March 25, 2022
Image: da-kuk/E+ via Getty Images
Good morning, and welcome to Protocol Fintech. This Friday: the globally chaotic state of crypto regulation, the great roller derby NFT squabble, and arrests in the year’s biggest rug pull.
Could a sanctioned Russia get paid in bitcoin for its oil and gas? A Russian parliamentarian, Pavel Zavalny, proposed that Thursday. It seems theoretically possible, when you consider that the bitcoin network processed $3 trillion in transactions last year, according to NYDIG. Russia’s central bank reported the country had around $240 billion in oil exports in 2021, so it wouldn’t necessarily swamp bitcoin capacity. The main hitch: Customers for Russian energy have contracts that spell out payment in dollars or euros, and insisting on different forms of payment would breach those. Once again, crypto turns out not to be a magic wand you can wave over thorny financial problems.— Owen Thomas (email | twitter)
As the EU debates a key bill and Washington figures out how to implement Biden’s executive order on digital assets, crypto regulation seems to be playing a larger role in the policy agenda every day. And Russia’s invasion of Ukraine has made a number of previously abstract concerns about crypto suddenly concrete. It’s not just the big Western economies that are struggling with figuring out crypto regulation, though: Crypto rules are getting thrashed out in capitals globally, which (spoiler alert!) could cause big problems for crypto companies operating internationally.
The U.S., U.K. and EU are all making moves. Their approaches are different, and if their rules end up diverging substantially, that could cause a serious splintering of crypto.
And some countries might need a hand, because many are struggling with how to grapple with crypto. You thought the SEC-CFTC standoff in the U.S. was bad? Agencies around the world are bickering.
Singapore may be a better model. The city-state’s financial hub has experienced regulators. The secret to their success in reining in crypto? You’re not going to get a “maybe.”
Singapore’s clarity and the EU’s common-market consistency are good for crypto regulation. But unless the industry gets serious about demanding more convergence for digital asset rules, the world looks to be headed for a global policy patchwork. That’s good news for lawyers and lobbyists, at least.
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The roller derby community isn’t buying the NFT hype. After three top derby athletes announced an NFT project called ‘Bout Time NFTTT, they were met with so much backlash they ended pulling it. Which is too bad, because as one person discussing the matter on Facebook pointed out, “‘Blockchain’ would make a good derby name.”
ExxonMobil wants to use waste gas for bitcoin mining. The oil giant says it’s running a pilot program where excess natural gas that would otherwise be burned off oil wells is used to power crypto-mining operations.
A former accountant pleaded guilty in the BitClub Ponzi scheme. Gordon Brad Beckstead admitted to helping three BitClub leaders defraud investors of about $722 million.
A New York state bill might ban bitcoin mining. The state assembly passed a bill that would ban electric-generating facilities from mining cryptocurrencies for two years.
The city of Austin is getting bitcoin-friendlier. Austin city counselors approved a plan to study whether bitcoin or other cryptocurrencies would be feasible for paying taxes in the future. It’s in line with the state of Texas’ moves to become more crypto-friendly.
Protocol reported in depth on the Frosties rug pull in January, the biggest scam to hit the NFT world this year. Now two alleged masterminds of the Frosties NFT scam have been arrested, the Justice Department announced yesterday.
Ethan Nguyen, who officials say used several handles including “Frostie,” and Andre Llacuna, identified in the charges as “heyandre,” face wire fraud and money-laundering conspiracy charges for defrauding thousands who bought the Frostie NFTs in what became this year’s first major “rug pull.”
Nguyen and Llacuna, who were arrested in Los Angeles, allegedly launched the digital collection of colorful ice-cream-scoop characters, promising buyers a host of money-making features such as staking and breeding. But the NFT project abruptly shut down hours after the Frosties sold out in January. The accused rug-pullers then transferred $1.1 million in crypto proceeds out of the Frosties wallet, the DOJ said.
Read more on the Frosties rug pull arrests.— Benjamin Pimentel (email | twitter)
It hasn’t been a good year for tech stocks, but Robinhood has underperformed the Nasdaq Composite. The launch of a new spending-account product, the Robinhood Cash Card, promised to diversify its revenue away from trading and crypto, but that didn’t impress shareholders: Shares fell Wednesday and Thursday after its unveiling.
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Thanks for reading — see you Monday!