SPIRIT Blockchain – Weekly Wrap-up

Here’s what happened in blockchain and crypto this week. 

G7 policymakers met in Berlin last week to discuss crypto regulation, among other things, in the wake of the collapse of the UST stablecoin. This week, the European Central Bank (ECB) released a report on crypto’s risk to financial stability, warning of potential systemic risks. Meanwhile, ECB President Christine Lagarde harped on the same string, arguing on Dutch television that cryptoassets are “based on nothing” and that the digital euro will be a safer store of value. 

Not surprisingly, in its report titled “Decrypting financial stability risks in crypto-asset markets” which is part of the its twice-yearly Financial Stability Review, the ECB emphasized the danger posed by the increasing integration of crypto with traditional finance. The central bank stresses the importance of gaining a better understanding of the potential risks surrounding cryptoassets and the need to close regulatory and data gaps in the ecosystem to mitigate systemic risks. The report also addresses potential risks arising from leverage, DeFi credit and crypto lending suggesting that the rapidly growing ecosystem is now on the radar or central banks and regulators.  

Meanwhile, ECB President Christine Lagarde reiterated her hostile stance on crypto saying that it is “worth nothing” and should be regulated. Asked by an audience member of a Dutch talk show if she owned digital assets, Lagarde said no, but admitted that her son had invested. President Christine Lagarde also urged patience as the ECB looks to scale back its EUR 8 trillion balance sheet in the face of galloping inflation.     

Market Overview 

The global cryptoasset market capitalization currently amounts to $1.25 trillion – down from $1.3 trillion since Friday last week, with bitcoin accounting for 43.8%. Among the top 30 cryptoassets by market cap, Monero (XMR) outperformed once again, gaining 12.3% over the week. During the same period, the price of bitcoin (BTC) fell slightly by 5.3% to $28,780 and the price of ether (ETH) dropped by 13.6% to $1,749. The total value locked (TVL) in DeFi sits at $107 billion compared to the $111 billion last week – with Ethereum accounting for about 64% of TVL.  

This Week’s Headlines 

• Bitcoin network difficulty drops more than 4%, the most since July 2021
• Portugal’s parliament rejects crypto tax proposals admits budget negotiations
• Top Latin American crypto exchange Bitso lays off 80 employees
• Major staking firms including Lido, Figment and Chorus One will not support new Terra blockchain
• U.S. Fed report shows crypto is favored as an investment tool
• Venture capital funding to help crypto avoid a long winter, JP Morgan report
• Coinbase becomes the first crypto company to enter the Fortune 500  

Notable Deals and Fundraising

• Ethereum scaling project StarkWare raises $100 million at $8 billion valuation
• Crypto firm Babel Finance raises $80 million at a $2 billion valuation
• a16z announces $4.5 billion fund for crypto and blockchain startups
• Blockchain firm Flowcarbon raises $70 million for its carbon credits platform
• Blockchain analytics firm Elliptic announces JPMorgan joined its $60 million Series C round
• MetaKing Studios raises $15M for Web 3 strategy game
• Crypto tax startup ZenLedger raises $15 million in a Series B round
• Crypto app Pebble raises $6.2 million in seed funding
• Huobi acquires Latin America-basedexchangeBitex
• NGC Ventures raises $100M for Web 3-focused fund
• Standard Crypto raises $500 million for new crypto fund
• Former Binance executives launch $100 million crypto fund Old Fashion Research
• Volt Capital raises $50 million for its second fund crypto fund  

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Manuel Trojovsky, Advisor Investment & Research