GiD Report#179 — Crypto crackdowns continue, but Twitter doubles down

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GlobaliD

6 min readSep 28, 2021

Welcome to The GiD Report, a weekly newsletter that covers GlobaliD team and partner news, market perspectives, and industry analysis. You can check out last week’s report here.

This week:

The global crypto crackdown continues
What people are saying
Chart of the week (China bans crypto)
Twitter doubles down on Bitcoin
Chart of the week (DeFi rising)
Stuff happens

1. The global crypto crackdown continues

First, China continues turning up the heat on its crypto ban. According to Coindesk:

Authorities in China’s Inner Mongolia province seized 10,100 crypto mining rigs from a government-operated tech park, according to local media. This comes days after top government officials renewed a crackdown on crypto trading and mining. Separately, Huobi Global announced Sunday it would stop serving existing users in China by the end of the year.

In response to increasing regulatory pressure, crypto exchange FTX moved its HQ from Hong Kong to the Bahamas.

We’re feeling the heat here in the U.S. as well. The Biden administration is set to appoint a crypto (and Big Bank) critic to run the Office of the Comptroller of the Currency. (Contrast this to crypto-friendly Brian Brooks, who ran the same office under Trump.)

The Biden administration is also going after crypto payments in its fight against ransomware. Here’s the NYTimes (via /rcb):

The Biden administration took action on Tuesday to crack down on the growing problem of ransomware attacks, expanding its use of sanctions to cut off digital payment systems that have allowed such criminal activity to flourish and threaten national security.
The Treasury Department said it was imposing sanctions on a virtual currency exchange called Suex, in the administration’s most pointed response to a scourge that has disrupted U.S. fuel and meat supplies this year, when foreign hackers locked down corporate computer systems and demanded large sums of money to free them.

Three states are also going after Celsius, saying that the crypto lender violates securities law. Here’s Coindesk:

In an order dated Sept. 16, the state regulator said it believes Celsius violated state laws through its “Earn Rewards” program. Texas and New Jersey state regulators announced similar findings on Friday, with New Jersey filing a cease-and-desist and Texas announcing it would hold a hearing in February to determine if a cease-and-desist should be ordered.
Celsius has 28 days to respond to the Alabama regulator and show cause why the regulator should not impose a cease-and-desist order. If the company does not respond, the regulator will assume Celsius is waiving its right to a hearing and immediately move to impose sanctions.

And the big news, of course, is that Coinbase has canceled the launch of its new lending program following the SEC’s threat to sue. Here’s Blockworks:

The company said in a blog post on Friday that it was making “the difficult decision” not to launch the initiative, which would have allowed eligible customers to earn interest on select assets on Coinbase, starting with 4% annual percentage yield, or APY, on USD Coin (USDC). Coinbase has also discontinued the waitlist for this program.
“We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest,” the Sept. 17 Coinbase blog states. “We will not stop looking for ways to bring innovative, trusted programs and products to our customers.”

With crypto hovering at around $2 trillion in value as mainstream adoption expands, this was always going to be the new normal. This next chapter will be figuring out how to build necessary bridges between the crypto world and the regulated mainstream reality.

Relevant:

2. What people are saying

Here’s Kraken’s legal chief Marco Santori speaking speaking with last week:

“You’re just living in a fantasy world if you don’t believe that this industry is going to face heavier, more Wall Street-like regulation from governments in the U.S. and abroad, and Kraken has simply been practical about that future,” Santori said on Bloomberg’s “QuickTake Stock” broadcast Thursday.
“I’ve certainly followed Brian’s tweets, and I’ll say that look, you’re just not being honest with yourself about the crypto community if a little bit of you doesn’t think he’s saying what a lot of people are thinking,” Santori said. “I can’t support that kind of approach with regulators. It’s never been successful historically and from our experience, we’ve found the SEC to be open to discussion.”

3. Chart of the week (1/2)

(Sent from a friend, source unknown):

4. Twitter doubles down on Bitcoin

Twitter announced a slew of new crypto features last Thursday that included crypto tipping and NFT profile verification.

Here’s Coindesk’s David Morris (via /gregkidd):

I think Thursday’s announcement of new crypto features on Twitter is of a similar significance. First up is a tipping feature that will connect profiles to Bitcoin and Lightning Network addresses (as well as other payments services). The service isn’t available on Android yet, so I haven’t been able to use it. But early glimpses show a streamlined and intuitive experience that looks set to smoothly onboard new bitcoin users. Twitter also says it will implement non-fungible token (NFT) verification on the platform soon, though no firm timeline was announced.
…
NFT verification, however, will be a step change. The feature is still in development but it will provide some way of confirming and visually conveying that an NFT displayed in a Twitter profile is authentic, and that it is owned by the same person as the Twitter profile. As we’ve discussed in these pages at length, NFTs are a novel and powerful way to flex and show community affiliations online, but this integration will make those claims vastly clearer and more powerful.

Meanwhile, in El Salvador, there’s more crypto wallets than banks only a month after it became legal tender, according to Coindesk:

Almost a third of Salvadorans, or about 2 million people, are actively using the state-issued Chivo bitcoin wallet, according to President Nayib Bukele. If the figure is accurate, more people are using cryptocurrency than any particular bank in El Salvador less than a month after BTC became legal tender there.

Relevant:

5. Chart of the week (2/2)

DeFi rising:

GiD Report#179 — Crypto crackdowns continue, but Twitter doubles down

1. The global crypto crackdown continues

Relevant:

2. What people are saying

3. Chart of the week (1/2)

4. Twitter doubles down on Bitcoin

Relevant:

5. Chart of the week (2/2)

6. Stuff happens:

Written by GlobaliD