August 7th, 2023 — 🚀Payments Giant PayPal to Launch Dollar-Pegged Stablecoin on Ethereum

Get an overview of crypto market liquidity from July 31st to August 7th, 2023.

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Top crypto market headlines:

• PayPal launches stablecoin tied to the US dollar, issued on Ethereum — 8/7/23
• Crypto Hedge Funds Are Being Hit by Shutdowns, Lagging Returns in 2023–8/4/23
• Revolut Suspends U.S. Crypto Platform Over Regulatory Uncertainty — 8/4/23
• Coinbase Q2 earnings exceed estimates, signaling potential market recovery — 8/3/23
• Hong Kong Officially Opens Crypto Trading to Retail Investors, Grants First Licenses to HashKey, OSL — 8/3/23
• Worldcoin suspended in Kenya, one of its biggest markets for sign-ups so far — 8/2/23
• Ether-Futures ETF Filings Return En Masse Amid Crypto Optimism — 8/2/23
• Franklin Templeton plans blockchain money market funds on Avalanche, Aptos, Arbitrum — 8/1/23
• IRS: Crypto Staking Rewards Taxable Once Investor Gets Hands on Tokens — 8/1/23

Weekly Insights Report:

PayPal is rolling out a new dollar-backed stablecoin. The stablecoin, issued by Paxos Trust Co, was detailed in a statement published Monday morning by the American payments giant:

“Starting today and rolling out in the coming weeks, eligible U.S. PayPal customers who purchase PayPal USD will be able to:

• Transfer PayPal USD between PayPal and compatible external wallets
• Send person-to-person payments using PYUSD
• Fund purchases with PayPal USD by selecting it at checkout
• Convert any of PayPal’s supported cryptocurrencies to and from PayPal USD”

The announcement marks the first time that a major US financial company has created a stablecoin and comes a few months after PayPal enabled crypto purchases for Venmo users.

Coinbase released its Q2 earnings results. It made $708 million in revenue (beating analysts’ expectations of $628 million), and for the first time, non-transactional revenue exceeded transactional revenue, while recurring expenses decreased by 50%. Non-transactional revenue was mainly driven by interest income, which grew by 520% from Q2’22 levels (from $32.5M to $201.4M).

Coinbase also came closer to profitability, decreasing quarterly losses by 90% from $1B last year to $100m this year. The company also had some significant regulatory progress and cited ecosystem-wide institutional activity growth in the quarter. In a broader article last week, we covered centralized crypto exchanges and mainly Coinbase: Why will at least 80% of centralized crypto exchanges (CEXs) disappear?

UK fintech Revolut is suspending US customers’ access to cryptocurrencies due to “the evolving regulatory environment and the uncertainties around the crypto market in the US.” US customers will no longer be able to purchase crypto through the platform after Sep 2. They will still be able to sell tokens until Oct 2, but if they don’t sell, Revolut will liquidate for them. This move does not affect Revolut’s non-US users and impacts under 1% of the company’s crypto customers globally.

Many government privacy watchdogs are looking into Worldcoin: Kenya recently suspended scans, while regulators in France, Germany, and the UK have opened probes. This might impact Worldcoin’s growth, as Nairobi, Kenya’s capital, accounted for over 250,000 of its signups in December 2022. The project is not currently operating in the US due to the questionable legal status of crypto. Worldcoin’s co-founder Alex Blania also declared that it sees its iris-scanning orbs becoming decentralized like Bitcoin mining. As such, Worldcoin will bake such decentralized orb-maker incentives into the project’s tokenomics. However, those with security expertise see the potential for fake orbs to steal biometric data. Worldcoin could use an independent third-party auditor to protect its iris-scanning hardware and software. Currently, World ID has ~2.2 million signups with verified World ID users from 120 countries; 2,000 Orbs have been manufactured, and ~18.7 million WLD tokens have been claimed by users. At the current price of ~$2, WLD has a Market Capitalization of ~$243 million and a Fully Diluted Valuation (FDV, taking into account the total supply) of ~$20.3 bn, which would make it the 7th most valuable token across the entire crypto market 13 days after its launch. “Tools for Humanity”, the technology company behind Worldcoin, announced in May that it has raised $115 million in series C funding led by Blockchain Capital. The round also saw participation from major crypto investors a16z, Bain Capital Crypto, and Distributed Global.

On a weekly basis, BTC is down by 0.6% and ETH is down by 2%.

Other major crypto headlines:

• Tether is now the 11th largest bitcoin holder in the world — 8/4/23
• Coinbase Sets Public Launch of ‘Base’ Layer 2 Blockchain for Next Week — 8/3/23
• Worldcoin/Altman: lowballing for eyeballs will not brake AI juggernaut — 8/3/23
• Binance user base surges to 150 million, CZ says — despite US regulatory lawsuits — 8/3/23
• U.S. prosecutors worry Binance charges could cause run on exchange — 8/2/23
• Robinhood Crypto Revenue Fell 18% Sequentially to $31M in Q2–8/2/23
• Nomura’s Crypto Arm Gains Operating License Approval in Dubai — 8/1/23
• Etihad Airways ‘Horizon Club’ Web3 Loyalty Program Will Let You Stake NFTs for Miles — 8/1/23
• Tether’s excess reserves up to $3.3B, holds $72.5B worth of US Treasury bills — 7/31/23

And in case you haven’t seen, here is a selection of our latest articles:

• Why will at least 80% of centralized crypto exchanges (CEXs) disappear? NEW!
• Market Making Overview: TradFi vs Crypto
• Commentary notes on Credit Suisse’s rescue deal and recent banking turmoils (2/2)
• Commentary notes on SVB’s failure, Credit Suisse, implications for crypto, and where do we go from here (1/2)
• The Future of Trustless and Decentralized Cross-Chain DeFi — Focus on Interlay
• On Blockchain Interoperability — Focus On The Polkadot Ecosystem