Good morning, and welcome to Protocol Fintech. This Friday: crypto in Washington, GameStop’s NFT plans, and South Korea’s deregulator-in-chief.
Off the chain
Money remains fragmented. PayPal announced just yesterday that Ukrainian citizens could open up wallets to receive money, hold balances and transfer money to debit cards, all features previously unavailable to them. Even the largest payment businesses tend to be regional, not global: Think WeChat Pay and Alipay, Paytm or M-Pesa. Universality is part of crypto’s appeal, and to compete with it, established payments systems will need to look at the gaps in their networks more closely and consider once-unthinkable tie-ups.
— Owen Thomas (email | twitter)
Ukraine makes crypto’s case in Washington
Crypto was back in the spotlight at the Capitol yesterday, but the reception was decidedly warmer. That’s largely thanks to entrepreneur Michael Chobanian, who did for crypto what Volodymyr Zelenskyy has been doing for Ukraine.
Testifying virtually before the U.S. Senate Banking Committee, Chobanian praised crypto as a force for good, highlighting the speed and ease by which a global crypto relief campaign made a difference for the embattled country.
But crypto’s critics, led by Sen. Elizabeth Warren, again turned the conversation to crypto’s dark side, asking why the forces seeking to destroy Ukraine wouldn’t also be able to use a system that’s quasi-anonymous and unregulated.
“The first problem we’re solving is urgency,” Chobanian, founder of the Kuna Exchange and president of the Blockchain Association of Ukraine, told the Senate committee.
- The crypto relief campaign, which has raised more than $50 million, took 10 minutes to set up, he said. The hardest part, he said, was “going through the bureaucracy” to figure out who was in charge of Ukraine’s Twitter account. But “the minute the crypto landed on these addresses, the government could use them so immediately. No bureaucracy.”
- That would have taken days with traditional finance. It took weeks for Ukraine to set up a mechanism to convert crypto to fiat for things it couldn’t buy with bitcoin or ether. “For my country, which is fighting right now with bare hands, time is vital,” Chobanian said.
- “What we're fighting for is speed,” he added. “The faster we buy helmets, the faster we buy bulletproof vests, the faster we buy aid kits, the more people I can save in my country.”
Rogue nations have used crypto to evade sanctions. Senator Warren stressed that point at the hearing, as she raised the worry that crypto can also be a weapon for Vladimir Putin and his allies.
- Warren grilled Chainalysis co-founder Jonathan Levin, who said the blockchain analytics company has “detected the use of cryptocurrency in Venezuela, Iran and North Korea.”
- For Putin and his allies, Warren argued, “crypto looks like a pretty good option,” which is why she’s introducing a bill that would authorize the president “to sanction foreign crypto firms that are doing business with sanctioned Russian entities.” So far, it only has Democratic co-sponsors.
- Chobanian, Levin and other witnesses including former FinCEN official Michael Mosier countered that, for Russian oligarchs, crypto is simply an impractical option. Even if oligarchs manage to convert fiat to crypto, what are they going to do with it, given travel limits and other sanctions on their wealth, Chobanian asked: “For them, it's just numbers which are pretty useless.”
Ukraine is making a powerful pro-crypto argument right now. The Senate hearing underscored that amid the fears about crypto, it also represents hope. And hope is crucial for a country under siege. Crypto and blockchain, Chobanian said, “will be the technology that we’re going to use to rebuild our country.”
— Benjamin Pimentel (email | twitter)
A MESSAGE FROM FIREBLOCKS
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On the money
Robinhood is planning to let customers lend out stocks. The income-earning feature is set to be available in the next few months, but a beta version is already being rolled out on its iPhone app. Users will be able to buy and sell as usual, even if their stocks are on loan.
Crypto.com partnered with Carnegie Mellon University’s CyLab Institute. The crypto exchange has a three-year deal with the university and will also be a founding sponsor of its Secure Blockchain Initiative.
Coinbase’s wallet added Solana support. Users can now transact Solana-based tokens on its Chrome extension, and the crypto exchange is currently planning to add Solana support for its mobile apps.
The IRS is moving crypto up top. In an updated draft of Form 1040, the Internal Revenue Service put the virtual currency tax disclosure section on the main page.
Russia’s central bank gave Sberbank a digital assets license. Sberbank, Russia’s biggest lender, can now issue and exchange digital assets, a move poised to soften the blow of Western sanctions.
70% of BNPL complaints were filed against one company, a new report found. A report published by consumer advocate group U.S. PIRG showed that out of the five major “buy now, pay later” apps, one company accounted for a majority of complaints filed to the Consumer Financial Protection Bureau. The company wasn’t named, but the agency’s data request covered Affirm, Afterpay, Klarna, PayPal and Zip.
GameStop set a date for its NFT marketplace. In a move to prove that it’s more than just a meme stock, the game retailer partnered with Immutable X to launch an NFT marketplace, which is now slated to launch by the end of July.
The Fed rate hike boosted Circle’s valuation. A new rate outlook led the stablecoin issuer to renegotiate its SPAC deal, doubling its valuation from $4.5 billion to $9 billion. Circle earns interest on the reserves backing the USDC stablecoin.
Overheard
Rasmus Andresen, a member of the European Parliament, doesn’t think people should air their grievances on Twitter. (Good luck talking to anyone in crypto, then!) “I am ready to take a serious debate with interested people, if the debate is organized more constructive and open minded also on critical aspects of cryptocurrencies, than some of the tweets made as response to our vote,” he tweeted in response to a user who posted images of EU members who voted for a bitcoin ban.
Bitcoin-friendly Miami Mayor Francis Suarez thinks crypto is the way to outcompete other countries. “We have a generational opportunity to outmaneuver countries such as China, Russia and other parts of the world that try to steal our technology,” he said at an Inveniam-backed conference.
Newly elected South Korean President Yoon Suk-yeol thinks that crypto should be deregulated. “To realize the unlimited potential of the virtual asset market, we must overhaul regulations that are far from reality and unreasonable. We must shift to a negative regulation system to ensure at least the virtual asset market has no worries,” he said at a forum.
The chart
Bitcoin has been hovering around $40,000 for most of the past month. It took a hit along with other risk assets when Russia invaded Ukraine, then gyrated as traders digested the implications of sanctions and the potential for increased demand for crypto. President Biden’s executive order also gave crypto a boost of official Washington recognition.
Image: Protocol/Datawrapper
A MESSAGE FROM FIREBLOCKS
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Thanks for reading — see you Monday!