Monday May 1, 2023
Several people called me this weekend to get my thoughts on my trip to Consensus 2023. I wrote about it on Saturday and am re-publishing my thoughts this morning:
Nine months ago I was packing my bag and preparing to fly home from Consensus 2022. As I headed to the airport I read a blog announcing that Celsius was suspending “all withdrawals, swaps, and transfers between accounts.” This was concerning news, but never in my imagination did I expect that this announcement would lead to a market collapse and initiate a domino effect of leading crypto company bankruptcies.
This past week I returned to Austin for Consensus 2023. 13,000 people from 70 countries attended the crypto festival, and while it was good to see old friends and make new acquittances, the overall atmosphere was toned down from prior years. The past excitement of attendees was missing. People attended the multiple sessions and visited the trade fair, but even the best attended talks lacked the bro-culture cheers from the audience.
The good news is that projects and protocols, some of which have now been around for close to ten years, are separating themselves and establishing their merits across this still relatively new ecosystem.
But as someone who actively follows the crypto, blockchain and web3 market, I left this years event asking if anything is really new?
There were definitely new projects and the web3 market continues to grow, but the subject of regulator clarity is getting tiring and we are aware that the US needs to act before it is passed by other sovereign nations and the dollar’s role as a reserve currency is weakened. From the product side we need one thing and that is adoption.
Here are a few additional takeaways:
◾ Crypto can be the native financial rail for artificial intelligence with the blockchain providing authenticity, provenance and ownership.
◾ Distribution platforms continue to be lacking for tokenized financial products Too many teams are proudly announcing how they have tokenized assets and even traditional funds, but they are not finding buyers for their products.
◾ Operation ‘Chokepoint 2.0’ seems to be more than a conspiracy theory. It is becoming public that the Fed and OCC have been acting in parallel against the crypto industry.
◾ We were surprised to hear the impact the US regulatory situation is having on token funds who are simply avoiding any US domiciled LPs and exchanges who are actively hiring non US citizens.
◾ The Prime Minister of the Bahamas said the collapse of FTX has not had any impact on his nation’s GDP. (I do not believe this)
◾ Fears over AI is moving Congress’ immediate focus away from crypto markets.
◾ Bermuda is quickly becoming a favored location for crypto companies due to its clearly defined regulations. They are operating a phased approach to legislation with a test license, sand box license, and then full license.
◾ There is an abundance of crypto equities available in the secondary market, but there are not many buyers. Furthermore, the names of companies people are interested in acquiring can be amassed on ten fingers.
◾ Several companies who always presented at past Consensus’ were not in attendance and we had several thoughts as why these companies were not in Austin. Was it because these companies are not looking to raise new funding or felt they could hire through their existing networks? Or was it some how related to the Genesis bankruptcy with creditors not wanting to show their support?
◾ Genesis and key creditors agreed to meet with a mediator in an effort to save the proposed bankruptcy-exit plan. (Bloomberg)
◾ The EU’s tech regulation chief says the European block is likely to reach agreement on the world's first major artificial intelligence law this year. (Reuters)
◾ PayPal (PYPL) plans to roll out off-platform crypto transfers to Venmo. (Paypal-corp)
Government & NGO Actions
◾ The digital ministers of the G7 nations agreed that they should adopt a common vision with risk based regulations for AI. (Reuters)
◾ The US House of Representatives introduced a bipartisan bill to mandate a human being must be in the loop to deploy nuclear weapons and eliminate the risk that AI could fire the weapons on its own. (Foxnews)
◾Norway’s sovereign wealth fund plans to establish guidelines on how the companies it invests in should use AI ethically. (FT)
◾ Druk Holding, the commercial arm of the Government of Bhutan, confirmed a report in Forbes that it had been mining bitcoin since entering the market when bitcoin was trading for $5,000. (Thebhutanese)
◾ Italy’s data regulator removed a temporary ban on ChatGPT. (Reuters)
◾ The military wing of Hamas stopped accepting bitcoin donations to avoid prosecution and hostile efforts against anyone who tries to support the organization. (Shehabnews)
◾ The Securities and Exchange Commission of Nigeria is considering permitting tokenized coin offerings on licensed digital exchanges that are backed by assets including equity, debt, property but not crypto. (Bloomberg)
◾ The Chairman of the House’s Financial Services Committee, Agriculture Committee, Digital Assets Financial Technology and Inclusion Subcommittee, and Commodity Markets, Digital Assets, and Rural Development Subcommittee committed to holding hearings on ways to regulate the digital asset ecosystem. (House.gov)
◾ The FDIC issued a cease-and-desist to Cross River Bank accusing the crypto-friendly lender of “unsafe or unsound” practices. (Bloomberg)
◾ The SEC fined Coinme ≈$4 million for running an unregistered token offering for UpToken (UP). (Sec.gov)
◾ Dubai's Virtual Asset Regulatory approved BitOasis as a broker-dealer with a minimum viable product operational license. (Reuters)
◾ The Shanghai Cooperation Organization, a China-led regional organization that covers more than half of Eurasia, plans to move away from US dollar settlements and switch to its member country’s national currencies. (News.bitcoin)
◾ Senator Elizabeth Warren’s (D-MA) anti-money laundering cryptocurrency bill has been pushed back as she try’s to identify more cosponsors. (Blockworks)
◾ Senator Ted Cruz said he was bullish on bitcoin “particularly when you have irresponsible politicians in Washington that spend money like drunken sailors.” (Twitter)
Public Company Releases
◾ BitDigital (BTBT) reported $32 million in revenue with a net loss of $105 million in 2022. (Bit-digital)
◾ Bitfarms (BITF) achieved its stated goal of producing 5 EH/s in mining capacity. (Globenewswire)
Protocols, Applications & Business News
◾ Mastercard (MA) is looking to expand its partnerships for its crypto payment card program. (Reuters)
◾ Block (SQ) announced its successful release of a prototype 5-nanometer ASIC unit for bitcoin mining. (Mining.build)