Nischal Shetty, the co-founder of Indian cryptocurrency exchange WazirX, is seeking a $20 million to $30 million funding round for his blockchain startup Shardeum at a $200 million valuation.
According to TechCrunch, investors in the round include Spartan Group, Struck Crypto, Big Brain Holdings, and Cogitent Ventures.
The financing is in the form of a private, financing is still in progress, and the specific funds raised have not been disclosed.
The public chain project Shardeum network will use sharding technology – dividing the network into multiple shards. Enables more transactions to be processed in parallel.
The network is currently undergoing testing, has an EVM-compatible mechanism and uses Proof-of-Stake consensus.
Nischal Shetty said:
“We are currently working with top VCs in an ongoing funding round. While it has not yet closed, we expect to see great support for Shardeum and our mission of making blockchain technology faster, smarter, and easier to use for everyone.”
According to people familiar with the matter, the project will start with India and emerging markets as its primary user base, who said users could process more than 100,000 transactions per second through the blockchain’s 100,000 nodes.
The company expects to launch the mainnet in October and launch more than 500 million SHM tokens.
Subject to the bankruptcy crisis caused by depleted Ethereum reserves, NFT lending protocol Bend DAO has proposed new emergency measures pending a governance vote.
The NFT lending protocol provides asset collateral for NFT holders by using their NFT assets as collateral to borrow ETH. When someone deposits an NFT into BendDAO, they can borrow up to 40% of the collectable’s reserve price in ETH.
If the reserve price falls below a certain threshold, NFT depositors can liquidate their assets.
According to the Bend DAO development team:
“We are sorry that we underestimated how illiquid NFTs could be in a bear market when setting the initial parameters.”
At present, the platform has lent a total of 16,500 ETH, and the ETH loan utilization rate has soared from 57.6% to 86.8%.
NFT depositors are at risk of losing their NFTs if their collectable value plummets. Still, those who deposited ETH into the protocol will also suffer if the protocol cannot recover enough funds to pay them back.
To save the protocol from a credit crisis, the Bend Dao development team proposes to limit the liquidation threshold for collateral to 70% of the loan value, lower than 85%.
The company said it is also reducing the auction time for NFTs on its platform from 48 hours to four hours and removing the requirement that the minimum bid price for NFTs on Bend DAO is tied to 95% of the reserve price of popular digital collectables trading platform OpenSea.
BendDAO has liquidated 12 NFTs collateralized for ETH loans since August 14.
As of June 2022, the number of crypto investors in India had clocked 115 million, representing 15% of the nation’s population aged 18 to 60 years, according to a survey by crypto exchange KuCoin.
The report noted that despite the Indian administration’s hard stance on crypto assets like the 30% tax imposed, the crypto market is speculated to continue attracting more players. Therefore, it is expected to hit $241 million by 2030.
The Into the Cryptoverse Report India highlighted that fresh young blood triggered significant dynamism in the cryptocurrency market. Per the study:
“39% of young crypto investors below the age of 30 are first-time crypto investors who only started trading over the past three months.”
Furthermore, the younger and tech-savvy demographic is expected to enhance India’s digital economy. The report added:
“With its rapidly growing middle class and tech-savvy, young population, the country is poised to become a powerhouse of the digital economy in the near future, despite the challenges of poor topic education and information accessibility.”
On the other hand, the nation’s crypto investors aired their optimism about the market despite the current meltdown. KuCoin pointed out:
“56% of crypto investors believe crypto is the future of finance. 54% believe crypto will bring them a higher return on investment in the long run. 52% invest in crypto to gain passive income and improve the quality of living.”
For potential investors, the ambiguity enshrined in government regulations emerged as the main stumbling block to entering the crypto market, with 33% of the respondents airing their concerns.
The report also pointed out that more than 50% of crypto investors in India intended to propel their investments in the next six months despite the market downturn.
Meanwhile, a previous KuCoin study noted that Nigerians were entering the crypto space because of high inflation rates and the lack of affordable financial services.
Seven major domestic securities companies in South Korea have filed to launch their own cryptocurrency exchanges in the country. Local newspaper NewsPim reported the new development on Monday.
According to NewsPim, Samsung Securities, Mirae Asset Securities, and five other giant brokerage companies have applied for preliminary approval to operate an exchange within the first-half of 2023.
Mirae Asset Securities Co., Limited is the largest investment bank and stock brokerage company by market capitalization in South Korea, with $648 billion under its management.
As per NewsPim, Mirae has developed a subsidiary under its consultation arm Mirae Consulting to operate the exchange. Mirae is seeking to hire technical staff to research and develop cryptocurrency and other blockchain-based platforms.
Similarly, Samsung Securities is carrying out studies on how best to enter the cryptocurrency ecosystem.
Samsung Securities is a South Korea-based wealth management firm that provides a wide range of financial services from brokerage, wealth management and investment advisory services to corporate finance and trading.
According to NewsPim, Samsung Securities tried to spearhead the development of a crypto trading platform last year, though it failed to acquire the necessary talent to do so.
The report said the sudden influx of institutional interest in South Korea was driven by the newly elected President Yoon Suk-Yeol, who took office in May.
To assist in accomplishing such goals, the report disclosed that South Korea’s Financial Services Commission (FSC), the South Korean government’s top financial regulator, plans to revise the relevant laws for Bitcoin, cryptocurrencies, and securities.
The regulator intends to push for a Digital Assets Framework Act so that these (Bitcoin, cryptocurrencies, and securities) can be managed in one regulated framework divided into security-type tokens and non-security-type tokens.
According to NewsPim, the FSC will also examine whether domestic virtual assets are securities.
Singapore-based crypto exchange Crypto.com has tweeted that it will make a series of updates to its iconic arena, the Staples Center, including renovations of giant screens and concession stands, as well as a terrace overlooking downtown Los Angeles.
According to the company, the Los Angeles-based venue, the Staples Center, will be renamed and planned for a “multimillion-dollar campaign.”
Last year, Crypto.com signed a 20-year cooperation deal worth $700 million with Anschutz Entertainment Group (AEG), which owns the Staples Center and the L.A. Live.
As part of the agreement, Crypto.com has acquired the naming rights to the Staples Center, the Los Angeles Lakers home of the NBA team.
Staples Center will be renamed Crypto.com Arena. This will be the largest venue naming rights transaction in U.S. history so far.
As reported by Blockchain.News on August 24, The American cryptocurrency exchange giant FTX sponsors the University of California, Berkeley (UCB) with $17.5 million in cryptocurrency in exchange for getting the 10-year naming right of the California Memorial Stadium.
Crypto.com and BlockFi have followed a series of various crypto firms faced with massive layoffs due to the recent downturn in the crypto market. Crypto.com said it would reduce its workforce by 5%, or about 260 staff members.
In August, the leading crypto exchange acquired South Korean virtual asset exchange OK-BIT and payment service provider PnLink under the Korea Electronic Financial Exchange Act, expanding its business to South Korea.
Hidden Road Partners is in talks with hedge funds and many of the top 20 global banks about providing access to trade or hedging their crypto risks, Bloomberg reported citing executives at the firm.
Hidden Road Partners is a prime brokerage focusing on digital assets and foreign exchange.
Last month, Hidden Road Partners completed a $50 million funding round last month that included Citadel Securities, as well as the investment arms of cryptocurrency exchanges FTX Trading Ltd. and Coinbase Global Inc.
This move by the prime brokerage startup is being seen to ease Wall Street’s entry into crypto trading by tackling counterparty risks and conflicts of interest.
Managing counterparty risk has come at a critical time as the recent crypto downturn has led to the default of influential crypto hedge fund Three Arrows Capital (3AC) and crypto lenders and brokers such as Celsius Network Ltd. and Voyager Digital Ltd. filed for bankruptcy protection.
“Such credit risks could hamper traditional funds’ interests in trading directly with cryptocurrency firms,” Bloomberg said.
Ramnik Arora, a general partner at FTX’s venture arms, said, “the recent episode with crypto lenders has made it abundantly clear that the industry is in need of better real-time credit risk management.”
“Hidden Road is making it easier for risk-conscious borrowers to access credit markets, reducing systemic risk for the ecosystem.”
The startup was founded in 2018 by Marc Asch, formerly with Steven Cohen’s hedge fund SAC Capital and Point72 Asset Management. Hidden Road initially started with foreign-exchange services and expanded into digital assets in October.
The company allows banks or other institutions to post dollars as collateral in a “tri-party” set up with a custodian and receive profits and losses in dollars. However, this is only limited to those banks or institutions that cannot hold digital assets directly.
Clients can trade with exchanges as well as liquidity providers, including Virtu Financial Inc., Optiver BV and Wintermute Trading Ltd.
There is an increasing number of crypto platforms and brokers vying for institutional traders. But Hidden Road claims that, unlike many others, its pure-play structure would eliminate potential conflict of interests.
“The firm takes on counterparty risks on behalf of the client and the crypto exchange or market maker. If a counterparty defaults, the startup would be on the hook for completing the defaulted side of the trade. In exchange, Hidden Road’s prime-brokerage fee incorporates this aspect of credit risk,” Bloomberg said.
The business model for Hidden Road does not include carrying a huge balance sheet to lend to its clients; instead, the firm raises capital from investors such as pension funds and pays them a return on capital. It generates returns by providing financing to clients for their trading activities.
The company’s risk mitigation involves using a real-time system, which sets risk limits and requires portions of collateral upfront.
Hidden Road said it plans to enter futures and options clearing.
The Ministry of Strategy and Finance of South Korea announced on Monday that hard-forked tokens, staking rewards, and crypto airdrops will be subject to gift tax under the country’s Inheritance and Gift Tax Act.
The South Korean Ministry of Finance said that during its response to a tax law interpretation for the freely movable digital asset by exchanges.
The National Tax Service (NTS), the tax authority in Korea under the Ministry of Strategy and Finance, said that any free virtual asset transfers in the form of airdrops, staking rewards, and hard-forked tokens would attract a gift tax.
The authorities will levy the tax on third parties who get the crypto transfers free. According to the announcement, gift tax will be: “Levied on the third party to whom the virtual asset is transferred free of charge.”
While the virtual asset gains tax will be postponed to 2025, the authorities said free virtual asset transfers would attract a 10%-50% tax under the Inheritance and Gift Tax Act.
The South Korean gift taxation law applies to all items of economic value which can be converted to fiat currency.
Under the Act, once a recipient receives a gift, they will be expected to file a gift tax return within three months of receiving it.
Due to the lack of regulations surrounding the digital asset market, the ministry said that actual taxation on such digital asset transfers would be considered a case-to-case basis.
Preparing Crypto Regulations
South Korea’s government postponed the virtual asset gains tax until 2025 because the country still does not have proper regulatory guidelines surrounding digital assets.
Last month, the government postponed plans to impose a 20% tax on all crypto earnings until 2025. Government officials said the decision was triggered by stagnant market conditions and the time required to prepare investor protection measures.
Initially, the country’s legislators delayed such plans until December 2023. Some reasons for the postponement were attributed to the current global market outlook, which is generally negative. The lawmakers were also concerned about the time required to prepare for investor protection measures.
Authorities prefer to postpone the tax until the crypto market matures and a new regulatory framework is thoroughly prepared to ensure transparency and investor protection.
WisdomTree Investments, Inc., a New York-based exchange-traded fund and exchange-traded product provider and asset manager, announced on Monday that it has added Polygon (MATIC) and Avalanche (AVAX) to indices at two physically backed crypto basket exchange-traded products (ETPs), the WisdomTree Crypto Market (BLOC) and the WisdomTree Crypto Altcoins (WALT).
The firm added Polygon and Avalanche to the WisdomTree Crypto Market (BLOC) and the WisdomTree Crypto Altcoins (WALT).
BLOC and WALT are already trading on the German stock exchange Börse Xetra, the France stock exchange known as ‘the Euronext Paris,’ Amsterdam stock exchange and the Swiss stock exchange SIX.
The two crypto ETPs have a sales pass for the whole European Union.
Alexis Marinof, head of Europe at WisdomTree, talked about the development: “Our crypto baskets are designed to give investors exposure to the changing environment of crypto assets. Additional coins such as MATIC and AVAX can be added to the indexes through quarterly resets. Before being included in our indexes, coins are evaluated by a committee, and they must meet several criteria, including sufficient liquidity levels, practical use cases, and significant mass.”
Marinof further elaborated: “Our monitoring and rebalancing allow investors to conveniently allocate some of our largest and most liquid investable crypto assets within a familiar structure without having to open or insure individual portfolios or any individual currency to stake.”
The BLOC is a free-float market capitalization-weighted ETP that offers exposure to a diversified basket of cryptocurrencies representing about 65% of the crypto market capitalization. The product is designed for investors who want broad exposure to the liquid and established assets of the crypto market. With the new additions, the basic BLOC index is now constituted of Bitcoin, Ethereum, Cardano, Bitcoin Cash, Litecoin, Polkadot, Solana, Polygon, and Avalanche.
On the other hand, the WALT is a market capitalization-weighted free-float ETP that enables exposure to a diversified basket of altcoins. The ETP offers exposure to major crypto assets, excluding Bitcoin and Ethereum. It was designed for investors who already have exposure to these major cryptocurrencies and want to diversify their exposure without modifying their current holdings. With the new additions, the basic WALT index now consists of Cardano, Bitcoin Cash, Litecoin, Polkadot, Solana, Polygon, and Avalanche.
WisdomTree said it added MATIC and AVAX to BLOC and WALT on August 19 after rebalancing the indices of the two crypto-basket ETPs.
Crypto ETPs Blossoming in Europe
The crypto ETP market in Europe is becoming more competitive than in North American and Latin America. Firms are issuing more varieties of crypto ETPs because of increasing demand.
In February, Fidelity International listed the Fidelity Physical Bitcoin ETP on Germany’s Deutsche Börse stock exchange and Switzerland’s SIX Swiss Exchange. The product is available to institutional clients and investment firms in Europe.
In 2019, WisdomTree launched its first crypto-asset ETP and has continued to build some diversified crypto baskets since then. WisdomTree has $200 million in assets under management in its crypto asset ETPs.
Following the indictment of Nathaniel Chastain, a former Head of Product at the Non-Fungible Token (NFT) marketplace, OpenSea, a new petition has now been filed by his lawyers, requesting the court to dismiss the case as it lacks merit.
Chastain’s lawyers said the accusation of insider trading does not qualify as NFTs can neither be classified as either security or commodities. The grand jury charges on OpenSea were filed in May, with Chastain accused of buying NFTs before they were featured on the trading platform’s homepage.
The charges brought against him detailed the fact that he used insider knowledge to make the business calls. He also used anonymous accounts and wallets to make the transactions. According to the earlier indictment, Chastain often sells the NFTs after they are listed on OpenSea at a relatively higher price.
“NFTs might be new, but this type of criminal scheme is not,” U.S. Attorney Damian Williams in a statement at the time the charges were first levied. “As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself. Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”
In defence of Chastain, his legal counsel argued that the government cannot prove whether the transactions being probed qualify as financial transactions under Anti-Money Laundering (AML) rules.
“The government has brought the instant prosecution using ill-founded applications of criminal law to set a precedent in the digital asset space,” Chastain’s lawyers wrote in the motion to dismiss the indictment.
OpenSea is the largest NFT marketplace in the world, and the title comes with many legal challenges. Some of its aggrieved users have consistently sued the platform, most requesting the trading outfit to refund their NFTs that was stolen based on improper security infrastructures installed by the exchange.
Considering the state of the digital currency ecosystem, Morgan Stanley’s analyst, Sheena Shah, revealed in a note to clients on Monday that the nascent crypto market is still very much subjected to the Federal Reserve’s continuous quantitative tightening expectations.
According to Shah, the fact that the stablecoin’s market capitalization has stopped falling is a very positive sign that institutional crypto deleveraging appears to have paused.
“Stablecoin availability is a sign of liquidity within the crypto world and demand for crypto leverage. In early June, Tether (USDT), the largest stablecoin, saw its market capitalization fall 20% in about a month, causing the crypto equivalent of quantitative tightening,” Shah said in a note to clients.
“Around the same time, bitcoin fell 45% and traded below $30k. This week marked the first time since April that stablecoin market capitalisation has stopped falling on a monthly basis. The market cap is still down 20% from the peak (12% excluding TerraUSD), but this may be a sign that the extreme institutional deleveraging appears to have paused for now.”
Shah also pointed out that the price of Bitcoin typically weakened in Asian trading hours in June. The Morgan Stanley analyst noted this decline to align with their observation that U.S. treasury yields were rising most during the U.S. hours, a representation of Fed tightening expectations.
“We do not think that bitcoin weakening most during U.S. hours necessarily tells us that it was U.S. investors selling bitcoin as crypto traders could trade 24 hours a day. However, it does suggest that U.S. central bank monetary policy tightening expectations have been an important driver of the crypto bear market this year,” the note reads.
The digital currency ecosystem is expected to react in a very significant swing over the next few months until both the US and the global economy remain steady.