CoinDesk Crypto

Bitcoin stabilized around $29,600 at press time Tuesday after breaking below the important $30,000 level on Monday. The world’s largest cryptocurrency has been in a downtrend trend since failing to hold an all-time high around $63,000 in April. Concerns about regulatory risks, less accommodative monetary policy and fading institutional demand have contributed to selling pressure over the past few months.

Edward Moya, analyst at the foreign exchange brokerage firm Oanda, described bitcoin’s trading environment as a “tug of war between bears and bulls,” in an email to CoinDesk.

“Bitcoin’s longer-term bullish outlook depends on some mainstream adoption across the U.S. and Europe, and for some that appears to be at risk,” wrote Moya. 

Latest prices

Related: So THIS Is ‘And Then They Fight You’

Cryptocurrencies:

• Bitcoin (BTC) $29,814.97, -3.13%
• Ether (ETH) $1,792.4, -1.86%

Traditional markets:

• S&P 500: 4324, +1.54%
• Gold: $1809.9, -0.2%
• 10-year Treasury yield closed at 1.213%, compared with 1.201% on Monday

The European Union Commission is proposing a revamp of anti-money laundering rules, which could include banning anonymous crypto asset wallets. That did not help market sentiment on Tuesday, according to Moya. 

“We see that at the federal and state levels, the falling price of bitcoin and resulting financial losses for many retail investors will only focus more regulatory scrutiny on this market,” wrote Timothy Butler, partner at Troutman Pepper, in an email to CoinDesk.

Related: Institutional Demand for Bitcoin Remains Weak: Glassnode

Aside from regulatory uncertainty, traders will also be alert for comments from Tesla CEO Elon Musk, who is scheduled to speak at The B Word conference on Wednesday. Musk’s appearance is especially timely given the potential for bitcoin to drop towards $25,000, which would mean Tesla could suffer a $300 million hit to its earnings, according to Shawn Tully, a senior editor at Fortune. 

Bitcoin volatility

Short-term implied volatility rose as bitcoin broke below $30,000, indicating that cryptocurrency options traders see sharp price moves ahead. Volume, however, remains low, in the $20,000 to $30,000 price range.  

“Continued pressure at these levels could see continuation to the downside,” wrote Nathan Cox, chief investment officer at digital asset investment firm Two Prime, in an email to CoinDesk.

Futures backwardation

Bitcoin futures on the Chicago Mercantile Exchange (CME) have shifted into “backwardation,” which is when futures trade at a discount to the spot price. This is the second time that regulated futures on the CME are trading at backwardation in the last seven days, according to a Tuesday report by Arcane Research.

“Institutional investors seem very cautious at the moment, and in general seem to be in the process of de-risking,” Arcane wrote. 

“The declining trend in the futures market indicates that fear is accumulating as long as traders are no longer willing to pay a premium for their exposure.”

Bitcoin drawdown

Bitcoin’s drawdown, or the percentage decline from the April peak around $63,000, is roughly 50%. Typically, drawdowns that exceed 50% can last for several months, similar to 2018 and the second-half of 2019. 

Two decisive daily closes below $30,000 are needed to confirm a breakdown, wrote Katie Stockton, managing director of Fairlead Strategies, in an email to CoinDesk. For now, secondary support is at $27,000, which bitcoin will need to hold in order to maintain a long-term uptrend.

Weak institutional demand

The Purpose Exchange-Traded Fund, one of the first approved bitcoin exchange-traded products (ETPs), has seen a slowdown in net inflows this week after experiencing a period of relatively strong demand in May and June, according to a report by Glassnode. 

The slowdown suggests institutional demand for the largest currency by market cap remains weak across these regulated products, according to Glassnode. 

Where to from here

Among 42 cryptocurrency experts surveyed by Finder, 61% think that bitcoin is currently undervalued, while the experts on average expect bitcoin to reach $66,284 per BTC by the end of 2021. 

“Adoption by corporations and institutional investors paired with a loose monetary policy and high asset inflation will propel bitcoin to six figures before the end of this year,” Morpher CEO Martin Fröehler, the most bullish among the panelists, told Finder. 

University of Canberra senior lecturer John Hawkins, one of the most bearish panelists, said that government adoption of bitcoin will adversely affect the cryptocurrency’s price. “I’m assuming El Salvador adopting it as legal tender puts a floor for a while. But after the price has dropped a lot, they may remove the legal tender status.”

Altcoin roundup

• DOGE: A recent shakeout in meme tokens, a sector best known by the Shiba Inu-themed dogecoin, indicates that retail investors are exiting their positions in cryptocurrencies as recent market sell-offs have spooked many crypto newcomers. Momentum appears to have dissipated in an oversaturated market for meme coins, wrote CoinDesk’s Muyao Shen.
• USDC: Circle, a global payments company, was one of USDC’s creators. It published a breakdown of its assets backing the stablecoin for the first time in its latest attestation report, which was dated July 16. According to the report, about 61% of its tokens are backed by “cash and cash equivalents,” meaning cash and money market funds, wrote CoinDesk’s Nikhilesh De.

Relevant news

• FTX Valued at $18B in Massive $900M Series B
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Other markets

Most digital assets on CoinDesk 20 ended up lower on Tuesday. In fact, everything was in the red except for dollar-linked stablecoins. 

Notable losers: 

nucypher (NU) -7.15%

filecoin (FIL) -6.62%

algorand (ALGO) -6.41%

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Bank of America’s prime brokerage unit has started the clearing and settlement of cryptocurrency exchange-traded products (ETPs) for hedge funds in Europe, according to three sources with knowledge of the matter.

This is the second recent move on the part of the traditionally conservative bank in the volatile cryptocurrency arena. As reported last week by CoinDesk, Bank of America has also approved the trading of bitcoin futures for some clients and is clearing cash-settled contracts.

Bank officials may have felt they could not ignore an asset class that has seen numerous companies dive in. The demand for products such as ETPs has been increasing. 

Related: EU Policymakers Propose Tighter Regulation of Crypto Transfers

In February it emerged that Goldman Sachs, ICAP, JPMorgan and UBS have all been purchasing the 21Shares Polkadot ETP for clients, according to Bloomberg data. In June, ETC Group launched the first bitcoin ETP in the U.K. on the Aquis Exchange in London.

There has also been an increasing number of cryptocurrency ETPs being listed on the SIX exchange in Switzerland and the Deutsche Boerse’s Xetra market in Germany. The offerings range from blue-chips (bitcoin, ether) to the exotic (cardano, polkadot.)

According to CoinDesk’s sources, hedge funds are using Bank of America’s prime brokerage unit to access a raft of crypto ETPs approved by European regulators. The vehicles allow big firms to invest in various corners of the crypto universe without investing in crypto directly, but through a security that tracks the performance of various digital assets.

A Bank of America spokesperson declined to comment.

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The U.S. Senate is set to investigate crypto’s use in ransomware on multiple fronts as regulators globally continue to scrutinize digital assets.

On Tuesday, Sen. Gary Peters (D-Mich.), chair of the Senate Homeland Security and Governmental Affairs Committee, said he would investigate how “cryptocurrency can embolden cybercriminals” and what the federal government can do to fight back.

Coming less than a week after the Senate Judiciary Committee said it would hold its own ransomware hearing, the dual probes speak to the heightened attention crypto is facing from U.S. lawmakers.

Related: Biden Accuses Chinese State Actors of Ransomware, Cryptojacking Attacks

Peters’ probe is notable because of its focus on cryptocurrency, instead of ransomware more generally. Lawmakers seldom train their investigative sights on crypto specifically. But the recent tsunami of ransomware attacks against everything from pipelines to meatpackers has changed that.

Attacks were up 150% in 2020 with $412 million in ransoms paid, Peters said, adding that an ongoing July attack is holding 200 corporate networks hostage for $70 million.

“The increased use of cryptocurrencies as the preferred method of payment in ransomware attacks shows that cybercriminals believe they can commit attacks without being held accountable,” Peters said in a statement.

Even so, Peters’ investigation appears to be leaving room for a different crypto narrative.

Related: Anatomy of Ransomware Attack: Chat Support, a Discount and a Surcharge for Bitcoin

The investigation will examine current oversight efforts and regulations related to virtual currencies. It will also make recommendations into how lawmakers and federal agencies can ensure all Americans can safely benefit from access to cryptocurrencies, and that they are not providing an incentive for criminal organizations and foreign adversaries to continue assaulting American networks and communities nationally.

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Bitcoin enthusiast and Twitter CEO Jack Dorsey recently put his mobile payments company Square at the center of one of the most talked about areas of innovation in finance.

Sam Bankman-Fried’s FTX exchange has raised the largest funding round in crypto history.

The exchange’s $900 million Series B round included more than 60 investors, including Paradigm, Ribbit Capital and Sequoia, according to a company announcement.

FTX has been spending lavishly lately to get its brand out to the wider world. From multimillion-dollar sponsorship deals with the National Basketball Association’s Miami Heat to a tie-up with Major League Baseball, FTX has plowed earnings from crypto’s most recent bull run in a bid to market itself to those who are curious about cryptocurrencies.

Related: CoinFund Targets ‘Early Mainstream Adoption’ With $83M Venture Fund

The new round of funding signals that bitcoin‘s recent dip below $30,000 has far from halted venture capital’s rush to back the next Coinbase, the crypto exchange that went public in April with a market cap of about $86 billion.

“It was a long process, but in the end, what mattered was getting a chance to talk about what FTX has been and where we’re going,” Bankman-Fried told CoinDesk via email.

He said the funding will go toward new products, “both globally and in the U.S.”

As for a potential public listing, he added: “We want to be prepared and ready in case we decide to go for it, but we don’t have imminent plans.”

Related: Crypto Long & Short: Crypto Needs More Than VC Interest

Bankman-Fried, a 29-year-old billionaire, founded FTX in 2019. The exchange has 1 million users and is averaging $10 billion of daily trading volume, it said Tuesday.

“Sam Bankman-Fried is one of those special founders whose vision is both stunningly ambitious and uniquely adapted to the future of crypto,” Matt Huang, who co-founded Paradigm with early Coinbase staffer Fred Ehrsam, said in a statement. “The team’s execution speaks for itself, with FTX growing to become a top global exchange in two years.”

Other investors in the round included Thoma Bravo, SoftBank, Insight Partners, Third Point, Lightspeed Venture Partners, Altimeter Capital, BOND, NEA, Coinbase Ventures, Willoughby Capital, 40North, Senator Investment Group, Sino Global Capital, Multicoin Capital, the Paul Tudor Jones family, Izzy Englander, Alan Howard, VanEck, Hudson River Trading and Circle, according to Tuesday’s press release.

The previous largest round for a crypto firm was a $440 million raise for Circle in May. Earlier this month, the financial services firm announced its intention to go public in a deal with a special purpose acquisition company worth $4.5 billion.

Update (July 20, 18:23 UTC): Adds comments from FTX CEO Sam Bankman-Fried.

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Have dog-themed meme tokens had their day or are they just playing dead? 

A recent shakeout in meme tokens, a sector best known by the Shiba Inu-themed dogecoin (DOGE), indicates that retail investors are exiting their positions in cryptocurrencies as recent market sell-offs have spooked many crypto newcomers.

But analysts and traders are divided on whether retail interest in meme tokens will return anytime soon to this community-driven, less serious part of the crypto market.

Related: How Axie Infinity Creates Work in the Metaverse

Meme tokens posted massive gains earlier this year, inspired by Tesla CEO Elon Musk-touted dogecoin, which posted a four-month-long winning streak. In April alone, the price of dogecoin rose 528.4% on Hong Kong-based crypto exchange FTX, according to TradingView.

Following the dogecoin phenomenon, numerous meme coins were launched, including the doge-imitator shiba inu token, as a new obsession with the meme culture worldwide sparked a wave of interest in the tokens. The GameStop stock trading mania earlier this year just fueled the frenzy.

“The [meme token] market becomes oversaturated with pointless meme coins,” Arcane Research analyst Vetle Lunde said.

Though there were countless other canine-themed coins listed such as dogelon mars (ELON), and doggy (DOGGY), the area wasn’t restricted to just dogecoin wannabes. There was also CUMROCKET (CUMMIES), a token that powers a non-fungible token marketplace for the adult entertainment industry and loser coin (LOWB), a token representing a self-deprecating culture in China.

Related: Tether Hasn’t Printed New USDT in Weeks: 3 Possible Explanations

“I think it highlights the aggressive nature of the risk-on flow that was prevalent during that period,” Denis Vinokourov, head of research at Synergia Capital, said. “Fundamentals per se did not matter or mattered less to a degree, and in the end, it became a very crowded momentum trade.”

That momentum appears to have dissipated. Data compiled by CoinDesk research shows that dogecoin was already in the red during May, while smaller meme tokens were posting some gains. A month later, however, almost all of the 10 meme tokens from CoinMarketCap turned tail and followed the pack leader in posting negative returns in June.

Doge’s price is down by 35.3% in July so far, according to TradingView and FTX, indicating that the No. 1 meme token by market capitalization is likely to close the month at a loss again.

An oversaturated meme market

The once white-hot sector in crypto has faced unprecedented selling pressure since the broader market sell-off in May, partly due to “a reduced presence of new retail investors,” according to Lunde.

In Asia, where the crypto market is dominated by retail investors, the recent crackdown in China on crypto trading and bitcoin mining also has hurt the meme tokens.

China’s crackdown “is making it harder for people to invest new money into the market, and rumors of further regulations on centralized exchanges have raised concerns about further investing,” Rachel Lin, CEO of decentralized derivatives exchange SynFutures, said. “Many of the meme coin traders in Asia are also miners, so they are preoccupied with handling the crackdown and recovering their losses.”

Meme token craze “was over a while ago,” Annabelle Huang, a partner at Hong Kong-based Amber Group, said. “Then it’s all about the mining ban and the ‘great migration’ [in China] as I call it.”

Speculative traders eye next big thing

For some analysts, it is clear that those speculative traders, who once loved the high returns from the meme tokens, have moved on to the next hot project, evidenced by the rise of Axie Infinity in recent weeks.

“This summer is so far turning out to be the summer of crypto game projects,” Arcane’s Lunde said, warning that the gaming sector, potentially, is also facing or will face an over-exuberant market, similar to what happened with meme tokens.

At their peak reached just last week, AXS tokens had a total market capitalization of more than $1 billion, compared with French video-game company Ubisoft’s market value at around $7 billion.

“I think it is safe to say the bulls might be a bit too optimistic at the moment,” Lunde said.

At press time, AXS was trading at around $15.4, according to data from Messari, down by 46.3% from its all-time high of $28.66 on July 15.

Synergia Capital’s Vinokourov, citing unwinding bitcoin carry trades with the one-month bitcoin futures contract moving into backwardation, said that more cash is sitting on the sidelines at the moment rather than being put into crypto. 

The cash-and-carry trade – meaning shorting futures and taking a long position in an asset to profit from a tightening of the spread between the futures’ price and the spot price – has become less attractive to traders as the difference between the price of the futures contract and the spot price on an annualized time frame has fallen significantly recently.

The crypto market needs a much stronger “risk-on” mood before meme tokens can, if at all, make another comeback, he said.

Legacy (and some hopes) remain

But not all are so pessimistic about where meme tokens are heading.

“Beyond speculation, these meme coins have actually seen great traction in the wider crypto ecosystem, particularly when used as a tip for content on social media,” Jay Hao, CEO of crypto exchange OKEx, told CoinDesk via a spokesperson. “It is especially interesting to see millennials get involved with these meme coins.”

Hao said if the meme tokens’ creators and communities can help build a better infrastructure, the tokens have the potential to turn into “robust utility tokens” that are beyond the jokes or the culture they represent.

Despite the disappointing prices, the dogecoin community, for example, remains active: A new fee structure for dogecoin was proposed at the end of May by its core developers to reduce overall transaction costs. Last week, eToro, an exchange that mainly caters to “social” or beginner traders, reported that dogecoin became the fifth-most held crypto on the exchange after having been listed less than two months.

And chief dogecoin booster Musk has posted several tweets regarding the meme token this month, though his ability to make the Shiba Inu-represented token jump isn’t what it once was.

OKEx’s Hao said that the limited access to crypto investments poses a major challenge for crypto newbies to continue to invest in the market after first being attracted by the meme tokens.

“It would be an easier first step for them to use traditional channels such as [exchange-traded funds], or if banks operated as custodians,” he said. “Then we would have retail investors … continue to invest in up-and-coming [alternative tokens] and in [decentralized finance] – with an understanding that gains may no longer happen overnight and that profits will come by playing the long game.”

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The Purpose Exchange-Traded Fund, one of the first approved bitcoin exchange-traded products (ETPs), has seen a slowdown in net inflows this week after experiencing a period of relatively strong demand in May and June,  according to a report by Glassnode. 

“The week closed with the largest net outflow of -90.76 BTC since mid-May,” said the report. 

The slowdown suggests institutional demand for the largest currency by market cap remains weak across these regulated products, according to Glassnode. 

Related: Ether Falls Toward $1.7K as Bitcoin’s Price Drop Weighs on Broader Market

The bitcoin price fell early Tuesday below the crucial support level of $30,000 for the first time in four weeks. As of press time, bitcoin was trading around $29,960.

While data tracked by Glassnode shows weak institutional demand, the situation is somewhat encouraging in Europe. 

“This is only $3 million of outflows,” said Laurent Kssis, managing director of ETPs at 21shares AG. “In Europe, some ETP bitcoin have seen larger outflows in one day.” 

Also contributing to the bearish case for bitcoin is the performance of the Grayscale (GBTC) bitcoin trust share price. The GBTC shares continued to trade last week at a notable discount to the fund’s net asset value, ranging between 11% and down to 15.3%, demonstrating lackluster demand for the cryptocurrency, according to Glassnode. 

Related: Bitcoin Struggles Below $30K; Next Support at $27K

Grayscale is owned by CoinDesk parent Digital Currency Group.

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The original decentralized finance (DeFi) protocol started out decentralized and to decentralization it will return.

The Maker Foundation has announced it is turning over operations entirely to its decentralized autonomous organization (DAO), MakerDAO, as founder Rune Christensen has long promised.

“The Foundation will formally dissolve within the next few months,” Christensen wrote in a blog post shared in advance with CoinDesk. No more specific timeline was offered.

Related: DeFi Isn’t Better Than TradFi if People Can’t Use It

MakerDAO has been wildly influential within crypto, especially the Ethereum community.

It has more often than not had the most assets locked in its smart contracts of any other DeFi protocol. Its founders pioneered the DAO structure early on only to formalize into a traditional organizational structure in 2018, which engendered internal tension and division. 

MakerDAO is best known as the creator of the DAI stablecoin, but DAI is enabled by a lending system that has allowed many crypto holders to make use of their assets without selling them.

The Maker Foundation is the formal organization that was created to steward the protocol through its early days until holders of the MKR token were ready to take on all aspects of stewarding the project, managing all its teams, making necessary upgrades and promoting its use around the world. 

Related: DeFi Derivatives Protocol Vega Raises $43M in CoinList Token Sale

The intent was always to gradually decentralize the home office out of existence.

On Tuesday, Christensen wrote:

“From the earliest days of Maker, everyone involved worked tirelessly to devise a framework for scientific governance and create an infrastructure for a new generation of open financial services that can be used by anyone, anywhere, anytime. We all hoped for success, but knew it would never be guaranteed. We realized that only a very independent, passionate, and committed Maker community could make success a reality in the end.”

Looking back

When CoinDesk spoke to Christensen in 2019, he seemed as though he was looking forward to a project he didn’t have to be in charge of any longer. While Christensen has been preparing everyone for this move from the Foundation’s earliest days, it echoes a move by a pioneering non-custodial exchange, ShapeShift, which also put the wheels of decentralization in motion this month, though that came as a surprise to everyone.

The Foundation was set up in 2018 at the behest of its early venture investors. In early 2019, this led to a rift between MKR holders and the organization, particularly in light of what one leaked legal letter described as a forced reconstitution of the foundation’s leadership. A detailed recounting of that transitional period would later be reported out by Bloomberg.

Since then, though, the protocol has generally made strong progress. 

In April 2020, Christensen rolled out a plan to reach decentralization, putting more power in the hands of community members and remunerating them for their time.

As noted, it has remained one of the dominant forces in DeFi, found ways to improve itself and decentralized the assets it is able to incorporate as collateral for loans that generate DAI. 

The community was tested in early 2020 when a sharp downturn in ETH prices left the overall protocol several million dollars undercollateralized. In a controversial move, it subsequently incorporated the fiat-backed stablecoin from Circle and Coinbase, USDC. MKR holders have subsequently added many more crypto assets to the mix, under the theory that the more assets it can incorporate the less the collapse of prices in any one can threaten the project. 

Christensen’s ultimate vision has always been to include real-world assets as collateral. 

In March of this year MakerDAO created the Core Units framework, essentially committees that would take the lead in key aspects of running the protocol; that is, they do the work the Foundation once took on. This very much squares with what Christensen described to CoinDesk as “DAO teams” in 2019.  

“I look forward to once again being an independent community member and Maker Forum participant,” Christensen wrote.

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Titan said it raised $58 million in a Series B round led by Andreessen Horowitz (a16z) with participation of existing investors including General Catalyst and BoxGroup.

• Titan said the funds take the total amount it has raised to $75 million, which will be used to build its underlying platform and investment products.
• The company is a mobile-first investment platform that allows clients to have their capital actively managed in long-term strategies.
• Anish Acharya, general partner at a16z, will join Titan’s board.

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Registered investment advisor Viridi Funds has launched an exchange-traded fund that invests in crypto mining firms that are making the switch to cleaner sources of energy.

The fund is called the Viridi Cleaner Energy Crypto-Mining & Semiconductor ETF and will trade on the New York Stock Exchange’s Arca platform; Viridi will serve as a sub-adviser to the fund while Alpha Architect is creating the fund’s infrastructure. The management fee on the ETF will be 0.9%, higher than most ETFs but lower than most closed crypto funds. 

Eighty percent of the fund will invest in publicly traded miners that have switched to nuclear or renewable sources of energy or are trying to offset their carbon emissions with carbon credits, while 20% is going towards semiconductors that also take advantage of clean energy. 

Related: Russian Industry Association Works to Attract Crypto Mining

The fund will include semiconductor companies because of how few publicly traded mining companies there are, Wes Fulford, CEO of Viridi Funds, told CoinDesk. 

“There aren’t 50 large-cap reputable publicly listed global miners here too to have like a diverse universe of potential holdings,” he said.

Fulford noted the ETF would invest in companies that use carbon credits to offset emissions, as well as a combination of carbon credits and renewable energy, but that using credits wouldn’t likely be a sustainable business model for crypto miners.

Some firms are using the credits in the “interim,” Fulford said, but “if they’re smart, they’ll continue to migrate to renewable power.”

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Between negative-yielding bonds, the frothy equity market and looming inflation, institutional asset allocators have been forced to look for alternative means of generating yield. 

Venture capital firm Pillar VC raised $192 million for two funds focused on crypto as well as fintech, artificial intelligence/machine learning and enterprise Software-as-a-Service (SaaS).

• The Boston-based firm raised $169 million for its Pillar III fund and $23 million for Pillar Select, according to an announcement Tuesday.
• Investments will be focused on northeast U.S., it said.
• The funds will make pre-seed investments of $50,000-$500,000 and seed-round investments of $2 million-$6 million in startups focused technologies including crypto, fintech, and AI/ML.
• USDC-backer Circle is among Pillar’s beneficiaries from previous funds. The firm joined a mammoth $440 million fundraising round in May alongside Fidelity and CoinDesk parent Digital Currency Group.
• Circle intends to go public later this year via a SPAC deal worth $4.5 billion.

UPDATE (July 20, 16:28 UTC): Corrects dollar amount of how much was raised for Pillar III and Pillar Select funds.

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Decentralized derivatives trading protocol Vega raised $43 million in a community token sale on CoinList, it said Tuesday. 

The Gibraltar-based project, which launched in 2019 and is expected to go live for trading in Q4 of this year, is a layer 2 solution for trading derivatives in a decentralized fashion. Vega’s software will allow users to pseudonymously spin up markets for derivatives, including futures, swaps and options, while abiding by relevant regulations and removing financial middlemen, the team said.

Some 21,000 unique participants took part in CoinList’s Vega token sale, just the latest in a string of splashy raises on the platform.

Related: DeFi Isn’t Better Than TradFi if People Can’t Use It

Though Barney Mannerings, founder of Vega, says the protocol doesn’t collect information on its users, he believes the users are generally early adopters with an interest in crypto and decentralized finance (DeFi), and are members of Vega’s rapidly growing Discord community. 

The token sale was not available to residents of the United States or Canada due to regulatory restrictions. Mannerings told CoinDesk he does not believe the restrictions will have a long-term impact on Vega’s success or viability as a protocol and network.

Vega’s successful community raise is indicative of the growing market interest in DeFi. Protocols like Vega are emerging to offer DeFi alternatives to traditional finance products, from derivatives markets to structured products. 

Mannerings told CoinDesk the money generated from Vega’s token sale will be used to improve the protocol once the first mainnet is live. 

Related: MakerDAO Moves to Full Decentralization; Maker Foundation to Close in ‘Months’

In 2019, Vega raised $5 million in a seed funding round led by Pantera Capital, and in 2020 raised an additional $5 million to develop the protocol in a funding round that included Arrington XRP Capital and Coinbase Ventures.

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European Union (EU) policymakers have proposed tightening regulations on the transfer of crypto assets by requiring companies to collect details of senders and recipients.

• The European Commission, the EU’s executive arm, made the proposal Tuesday to help crack down on the flow of illicit money.
• Such a law would extend to crypto the Financial Action Task Force’s “travel rule” that already applies to wire transfers.
• The aim of the legislation would be to “ensure full traceability of crypto-asset transfers” and “allow for prevention and detection of their possible use for money laundering and terrorism financing,” the Commission said.
• The travel rule requires service providers to exchange identifying information such as customer’s name, address and account details.
• Extending these requirements to crypto transfers would prohibit the use of anonymous crypto wallets.

UPDATE (July 20, 15:31 UTC): Adds quote from commission, details of travel rule requirements.

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Silvergate Bank accepted a whopping $4.3 billion in new deposits from new and existing digital currency customers in second-quarter 2021, according to an earnings report released Tuesday.

Most came from crypto exchanges, which deposited $2.4 billion in cash during the quarter. Institutional investor deposits grew by $1.8 billion and those from other customers by $100 million. The La Jolla, Calif.-based bank, which serves major crypto firms such as Coinbase, Gemini and Kraken, added 120 digital currency customers for a total of 1,224. 

Crypto firms are often a rich source of low-cost deposits for the few banks that openly serve the sector. Silvergate’s average cost of deposits was 0% in the three months through June, compared with 0.37% in the year-earlier quarter. For scale, average deposit costs for mid-cap commercial banks are normally around 0.75% to 1.25%.

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The Silvergate Exchange Network (SEN), a fiat on-ramp for bitcoin markets, processed 137,947 transactions and transferred $239.6 billion over the network during the last quarter.

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The majority of Circle’s USDC stablecoin is backed by U.S. dollars, the company revealed on Tuesday.

Circle, a global payments company, was one of USDC’s creators. It published a breakdown of its assets backing the stablecoin for the first time in its latest attestation report, which was dated July 16. According to the report, about 61% of its tokens are backed by “cash and cash equivalents,” meaning cash and money market funds.

Yankee Certificates of Deposit – meaning CDs issued by foreign (non-U.S.) banks – comprise a further 13%, U.S. Treasuries account for 12%, commercial paper accounts for 9%, and the remaining tokens are backed by municipal and corporate bonds. 

Related: So THIS Is ‘And Then They Fight You’

The company has issued about $22.2 billion worth of USDC, according to the attestation.

It’s unclear what, specifically, Circle has invested in to back USDC. The company intends to go public later this year in a merger with a special purpose acquisition company that would value Circle at $4.5 billion.

According to footnotes in Tuesday’s attestation, the commercial paper has a “minimum S&P rating of S/T A1,” meaning S&P Global Ratings regards the issuer’s ability to meet its financial obligations as being strong.

Circle joins Tether in publishing a rough breakdown of its asset reserves, at least partially answering questions about whether its stablecoin is fully backed. Like Circle, Tether also uses commercial paper to back its USDT token, though commercial paper accounts for far more of Tether’s reserves than Circle’s does.

Related: State of Crypto: Stablecoin Rules Are Coming

UPDATE (July 20, 2021, 14:27 UTC): This story has been updated with additional context.

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CoinFund’s recent bets on liquidity staking and blockchain gaming are part of an $83 million fund the crypto venture firm closed in March. 

The Brooklyn, N.Y.-based CoinFund’s third fund, “Ventures,” is focused on “early mainstream adoption” projects, CEO Jake Brukhman told CoinDesk Monday. 

Where the firm’s previous fund was largely focused on non-fungible tokens (NFTs) and decentralized finance (DeFi), Brukhman said the new fund’s portfolio includes go-to-market consumer and enterprise plays, plus Web 2 developers building in the crypto space.

Related: FTX Crypto Exchange Valued at $18B in $900M Funding Round

“Just in the first six months of this year, we are leading or co-leading seven opportunities in blockchain,” Brukhman said. 

That includes multichain protocol Moonbeam, NFT marketplace Rarible, staking platform ClayStack and the esports play Community Gaming.

Institutional investors (pensions, endowments and family offices) contributed over half of the new fund’s $83 million, Brukhman said. It’s CoinFund’s largest pool to date.

In March filings with the U.S. Securities and Exchange Commission, the VC revealed its two other private funds, “Liquid Opportunities” and “CoinFund,” had gross asset values of $37.3 million and $59.2 million, respectively. Representatives for the firm declined to share total assets under management.

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New York-based Signature Bank added $6.14 billion in non-interest bearing deposits in the second quarter in a sign of increased growth from digital currency customers, the company said in a statement.

• The figure compares with growth of $3.77 billion in the first quarter.
• Analysts tend to monitor non-interest bearing deposit growth as a proxy for deposits from digital currency customers because cryptocurrency firms are often a source of low-cost deposits.
• Signature doesn’t break out its deposits from digital currency customers.
• Non-interest bearing deposits rose to $28.7 billion, or 33.5% of total deposits. That’s up from 30.5% of the total in the previous quarter.

UPDATE (JULY 20, 10:26 UTC): Adds percentage of total deposits in final bullet point.

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OpenSea, one of the largest digital art marketplaces to capitalize on 2021’s non-fungible token (NFT) boom, is the latest crypto unicorn.

The NFT platform was valued at $1.5 billion after a $100 million Series B that closed Tuesday, executives told CoinDesk Tuesday. Silicon Valley’s best-known VC, Andreessen Horowitz (a16z) once again led the financing round; it headlined OpenSea’s $23 million Series A in March.

Only a handful of crypto startups have become unicorns and OpenSea is perhaps the only to do it, in part, by selling digital pictures of them: A particularly anxious-looking yellow one standing beside a steaming volcano was listed for .4 ETH on Monday. 

Related: Polygon Launches Unit to Grow Blockchain Gaming, NFTs

That’s four times more than its March sale price, during the height of an NFT mania driven by crypto-rich investors and million-dollar NFT sales. The $2.5 billion industry has since cooled amid a wider crypto sell-off – at least according to the popular narrative.  

But OpenSea’s trading activity has endured and even grown. Its NFT marketplace, which takes a 2.5% cut, posted a record $160 million in digital asset sales in June.

Co-founder and CEO Devin Finzer said the market has “shifted” to niche projects experimenting in ways “weird and strange.”

Bored Ape Yacht Club, whose 10,000 NFT primates double as digital access passes “has been a big driver of volume.” Horse racing game ZED RUN has also been a hit.

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“It’s getting much more interesting” than one-off art sales, Finzer said. “The art is still really cool, but gaming, event ticketing, domain names, those sorts of use cases” have moved into position.

Cross-chain marketplace

OpenSea plans to support NFT sales from networks like Flow and Tezos in addition to Ethereum, the medium’s historical hub.

The move is a compromise for economics and accessibility, said Finzer. Transactions on Ethereum are just too pricey for casual users. He said other blockchains better support low-value, high-volume projects like event ticketing or gameplay that OpenSea plans to court.

There’s still a market for minting “high-value artwork” minted on Ethereum, Finzer said. But “having more scalable blockchains and layer 2 solutions” is vital to the longevity of NFTs.

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A study on behalf of Fidelity Digital Assets found that seven in 10 institutional investors expect to buy or invest in digital assets in the future, Reuters reported Tuesday.

• Over half of those surveyed between December 2020 and April 2021 by financial industry analytics firm Coalition Greenwich said they already had digital-asset investments, according to the report.
• Of those interested in investing in the future, around 90% expected their companies’ or clients’ portfolios to have digital asset exposure within five years. Exposure may be through stocks in cryptocurrency firms, investment products with crypto exposure or direct investment in crypto itself.
• Volatility was cited as the biggest obstacle to crypto investment, with concerns around market manipulation and a lack of fundamentals to determine crypto’s value also offered as issues.
• The findings are in line with other surveys that have shown institutional investors are planning to increase their crypto exposure in the years ahead.
• Coalition Greenwich surveyed 1,100 global institutional investors.

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