March 29, 2022
Photo: Kevin Dietsch/Getty Images; Protocol
Good morning, and welcome to Protocol Fintech. This Tuesday: crypto and the dealer-trader rule, the CFTC’s budget request, and a digital dollar that’s not a CBDC.
Another strand in the financial web connecting Russia to the rest of the world fell last week, when Apple Pay and Google Pay stopped working for holders of Sberbank cards on the Mir network. Was this the closing of a “loophole,” as Reuters reported? I think it’s more likely Apple and Google following the letter of the law. The White House announced sanctions against Sberbank on Feb. 24 to take effect within 30 days.— Owen Thomas (email | twitter)
Crypto is under fire on many fronts in Washington. The latest developments underline how the industry is carefully choosing where it spends its political capital, while keeping a watchful eye for the latest surprise regulation or bill.
Top lobbyists mostly shrugged at President Biden’s whopping $11 billion tax bill proposal, which could eat into the profits of crypto investors, including HODLers. But insiders quickly raised a furor over the SEC’s plan to expand the definition of “securities dealer,” which could mean hefty penalties for some crypto companies.
Biden wants crypto to pay up. The proposed $5.8 trillion federal budget would raise revenue in part by changing the rules which would generate more revenue from taxing crypto.
The SEC’s proposal, meanwhile, is an “all-out attack on decentralized finance.” That’s how Gabriel Shapiro, general counsel of Delphi Labs, described the new rule proposal, which would expand the definition of a “dealer-trader.”
Crypto companies do “need to pick their battles,” Brue said. A “more aggressive stance” on the SEC rule “makes sense” given how it “affects their business model directly,” she said. The budget proposal, on the other hand, is “Biden's wish list rather than actual law.” The crypto industry has “both the luxury of not responding and the burden of preparing for an any-case scenario,” she said. The companies, she speculated, “are playing their cards close to their chests at the moment.”
100% of C-suite staff surveyed by Workplace by Meta said that frontline workers were a strategic priority for their business in 2022, but nearly two in three of them said that keeping their frontline staff, who bear the brunt of the stresses of the workplace most acutely, had only become a priority since the pandemic hit.
The Central Bank of Sudan is warning consumers against crypto. The central bank labeled cryptocurrencies as “high risk” for financial crime, electronic piracy and loss of value, and said that they were largely unregulated.
The CFTC is seeking extra resources for crypto training. In its new budget proposal, the Commodity Futures Trading Commission highlighted how the risks of digital asset trading were growing alongside its increasing popularity, and asked for additional training resources “in the area of loss prevention” and more generally for analyzing crypto.
The Indian government is probing 11 crypto exchanges for tax evasion. The country’s tax authority has reportedly seized about $12.6 million from the exchanges. The probes come shortly after the government raised crypto transaction taxes to 30%.A new bill proposes a digital dollar that’s not a CBDC. Congressman Stephen Lynch introduced the Electronic Currency and Secure Hardware Act, otherwise known as ECASH, which would establish a digital dollar that would be “printed” by the Treasury, not issued by the Fed.
After Elon Musk said he was seriously considering starting his own social media service, a Twitter user said, “One of the best things about Elon Musk either buying Twitter or starting his own platform is you know there would be a dogecoin tip jar!” to which Musk responded with the “100” emoji. (Nobody tell them Twitter already accepts crypto tips, OK?)
SkyBridge Capital CEO Anthony Scaramucci thinks Washington’s warming up to crypto, including Biden. “The 2024 final two presidential candidates will be pro-crypto, pro-blockchain. Follow the money,” he predicted in an interview with Crypto Banter.
Pierre Poilievre, a Canadian prime minister candidate from the Conservative Party, is appealing to the bitcoiners of the country. "Government is ruining the Canadian dollar, so Canadians should have the freedom to use other money, such as bitcoin," he said.
Stax raised $245 million and achieved unicorn status. Investors include Greater Sum Ventures, HarbourVest Partners and Blue Star Innovation Partners. The payment technology company’s deal included a secondary component, it said.
Worldcoin is raising $100 million, valuing its tokens at $3 billion. The funding will mark the company’s second major capital raise, with participation from investors like a16z and Khosla Ventures. Its plan to use eyeball scans has alarmed some privacy advocates.
Digits has now raised a total of $97.5 million. The financial analytics service’s series C round was led by SoftBank, with participation from Benchmark and GV. Investors placed the company’s valuation at $565 million.
Finally raised $95 million. The workplace finance platform’s series A round was led by PeakSpan Capital, with participation from Active Capital, 500 FinTech and GTMfund.
Upshot, a startup that provides NFT appraisals, raised $22 million. The startup’s series A2 funding round was led by Polychain Capital, with participation from previous investors Framework Ventures, CoinFund, Blockchain Capital, Slow Ventures, Mechanism Capital and Delphi Digital.
Cornerstone acquired Paydrop. The acquisition of the payments company by the crypto payroll services company will allow gig workers and other nontraditional employees to convert part of their pay into crypto.
Businesses are starting to turn to workplace communication tools. Such tools enable frontline workers to feel more connected to the rest of their business, to raise concerns and to provide feedback on potential pain points or points of improvement. By bridging that divide, companies can unlock new savings and efficiencies, and build a business that can last for the long run.
Thanks for reading — see you tomorrow!