Avneri writing at CoinDesk, Andie Kramer of Forbes.
Data: Report from BTC Markets, Boston Consulting Group survey.
[Tidbits]
Coinbase announced Wallet as a Service, part of a raft of launches the crypto exchange hopes will help onboard the next billion users of crypto.
Binance will try again to secure a license to offer crypto services in Singapore, aimed this time at corporate clients. In 2021 its affiliate withdrew a local licence application, apparently after pressure from local regulators.
[Reading]
An academic and the co-founder of Gitcoin wrestle with how to manage Ethereum as a public good, trapped, as they argue, between 'regens' and 'degens'.
Two academics dig into digital ledger technologies to ask about how they are improving, or may improve, economic mobility. It's the first step, they argue, to "formalise the theory" of how to empirically test the impact of DLTs on economic mobility.
Investment strategist Lyn Alden takes a deep dive into what is needed to make open monetary, and information networks succeed. The outcome, she says, is more a matter of technology than politics.
[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 "Regenerative Finance (ReFi)" by Imogen Searra.
Regenerative finance (ReFi) is the vessel used to instil John Fullerton's theory of regenerative economics. This theory promotes and sustains human well-being by providing value to communities that have lost natural resources, helping protect what remains and creating long-term, sustainable financial security.
ReFi was not created for blockchain technology and decentralised finance (DeFi). However, various protocols have emerged based on the idea of creating ways to sustainably benefit people and the planet versus solely focusing on profit.
ReFi is decentralised and democratic. Through peer-to-peer funding, communities can determine which NPO or NGOs a protocol should provide capital to. Unlike traditional corporate social investments, ReFi ensures 100% of the funding goes to the chosen party, thus reducing the risk of corruption or misuse of funds.
ReFi is a way to utilise crypto, its core principles of democratisation and financial independence free of intermediary exploitation, to create a sustainable future for the next generation.
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.