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*Ninepoint Digital Asset Group, is a division of Ninepoint Partners LP.
(6 Day Change as of Mar 16, 2023 1:10 PM ET)
Bitcoin Price: $24,747  23 .61%
DeFi Total-Value-Locked: $46.95 B
Ethereum Price: $1,658  16.35%
Crypto Market Cap: $1.08T
Bitcoin Range: $19,569 - $26,554
BITC.U Close: $7.17 (as at Mar 15, 2023)
Ethereum Range: $1,370 - $1,788
BITC.U NAV: $7.21
Bitcoin Dominance: 45.65% 6 .34%
BITC.U Discount: 0.55%

Crypto “De-Banking” Carnage Ensues: Signature Bank Shut Down

Signature Bank's closure by New York state regulators is the latest blow to the cryptocurrency industry as it loses more access to the banking system. The lender had relationships with prominent crypto companies like Coinbase and Circle. It shut down following the collapse of both Silvergate Capital and Silicon Valley Bank, which were among the most crypto-friendly banking institutions in America. Signature had already begun withdrawing from digital assets after the FTX exchange explosion, but it still held $16.5 billion in crypto-related client deposits as of March 8th. This significant "de-banking" of crypto-enabled banks will likely force such companies to establish presences in jurisdictions outside of American borders.

Circle Cuts Ties With Silicon Valley Bank: Deepens Relationship with Cross River Bank And BNY Mellon

Cryptocurrency giant Circle has announced its newfound partnership with Cross River Bank as their new commercial bank relationship to mint and redeem USDC stablecoins. It also has "expanded relationships" for USDC redemptions, including with BNY Mellon, which already provides custody services for the company's reserves. The company confirmed that its $3.3 billion in Silicon Valley Bank deposits were safe, and the token remains redeemable at a 1:1 ratio with the dollar. The move follows a tumultuous weekend that saw Circle's USDC stablecoin break its peg to the dollar and fall below $0.90 before restoring confidence and re-pegging back to $1. The company is now seeking to mitigate further risk by solidifying ties with larger financial institutions.

Binance’s Industry Recovery Initiative Fund Converts $1 Billion BUSD to BTC, ETH, BNB

Crypto exchange Binance has announced its official conversion of $1 billion worth of stablecoin BUSD into Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and other tokens to support the market. The move was financed through Binance's Industry Recovery Initiative fund, which was established after the FTX collapse to help crypto projects deal with liquidity issues. Binance CEO Changpeng Zhao (C.Z.) tweeted on Monday to confirm that this conversion took a total of fewer than five seconds and only cost $1.29 to execute. The move likely contributed to heightened intraday buying pressure, with Bitcoin jumping to over $22,500 in Asian hours on Monday while Ethereum regained $1,600. The move came amid supplementary stress on the market after US regulators shut down Signature Bank.

Coinbase Updates Staking Terms: Protocols Responsible For Rewards, Not Coinbase

Coinbase, the largest cryptocurrency exchange in the US, has updated its staking service terms and conditions a month after US regulators cracked down on similar products. The exchange emphasized that customers earn rewards through protocols, not Coinbase, which is a specific point of contention for US regulators such as the SEC. Coinbase users must now unstake certain assets before selling or transferring them, bringing the service more in line with native blockchain networks. The assets that must be unstaked on Coinbase are Solana, Cosmos, Cardano, and Tezos. The update follows the SEC fining Kraken $30 million for allegedly violating securities laws with its staking-as-a-service product.

Is the U.S. Government Really Trying to Kill Crypto?

By Alex Tapscott

The stunning collapse last week of Silicon Valley Bank (SVB) and Silvergate, along with the seizure of Signature bank by regulators Sunday, sent shockwaves through financial markets. The Federal Reserve stepped in to guarantee depositor funds at the defunct banks and to create a much needed window for other banks to easily access liquidity to prevent contagion. We are not out of the woods yet, but things are calmer – for now.

However, the events of the past few days have already had a dramatic, immediate, and potentially long-lasting impact on the digital asset industry in the United States.

Throughout the crisis, SVB has been mostly portrayed as the favorite bank of venture-backed startups and the technology industry more generally. That is true, but it is also one of the most important banks to the digital asset world, providing banking services to many of the largest firms like Circle and Coinbase, and acting as an on/off ramp for many more businesses and countless everyday users. Signature Bank and Silvergate played similar critical roles in the ecosystem.

In a few short and tumultuous days, the U.S. digital asset industry lost its three largest banking partners.

This may be just an unfortunate accident – collateral damage from the broader crisis. After all, the biggest U.S. banks don’t bank the digital asset industry, leaving smaller players to pick up the business. Those firms’ deposits are typically less diversified, and the businesses are not always as well capitalized, making them more vulnerable to shocks.

But some are wondering openly if this is not part of an effort by some of Biden allies, such as Elizabeth Warren to kneecap the industry by removing its banking partners and severing any connection to the fiat-currency denominated world - a so-called “Operation Chokepoint.” Former Congressman Barney Frank, until recently a member of Signature’s board of directors, threw fuel on the fire saying “I think part of what happened was that regulators wanted to send a very strong anti-crypto message. We became the poster boy because there was no insolvency based on the fundamentals.”1 Frank may know something we don’t and be alluding to a behind the scenes effort by lawmakers and regulators to try and crush a nascent industry - or he may be trying to deflect blame for the collapse of a bank on his watch. The truth will reveal itself in the goodness of time.

By now you might be asking, “Why does the digital asset industry need banks?” After all, Bicoin began as a movement about decentralization, creating an alternative to the central bank system that allowed anyone anywhere in the world to “Be their own bank.” DeFi promises users the benefits of finance without intermediaries. Yes, self-custody is one of the superpowers of digital assets and DeFi is accessible to anyone anywhere with or without a bank account. However, in the dollar-dominated world, almost all economic activity happens “off-chain” outside of crypto. The migration of trillions of dollars of assets to blockchain platforms is one of the great economic opportunities of our era, something Coinbase, Circle and others were quick to seize on. But to get money and other assets to the on-chain superhighway, we need an on-ramp from the country roads of legacy banking.

What happens now? Well, for starters, there is a business opportunity to pick up the business Silvergate and others were doing. In a free market, that shouldn’t take long. Perhaps this is an opening for bigger banks to do more on the frontier of finance: BNY Mellon is building a custody offering and others like J.P. Morgan are experimenting in Web3.

If this truly is an industry-wide ‘crackdown,’ then I fully expect many businesses and would-be-entrepreneurs will just leave the U.S. altogether for greener pastures off-shore. Abu Dhabi has just launched a $2 billion fund to attract Web3 talent. As one government closes a door, others open windows. This would be a drastic, short-sighted, and self-defeating move by the government – ceding its leadership as the innovation engine of the digital economy and the global financial services leader.

I suspect that concerns of a government conspiracy to kill crypto are vastly overblown. There are dozens of lawmakers on both sides of the aisle who have eagerly embraced this industry and recognize its transformational potential. When the dust settles from this crisis, hopefully they can work with responsible industry leaders to guide us back to the path of sustainable innovation.


What’s Next on the Ethereum Roadmap with Tim Beiko, Ethereum Core Developer

Join Alex Tapscott and Andrew Young as they decode the world of DeFi with special guest Tim Beiko, a core developer and key figure in the Ethereum Foundation. Listen in as they discuss Tim’s Web3 origin story, events leading up to and after The Merge, the significance of the Shanghai Fork, and more!

Ethereum is the preeminent open-source layer-1 blockchain platform for developers to build and deploy decentralized applications (dApps); with a market capitalization of $200 billion, it boasts being the second-largest cryptocurrency after Bitcoin. In September 2022, Ethereum completed The Merge, a major upgrade that merged the Ethereum Mainnet with the proof-of-stake (POS) blockchain Beacon Chain, reducing the network’s energy consumption by 99.95%, with Tim playing a key role in its rollout. The recent successful execution of the Shanghai hard fork on the Goerli testnet signifies that Ethereum validators will soon be able to withdraw Ethereum from the Beacon Chain and provide ETH holders with greater access to their holdings, allowing them to unstake assets for the first time.

Tune in to the 86th DeFi Decoded episode to hear Alex, Andrew, and Tim discuss all things Ethereum and how they are selling secure block space. How did Tim fall down the rabbit hole of Web3 and ultimately find himself working for the Ethereum Foundation? What did Ethereum’s development and implementation of the Merge look like behind the scenes? Why is Ethereum often referred to as “ultra-sound” money post-Merge? Will account abstraction unlock Web3 for mainstream users? And More!

Source: The Block
#1. USDC Holders Sold After Circle Revealed Partial Reserve Exposure in Silicon Valley Bank

Circle's weekend announcement that $3.3 billion of its reserves were trapped in Silicon Valley Bank (SVB) caused the company's USDC stablecoin to lose its peg to the dollar and plummet to a low of $0.879. As a result, USDC investors of all sizes participated in a significant fire sale, causing a decrease in the number of USDC addresses with a balance over $1K by 23%, over $10K by 29%, over $100K by 27%, over $1M by 20%, and over $10M by 11%. However, the U.S. stepped in to guarantee protections for all SVB deposits, and Circle's new commercial banking relationships have since restored confidence; the USDC stablecoin has re-pegged to $1 as a result.
Source: The Block
#2. Uniswap Sees Record Daily DeFi Revenue Amid Coinbase’s USDC Weekend Conversion Halt 
Coinbase's announcement regarding its exposure to Silicon Valley Bank led to their halting of conversions between USDC and U.S. dollars over the weekend. As a result, investors leveraged decentralized exchange Uniswap to convert USDC into other holdings amid concerns about the stablecoin's peg. Uniswap accounted for 79% of the $11.12 million DeFi revenue on Saturday, the highest daily level since May 2022. This showcases the growing importance of DeFi protocols within the industry and their potential to benefit from such disruptions in traditional financial systems.


#3. USDT’s Increasing Stablecoin Supply Dominance Reflects Industry Dependence
The relative supply dominance of the top four stablecoins - USDT, USDC, BUSD, and DAI - has shifted significantly since the beginning of the year due to various news events. USDT's relative supply dominance has increased by 6.93%, with its relative supply now at 57%. USDC's supply dominance has decreased by 1.83%, BUSD's by 5.85%, and DAI's has increased by 0.74%. These shifts were driven by events such as Paxos ceasing the minting of BUSD following regulatory demands and Circle's USDC de-pegging due to uncertainty around its reserve funds at Silicon Valley Bank. USDT's growing dominance highlights its immense importance in crypto and the industry's dependence on its integrity.