Launch of crypto payment products, DeFi networks and price indices; CBDC report and NFT royalty data published; FinCEN, FTC address crypto regulation | Baker Hostetler
Payment firms launch crypto products, new DeFi price indices announced
Of Shade Quailey
An American fintech company recently announced the launch of a fiat-to-crypto on-ramp, which facilitates fiat-to-crypto payments using “a customizable widget that developers can embed directly into their DEX, NFT platform, wallet or dApp.” According to a blog post, the fintech company handles all KYC, payments, fraud and compliance, removing the need to integrate multiple third-party services. The blog post notes that the fintech company has rolled out support for crypto payments to 67 countries and has partnered with several crypto projects, including a blockchain-based music streaming platform, an NFT marketplace, and a DeFi wallet provider.
In related news, Bitcoin payments startup Strike recently announced a partnership that will facilitate payments to Africa. The partnership will reportedly enable users to send instant, low-cost remittances to Africa by taking advantage of the Bitcoin Lightning Network, which is a layer-2 payment network built on the Bitcoin Network. According to reports, the feature currently allows US customers to send money to Ghana, Kenya and Nigeria.
In a recent latest development, a major US derivatives market and cryptocurrency index provider CF Benchmarks recently announced that they will introduce three new DeFi benchmark rates and real-time indices for Aave, Curve and Synthetix on December 19. press release, the new benchmarks, “together with Uniswap launched earlier this year … will capture more than 40% of the total value locked in DeFi protocols on the Ethereum blockchain.” The new benchmarks will reportedly use price data from several major cryptocurrency exchanges.
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Private Finance Sector Report Criticizes CBDCs
Of Joanna F. Wasick
A report released this week by Team Blockdata outlines significant developments in central bank digital currencies (CBDCs) and particularly illustrates criticism of CBDCs from various stakeholders in the private financial sector. The American Banking Association (ABA), for example, reportedly believes that issuing digital currencies should be left to the private sector, and that a CBDC issued by the US Federal Reserve lacks “compelling use cases” and would rewire the banking system. The head of policy for stablecoin issuer Circle Internet Financial is quoted in the report as calling CBDCs an “unpleasant idea.” According to the report, other concerns about CBDCs from private stakeholders relate to anonymity and privacy, interoperability, scalability, technological structure and balance between design and central bank policy.
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NFT royalties exceed $1 billion; The record company introduces new music NFT platform
Of Amos Kim
According to recent reports, NFT Marketplace OpenSea announced that NFT creators have passed $1 billion in royalty payments on its platform. These royalties, or “creator fees”, are a percentage of the resale of the artist’s NFT on the OpenSea platform. The royalties earned “do not include sponsorship income, engagement incentives or grants. …”
In other recent NFT news, according to reports, an American multinational record label has announced a multi-year partnership with Polygon, an Ethereum sidechain network, and LGND Music, an online marketplace for NFT music. Artists signed to this label will reportedly begin releasing music NFTs through the LGND Polygon-based marketplace, which will offer desktop and mobile applications to access the music NFTs. A report quoted Polygon Studios CEO Ryan Wyatt as stating, “The way we own and experience music is evolving, fully embracing decentralized technologies and collectibles.”
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DeFi Price Oracle Launches Staking; The app enables blockchain-verified accounts
Of Keith R. Murphy
According to reports, Chainlink, a provider of cryptocurrency price data and other data for use in smart contracts, this week introduced staking of its native token, LINK. In the first 30 minutes, select holders reportedly locked up 7 million tokens to secure the oracle network, and within two days the staking pool reached its pre-defined limit, with approximately $170 million in value staked. The stake pool is reportedly still in beta, and the pool will initially be limited to 25 million LINK, with a plan to scale up to 75 million over time. The protocol is said to pay stakers 4.75% in annual rewards in the form of LINK tokens. According to a co-founder of the company, staking allows the company to “scale the system by creating incentives that allow the system to grow.”
In other news, a popular encrypted cloud-based instant messaging service issued an update on Dec. 6 that reportedly allows users to create accounts using blockchain-based anonymous numbers instead of cellphone numbers. The update also allows users to enable automatic deletion of timers on messages in new chats, according to a report. The anonymous numbers can allegedly be purchased from a separate, decentralized auction company started by the messaging service’s founder, but that service is not offered to residents of the United States. The report also notes that following the recent meltdown of FTX, the messaging service’s founder announced that they are building a suite of decentralized tools, with the intention of rolling out non-custodial wallets and decentralized exchanges.
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US regulators indicate that digital asset enforcement is a priority for 2023
Of Veronica Reynolds
Recent comments by Himamauli Das, acting director of the US Financial Crimes Enforcement Network (FinCEN), at this year’s FinCEN conference indicate that decentralized finance (DeFi) is likely to be a core focus of the agency’s enforcement efforts in 2023. Citing the Treasury Department’s Digital Asset Action Plan, issued under President Joe Biden’s Executive Order to Ensure Responsible Development of Digital Assets, Director Das emphasized that FinCEN is taking “a closer look” at its anti-money laundering (AML) and countering the financing of terrorism (CFT) frameworks to the extent that they applies to digital assets to determine whether further regulation or guidance is necessary. In particular, Director Das stated that the agency is “looking closely at decentralized finance and its potential to reduce or eliminate the role of financial intermediaries that play a critical role” in FinCEN’s AML/CFT work. In addition, Director Das’s comments also underscored FinCEN’s commitment to closely monitor FinTech and RegTech companies engaged in traditional depository lending activity to assess whether additional regulation or guidance is needed to address corresponding AML/CFT concerns.
Also this week, according to comments from a spokesperson from the US Federal Trade Commission (FTC), the FTC is investigating several crypto firms for potential misconduct related to misleading or deceptive advertising. This comes on the heels of recent enforcement action taken by the US Securities and Exchange Commission against a reality TV star for touting digital assets on social media without disclosing the compensation received for the promotion. According to a report published by the FTC earlier this year, approximately half of all fraud related to digital assets in 2021 originated from social media.
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