CoinDesk Crypto

When opening Dapper Labs blockchain game NBA Top Shot for the first time, users will hear Miami Heat shooting guard Tyler Herro guiding them through the onboarding process. 

Herro is the first professional athlete to provide a voiceover for a crypto platform, helping fans get situated in the world of non-fungible tokens (NFTs) by using his own Top Shot moments as a teaching aid.

NBA Top Shot is the flagship product of Dapper’s new Flow blockchain. The site is based on video snapshots of NBA players’ memorable on-court antics, which are graded in various rarities of non-fungible tokens (NFTs). By September, the digital collectibles had raked in $2 million in sales; that number is surely higher by now.

Related: Axie Infinity Launches Public Testnet of Ronin Sidechain to ‘Scale Even Faster’

“I’m part of the digital generation,” Herro said via email. “Having to collect, buy and sell great moments virtually gives fans more access to the game than ever before.”

The most valuable moment on the market is a LeBron James “Cosmic Dunk” selling for 6.7 ETH ($4,191). 

The 2020–2021 NBA season returned on Tuesday night with a game between the Golden State Warriors and the Brooklyn Nets.

Dapper Labs has looked to seize on renewed NBA interest with a variety of new packs in recent days.

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MoneyGram has yet to see any “negative impact” on its longstanding business arrangement with Ripple from the U.S. Securities and Exchange Commission (SEC)’s lawsuit against the latter company. 

“MoneyGram will continue to monitor the situation as it evolves,” a company spokesperson told CoinDesk in an emailed statement. “MoneyGram has continued to utilize its other traditional FX trading counterparties throughout the term of the agreement with Ripple.”

The SEC alleged in a case filed Tuesday that Ripple used XRP, the cryptocurrency two of its founders created, to conduct an ongoing, $1.3 billion sale of unregistered securities.

Related: Market Wrap: Bitcoin Recovers to Nearly $24K; Ether Rides Bitcoin’s ‘Coattails’

Ripple owns more than 4% of MoneyGram and paid MoneyGram $9.3 million in the third quarter of this year for providing liquidity for Ripple’s XRP-based cross-border settlement network. All in, Ripple has given MoneyGram $52 million for using Ripple’s on-demand liquidity (ODL) service. 

On-demand liquidity through Ripple’s xRapid cross-border payment service allows companies to transfer funds from one currency to XRP and from XRP to another currency. This allows enterprises to avoid opening a bank account in countries they want to send payments to, letting them avoid holding funds there for cross-border transactions.

Read more: An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say

MoneyGram, currently the second-largest money transfer provider in the world behind Western Union, has used Ripple’s ODL to move in and out of four currencies since June 2019. At the time, CEO Alex Holmes said MoneyGram was becoming a “chief partner for cross-border settlement using digital assets.”

Related: SEC Sues Ripple Over 7-Year, $1.3B ‘Ongoing’ XRP Sale

In the complaint filed Tuesday, the SEC seems to make a mention of MoneyGram when it alleges that “onboarding onto ODL was not organic or market-driven” but rather “subsidized by Ripple.” MoneyGram was not identified by name in the SEC complaint though it did specify that Ripple paid the unnamed money transmitter $52 million in fees through September 2020, in an arrangement that began in 2019.

“The Money Transmitter became yet another conduit for Ripple’s unregistered XRP sales into the market, with Ripple receiving the added benefit that it could tout its inorganic XRP ‘use’ and trading volume for XRP,” the SEC alleged.

MoneyGram declined to comment further. 

Related Stories

• An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say
• First Mover: What People Said About Bitcoin in 2020 (Both Good and Bad)

Coinbase has revealed the inaugural recipients of its Crypto Community Fund developer grants. First announced in October, the fund was established to support Bitcoin developers in their work on projects that support the cryptocurrency’s underlying technology.

The first two developers, João Barbosa and pseudonymous developer 0xB10C, were chosen by the fund’s advisory board, which includes Stanford cryptography professor Dan Boneh and Bitcoin developers Carla Kirk-Cohen, Anthony Towns, Amiti Uttarwar and Felix Weis.

Read more: Amiti Uttarwar: Building Bitcoin’s Future

Related: FTX Coinbase Futures Soar 140% in First Hour of Trading

Coinbase said 0xB10C, the creator of mempool.observer, will work on a software fork visualizer on Bitcoin’s Signet test network, a tool which could be used to monitor updates of the Bitcoin software (and which may prove useful in light of Bitcoin’s Taproot upgrade). They will also continue to publish research and work on Bitcoin code review.

Barbosa, who only just recently lost his funding from mining company Bitmain, will work on a user interface for Bitcoin Core that will allow its users to access advanced functions without having to use the command line – a coding interface that allows you to talk to your computer to make it interact with applications in the form of text lines. 

Additionally, the advisory board chose Barbosa because they “value [his] previous work on code reviewing, and wanted to ensure he could continue in the future,” the release said.

“I’m very fortunate to keep contributing to the project on a regular basis. I hope to be up to the task for one more year,” Barbosa told CoinDesk.

Bitcoin developer funding

Related: Crypto Exchange Coinbase Is Hiring for a New Canada Operation

Barbosa, along with a handful of other Bitcoin developers, recently had funding cut off from Bitcoin mining behemoth Bitmain.

As evidenced by Barbosa hopping from one grant to another, open-source work is fraught with financial uncertainty, and even the best Bitcoin developers may be funded for their work only partially or not at all. 

For much of Bitcoin’s history, its developers have worked as volunteers to maintain and improve Bitcoin’s code. Some companies including Blockstream and Chaincode, among others, have funded Bitcoin Core development since before 2017, but it hasn’t been until Bitcoin’s latest time in the limelight that other companies and organizations have upped their efforts to dole out grants.

Read more: Square Crypto’s 20th Grant Will Support Bitcoin Design, User Experience

In addition to these sponsorships, some of the more prolific developers have attracted donations from Bitcoin users on GitHub.

Coinbase’s advisory board is accepting proposals for its next grant round until Jan. 11, 2021. 

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Bitcoin’s price recovered quickly from Monday’s small market sell-off, approaching a new resistant level at $24,000 Tuesday. Traders and analysts said it is because demand has continued to rise despite minor negative market movement.

• Bitcoin (BTC) trading around $23,433.85 as of 21:00 UTC (4 p.m. ET). Gaining 2.64% over the previous 24 hours.
• Bitcoin’s 24-hour range: $22,384.13-$23,629.40 (CoinDesk 20)
• BTC above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

There were few reactions from the market on Monday’s sharp drop to Tuesday’s fast recovery.

“The bitcoin market is highly levered at the time and volatility spiked sharply with the $20,000 break,” said macro cryptocurrency analyst Alex Kruger. A “$1,000 move (~5%) under current circumstances is rather ordinary. Expect such price action to continue until leverage and [trading] volumes come down.”

Related: MoneyGram Takes Wait-and-See Approach as SEC Sues Partner Ripple

With most people already headed out for the holidays, bitcoin’s trading volumes on the eight major exchanges tracked in the CoinDesk 20 have not come down since November.

It is possible Monday’s small drop in pricing was viewed as another great opportunity for many new and big players in the crypto space, traders and analysts told CoinDesk, and that partly drove the quick recovery on bitcoin’s price on Tuesday. It is now approaching $24,000.

Read More: Riot Purchases Additional 15,000 Mining Machines From Bitmain

“Regardless of the short term, the trend is showing demand rising for bitcoin, especially by big players that want to get into the crypto market,” said Alessandro Andreotti, an over-the-counter crypto trader, who also said $24,000 will be the next resistance level.

Related: SEC Sues Ripple Over 7-Year, $1.3B ‘Ongoing’ XRP Sale

“If it was my guess, the dump was related to macro fears related to the coronavirus,” Ryan Watkins, research analyst at Messari, told CoinDesk. “I think it’s pretty clear the bullish trend is intact and I expect dips to be bought from here on out.”

Another potential reason for recent volatility is the differing attitudes towards bitcoin by investors in different parts of the world.

“European and American institutions are bullish, Asian retail investors are bearish,” Simons Chen, executive director of investment and trading at Hong Kong-based crypto lender Babel Finance, told CoinDesk. “Therefore, prices have remained volatile recently. But as traditional institutions continue to enter the market, a new price rally is only a matter of time.”

Notably, bitcoin’s price traded lower during Asia trading hours, but has been trending up since the markets opened in the U.S. Tuesday.

Bitcoin’s volatility has remained much higher than the volatility of the S&P 500 stock index and of gold, and has gone up since October, according to data compiled by CoinDesk.

Read More: Scaramucci’s Skybridge Invested $25M in New Bitcoin Fund

Ether follow’s bitcoin’s positive trend

The second-largest cryptocurrency by market capitalization, ether (ETH), was up Tuesday, trading around $626.26 and climbing 2.35% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Like most of the other cryptocurrencies, ether’s price has followed bitcoin’s recovery, yet it has still largely underperformed the oldest cryptocurrency.

Ether “looks to simply be riding the coattails of bitcoin,” Vishal Shah, an options trader and founder of derivatives exchange Alpha5, said. “All said, the ether/bitcoin cross continues to grind in favor of bitcoin, and there’s limited reason to see that derail. Ether could continue to underperform.”

Other markets

Digital assets on the CoinDesk 20 are mixed Tuesday. Notable winners as of 21:00 UTC (4:00 p.m. ET): 

• litecoin (LTC) + 6.01%
• cardano (ADA) + 3.09%
• algorand (ALGO) + 3.83%

Notable losers:

• xrp (XRP) – 10.91%
• orchid (OXT) – 5.44%
• 0x (ZRX) – 2.31%

Read More: An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say

Equities:

• Asia’s Nikkei 225 closed in the red 1.04% as a new coronavirus strain in the U.K. threatens the global economy recovery.
• The FTSE 100 in Europe closed higher by 0.57% on Tuesday, a small recovery from Monday’s sell-off on the U.K.’s new coronavirus concerns.
• The S&P 500 in the United States was down 0.21% as investors seek direction from the potential impact of the new variant of coronavirus found in the U.K.

Commodities:

• Oil was down 2.19%. Price per barrel of West Texas Intermediate crude: $46.93.
• Gold was in the red 0.89% at $1859.93 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield fell Tuesday dipping to 0.92 and in the red 0.05%.

Related Stories

• An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say
• First Mover: What People Said About Bitcoin in 2020 (Both Good and Bad)

The U.S. Securities and Exchange Commission (SEC) believes Ripple Labs violated federal securities laws in selling the XRP cryptocurrency to retail consumers.

According to a lawsuit filed Tuesday, Ripple raised $1.3 billion over a seven-year period to retail investors through its sale of XRP on an ongoing basis. Ripple CEO Brad Garlinghouse announced Monday that the SEC had told his company of the impending lawsuit, and published the payment firm’s Wells Response, a document that seeks to tell the SEC why certain activity did not violate U.S. securities laws.

The San Francisco-based fintech firm has long maintained that XRP the cryptocurrency is separate from Ripple the company. The cryptocurrency was often referred to as “ripple” through early 2018 and shared a logo with the company until later that year. 

Related: MoneyGram Takes Wait-and-See Approach as SEC Sues Partner Ripple

The impact could be wide-ranging: several exchanges list XRP in the U.S., with only one deciding to delist the cryptocurrency ahead of the Tuesday lawsuit. If the SEC prevails, platforms that continued to list the crypto may have to register as securities exchanges.

According to the complaint, which names CEO Brad Garlinghouse and Chairman Chris Larsen in addition to Ripple Labs as defendants, Ripple violated Sections 5(a) and 5(c) of the Securities Act of 1933 by failing to register XRP as a security or seeking an exemption. 

“Over a years-long unregistered offering of securities (the ‘Offering’), Ripple was able to raise at least $1.38 billion by selling XRP without providing the type of financial and managerial information typically provided in registration statements and subsequent periodic and current filings,” the filing said. “Ripple used this money to fund its operations without disclosing how it was doing so, or the full extent of its payments to others to assist in its efforts to develop a ‘use’ for XRP and maintain XRP secondary trading markets.”

Ongoing debate

XRP’s status under U.S. securities law has been a subject of debate for several years. 

Related: Market Wrap: Bitcoin Recovers to Nearly $24K; Ether Rides Bitcoin’s ‘Coattails’

The Crypto Rating Council, a joint venture spearheaded by Coinbase and supported by cryptocurrency exchanges like Bittrex, Kraken and OKCoin, among other entities, assessed that XRP looked more like a security than a non-security. 

The group has specified that its ratings should not be taken as legal advice, but rather its members’ assessment of how different cryptocurrencies might fall within the U.S. regulatory umbrella. CrossTower, one of its members, delisted XRP earlier Tuesday after news of the lawsuit first came out, though other trading platforms have yet to weigh in on whether they’ll consider doing so. 

XRP allegedly being centralized through control by a single entity was even seen as an attractive aspect by some. Wall Street veteran Brian Kelly told CNBC in 2018 that, “I happen to like the fact that they have several banks using it and they have a company … that is out there trying to make the value of the currency go higher.”

See also: An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say

On the other hand, former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo has said that in his view, XRP should be “considered a currency or a medium of exchange,” not a security.

Giancarlo cited the Howey Test – a Supreme Court case that has been used as a chief standard for assessing whether or not something is a security – in his reasoning.

In short, Howey states that something is a security if it 1) is an investment of money in b) a common enterprise with c) a reasonable expectation of profits derived from the efforts of others. According to Giancarlo, XRP investors were not promised returns or a share of Ripple’s profits.

The SEC sees it differently.

“At all relevant times during the Offering, XRP was an investment contract and therefore a security subject to the registration requirements of the federal securities laws,” the lawsuit said. 

According to the SEC, the defendants allegedly said that the main reason someone might buy XRP is to speculate on its price, with the complaint quoting Ripple employees from as far back as 2013. 

“Similarly, in its official application to the NYDFS for XRP II in 2016, Ripple acknowledged that buyers were ‘purchasing XRP for speculative purposes,’” the complaint said.

Information asymmetry

Much of the SEC’s complaint contends that there was asymmetric information about XRP. The defendants allegedly “created an information vacuum” that let Ripple, Larsen and Garlinghouse sell XRP to a market that didn’t have a lot of information about the cryptocurrency. 

“Defendants continue to hold substantial amounts of XRP and – with no registration statement in effect – can continue to monetize their XRP while using the information asymmetry they created in the market for their own gain, creating substantial risk to investors,” the complaint said.

David Schwartz, Ripple’s CTO, is cited in the complaint as saying that Ripple’s “publicly announced strategy” was to “do everything we can to maximize the price of XRP over at least the time it takes us to sell the XRP we have.”

“The people who created XRP are pretty much the same as the people who created Ripple and they created Ripple originally to, among other things, distribute XRP,” he said in a tweet (though he’s identified as “Cryptographer-1” in the complaint).

Ripple even knew that XRP may fulfill the requirements of being a security, the SEC claimed, saying the company received a pair of memos in 2012 from “an international law firm” which stated that there was some risk of this assessment. 

Many of the comments in the SEC complaint seem to match or are similar to statements used in a two-year-old investor lawsuit against the company.

The SEC also heavily cites internal emails and communications between Ripple employees and board members in its complaint. 

Part of this information vacuum is the fact that On-Demand Liquidity, a Ripple product which uses XRP, did not have organic or market-driven volume, the SEC alleged.

“Though Ripple touts ODL as a cheaper alternative to traditional payment rails, at least one money transmitter (the ‘Money Transmitter’) found it to be much more expensive and therefore not a product it wished to use without significant compensation from Ripple,” the complaint said.

It appears to be referring to MoneyGram; it said the majority of XRP trading on ODL between “early 2019 and July 2020” was conducted by the unnamed transmitter. Ripple took a stake in MoneyGram in June 2019 and as has been publicly disclosed, the payments firm has compensated MoneyGram for using XRP.

“Specifically, from 2019 through June 2020, Ripple paid the Money Transmitter 200 million XRP, which the Money Transmitter immediately monetized by selling XRP into the public market, typically on the very days it received XRP from Ripple. The Money Transmitter publicly disclosed earning over $52 million in fees and incentives from Ripple through September 2020,” the lawsuit said.

The amount matches details in MoneyGram’s public filings.

“Ripple and Garlinghouse did not disclose to XRP investors or the public the full extent of incentives that Ripple provided to the Money Transmitter in return for its assistance in increasing XRP trading volume,” the complaint said.

Further, the SEC alleged that Ripple paid at least 10 crypto trading platforms to list and trade XRP in 2017 and 2018. One platform received a 17-million XRP fee in 2017, the agency said in an example. Other exchanges received incentive fees. None of these platforms were registered with the SEC, though at least two are based in the U.S.

Political upheaval

The SEC’s lawsuit comes as the agency’s chief prepares to step down and the federal government undergoes a change in leadership. Chairman Jay Clayton previously announced he would leave his role at the end of the year, though a specific date has not been provided. 

SEC Enforcement Director Stephanie Avakian, who created the commission’s cyber unit, likewise plans to leave her role by year-end. Avakian is quoted in a press release saying, “We allege that Ripple, Larsen, and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system.”

This means incoming President Joe Biden may appoint an acting chair to oversee the commission while his nominee to run the agency for a full term makes their way through Congress. 

Garlinghouse has previously donated to the Biden for President campaign, as well as to the former presidential campaign of Vice President-elect Kamala Harris. In public statements, he’s indicated that he is waiting to see how the new administration might handle matters of crypto regulation. 

“I am optimistic that will actually improve where things sit for the XRP community broadly,” he told CNN’s Julia Chatterley earlier this month, when asked whether Ripple had made a decision on whether it was relocating its headquarters outside of the U.S.

Prior to the presidential election, Garlinghouse raised the possibility that Ripple could leave for greener pastures due to the lack of clarity from the SEC about XRP’s legal status. 

Read the full complaint:

UPDATE (Dec. 23, 2020, 00:40 UTC): Updated with additional context and details from the complaint.

Related Stories

• An SEC Victory in Ripple Case Would Render XRP ‘Untradeable,’ Market Pros Say
• Ripple CEO Warns SEC May Sue Company Over XRP Sales

Anthony Scaramucci said his hedge fund, Skybridge, has invested $25 million in its new bitcoin fund.

• Skybridge has moved $25 million into the fund already, Scaramucci said during a Tuesday interview with CNBC. He said new investors can participate starting Jan. 4 2021.
• Fidelity Digital Assets is the bitcoin “back office” and “storage mechanism,” he said. Scaramucci further claimed that Skybridge is running a full bitcoin node.
• Scaramucci said his fund’s structure will give investors exposure to bitcoin’s net asset value while avoiding the premiums extracted by the Grayscale Bitcoin Trust (GBTC). (Grayscale is a CoinDesk sister company.)
• “This will be a way for us to democratize bitcoin, like we did the hedge fund industry a decade ago,” he said.
• Scaramucci said he and Michael Saylor have developed a “very close relationship over the past few months,” and credited the MicroStrategy CEO, whose firm now holds over $1 billion in bitcoin, as an inspiration for starting the new fund.

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Publicly traded bitcoin mining company Bitfarms (BITF) announced its deployment of 1,000 Whatsminer M31S mining machines with another 3,000 set to be deployed in Q1 2021.

• The mining capacity expansion is set to push Bitfarm’s hashrate above 1.2 exahashes per second (EH/s), per an announcement shared with CoinDesk, just over one third of its target 3 EH/s hashrate.
• To date in 2020, the Toronto-based firm has acquired or deployed nearly 6,000 new machines, according to prior press releases.
• Other mining companies, including Colorado-based Riot Blockchain (RIOT), are on shopping sprees for new mining machines as leading manufacturers like Bitmain have sold out until Q3 2021. Strong demand has pushed miners to secondary markets as they scrounge for any available machines, per CoinDesk’s prior reporting.
• Shares of Bitfarms are trading hands around $2.62 at last check, a more than 230% gain to date this month.
• Bitcoin gained roughly 20% over the same period.

Update (Dec. 22, 18:02 UTC): Added a total count of machines deployed and acquired in 2020.

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Cryptocurrency exchange EXMO has given a new estimate for the amount of cryptocurrency lost in a security breach Monday, saying nearly 6% of its total crypto assets were stolen.

• The U.K.-based platform had originally estimated that 5% of its cryptocurrency had been lost to the attacker. The total loss in terms of dollar value is still being calculated, the exchange told CoinDesk Tuesday.
• EXMO said, after analyzing logs for the affected servers, it is “assuming” the attacker had access to some of its the private keys and that it’s trying to find out how this was possible.
• EXMO saw losses in six cryptocurrencies out of 57 supported: bitcoin, XRP, tether, ether and ethereum classic. Each digital asset is hosted on its own server, the firm said.
• Most of the stolen bitcoin was sent to an address that has accrued 306.99 BTC, worth around $7,206,200 at time of writing.
• EXMO said it contacted cryptocurrency exchange Poloniex with a request to block an associated account and has also informed London police about the breach.
• Production servers were not affected by the breach and information about transactions and client data was not accessed by the hackers, it said.
• The platform hopes to be able to reinstate withdrawals and deposits within the next few days.

See also: CEO of DeFi Insurer Nexus Mutual Hacked for $8M in NXM Tokens

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Supply chain startup ShipChain is taking on water fast.

The U.S. Securities and Exchange Commission ordered ShipChain to cease and desist operations Monday and pay a $2.05 million penalty for violating securities laws in 2017. ShipChain, which had raised $27.6 million through its SHIP token initial coin offering (ICO), agreed to the penalty and quickly settled the suit.

“The penalty represents substantially all of ShipChain’s net assets,” according to the order. ShipChain has further opted “to cease all operations,” the order said.

Related: Ripple CEO Warns SEC May Sue Company Over XRP Sales

The development spells an end for a token project that’s long tacked through stormy seas.

ShipChain had sought to build an automated ledger for international trade atop the Ethereum blockchain. It sold 145 million SHIP tokens to over 200 investors in late 2017 through early 2018. An early project whitepaper explained that proceeds would power research, development, marketing, legal – basically, all operations.

That caught the early ire of U.S. securities regulators. Shortly after the ICO wrapped up, South Carolina state securities regulators ordered ShipChain to cease operations. It alleged SHIP to be unregistered security in violation of state law. But ShipChain fought back. South Carolina ultimately vacated the case and the project sailed on.

The SEC action revives those charges and swiftly wraps them up. SHIP’s buyers could reasonably expect a return on their investment deriving from ShipChain’s business efforts, SEC argued. That’s known as an investment contract – a security. Companies must register securities offerings with the SEC.

Related: Robinhood Pays SEC $65M to Settle Allegations It Misled Customers

ShipChain never did. It now joins the graveyard containing the wrecks of other ICO projects sunk by Chairman Jay Clayton’s SEC.

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In Argentina,  the U.S. dollar has long been the most wanted foreign currency. But these days people can’t stop talking about DAI, a stablecoin issued by MakerDAO. DAI’s volume has already grown at least six-fold this year, according to information provided by local crypto exchanges SatoshiTango, Decrypto and Ripio. 

Argentines, faced with a devaluation of the peso from $0.02 to $0.006 in just 18 months and an annual inflation rate higher than 30%, are looking for ways to safeguard their value. But as they are only permitted to buy up to $200 a month in dollars through official channels – with an additional tax of 65% over the official quote – some Argentines are turning to stablecoins like DAI. 

Lea este artículo en español.

Related: Los argentinos están cambiando su obsesión histórica con el dólar por DAI

“The adoption of DAI became popular because, being a stablecoin and having a quotation linked to the U.S. dollar, many Argentines have decided to acquire it as an indirect form of dollarization,” crypto exchange Buenbit stated in an email sent to Coindesk. 

This is all taking place amid an overall crypto boom in Argentina, with crypto exchanges enjoying record growth this year. Sebastian Serrano, CEO of Argentinian crypto exchange Ripio, told CoinDesk the exchange’s stablecoin trading volume grew 20 times in 2020.  “This is increasing month by month due to a local need for dollarization and a bullish crypto market promoting a higher adoption. It is a perfect storm,” he stated. 

Argentines’ obsession with U.S. dollars has grown stronger in recent decades, mainly driven by high inflationary processes that pulverized the peso value. “We have a relationship with the dollar that is typical of 70 years without a strong local currency. DAI is an alternative to the dollar,” said Matias Bari, CEO of SatoshiTango, an exchange firm that started offering that stablecoin in 2020 and increased by seven its business in Argentina during this year. 

DAI, a decentralized cryptocurrency built on Ethereum that is stabilized to the value of U.S. dollar (USD), is pegged 1:1 to this currency via what is known as the Maker (MKR) Dai Stablecoin System. The cryptocurrency collateral, viewed publicly on the Ethereum blockchain, keeps DAI’s value stable, unlike other popular stablecoins whose value is backed directly by USD. 

Related: Las criptomonedas crecen en la problemática economía de Argentina

Although many stablecoins have grown in Argentina, DAI has been a star in the local market. And that success, according to important crypto players such as Serrano, from Ripio, and Bari, from SatoshiTango, is partially explained by the early relationship that MakerDAO built with the Latin American crypto ecosystem in 2018.

Buenbit started offering DAI in November 2018, when Ripio also included that stablecoin, while it added USDC in August of this year. SatoshiTango, for its part, first made DAI available in March and then incorporated USDC in August. 

Mariano Di Pietrantonio, senior marketing manager and community lead for the Maker Foundation, the foundation behind DAI, says, “This world was always closer to trading and short-term speculation. But we positioned DAI as a saving tool, a more down-to-earth proposal.”

In Argentina, crypto exchange Bitso recorded a trading volume of 2.3 million DAI during November, while its Mexican business, where the company holds 10 times more clients, counted 883,215 DAI during the same month, according to information published by the company.  

“It is a phenomenon,” said Bitso Alpha Director Eduardo Arenas, who added that Argentina has a much higher sophistication in crypto than any other Latin American country, which helps local people to digest more easily what DAI is about. 

A green obsession

According to Iván Tello, co-founder of the crypto exchange Decrypto, Argentines started buying DAI with pesos and then immediately exchanged them into dollars to save the money in their houses. That type of saving is known in Argentina as colchón – the Spanish word for mattress – by referring to a common place where they keep bills. However, over this year, users began to leave their DAI in  exchanges, said Tello. “The economic crisis in Argentina led Argentines to trust the crypto system and to mistrust the traditional system,” he added. 

Argentines have reasons to distrust the traditional system – in 2001, through a process known as “corralito”, dollar accounts were frozen and part of the money was returned, in local pesos, after a strong devaluation. Not surprisingly, according to the National Institute of Statistics and Consensus of the Argentine Republic (INDEC), of the $228 billion that locals keep in foreign currency, only 8% is banked.

Purchases of DAI and other cryptocurrencies occur most strongly during the first 10 days of each month, when Argentines collect their salaries in pesos and seek to dollarize their incomes as soon as possible, Tello said. DAI transactions in Decrypto, whether purchases or sales, usually fluctuate between $200 and $400, according to private information provided by the company. 

Individuals are not the only ones interested in DAI. Manuel Calderon, partner at financial and crypto consulting firm Beex, said in an interview he is receiving a higher quantity of inquiries from companies seeking to enter the DAI ecosystem, given the constant obstacles to acquiring dollars in the official market. Many questions come particularly from small and medium-sized firms looking for a reserve of value for their surpluses and needing to execute payments abroad. 

However, it is more common for companies and funds to use other stablecoins instead of DAI. Ripio tends to operate USDC among institutional clients and investment funds. “For a company, the profile of this coin is more pleasant from an institutional point of view, and is easier to explain,” Serrano said. At Decrypto, companies usually use USDT for transactions between $5,000 and $10,000, Tello said. 

Read more: Crypto Is Booming in Economically Challenged Argentina

In Argentina, the price of DAI is close to different dollar quotations – some belonging to the black market – that emerged after the financial restrictions imposed in 2019. These informal quotations are currently higher than the government’s official rate. One of them, of a legal nature, is known as a “stock exchange dollar” – dolar bolsa, in Spanish – which allows certain bonds to be purchased in Argentine pesos and sold for U.S. dollars abroad.  However, the most famous quotation is called the “blue dollar,” commonly traded in illegal exchange offices known as “caves” and usually hidden behind traditional businesses such as jewelry stores. 

According to Di Pietrantonio, although DAI’s quote is close to these unofficial rates, its price does not depend on them. “A good mass of DAI at a local level makes the price competitive,” he said. 

Mariano Conti, former head of smart contracts at MakerDAO, explained in a 2019 talk how he received payments of DAI for his work. 

Conti said he started getting paid in bitcoin to escape Argentinian capital controls in 2014. He discovered the Ethereum network in 2015. When he joined MakerDAO in 2016, he started receiving DAI. “I have never bought crypto with fiat in my entire life. I have only earned it,” he stated in that talk. 

The programmer said that once a month he used to exchange the minimum amount of DAI for Argentine pesos to pay his expenses, but the rest was left in DAI. Although he acknowledged the risks of platforms and smart contracts, he preferred to trust those ecosystems before giving his money to the local government. 

“DAI has implications and good properties that our local currencies at least now do not have and may never have,” Conti said.

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En Argentina el dólar siempre ha sido la moneda extranjera más buscada. Pero por estos días la gente no para de hablar acerca de DAI, la moneda estable emitida por MakerDAO. Su volumen ya ha crecido por lo menos seis veces en lo que va de 2020, de acuerdo a información provista por los exchanges locales de criptomonedas Ripio, SatoshiTango y Decrypto. 

Los argentinos, quienes enfrentaron una devaluación del peso que fue desde $0.02 a $0.006 en solo 18 meses y una inflación anual superior al 30%, siempre están buscando maneras de cuidar sus ingresos. Pero, como solo se les permite comprar hasta $200 mensuales en los canales oficiales – con un impuesto adicional de 65% sobre la cotización oficial – algunos de ellos están volcándose hacia criptomonedas estables. 

Read this article in English.

Related: Why Argentines Are Turning From Dollars to Stablecoins Like DAI

“La adopción de DAI se hizo muy popular porque, siendo una moneda estable y teniendo una cotización atada al dólar estadounidense, muchos argentinos han decidido adquirirla como una forma indirecta de dolarización”, explicó el exchange Buenbit en un correo electrónico enviado a CoinDesk. 

Este fenómeno está teniendo lugar en medio de un boom general de criptomonedas en Argentina, en el que los exchanges han registrado un crecimiento récord durante este año. Sebastián Serrano, CEO del exchange argentino Ripio, le dijo a CoinDesk que su volumen de trading de stablecoins creció 20 veces en 2020. “Esto está creciendo mes a mes por la necesidad local de dolarización y un prometedor mercado cripto que genera una mayor adopción. Es una tormenta perfecta”, dijo. 

La obsesión de los argentinos con el dólar se ha hecho más fuerte en décadas recientes, principalmente provocada por procesos de alta inflación que pulverizaron el valor del peso. “Tenemos una relación con el dólar que es típica de haber estado 70 años sin una moneda local fuerte”, dijo Matias Bari, CEO de SatoshiTango, un exchange que comenzó a ofrecer stablecoins en 2020 y que incrementó siete veces su negocio en Argentina durante este año. 

DAI, una criptomoneda descentralizada creada sobre Ethereum y estabilizada al valor del dólar estadounidense, está atada 1 a 1 al valor de esa moneda mediante lo que es conocido como el Maker (MKR) Dai Stablecoin System. Su colateral, visto públicamente en la blockchain de Ethereum, mantiene estable el valor de DAI, a diferencia de otras criptomonedas estables cuyos valores están directamente sostenidos por dólares. 

Related: India’s State-Led Payment Network Is Growing. Now Nation Wants to Export It

A pesar de que muchas criptomonedas han crecido en Argentina, DAI ha sido la estrella en ese mercado. Y ese suceso, de acuerdo a importantes jugadores de la escena cripto local como Serrano – de Ripio, y Bari – de SatoshiTango, está parcialmente explicado por la temprana relación que MakerDAO tejió con el ecosistema cripto de América Latina desde 2018. 

Buenbit comenzó a ofrecer DAI en noviembre de ese año, mes en el que Ripio también incluyó esa stablecoin, mientras que esta última compañía añadió USDC en agosto de 2020. SatoshiTango, por su parte, primero puso a disposición DAI en marzo y más tarde incorporó USDC, en agosto. 

Mariano Di Pietrantonio, senior marketing manager y líder de comunidad de Maker Foundation, la fundación que está detrás de DAI, dijo: “Ese mundo siempre estuvo más cerca del trading y la especulación de corto plazo. Pero nosotros posicionamos a DAI como una herramienta de ahorro, como una propuesta más bajada a tierra”.

En Argentina, el exchange Bitso reportó un volumen de trading de 2,3 millones de DAI durante noviembre, mientras que su negocio en México, donde la compañía posee diez veces más de clientes, informó 883.215 DAI durante ese mismo período, de acuerdo a información publicada por la compañía. 

“Esto es un fenómeno”, dijo el director de Bitso Alpha, Eduardo Arenas, quien agregó que Argentina tiene una sofisticación en cripto mucho más alta que cualquier otro país de América Latina, lo que ayuda a los argentinos a digerir de manera más sencilla de qué se trata DAI.

Una verde obsesión

De acuerdo a Iván Tello, cofundador del exchange Decrypto, los argentinos primero compraban DAI con pesos para inmediatamente cambiarlos por dólares y guardarlos físicamente en sus casas, en un mecanismo de ahorro conocido en el país como “colchón”, al referirse a un lugar común para atesorar los billetes. No obstante, en el transcurso de este año, los usuarios comenzaron a dejar sus DAI en los exchanges, dijo Tello. “La crisis económica en Argentina los llevó a confiar en el sistema cripto y a desconfiar del sistema tradicional”, agregó. 

Los argentinos tienen razones para desconfiar del sistema tradicional: en 2001, en un proceso conocido como “corralito”, las cuentas en dólares fueron congeladas y parte del dinero fue devuelto, en pesos, después de una fuerte devaluación. No es sorprendente que, de acuerdo al Instituto Nacional de Estadística y Censos (Indec), de los $228.000 millones que los locales tienen en moneda extranjera, sólo el 8% se encuentre bancarizado. 

Las compras de DAI y otras criptomonedas ocurren de manera más pronunciada durante los primeros diez días de cada mes, cuando los argentinos cobran sus salarios en pesos y buscan dolarizar sus ingresos lo antes posible, dijo Tello. Las transacciones de DAI en Decrpyto, ya sean compras o ventas, usualmente fluctúan entre los $200 y $400, de acuerdo a información provista por la compañía. 

Los individuos no son los únicos interesados en DAI. Manuel Calderon, Partner de la consultora en finanzas y cripto Beex, dijo en una entrevista que está recibiendo una mayor cantidad de consultas de empresas intentando entrar al ecosistema de DAI por los constantes obstáculos para adquirir dólares en el mercado oficial. Muchas preguntas llegan particularmente desde pequeñas y medianas empresas interesadas en encontrar una reserva de valor para sus excedentes y en ejecutar pagos en el exterior. 

No obstante, es más común para las compañías y fondos usar otras criptomonedas estables en lugar de DAI. Ripio tiende a operar USDC entre sus clientes institucionales y fondos de inversión. “Para una empresa, el perfil de esta moneda es más agradable desde un punto de vista institucional, y es más sencilla de explicar”, dijo Serrano. En Decrpyto, las firmas usualmente utilizan USDT para transacciones de entre $5000 y $10.000, dijo Tello. 

Lee mas: Las criptomonedas crecen en la problemática economía de Argentina

En Argentina, el precio de DAI es cercano a diferentes cotizaciones no oficiales del dólar que emergieron después de las restricciones impuestas en 2019, algunas de las cuales son ilegales. Todas ellas son actualmente más altas que la oficial del gobierno. Una, de carácter legal, es conocida como “dólar bolsa”, que permite adquirir ciertos bonos con pesos argentinos y venderlos en dólares estadounidenses en el exterior. De todas maneras, la cotización más conocida es llamada “dólar blue”, comúnmente negociada en oficinas de cambio ilegales conocidas como “cuevas”, usualmente escondidas detrás de negocios tradicionales como joyerías. 

De acuerdo a Di Pietrantonio, a pesar de que el precio de DAI esté cercano a estas cotizaciones no oficiales, su valor no depende de ellas. “Una buena masa de DAI a nivel local hace que el precio sea competitivo”, dijo. 

Mariano Conti, exlíder de Smart Contracts en MakerDAO, explicó en una charla de 2019 cómo recibía DAI por su trabajo. 

Dijo que comenzó aceptando pagos en Bitcoin para escapar de los controles de capitales que regían en Argentina durante 2014. Descubrió Ethereum un año después y cuando se unió a MakerDAO, en 2016, empezó a recibir DAI. “Nunca adquirí criptomonedas con fiat en mi vida. Solo las he recibido”, afirmó en esa charla. 

El programador contó que una vez al mes convertía a pesos argentinos la cantidad necesaria para pagar sus gastos, mientras el resto quedaba en DAI. Y, a pesar de que era consciente de los riesgos de la plataforma y de los smart contracts, prefería confiar en esos ecosistemas antes de darle su dinero al gobierno argentino. 

“DAI tiene implicaciones y buenas propiedades que nuestras monedas hasta el momento no tuvieron y probablemente nunca tengan”, dijo.

Related Stories

• Las criptomonedas crecen en la problemática economía de Argentina
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The Italian Banking Association (ABI) has started experimentation with a digital euro based on distributed ledger technology.

• Comprised of over 700 Italian banking institutions, the ABI said Tuesday the work would examine the technical feasibility of a digital euro and further look at “new value-added services” that would become possible due to the programmable nature of the technology.
• “The aim of the initiative is to proactively contribute to public debate and support banks operating in Italy as they prepare for the future,” said the ABI in a statement.
• The experiments will be divided into two parts: one looking at the infrastructure and distribution model to gauge technical feasibility, and another assessing how programmability could provide use cases that differentiate a central bank digital currency from existing electronic payments systems.
• In November, European Central Bank (ECB) President Christine Lagarde said she believes the region’s monetary authority will move to launch a digital version of the euro in the next two to four years.
• Along with other central banks, the ECB is actively working on how the digital euro might be designed and how it might function if launched.

Also see: Italian Banks Are Ready to Trial a Digital Euro

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Insurance startup Tidal Finance has raised a $1.95 million seed round for its TIDAL token, led by European digital asset company KR1.

New York-based Tidal will use the Polkadot blockchain to allow users to contribute funds that insure a set of decentralized finance (DeFi) applications against smart-contract failure or breaches in one pool, theoretically improving the capital efficiency for DeFi investors interested in insurance. Other participants in the round included NGC Ventures, Kenetic Capital, Genesis Block and others.

The pioneer in protocol insurance is Ethereum-based Nexus Mutual, which funded itself with a token sale and paid out its first claim in February, following the first round of attacks on bZx, the flash loan provider. 

Related: What Is an Oracle?

Tidal believes there are refinements that can be made on the model, however, and that there will be advantages in building it on an up-and-coming layer-one blockchain.

Why Polkadot?

In the works since early this year, the company detailed its project on Medium in October. CEO and founder Chad Liu said the team chose Polkadot because it should eventually allow for more sources of liquidity to provide insurance, therefore attracting more people to buy insurance.

“The Polkadot network will connect more chains when it becomes mature. It’s a bigger addressable market,” Liu said.

Polkadot’s lower gas prices will also help users, particularly if some pools eventually require more frequent payments in order to reflect changes in variable rates.

Related: Market Wrap: Bitcoin Dumps to $21.9K; ETH 2.0 Affected Ether Locked in DeFi

Notably, applications do not need to be on Polkadot to be insured by Tidal. In fact, it’s likely that many of the first applications covered will be on Ethereum, since that’s where basically all of DeFi runs for now. That said, if a well-resourced EOS holder wanted to draw insurance premiums, Tidal’s team believes they might be more likely to deposit on a Polkadot-based application, once it connects to EOS, simply due to lower friction.

Tidal sees this as its chief innovation: liquidity providers backing insurance will protect multiple applications in one pool (rather than each liquidity provider insuring one application at a time, as on the earlier projects). 

At launch, Tidal expects to provide three different pools – low, moderate and high risk – with as many as 20 applications in lower-risk pools.

Pool approach

Backing pools of assets rather than one at a time enhances the capital efficiency, Liu said, allowing backers to earn premiums from many applications at once.

The TIDAL token will earn a portion of the fee charged when people originate cover and it will also serve as a governance token for the application. Insurance premiums will go to liquidity providers in Tidal’s pools.

Liu said there will be a fixed supply of 20 billion TIDAL tokens. 

The details of the token-economies are still somewhat limited, but a distribution breakdown shared with CoinDesk showed that about 12% was designated for the token sale, 10% for the team, 12% for a liquidity mining program (the website indicates this would be a reward for those who fund insurance pools) and 39% for staking rewards (no details on this have been released). The rest is divided up between reserve, treasury and ecosystem. 

Tidal estimates that the first insurance pools will go live in the first quarter of 2021.

Update (Dec. 22, 19:12 UTC): There will be 20 billion TIDAL tokens, not 20 million.

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Nasdaq-listed bitcoin mining firm Riot Blockchain (RIOT) announced its purchase of 15,000 additional mining ASIC machines from Bitmain, pushing the total number of machines ordered by the mining company to over 31,000 in 2020.

• With its new machines, the Castle Rock, Colo.-based miner expects an expanded hashrate capacity of 3.8 exahashes per second (EH/s) in 2021, a 65% increase from its current 2.3 EH/s capacity.
• Notably, Riot’s purchase is a pre-order as Bitmain supplies are sold out until Q3 2021. Per the release, however, Riot expects delivery and deployment of the new machines to start in May and continue through October next year.
• Riot shares ended Tuesday trading at above $14.50, a more than 22% daily gain.
• In December, Riot shares have gained over 78%.
• Bitcoin gained 20% over the same period.

Update (Dec. 22, 21:08 UTC): Article update to reflect Riot shares’ price surge through Tuesday trading.

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Cryptocurrency traders showed their excitement for FTX’s pre-IPO Coinbase (CBSE) futures Tuesday morning by pushing the price above $295, a roughly 140% increase from the listing price of $125.

• Newly launched Coinbase futures reported over $2.2 million in traded volume at last check, barely 12 hours after the market opened, making it the largest tokenized stock market on FTX by a significant margin.
• The next largest tokenized stock market on FTX – Moderna (MRNA) – reports barely $800,000 in volume.
• On Friday, CoinDesk first reported that FTX had plans to launch Coinbase futures, pending non-U.S. regulatory approval. The maverick exchange also launched a pre-IPO market for Airbnb futures earlier this month.
• Coinbase futures have retraced some of their initial gains, dropping to $235 at last check, up roughly 95% from the initial listing price.
• Based on current trading, FTX’s pre-IPO futures assign Coinbase a rough market capitalization of over $58 billion, more than double the $28 billion value estimated by Messari in a Friday report.

Update (Dec. 22, 18:41 UTC): Last bullet added to reflect approximate market capitalization based on pre-IPO futures trading.

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Bitcoin (BTC) was higher, changing hands just above $23,000 after dropping for two straight days from a record high around $24,300. 

“The market looks to begin a consolidation phase above $22,000,” according to Matt Blom, head of sales and trading for the cryptocurrency firm Diginex. “Further attempts to drive the market lower are likely to be met with firm support from the bulls.”

XRP (XRP), the digital asset used for payments, fell for a fourth straight day, down 17% over that stretch, after Brad Garlinghouse, CEO for San Francisco-based Ripple, said he had been informed by regulators that the company would be sued by the U.S. Securities and Exchange Commission. The coming suit is believed to relate to sale of XRP, and whether the tokens represent securities that needed to be registered with authorities. Ripple disputes the claim and argues that other branches of the U.S. government have deemed XRP to be a currency. 

Related: MoneyGram Takes Wait-and-See Approach as SEC Sues Partner Ripple

“It’s an attack on the entire crypto industry and American innovation,” Garlinghouse said in an emailed statement.

In traditional markets, European stocks recovered some of Monday’s steep losses while U.S. stock futures wavered between gains and losses, as investors assessed elevated coronavirus case levels alongside the rollout of vaccines and economic-stimulus measures.  

Market moves

Bitcoin was launched in early 2009, and during its first decade a lot of notable and well-respected investors, economists, bank executives and financial-news commentators said a lot of things about the cryptocurrency.

Times change, and it’s arguable that, in the push and pull of global markets, all that’s now old news or maybe just water under the bridge. 

Related: Market Wrap: Bitcoin Recovers to Nearly $24K; Ether Rides Bitcoin’s ‘Coattails’

But as First Mover reviews the year that was, anything said in 2020 is fair game. Here’s a brief rundown of some notable pronunciations on bitcoin, in chronological order, as bitcoin tripled in price to about $23,000 from $7,168 at the start of the year.

Jan 22, 2020. Peter Schiff, CEO, Euro Pacific Capital, via tweet: “I concede that many people who bought bitcoin in the past and sell it now will profit. But those who buy it now and hold will suffer a loss.” 

Feb. 24, 2020. Warren Buffett, billionaire CEO of the conglomerate Berkshire Hathaway, in CNBC interview: “Cryptocurrencies basically have no value.” 

Feb. 28, 2020. Greg Cipolaro, then-co-founder of Digital Asset Research, now head of research for NYDIG, in interview: “As interest rates decline, you’re more likely to tip the seesaw toward assets that don’t have yield, such as collectible assets like artwork or gold or bitcoin.”  

March 9, 2020. Connor Abendschein, a research analyst for Digital Assets Data, in email: “Bitcoin may find its footing and shine further down the road during this financial crisis.”

March 12, 2020. Kevin Kelly, lead analyst at the cryptocurrency analysis firm Delphi Digital, said: “Bitcoin and crypto in general still very much sit further out the risk curve in investors’ minds.”

April 2, 2020. Joe DiPasquale, CEO of BitBull Capital, in phone interview: “You have so many people trying to swing trade on crypto.” 

April 7, 2020. Rich Rosenblum, head of markets group at GSR, in email: “The record stimulus being deployed by central banks is a reminder of why bitcoin was created.”

April 6, 2020. Jay Hao, CEO of the Malta-based cryptocurrency exchange OKEx, in blog post: “Bitcoin possesses the characteristics of a super-sovereign currency.”

April 10, 2020. Arthur Hayes, CEO, BitMEX exchange, in blog post: “There are only two things to own during the transition to whatever the new system is, and that is gold and bitcoin.”

April 20, 2020. Mike Alfred, CEO of cryptocurrency analytics firm Digital Assets Data, said: “We are hearing and seeing increased retail interest.”

May 11, 2020. Paul Tudor Jones II, hedge fund manager, in CNBC interview: “We’re watching the birth of a store of value, and whether that succeeds or not, only time will tell.” 

May 18, 2020. Arcane Research, a cryptocurrency analysis firm, in report: “Bitcoin has been performing well, while the stock market has struggled… . If this trend continues, it could also be strengthened by people finally believing the narrative and then becoming a self-fulfilling prophecy.” 

May 27, 2020. Goldman Sachs Consumer and Investment Management Division, in presentation: “Cryptocurrencies including bitcoin are not an asset class. … We do not recommend bitcoin on a strategic or tactical basis.” 

June 2, 2020. Mike McGlone, Bloomberg Intelligence senior commodity strategist, in a report: “Something needs to go really wrong for bitcoin not to appreciate.” 

July 13, 2020. Arca Funds, digital-assets investment firm, in weekly update: “We believe bitcoin will remain the best insurance policy against currency collapse and a complete unwind of the financial system as we know it.”

Aug. 3, 2020. Messari, cryptocurrency research firm, in a report. “We know that it won’t take much of an institutional allocation until $50,000 bitcoin is back on the table.”

Aug. 14, 2020. Lennard Neo, head of research at Stack Funds, in a report: “Bitcoin could be a ‘risk-on hedging-type asset,’ where it performs relatively well in thriving markets, yet acting as a hedge to global uncertainties, displaying financial attributes that fall in between that of equity and gold.”

Sept. 9, 2020: Charlie Morris, chief investment officer of digital asset-focused investment firm ByteTree, in WhatsApp audio interview: “Bitcoin’s still small and has huge upside from here.”

Oct. 6, 2020: Marc Chandler, chief market strategist at Bannockburn Global Forex, in a video chat: “I just don’t know how bitcoin can replace the greenback.” 

Oct. 9, 2020: Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, tells subscribers: “It’s a bit surreal to see gigantic corporate entities now going knee-deep in bitcoin.” 

Oct. 22, 2020. Zac Prince, CEO of the crypto lender BlockFi, in an email: “This coalescing of fintech and bitcoin is yet another bullish development for investors.”

Oct. 23, 2020. JPMorgan analysts, in a report: “Even a modest crowding out of gold as an alternative currency over the longer term would imply doubling or tripling of the bitcoin price from here.”

Nov. 9, 2020. Stanley Druckenmiller, hedge fund investing legend, in CNBC interview: “Frankly, if the gold bet works, the bitcoin bet will probably work better.”

Nov. 10, 2020. Michael Saylor, MicroStrategy CEO, in interview: “Ultimately you have to find something which you can’t print more of that doesn’t have its fundamental underpinnings tied to a fiat currency, and the only thing that I can find right now is bitcoin.” 

Nov. 11, 2020. Ray Dalio, the founder and co-chairman of Bridgewater Associates, in interview with Yahoo Finance: “I don’t think digital currencies will succeed in the way people hope they would.”

Nov. 18, 2020. Jamie Dimon, CEO of JPMorgan Chase, at New York Times DealBook conference: Bitcoin is “not my cup of tea.”  

Nov 26, 2020. Nouriel Roubini, via tweet: “Bitcoin has no role in institutional or retail investors portfolios.”  

Nov. 30, 2020. Inigo Fraser-Jenkins, co-head of portfolio strategy team for Alliance Bernstein, in report: “The volatility of bitcoin has significantly reduced, making it more attractive in its potential twin roles both as a store of value and as a medium for exchange.”

Dec. 7, 2020. Wells Fargo Investment Institute, in report: “Cryptocurrency investing is a bit like living in the early days of the 1850s gold rush.”

Dec. 16, 2020. Scott Minerd, chief investment officer of Guggenheim Partners, in interview with Bloomberg TV: “Bitcoin has a lot of the attributes of gold and at the same time has an unusual value in terms of transactions.”

Dec. 18, 2020. Ruffer Investment, in portfolio update: “Bitcoin has survived trial by fire, becoming stronger through multiple cycles of boom and bust.” 

– Bradley Keoun

WATCH: 2020 Bears and Bulls: Before Wall Street Loved Bitcoin, They Hated It

Bitcoin watch

(Editor’s Note: CoinDesk’s Omkar Godbole, who writes Bitcoin Watch, is off this week.) 

What’s hot

Uniswap is the top gas guzzler on Ethereum (CoinDesk) 

Crypto exchange Huobi returning to U.S. after winning Nevada trust license (CoinDesk) 

Grayscale halts bitcoin trust inflows as JPMorgan warns slowdown could hit BTC price (CoinDesk)

India’s leading bitcoin exchange raises $13.9M from Block.One, Coinbase Ventures (CoinDesk) 

Coinbase crypto exchange is hiring for new Canada operation (CoinDesk)   

Investor inflows to cryptocurrency funds and products has risen to $5.6B so far in 2020, up seven-fold from 2019, CoinShares says (Reuters) 

Microstrategy has now spent $1.125B on bitcoin, at average price of about $16K, CEO Michael Saylor tweets (CoinDesk) 

Bitcoin mining-computer maker set to spin out business lines in bid to end year-long power struggle between top executives (The Block) 

Anthony Scaramucci’s SkyBridge Capital files with SEC to launch bitcoin fund (CoinDesk)   

Analogs The latest on the economy and traditional finance

U.S. Congress passes $2.3T spending bill covering $600 checks, supplemental unemployment benefits and money for schools, airlines and vaccine distribution – just hours after rank-and-file lawmakers got their first look at the 5,593-page measure; additional relief package could be needed by March (Bloomberg)

European Union rebuffs U.K. Prime Minister Johnson’s latest Brexit concession, with just nine days left before U.K. leaves single market (Bloomberg) 

Oil prices tumble as new coronavirus strain sparks travel restrictions (WSJ) 

China set to further reduce U.S. dollar’s weight in index used to set yuan’s daily reference rate (Bloomberg)

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Cryptocurrency project Verge, previously adopted for payments by Pornhub, is forging a new role as a means to pay for mobile charging.

• Verge Currency announced Tuesday it has teamed up with a U.S.-based firm called Voice Life to develop a new mobile charging device that accepts verge (XVG) as payment.
• The tech will be on display at the Consumer Electronics Show in January 2021.
• When launched, users will be able to use the VergePAY platform to fund a two-minute charge of mobile devices. XVG is the only cryptocurrency the system will use, a Verge representative told CoinDesk.
• The system will use a Far-Field Wireless Power Charging System from Voice Life. This “will ultimately convert ambient terahertz waves into storable energy,” according to the firm’s website.
• Voice Life CEO Robert Smith said, “The ‘holy grail of blockchain technology’ is going to be a real-time application that extends its utility beyond just improving financial transactions. We believe we are developing that application with Verge.”
• Pornhub previously used verge as its only cryptocurrency option for performer payouts after PayPal withdrew its services from the company. It has since added the tether (USDT) stablecoin and tron (TRX). More recently, it added bitcoin and litecoin payments.

Also see: PayPal’s Axing of Pornhub Model Payments May Boost Crypto Conversions

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Leading cryptocurrency exchange Coinbase asked the U..S. Treasury Department to extend the comment period on proposed know-your-customer (KYC) requirements from 15 days to the typical 60 days normally afforded such proposals.

• Coinbase noted that the Financial Crimes Enforcement Network (FinCEN), part of the U.S. Treasury, asked for comments on 24 questions, each requiring detailed analysis and extensive cost assessments.
• “Addressing all of the questions FinCEN has posed and the additional issues FinCEN has not yet considered would take much longer than 15 days in the best of times,” Coinbase said in its letter. “To do so in a handful of working days across the national holidays and during the latest surge in COVID is quite obviously impossible.”
• Under the advanced notice of proposed rulemaking announced last week, users who want to send cryptocurrencies from centralized exchanges to a private wallet would need to provide personal information about the owner of that wallet to the exchanges, if the amount sent is greater than $10,000 in one day. 
• The exchanges would also need to submit and store records involving such transactions with a total value over $10,000 in a 24-hour period, and maintain records for transactions over $3,000.
• The general public will have until Jan. 4, 2021, to provide comments or feedback (although another part of the document says feedback can be submitted within 15 days after the rule is published in the Federal Register, the national logbook, on Dec. 23).
• While 60 days of comment is the norm for such proposals, the Treasury cited “significant national security imperatives” for the shortened period.
• Coinbase attributed a more mundane reason for the shortened review period: “There is no emergency here; there is only an outgoing administration attempting to bypass the required consultation with the public to finalize a rushed rule before their time in office is done,” the exchange said in its letter to the director of FinCEN.

Read also: US Floats Long-Dreaded Plan to Make Crypto Exchanges Identify Personal Wallets

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The U.S. Securities and Exchange Commission (SEC) intends to sue Ripple over its sale of XRP, CEO Brad Garlinghouse said Monday.

According to Fortune, the lawsuit will be filed in the near future, though no specific date has been provided yet. The suit had not been filed as of press time. Ripple cofounder Chris Larsen and Garlinghouse will be named defendants alongside the firm, Garlinghouse said.

“It’s an attack on the entire crypto industry and American innovation,” Brad Garlinghouse said in an emailed statement.

Related: Market Wrap: Bitcoin Dumps to $21.9K; ETH 2.0 Affected Ether Locked in DeFi

In an emailed statement, outside counsel Michael Kellogg, of Kellogg, Hansen, Todd, Figel & Frederick said, “This complaint is wrong as a matter of law. Other major branches of the U.S. government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency. Transactions in XRP thus fall outside the scope of the federal securities laws. This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again.”

Ripple received word Monday that the SEC intended to sue, according to the Wall Street Journal.

Ripple is already being sued by XRP investors in a putative class-action lawsuit, on claims that the company said XRP’s price would rise. That suit, which began in 2018, continues its course through the courts.

The company has previously paid $700,000 in fines on charges it violated aspects of the Bank Secrecy Act brought by the Financial Crimes Enforcement Network (FinCEN), as well as an additional $450,000 in fines to the U.S. Attorney’s Office for the Northern District of California.

Related: Market Wrap: Bitcoin Pushes Past $23.7K While Crypto Locked in DeFi at All-Time High

Garlinghouse’s move Monday is reminiscent of how messaging platform Kik announced the SEC would file suit against it for raising $100 million to build Kin. Kik later settled the case.

Crypto company CEOs warning the broader industry of upcoming regulatory actions may be a bigger trend. Coinbase chief Brian Armstrong previewed potential U.S. Treasury Department rulemaking last month, weeks before FinCEN published a proposal for rulemaking.

XRP

XRP was developed and launched by Larsen’s Ripple Labs co-founder Arthur Britto and tech chief David Schwartz in 2012. Ripple maintains 55 billion XRP in escrow, releasing 1 billion every month. Unused XRP is returned to escrow.

According to Messari, Ripple has sold about $1.2 billion in XRP over the years.

XRP’s price fell after news of the impending lawsuit came out, dropping 12% on the 24-hour trading period to below 50 cents. The cryptocurrency’s price had already begun falling earlier in the day, joining a broader market decline.

An SEC spokesperson did not immediately return a request for comment. After the publication of this article, a Ripple spokesperson emailed the following statement, attributed to Garlinghouse:

The SEC is fundamentally wrong as a matter of law and fact. XRP is a currency, and does not have to be registered as an investment contract. In fact, the Justice Department and the Treasury’s FinCEN already determined that XRP is a virtual currency in 2015 and other G20 regulators have done the same. No other country has classified XRP as a security.

The SEC has permitted XRP to function as a currency for over eight years, and we question the motivation for bringing this action just days before the change in administration. Instead of providing a clear regulatory framework for crypto in the U.S., Jay Clayton inexplicably decided to sue Ripple – leaving the actual legal work to the next Administration.

This is an attack on the entire crypto industry and American innovation. By giving the stamp of approval only to Bitcoin and Ether (whose networks are at the mercy of the Chinese Communist Party), the SEC has picked the winners – disregarding an entire industry outside of these two tokens. Ignoring advice from national security experts and the U.S. government, Jay Clayton is handing over the future of our global financial systems – underpinned by blockchain and crypto technologies – to an authoritarian regime.

We are right and will aggressively fight – and win – this battle in the courts to get clear rules of the road for the entire industry in the U.S. We are on the right side of the law, the right side of policy and will absolutely be on the right side of history. In the meantime, it’s business as usual for Ripple and our hundreds of customers made up of the world’s top financial institutions that have come to depend on Ripple to deliver high-value solutions.

UPDATE (Dec. 22, 2020, 02:25 UTC): Updated with additional context.

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After the past week’s record bitcoin volume for 2020, the price dipped on lower volume. Meanwhile, November’s dip in ether assets locked in DeFi can at least partially be attributed to the Ethereum network’s ambitious 2.0 upgrade.

• Bitcoin (BTC) trading around $22,843 as of 21:00 UTC (4 p.m. ET). Slipping 5.3% over the previous 24 hours.
• Bitcoin’s 24-hour range: $21,960-$24,081 (CoinDesk 20)
• BTC near its 10-hour moving average and below the 50-hour on the hourly chart, a sideways-to-bearish signal for market technicians.

Bitcoin’s price rode a roller coaster up and down over the past 24 hours. After a steady run above $23,800 in early hours trading, the world’s oldest cryptocurrency dumped as low as $21,960, according to CoinDesk 20 data. The price recovered somewhat to $22,843 as of press time. 

Lower-than-average volume led to a thinner-than-usual market Monday as many traders were likely staying on the sidelines with the holidays and new year quickly approaching. 

Related: Ripple CEO Warns SEC May Sue Company Over XRP Sales

“Trading activity is subdued. That doesn’t motivate anyone to trade on Christmas week,” said Misha Alefirenko, co-founder of crypto market maker VelvetFormula.

After Dec. 17’s combined volume record $4.7 billion day across major exchanges Bitfinex, Bitflyer, Bitstamp, Coinbase, Gemini, ItBit, Kraken and Poloniex, that figure was much lower, down to $2.5 billion as of press time Monday.

Despite this, big-time buyers in the over-the-counter market have helped keep bitcoin well above the $20,000 level, first breached back on December 16. 

Read More: MicroStrategy Splurges On Another $650M in Latest Bitcoin Investment

Related: Author Ben Mezrich on Capturing the Winklevii and Plans for a ‘Bitcoin Billionaires’ Movie

“Real demand from largely price-insensitive institutional buying drove us into that level, and the resulting fireworks we saw on the break came from the leveraged side as roughly half the market’s outstanding leveraged short positions were liquidated,” quant trading firm QCP wrote in an investor note Monday. 

On derivatives venue BitMEX, over $44 million in sell liquidations, the crypto equivalent of a margin call, occurred, which put some pressure on the market for bitcoin to head lower. Sell liquidations are triggered when leveraged long positions start losing a significant portion of the money the buyer posted to place the trade. 

“The $20,000 spot level … is now our firm bull/bear line, with $16,000 as our strong support,” QCP Capital said in its investor note. “We are lightening up on selling puts up here, as this week brings our very well flagged Christmas expiry, which is now officially the largest OI on record.” 

Open interest, or OI, is loaded up in the bitcoin options market for Dec. 25 expiration, according to data from aggregator Skew. 

The overhang of options expiration and the declining activity in the spot market may be the largest dynamics to watch for the market in the next several weeks.

Read More: Grayscale Halts Bitcoin Trust Inflows

“We could be looking at an extended consolidation from here, considering the weak Q1 seasonality and risks associated with the new administration after [U.S. President-elect Joe] Biden’s inauguration in mid-January,” QCP added.

ETH Locked in DeFi rising from November trough

The second-largest cryptocurrency by market capitalization, ether (ETH) was down Monday, trading around $609 and slipping 7% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

Read More: Uniswap Is the Number One Gas Guzzler on Ethereum

The amount of ether “locked” in decentralized finance, or DeFi, for “yield” or a return in exchange for providing liquidity, hit a high of 9.4 million ETH on Oct. 20. In November, the amount of ether locked dipped as low as 6.7 million before rebounding in December, at over 7.2 million ETH as of press time.

Cooper Turley, editor of newsletter DeFi Rate, told CoinDesk that Ethereum’s 2.0 upgrade dynamics, which also includes staking in the network, played a role in the amount of ether locked, dipping and then recovering somewhat. “People unlocked ETH to stake via [Eth 2.0] and trade it during the recent run-up,” Turley said. “Now that things have settled a bit, most that did not stake into [Eth 2.0] are depositing back into DeFi.”

Other markets

Digital assets on the CoinDesk 20 are mostly red Monday. One notable winner as of 21:00 UTC (4:00 p.m. ET):

• orchid (OXT) + 14.7%

Notable losers:

• bitcoin cash (BCH) – 12.7%
• litecoin (LTC) – 12.3%
• xrp (XRP) – 11.1%

Equities:

• Asia’s Nikkei 225 closed in the red 0.18% as a volatile Monday session led the index lower on concern over rising Japanese coronavirus cases.
• The FTSE 100 in Europe ended the day dropping 1.7% as the U.K. identified a new coronavirus strain over the weekend, concerning investors’ economic outlook.
• The S&P 500 in the United States dropped 0.40% as the new U.K. coronavirus strain and fresh lockdowns there caused investors to sell, dragging the index lower.

Commodities:

• Oil was down 2.6%. Price per barrel of West Texas Intermediate crude: $47.78.
• Gold was in the red 0.26% and at $1,876 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield fell Monday dipping to 0.936 and in the red 0.70%.

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