Blockchain Confidential - 31 December 2021

New Year's Eve Confidential

The Week

Aave partnered with Centrifuge to start offering liquidity pools for real-world assets like freight forwarding invoices and trade receivables. The Block served up stats to close out the year, reporting $32T traded on Bitcoin and Ether futures, $387B in Bitcoin and Ether options trading, up 443%, while NFT trading surpassed $13B; OpenSea continued to dominate the latter, with 88% of volumes traded, though as noted below multiple centralized exchanges clearly have OpenSea in their sights.

The Defiant wins the prize for best metaverse hype headline this week with “The Metaverse Doesn’t Really Exist But It’s Huge” — thank you for that. And after a DAO failed in its pursuit of a prize copy of the Constitution, we now have a DAO pursuing the remnants of Blockbuster Video. On the plus side, it’s unlikely Ken Griffin will bid. Shanghai’s next five-year plan highlights investment in metaverse technology, as the Chinese government continues trying to thread the needle of control & innovation. Kraken’s coming NFT trading platform will offer collateralized loans against NFT’s.

Finally, as the year winds down and we say goodbye to 2021, Decentraland will offer you a chance to experience the ball drop at One Times Square in the metaverse.

Regulator Radar

In an interview with Coindesk, Blockchain Confidential’s favorite SEC commissioner, Hester Peirce, highlighted the risks of NFT’s running up against securities laws and questioned whether yet another regulatory agency is the right answer. Meanwhile SEC Chair Gensler added a crypto senior advisor, Corey Frayer, to help support the agency’s many initiatives in the space.

Turkey’s President Erdogan pushed forward a crypto regulation bill in the face of the lira’s ongoing troubles, though it’s not expected to include an outright ban. The Bank of Israel directed local banks to reinforce KYC/AML controls rather than walling off and not doing business with cryptocurrency-related companies. Mexico may have a CBDC in circulation by 2024. And Korea is going to start imposing gift & inheritance taxes on digital assets in 2022, in advance of capital gains taxation in 2023.

Finally, Polygon quietly patched a hole in its Layer 2 protocol which had put $24B in user funds at risk, though not before a hacker used it to abscond with $1.8M.

At the Office

Jia Yng has signed on a law firm and set up the company bank account in Singapore, so we are nearly there getting Cloudwall Capital SG fully operational. On the Research side, Ilya is deep into a literature review on digital asset risk and pricing and also talking to a number of prospective Research team hires. We kicked off a series of 12 one-week sprints, each ending in a Friday demo, inspired in part by Sprint. Risk systems need solid data foundations, and the most basic data for risk & trading is reference data, so our first demo is starting with building a digital asset product master. We will be covering some of the technical details in future Geek Out posts.