Ciaran Lyons
The United States Congress needs to take control of crypto legislation and make it a more “open process” where the entire marketplace is looked at “comprehensively,” suggests Kristin Smith, CEO of the Blockchain Association — a prominent U.S. crypto industry nonprofit.
In a Feb. 22 Bloomberg interview, Smith said the industry needs U.S. lawmakers to lead crypto legislation despite it making the process “very slow,” with regulators “stepping in” in the interim.
Smith noted that despite regulators “moving very quickly,” progress on legislation is happening “behind closed doors,” suggesting it’s vital for more industry involvement in an “open process,” which would involve Congress.
Smith believes the issue with regulators leading legislation with enforcement actions and settlements relates to “very specific facts and circumstances.”
She explained it’s a difficult position for Congress at the moment, as many in Washington D.C. who “were close” to former FTX CEO Sam Bankman-Fried and FTX feel “burned” and “betrayed” over the collapse of the cryptocurrency exchange in November 2022.
Smith is hopeful that stablecoin regulation will soon happen in the U.S., saying Congress has been looking at it “since 2019” and the “work has been done.” She said it “came close” to happening last year before the collapse of FTX.
She added that crypto risks are different from traditional financial services, so regulators must spend more time looking at market regulation and “tailor to those risks.”
Smith suggested that stablecoin and “market side” regulation should be a higher priority than focusing on legislating crypto-related criminal activity, saying that public ledgers make it “much more transparent” than we see in the traditional financial system.
This comes after the Blockchain Association’s chief policy officer, Jake Chervinsky, took to Twitter on Feb. 15, stating that no matter how many enforcement actions the Securities and Exchange Commission and Commodity Futures Trading Commission bring, they are “bound by legal reality,” adding that “neither” has the authority to “comprehensively regulate crypto.”
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Arijit Sarkar
Payments giant PayPal and investment management firm Galaxy joined hands to raise $20 million in seed funding for Chaos Labs, a New York-based cloud platform for securing blockchains and protocols.
With an automated risk management platform, Chaos Labs protects crypto protocols against external exploits and risks. The platform does this by offering agent and scenario-based simulations, which helps secure protocols against economic vulnerabilities and market manipulation events.
The seed funding is aimed at helping Chaos Labs further automate on-chain risk optimization.
1/ We are thrilled to announce we have secured $20M in seed funding led by @galaxyhq and @PayPal to automate on-chain risk optimization! — omer (@omeragoldberg) February 21, 2023
The funding round saw participation from 23 organizations and six angel investors. Prominent names among the lot include Coinbase Ventures, Polygon, Avalanche, OpenSea UniSwap and Balaji Srinivasan.
According to Chaos Labs’ founder and CEO, Omer Goldberg, financial risk management must be upgraded to cater to the decentralized finance (DeFi) ecosystems. He added:
“We believe that every DeFi protocol must regularly conduct robust risk testing to verify and validate that their economic system is secure against hackers and unanticipated volatility.”
The official website states that Chaos Labs’ risk suite can help protect DeFi protocols through optimized risk and capital efficiency, streamlined risk assessments and streamlined risk assessments.
PayPal’s interest in the crypto ecosystem was highlighted when the company was found to be holding a significant part of its financial liabilities in cryptocurrencies offered to its customers.
As Cointelegraph reported, by the end of 2022, PayPal held a total of $604 million in various cryptocurrencies, including Bitcoin, Ether, Litecoin and Bitcoin Cash. The information was found on the annual report filed with the United States Securities and Exchange Commission on Feb. 10.
Bitcoin accounts for $291 million in the firm’s asset breakdown, with $250 million in ETH. The remaining $63 million includes Litecoin and Bitcoin Cash combined.
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Luke Huigsloot
The co-founder of the social media website Reddit, Alexis Ohanian, reportedly bought 50,000 Ether for just $15,000 during the cryptocurrency’s presale in 2014, costing just 30 cents per coin.
Ohanian, who left the social media giant in 2020, told Forbes on Feb. 21 that he found the idea of a decentralized store of value very attractive, partly due to his Armenian heritage, prompting him to take an early gamble on Ethereum.
“Any group of people who have in their consciousness, or in their collective history, some idea of persecution, especially by a state, makes the idea of a store of value that is not controlled by any single state very attractive. And so, in some ways it was hardwired in me then, and made me in a way receptive to the idea of a decentralized currency.”
At current prices, this investment is worth a whopping $82.5 million, according to CoinMarketCap, representing an increase of 549,589%.
He continued to explain how Turkish soldiers seized his family’s inheritance of heirloom rugs during the Armenian genocide in World War I, which led to his interest in “unseizable property.”
Due to his aversion to seizable property, Ohanian is a big proponent of self-custody. He manages the private keys to some of his most valuable crypto-related investments, keeping them off exchanges that are more vulnerable to the prying arms of governments.
When he heard about Ethereum in a meeting with cryptocurrency exchange Coinbase, Ohanian claimed he saw the potential for developers to build a wide range of potentially unseizable assets on top of it, such as nonfungible tokens (NFTs).
As a result, he made his initial investment in Ether but noted in the interview that “in hindsight, I didn’t invest nearly as much as I should have.”
Ohanian founded venture capitalist firm 776 in 2020 using the proceeds from his early investments in Ether and Coinbase. The firm has invested in 29 crypto-related startups and raised $500 million in February 2022 to finance similar investments.
In line with Ohanian’s views that bear markets allow investors to buy assets at discounted prices, the firm has regarded the latest market downturn as the perfect time to make long-term bets on the crypto industry.
The firm currently boasts over $750 million in assets under management.
Ohanian noted that although crypto is extremely volatile, “there are plenty of people who have that generational consciousness of seeing massive inflation,” which makes crypto’s volatility much more palatable.
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This Daily Dose was brought to you by Cointelegraph.
