BitGo: Crypto Water Cooler — May 17
GM. It’s Wednesday, May 17.
Newsmakers
VC Deal Flow Slows in Q1, But There Are Causes for Optimism
Venture capital funding cooled in Q1 2023 as the effects of crypto winter chilled investor interest. According to Pitchbook, global deal value totaled $2.6B, down 11 percent from the prior quarter, and 78 percent year-over-year.
There were 353 total deals. Layer-2 scaling solutions are attracting considerable attention. Blockstream, a Bitcoin scaling solution that previously raised $163.1MM in a 2022 Series B round, raised an additional $125MM. Zero knowledge is also hot; Scroll, a company building a zero knowledge Ethereum Virtual Machine solution (zkEVM), raised $50MM.
While it was tough sledding for early-stage companies with funding rounds down 16.7 percent, late-stage valuations were up 209 percent. Wallet hardware and technology providers Ledger and Taurus raised $108MM in a Series C, and $65MM in a Series B, respectively.
Coming as it does on the heels of last year’s bear market, Q1 deal flow is likely a lagging indicator. With crypto markets rallying in 2023, dealmaking appears to be heating up again. This week alone, the Worldcoin crypto project was said to be closing in on $100MM in new funding. River, a Bitcoin financial services company, secured a $35MM B round. And Binance Labs, which has over 200 portfolio companies, is deploying $500MM and has grown its assets to $9B.
Read more →Pitchbook
US House Taking Unusual Steps to Keep Up With the World on Regulation
This week, the E.U. put the final seal on MiCA, the comprehensive crypto regulatory framework for its twenty-seven member states. But consensus remains elusive in the U.S. where, last week, the House of Representatives tried a new strategy to break the gridlock: collaboration between subcommittees.
The House Financial Services Committee’s (HFSC) Subcommittee on Digital Assets, Financial Technology, and Inclusion held a joint hearing with the House Agriculture Committee’s (HAC) Subcommittee on Commodity Markets, Digital Assets, and Rural Development. Members pointed to MiCA as an example of how other jurisdictions are moving ahead of the U.S. But, in the hearing, there was fundamental disagreement from the jump
In his opening remarks, Rep. Stephen Lynch (D-Mass) said new laws are not needed, echoing the position of the SEC, which this week said in court that current rules cover digital assets. HFSC Chair Patrick McHenry (R-NC) and Rep. Maxine Waters (D-CA) disagreed with Lynch’s position. McHenry is demanding that the SEC clarify how crypto platforms should register.
Additional hearings are scheduled with McHenry still expressing optimism for a bill in two months. In the meantime, states are filling in the gaps. New York is seeking stronger regulatory powers; Florida’s governor has signed a bill banning central bank digital currencies; California filed a DAO framework; Texas is considering a proof of reserves bill for exchanges; New Jersey may pass statewide regulations; and so might Illinois.
Read more →HHRG
China Invests in Blockchain Education Despite Cryptocurrency Ban
China’s ban on cryptocurrencies hasn’t stopped it from giving Hong Kong the nod to go ahead with crypto licensing. Now with the launch of the National Blockchain Technology Innovation Center earlier this month, the government is investing in the foundation of a digital economy.
The center, which is expected to train more than half a million specialists is a collaboration with think tanks, universities, and blockchain businesses. The Beijing Academy of Blockchain and Edge Computing — the developer of the ChainMaker blockchain — will lead the effort to “accelerate the construction of ‘ultra large-scale’ blockchain computing power clusters” with support from fifty corporations, many of them state-owned. The goal is to combine siloed “blockchain islands” into a cohesive national blockchain, which will support core elements of China’s economy, including cross-border trade, supply chain finance, energy, production safety, and the food industry.
China is not alone in this type of effort. Abu Dhabi University’s collaboration with 5ire aims to “democratize” blockchain education, research, and entrepreneurship. Meanwhile, Kenya is collaborating with Venom Foundation, an Abu Dhabi-based blockchain, to launch an African Web3 hub while Cyberchain will help to provide blockchain education to Nigerians. Universities around the world are offering crypto-related classes; about two thirds of parents and college grads in the United States with an understanding of blockchain want crypto courses taught in schools.
Read more →Kitco
News In Brief
Regulation and Security
Recommended by LinkedIn
Business of Crypto
DeFi and Web3
Midweek Market Pulse
Total Market Cap: $1,126,213,197,310–7 day change as of Tuesday 5/16/23 Noon EST: -0.8%
Bitcoin (BTC, -2.3%) and Ethereum (ETH, -1.6%) sank to two-month lows on Saturday before rebounding this week. Bitcoin hit a major milestone with Glassnode reporting that the number of addresses holding at least one BTC surpassed one million. Glassnode says that 190,000 new “whole coiners” were minted between February 2022 and this week.
The price of Bitcoin Cash (BCH, -5.3%) declined, but the speed-focused Bitcoin fork announced a major upgrade that enables “CashTokens.” Developers say these tokens “can be issued by anyone, and they can both represent physical assets and directly serve as currencies, payment stablecoins, commodities, securities, debt instruments, gift cards, receipts, event tickets, and more.” The upgrade comes at a time when the Bitcoin network has been slowed by the proliferation of Ordinals and meme coins, which have also led to record-high transaction fees.
Litecoin (LTC, +11.7%) flipped Polkadot (DOT, -1.1%) on its way to a double-digit gain this week. Litecoin could be benefitting from the higher fees and transaction times on the Bitcoin network. Litecoin is also benefitting from KuCoin Pool’s announcement that it will launch mining pool services for both Litecoin and Dogecoin (DOGE, -1.7%).
Pepe (PEPE, -17.4%), the coin that sparked the current meme coin frenzy, cooled off but still has a market cap of nearly $700MM. Pepe’s meteoric rise has led to a spate of scammers trying to lure unwitting victims into new meme coins before pulling liquidity. Meanwhile, on the list of feuds you didn’t have on your 2023 bingo card, Coinbase described Pepe as a “hate symbol,” causing #DeleteCoinbase to trend on Twitter. Coinbase’s Chief Legal Officer later apologized, but the exchange has still not listed PEPE at time of writing.
The Last Word
Mining Pool
noun
: A group of miners that work together to increase their chances of mining a block of cryptocurrency
/ As the barriers to entry — cost and difficulty of mining Bitcoin — have increased, mining pools have emerged as a solution.
About BitGo
BitGo provides the most secure and scalable solutions for the digital asset economy, offering regulated custody, borrowing and lending, and core infrastructure to investors and builders alike.
Founded in 2013 — the early days of crypto — BitGo pioneered the multi-signature wallet and later built TSS to improve upon other companies’ MPC offerings. Between multi-sig and TSS, BitGo offers the safest technology on the market and safeguards over 600 tokens across a wide variety of blockchains.
Over the years, BitGo has expanded from offering wallets into providing a full-suite solution that lets clients hold assets safely and then put them to work.
BitGo launched BitGo Trust Company in 2018, providing fully regulated, qualified cold storage to complement BitGo Inc’s original hot wallet solution. In 2020, BitGo launched BitGo Prime, which allows its clients to trade, borrow, and lend. Moreover, BitGo also provides access to DeFi, staking, NFT wallets, and beyond, and serves as the world’s sole custodian for WBTC, or wrapped Bitcoin.
Today, BitGo is the leader in digital asset security, custody, and liquidity, providing the operational backbone for more than 1500 institutional clients in over 50 countries — a list that includes many regulated entities and the world’s top cryptocurrency exchanges and platforms. BitGo also processes approximately 20% of all global Bitcoin transactions by value.
For more information, please visit www.bitgo.com.
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