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In this episode of the podcast, we discuss the latest developments in Web3 finance and the regulatory challenges faced by the industry. We cover the recent burn of 11,500 wBTC worth $260 million and the decline in supply. We also talk about Ripple's chief legal officer calling for the SEC chair's recusal from crypto enforcement cases, Binance's shift towards TrueUSD as Tether and USD Coin use declines, and Hashnote's launch of a regulated DeFi platform. We explore the importance of KYC and AML standards and how regulated DeFi platforms can attract institutional investment in the space.
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What is Web3 Finance Flash: Insights for the Busy Web3 Finance Enthusiast?
"Web3 Finance Flash: Insights for the Busy Web3 Finance Enthusiast" is a podcast presented by CryptoCFOs, the premier members-only community for CPAs, CFOs, Investors, and other finance professionals. Each episode brings you quick and informative updates on the ever-changing world of Web3 finance. Whether you're a busy enthusiast looking to stay informed or a seasoned Web3 finance professional, this podcast provides valuable insights and analysis on the latest developments in the space.
Web3 Finance presented by CryptoCFOs
Wrapped Bitcoin supply drops to negative after 11,500 wBTC burn linked to Celsius.
Wrapped Bitcoin, or wBTC, has experienced a significant drop in supply after the second-largest single-day burn on February 27th. A total of 11,500 wBTC, worth $260 million, linked to now-bankrupt crypto lender Celsius was burned, resulting in a negative growth rate for the wrapped token. The current total supply of wBTC is 164,396, with a monthly growth rate of -7.39%. wBTC is an Ethereum-based ERC-20 token that mirrors the value of Bitcoin and is pegged 1:1 with its price. During the peak of the bull run, wrapped tokens became a popular tool in the decentralized finance ecosystem, but with the advent of the bear market and numerous crypto contagions, the demand has started to fade away. The market contagion caused by the FTX collapse also depegged wBTC from the original value of BTC. Although the slippage was just about 1.5%, it raised serious concerns about whether such synthetic tokens were a viable mode of value transfer.
Ripple CLO Urges SEC Chair to Recuse Himself from Crypto Enforcement Cases
Ripple's chief legal officer, Stuart Alderorty, has called on SEC chairman Gary Gensler to recuse himself from voting on any enforcement case involving cryptocurrencies. Alderorty cited Gensler's previous statement that "every cryptocurrency, except BTC, is an unregistered security," as evidence of his bias towards crypto assets. Alderorty referred to a previous legal case between Antoniu and the SEC to support his argument. The SEC has been taking enforcement actions against crypto firms for violating federal securities law. However, the regulator and Ripple are still embroiled in a legal battle over the classification of XRP.
Binance Relies More on TrueUSD as Tether and USD Coin Use Declines
Binance has minted $130 million worth of TrueUSD (TUSD) in the past week, making the stablecoin the fifth-largest by market capitalization. TUSD's supply surpassed $1.1 billion, according to CoinGecko, which is the highest level since August. The dollar-pegged stablecoin is issued by ArchBlock, previously known as TrustToken, and is fully backed by fiat assets, according to blockchain data provider ChainLink’s proof-of-reserve monitoring tool. Binance's increasing reliance on TUSD came after U.S. regulators cracked down on its Binance USD stablecoin.
Hashnote Launches Regulated DeFi Platform
Hashnote, a regulated decentralized finance platform for institutions, has launched following a $5 million incubation with early stage blockchain investor Cumberland Labs. The platform offers exposure to crypto-based investments such as yield generation, downside protection, and leveraged upside products, while also conforming to Know-Your-Customer (KYC) and Anti-Money-Laundering (AML) standards.
Hashnote CEO Leo Mizuhara believes that regulated DeFi platforms are key to attracting institutional money to the space, and he sees Hashnote as a funnel into DeFi for institutional investors. The platform is taking a multi-pronged approach to onboarding newcomers into the DeFi ecosystem, allowing clients to wire cash directly to Hashnote, creating an empty wallet which requires both Hashnote and the recipient to sign a transaction, or interacting with Hashnote via MetaMask or any other blockchain wallet.
Institutions are seeking a fully regulated KYC platform to access DeFi, and Hashnote is "getting a ton of interest," according to Mizuhara. He believes that the demand for financial products of this nature is "in demand right now" and sees the way forward as onboarding people who are in the traditional finance space and bridging the gap between traditional finance and DeFi.