Intro/Disclaimer: A few months ago I started preparing updates for the attorneys at my firm practicing in the Web3 space regarding what stories people were talking about the prior week. I believe eventually we are going to do monthly or bi-weekly posts on the award winning BitBlog summarizing the top stories. In the meantime, I thought I would start putting the weekly updates on my personal blog as well on Tuesdays. Note, any opinions from these (or any of my other) blogs are mine alone, and are not adopted or endorsed by my firm.
Now that the craziness that was the House of Representatives Majority Leader decision is behind us, people in government are setting in stone their 2023 legislative agenda, with crypto on the forefront of policy goals for many supporters and detractors. Also, big businesses are continuing to gobble up blockchain developer resources in the bear market to launch their own blockchain/metaverse expansion plans. Here are the biggest stories from the past week:
Amazon Launches Digital Assets Enterprise
Amazon is expected to announce an NFT initiative this spring, as a part of their larger plans to enter the digital assets industry. It is expected the NFT initiative will be focused on the gaming sector. The initiative is still in the development stage, but the deadline for the launch is set as April, according to information from four anonymous individuals shared with Blockworks.
Tl;dr– Anybody who didn’t see this coming hasn’t been paying attention. Back in April of 2022 Amazon’s CEO Andy Jassy was talking about the growth of NFTs and eventual acceptance of crypto payments by the online retailer. Because of the general market downturn and liquidity crunch on small projects that had funds on FTX, larger corporations will use this time to continue to grow and expand market share/acquire talent to build out their Web3 programing. Apparently at least one person running McDonald’s social media still is paying attention to the industry.
White House Releases Administration’s Roadmap to Mitigate Cryptocurrency Risks
In further development of the Executive Order on Ensuring Responsible Development of Digital Assets, this past week the administration issued their response to the risks made apparent from the FTX collapse. The statement is summarized at the end with “[t]he Administration wholeheartedly supports responsible technological innovations that make financial services cheaper, faster, safer, and more accessible. Yet to realize these benefits, new technologies need commensurate safeguards. Safeguards will ensure that new technologies are secure and beneficial to all—and that the new digital economy works for the many, not just the few.”
Tl;dr– While this story wasn’t especially talked about by crypto-twitter (maybe because it was released on a Friday), it is obviously important for a year where we expect cryptocurrency regulation to be front of mind (even if very little in the ways of actual federal legislation is expected to pass and become law in the upcoming year). The biggest reveal from the statement was the administration’s plan in the upcoming months to release their prioritized list of issues to address “for digital assets research and development, which will help the technologies powering cryptocurrencies protect consumers by default.”
Polsinelli’s own Romaine Marshall and Matt Todd wrote a client update on an open letter sent by a group of 28 organizations in the blockchain space to US lawmakers requesting a commonsense approach to industry regulation that, among other things, preserves personal financial privacy and “the right to code.” Read here.
Interesting report released this week giving all the SEC enforcement actions against digital-asset market participants in 2022. In context, last week SEC Commissioner Peirce once again criticized her agency’s regulation by enforcement of the digital asset industry.
Ted Cruz wants crypto vending machines on capitol hill. So that’s…something?
Kevin Rose had millions of NFTs stolen after the Proof CEO clicked on a malicious link from his cold storage wallet. Reminder: keep cold storage cold or risk the consequences.
Porsche released a series of NFTs with interesting terms for EU buyers. However, whether NFTs are goods, services, downloadable goods, or something else is undetermined. It is unclear if these terms are necessary or over-lawyering. It should be noted, even under EU consumer protection laws, the change of value of assets purchased isn’t an acceptable reason for return (but it might be under draft MiCA laws for some digital assets).
I thought this was an interesting article breaking down the issue I have raised many times about crypto being truly bi-partisan, with supporters and detractors on both sides of the aisle. Many fear if the US doesn’t move on crypto regulation in the near future, regulatory uncertainty combined with seemingly arbitrary administrative enforcement decisions could move industry development overseas. Apparently, we can expect at least regulation on stablecoins in the near future?
When Lewis Cohen talks crypto securities, people should listen. He’s no Dan McAvoy, but if I ever see a Lewis Cohen blog it’s going in this internal update. Just don’t ask him about his obnoxiously titled but insanely informational treatise “The Ineluctable Modality of Securities Law: Why Fungible Crypto Assets are Not Securities”.
Institutional investors are “not giving up on crypto,” with recent data pointing to as much as 85% of Bitcoin buying being the result of American institutional players.
California is testing out a program putting car titling on the blockchain. As far as use cases go, things like property records just make sense to be on an immutable blockchain.
On Thursday, the U.S. Department of Justice announced that the FBI had penetrated the Hive ransomware group, captured its decryption keys, and was offering restitution worldwide to victims. Hive has victimized over 1,500 companies worldwide, received approximately US $130 million in ransom payments, and always demanded payment in Bitcoin.
On Friday, Vice World News reported on how the shutting down of the darknet platform known as Hydra last year has led to the formation of new darknet platforms that have amassed $820 million in crypto currency deposits. This excellent article was summarized and supported by TRM Labs and is further evidence of the safety and security issues afflicting Web3 transactions.
In Celsius news, there are indications that the now defunct entity intends to set up a new entity to handle creditor claims. The lender also obtained court approval for customers to withdraw certain tokens they were airdropped.
The CFTC also had a busy week with multiple commissioners publicly speaking on the topic of crypto and lessons learned from the FTX collapse. Some good materials, but also some grandstanding because there is no known policy which can prevent outright fraud as we have seen throughout the history of financial skullduggery. See Bernie Madoff, Enron, Charles Ponzi, etc.
Here is a good intro to DeFi with terms and general background on how DeFi works from some of my favorite writers over at Around the Blockchain.
If you have any questions or would like me to write about anything else, let me know on either of my twitter pages! As always, I am an attorney, I am not your attorney. For legal advice, you should always consult (and pay for) an attorney.