Here are some of the major developments in the world of crypto over the past few days.
Tokyo-based investment firm Metaplanet has secured a $6.8 million loan from its shareholder, MMXX Ventures, to buy more Bitcoins. The loan will last six months from Aug 8 and is priced at 0.1% per year. At the current market price of $57,148 a token, the firm will add circa 118.5 Bitcoin to its book.
Following this announcement was a note by Metaplanet pertaining to the raising of $70 million in a stock rights offering to invest in Bitcoin, where $58 million would be put in. The decision is based on the consideration of not investing more in Japan, overly indebted with a constantly depreciating yen. This is particularly because many have already labeled the company as a "zombie," although CEO Simon Gerovich has positioned the firm on the right side of history with respect to its prospects in the long run.
Since then, Metaplanet has acquired 246 Bitcoin for $13.95 million at an average purchase price of $65,145 — down 12.8%. Shares of the company rose 290% since April but tapered off from $20.50 on July 24, in the wake of the latest downturn in the cryptocurrency market on Aug 5.
Sanctions on Tornado Cash Reveal Ethereum's Censorship Fragility
A recent report from the Federal Reserve Bank of New York, meanwhile, explored the effectiveness of multiple-counties' Treasury Department sanctions against crypto mixer Tornado Cash. The Office of Foreign Assets Control listed it in 2022 as one that permits large-scale money laundering. The sanctions will be very effective with decentralized finance, bringing far-reaching implications on the censorship on Ethereum.
Tornado Cash usage declined and then increased following the sanctions. At the same time, the Ethereum network itself was making the transition from proof-of-work to proof-of-stake. In terms of some level of compliance, it has been quite mixed; though most users and major block builders have been compliant, there were some builders that had refused to enforce them and didn't even do it for profit but for conviction.
It specifically stated that Ethereum has pretty weak censorship resistance, requiring a small number of parties to accept transactions into the network. Tornado Cash is still running, despite legal attacks. One of the developers, Alexey Pertsev, was found guilty in assisting in money laundering as a platform developer. In contrast, co-developers Roman Storm and Roman Semenov got charged for a whole host of offenses. As of now, Storm is imprisoned, while Semenov is at large.
Crypto Coalition Presses Biden to Clarify Crypto Regulatory Framework
In an August 7 letter, the Crypto Market Integrity Coalition—comprising bigwigs in the crypto world like Robinhood, BitGo, OKX, Gemini, among others—urged President Joe Biden and Vice President Kamala Harris to establish clearer regulations for digital assets. The coalition expressed in no uncertain terms that clearer regulations would come with huge economic and national security benefits in terms of protecting consumers against bad actors, promoting the US dollar, and the US safeguarding technological leadership.
To this end, according to CMIC, reviewing stablecoins is important among all digital assets as this could enshrine the said American values in the global financial systems. It makes a very strong case for democratic tenets and values, financial inclusion, and largely respecting the rule of law within the digital economy.
Yet in realizing the role played by the US securities regulator in lightening the market from manipulation, money laundering, and fraud, CMIC has continued to argue that efforts by the industry are all without utility if there is no comprehensive regulation. It highlights the Financial Innovation and Technology for the 21st Century Act and the Digital Commodities Act as a possible framework for directing US companies.