Daily Digest - 2 December 2022

Headlines

▌CFTC Commissioner Calls for New Rules in the Encryption Field

US Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson said in a statement on Thursday that the CFTC should use "existing powers to further mitigate potential risks to all customer assets," citing the cryptocurrency crisis triggered by the FTX bankruptcy. She called her statement a "call to action" against digital asset fraud. The liquidity crisis and lack of responsible governance by cryptocurrency exchanges and other prominent cryptocurrency intermediaries has disrupted the digital asset ecosystem, with a series of bankruptcy filings revealing some of the most egregious corporate governance in recent financial market history and a grim portrayal of risk management failures, Johnson said.

Policy

▌Deputy Secretary of the U.S. Department of the Treasury: The FTX Crash Highlights the Need for Global Encryption Regulation

U.S. Deputy Treasury Secretary Wally Adeyemo said on Thursday that the implosion of FTX shows that the United States needs to cooperate with other countries to develop international encryption regulations. Such regulations are very important to ensure the protection of investors, consumers and financial stability. "Crypto is a global phenomenon, which means we will have to work closely with our international partners to design regulatory regimes within a framework that will help us ensure that the global economy is protected when innovations like cryptocurrencies are considered," he said.”

Cryptocurrency

▌Singapore High Court: SuZhu and Kyle Davies Need to Provide Key Financial Documents Within a Week

Su Zhu and Kyle Davies, co-founders of the collapsed cryptocurrency hedge fund Three Arrows Capital, recently reappeared on Twitter and media interviews to express their views on Sam Bankman-Fried’s FTX collapse, but their Singapore legal team did not cooperate. The High Court of the Republic of Singapore has ordered Three Arrows Capital and its co-founders to file an affidavit outlining their dealings with the company within a week, while also formally acknowledging the filing in the British Virgin Islands A liquidation order, which means Teneo, the court-appointed liquidator, can demand Singaporean financial records from the company and its co-founders. Solitaire, one of the Singapore law firms representing Three Arrows Capital, also known as 3AC, tried to obtain the documents but received no reply.

▌Payment Company Stripe Launches Fiat-to-Cryptocurrency Payment Products for Web3 Enterprises

The payment company Stripe launched a product aimed at providing payment services from legal currency to cryptocurrency for companies in dozens of countries around the world. The product is a customizable widget that can be directly embedded into decentralized exchanges, NFT platforms, wallets or decentralized applications, and is designed to allow customers to instantly purchase cryptocurrencies in Web3 products. Stripe says it offers a customizable on-ramp service that can handle KYC, payments, fraud and compliance. It is reported that in the past year, Stripe has expanded its partnership with encryption companies to provide more support for encryption payments in 67 countries/regions, enabling companies to send USDC payments to individuals and businesses around the world.

▌Binance Chief Strategy Officer: The Company's "Centralized Exchange" May Cease to Exist Within 10 Years

Binance Chief Strategy Officer Patrick Hillman said that the company may cease to exist within 10 years because it is an encryption market that is developing in the direction of decentralized finance (DeFi). Currently, the exchange is trying to maintain customer trust following the collapse of rival exchange FTX by implementing “proof of reserves,” a way of showing customers that their assets are fully backed. But the process has been slow, with Hillman saying "it will be a multi-step process, including bringing in third-party auditors". Binance is participating in Web3's "Industry Recovery Plan" to help fund startups in the industry, and Binance said it will contribute up to $2 billion from its corporate reserves. Those reserves are separate from escrow reserves where user funds are held, Hillman said.

▌Apple Blocks Coinbase Wallet App Release, Requesting 30% of All NFT Transfer Gas Fees

As per the details from a tweet thread by Coinbase, iOS users will be unable to send NFTs from their wallets on iOS devices anymore. The main reason cited and mentioned by Coinbase is that “…the gas fees required to send NFTs need to be paid through their In-App Purchase system so that they can collect 30% of the gas fee.” Additionally, Coinbase mentioned that, for anyone who understands how NFTs and blockchain work, Apple’s request is impossible. “Apple’s proprietary In-App Purchase system does not support crypto, so we couldn’t comply even if we tried,” cited Coinbase.

Key Economic Event

▌Fed Powell Confirms Slowing Pace of Rate Hikes

At an event at the Brookings Institution on Wednesday, Federal Reserve Chairman Jerome Powell more or less confirmed weeks of suggestions that he would slow the pace of interest rate hikes from 75 basis points to 50 basis points this month. After Powell's speech, market participants saw a 77 percent chance of a 50 basis point rate hike at the mid-December meeting, up slightly from 76 percent before the Fed chairman's speech, according to CME's FedWatch tool. The November jobs report from the Labor Department on Friday is expected to show an increase of 200,000 jobs, according to economists polled by FactSet. That would be down from October's 261,000.