Blockchain Confidential - 6 May 2022

Solana wipes out again, Jane Street borrows while Goldman Sachs lends, and when all else fails there is always Gucci

The Week

Oh, Solana, winning a Formula 1 race is not just about going fast; it’s also about not crashing. Bots linked to the Candy Machine NFT project took out the famed high-performance blockchain for seven hours. OlympusDAO’s community will vote on adding a new inverse bond product to the protocol. Neither a borrower nor a lender be? This week we had both, with Jane Street borrowing $25M from Blocktower Capital via the Clearpool DeFi protocol, and Goldman Sachs partnering with Coinbase to offer its first Bitcoin-backed loan. Hedge fund giant Millennium hired Hunter Meghart as its digital assets COO. Argentina’s largest private bank is offering trading on Bitcoin, Ethereum, Ripple and USDC. In Big Tech, Twitter’s Bluesky decentralized social media project released its first code drop. Their idea of distinguishing between regulating “speech” vs. “reach” is interesting. Finally, that Bitcoin burning a hole in your hardware wallet can now be spent at Gucci. Who says crypto is a solution looking for a problem?

Regulator Radar

BitMEX’s co-founders have been ordered by the CFTC to pay $10M each linked to past failures at the exchange to implement adequate KYC and AML checks and violations of commodities laws. While the CFTC is getting along just fine bringing actions on crypto players, thank you very much, the SEC announced that it is beefing up crypto enforcement with 20 new hires. SEC Commissioner Hester Pierce was not amused, which is why she is our favorite regulator here at Blockchain Confidential. The SEC did wave through another Bitcoin futures-based ETF, this time from Valkyrie. Senator Tommy Tuberville of Alabama really wants you to be able to have Bitcoin in your 401K, and his Financial Freedom Act will allow it, though Senator Elizabeth Warren came out swinging against Fidelity’s attempt to do just that last week; the company is due to respond to the questions raised on 18 May. Finally, on the U.S. state level California Governor Gavin Newsom signed an executive order asking state agencies to explore applications of crypto and blockchain technology. Given California regularly leads on state-level regulation, this is one to watch.

Who does not love a regulator with a headquarters in the metaverse? Dubai may be onto something here. Attend Metaverse Fashion Week and then check out the latest in KYC/AML regulation? According to a BIS survey, 90% of central banks are experimenting with CBDC offerings; drill down to get some insights on why. France granted Binance a digital asset service provider license. Elsewhere in the EU, analysts at the EU Commission suggested a different approach on DeFi regulation; they also called out the oversight benefits that come out of the public blockchain’s transparency, an angle that we are surprised more regulators have not latched onto. Finally, the Indian IT Ministry directed crypto exchanges to follow data retention rules common elsewhere in finance. While the blockchain is immutable, a tremendous amount of activity still takes place on centralized exchanges off-chain.

From the Research Desk

Head of Research Ilya Kulyatin continues our series on factor investing, taking a step back to offer some background on the topic. Read A Primer on Factor Investing.

The Essay

It has be a long time since we had the Essay feature. This week the essay is about the long, strange trip in digital assets. Read A People’s History of Crypto.

The Good Read

This week’s Good Read once again comes from the stellar qualitative research team over at Amber Group as they take us through blockchain roadmaps. Read Roadmaps.

At the Office

Makas rebuilt Serenity’s cloud environment’s underpinnings to get it closer to the target production configuration while Barry continued revamping the front-end’s supporting infrastructure. Jia Yng worked with Makas and Ilya to onboard two more hires, joining Jose Martinez and Thierry Hue, who both joined this week; Jose will focus on the risk platform and Thierry on our petabyte-scale cloud data platform. We are thus tracking well to reach out target 15 person headcount by summer. Bob and Kyle worked closely with our design partners preparing for launch while Jia Yng laid the foundations for the Asia sales process.

Chloe is racing ahead on model integration and Boris and Ilya are working together to prepare V2 of the factor risk model by July 1st. We published our 2022/2023 roadmap internally and with our design partners and are lining up pricing library and data vendors. Thierry and the data engineering team started integrating an additional reference data and price source to switch us to more industrial-grade sources before we turn on the Serenity risk API for clients. And Kyle took a walk down memory lane and took over as interim scrum master for the final sprints to our MVP release.

Suited, booted & matrices convoluted: off we go!