Zhuorui Fu 傅卓蕊

The critical moment for the SEC to decide whether to approve a spot Ethereum ETF is approaching — in fact on the very day of today Eastern time. The SEC needs to make an initial final decision on applications from VanEck, Ark/21Shares on the 23rd and 24th respectively, while the final decision on Grayscale needs to be made by the 30th. Most people had already given up hope on the SEC approving an Ethereum ETF just a week’s ago, but starting this week, we are observing a streak of price surge, with Ethereum spiking 20% to $3,700 and Bitcoin nearly reaching $72,000, breaking the $70,000 mark for the first time in 40 days on May 21st. Why did this happen? It all started with Bloomberg ETF analyst Eric Balchunas' surprising reversal in stance.

Bloomberg ETF analyst Eric Balchunas made an unusually timed post early this week stating that he has significantly increased the approval likelihood from 25% to 75%. This change is based on some rumors he recently heard, suggesting that the US SEC might make a 180-degree shift on this increasingly politicised issue. However, another analyst, James Seyffart, subsequently added that although the likelihood of the 19b-4 rule passing has increased to 75%, the future still requires the approval of the S-1 application. This means that even if the 19b-4 rule is approved, the formal launch of an Ethereum spot ETF will still take some time.

As the end of May approaches, the crypto community's attention is fully focused on the Ethereum ETF approval, nevertheless, I was conservative on the projection initially. The SEC has been investigating whether Ethereum, the main native asset of the Ethereum blockchain, is a security, and launched a formal probe after the network transitioned from proof-of-work to proof-of-stake consensus. If Ethereum is deemed a security by the SEC, that could be one reason for the SEC to reject spot Ethereum ETF applications. The SEC would at most approve one of the rules, but not more. I am reading Manufacturing Consent these days and am just wondering on who will benefit from the price rise. However, it is true that we cannot take the regulators swinging attitudes for granted, since even Gensler himself made a comment claiming Ethereum is not considered security in his lecture at MIT in 2019. 

The Ethereal debate continues to burn. Even the founder of the bankrupt investment firm Three Arrows Capital, Zhu Su, has posted on social media platforms stating that he is bullish on Ethereum regardless of whether its spot ETF is approved or not. Zhu Su predicted that if the Ethereum spot ETF is approved, Ethereum will rise to a new high of $5,400, and Bitcoin will also reach a new high of $80,000. Another indicator related to DTCC also excites the market. A DTCC spokesperson stated that being listed was part of the preparation for launching a new ETF product, following standard procedures, and emphasised that this did not mean the ETF had received any form of regulatory approval or passed any other review process. However, shortly after that, the SEC officially approved it. Will history repeat itself this time? The market is eagerly anticipating this. The SEC also asks major exchanges to modify Ethereum ETF filings, which is interpreted by the market as a signal that an approval is near. 

The US government's attitude towards cryptocurrencies is very ambiguous. On the one hand, regulatory authorities are continuously increasing enforcement efforts, relentlessly cracking down on cryptocurrencies. In just the first half of the year, the SEC has sued multiple major institutions, including Genesis, Kraken, Binance, and Coinbase. On the other hand, the US government is the government holding the most bitcoins. According to Glassnode data, as of July 27, the US government held approximately 194,188 bitcoins, accounting for about 1% of the total bitcoin supply, worth around $5.68 billion. Although these bitcoins were all seized for free, compared to other governments, the US government has not rushed to cash out the confiscated bitcoins, but has chosen to hold them instead. Despite the fact that digital assets have existed for more than a decade, a comprehensive regulatory framework has not yet been established in the US, and the current regulatory framework lacks clarity. 

Against this backdrop, the FIT21 bill was finally born under the watchful eyes of millions. The bill aims to clarify the roles of the SEC and CFTC in regulating cryptocurrencies. The passage of the bill is seen as an early win for the crypto industry, with Coinbase's CEO describing it as a "total victory." Of course, the bill draws sharp criticisms from the SEC Chair Gary Gensler, who publicly expressed his objections to the FIT21 bill. He believes that HR 4763 undermines the classification of crypto assets as investment contracts, which would exempt them from SEC oversight and hinder investor protection efforts. Since the final bill still needs presidential approval before implementation, Biden had previously vowed not to let it pass smoothly. However, Biden suddenly announced that if the FIT21 bill passes the congressional vote, he will not veto it, and even called on Congress to cooperate on a comprehensive, balanced regulatory framework for digital assets.

Why did Biden suddenly change his stance? It should be noted that he previously had a very tough attitude, and Gensler has been a staunch supporter of Biden, so how could their stances be so vastly different? Biden's shift in attitude towards cryptocurrencies may be driven by political motives as his biggest competitor Trump is openly pro-crypto. 

US regulation on businesses, whether centralised or decentralised, is always tied with the complexity of bipartisan politics. For the ETF approval, I still hold a conservative view, as I cannot understand how SEC may be able to wrap its head and identify Ethereum to not be a security, although crypto industry’s arguments are that ETH is a technical product not a security (looping to Thomas’ great essay Staking or Not, ETH is Not Security). If it does, it also makes sense as we can never sit in the shoes of the regulators and understand the mandates on their table and under the table. After all, Hong Kong has already approved ether ETFs and these ETFs opened to a lukewarm sentiment - I had the fortune to discuss with Mr Joseph Chan, Under Secretary for Financial Services and the Treasury of the HK SAR Financial Services and Treasury Bureau, and he expressed confidence in Hong Kong’s crypto ETF future and a sense of “no idea” about another jurisdiction (US). After all, these are two quite different market in terms of size and jurisdictional power.  

Regardless, for the past two months, Ethereum on-chain activity and meme coins have been largely lifeless, which has led to a significant drop in the previously expensive Ethereum GAS, now basically hovering around the historical daily low of 6 gwei. Furthermore, the recent layer0 witch hunt incident has also caused many studios to stop on-chain interactions, further keeping Ethereum GAS fees low. This is good news for transaction users, but it's difficult for Ethereum ecosystem projects because the participating users have decreased significantly, and even the studios that used to brush transactions have stopped, so naturally, the data for various projects will be difficult to look at. However, the Ethereum spot ETF hotbed will attract a lot of capital inflow, although the original ecosystem has limited absorption of capital. If Ethereum ETF is passed, new meme coins and market hot spots may emerge on the Ethereum chain, a round of new wealth creation waves may happen on Ethereum like those on Solana and Base. 

Africa, the world's second largest continent (after Asia), accounts for 20% of the global population. Therefore, although most African regions are economically underdeveloped, they have always been a target market for major FinTech companies. With the development of the Crypto industry, since 2021 many projects have set their sights on Africa, which has underdeveloped financial infrastructure. Compared to Southeast Asia, which has shined due to GameFi, Africa seems to be still on its path to decentralized finance. groping. This article will introduce the development history of Africa's Web2 financial market and review the current Web3 projects and development status in Africa.

CreatorFi is in full swing. In addition to the currently popular Lens, Nostr, Mirror, etc., the author prefers to go to colleges and universities to discover interesting new projects. This time, the author found Utopic AI, which was created by the Berkeley team and wanted to become the next "Quora/Zhihu" in a Harvard Web3 Pitch, and shared it with readers.

Utopic page

Utopic’s “Utopia”: Becoming the Quora of Web3

Utopic started building today's product about 8 months ago. It relies on Use to Earn, a Web3 shared knowledge platform. Where users can create and discover a variety of content to earn cryptocurrency, mint into NFTs, and sell with one click.

Cypher Capital can be called the "a16z of the Middle East" or the "Hillhouse" of Web3 in the Middle East. Its influence in the Middle East, North Africa and Asia is quite unique, and according to public information, it has abundant funds. This institution started from Bitcoin mining (Phoenix). After building Phoenix into the world's largest Bitcoin network computing power giant, founder Bijan Alizadeh initiated the establishment of Cypher Capital on this basis to diversify the group's allocation. , Cypher Capital is headquartered in Abu Dhabi and Dubai. It conducts direct investment in mining, nodes, mother funds, and primary and secondary market projects in the global Web3 field. In 2022, it will launch a US$100 million VC focusing on the early field of Web3. , is the only "Capital With Solution" in the Middle East, providing full-stack ecological resource support including capital, Nodes, human resources and other resources to front-line founders around the world. There are also many crypto VCs with a scale of more than 1 billion US dollars in Dubai. The Dubai Government Fund is also the largest fund force. Previously, the current Sheikh was also actively conducting investment layout through different government and semi-governmental agencies. For details, please see the author's previous article "200,000 Chinese Dubai: Another major Web3 capital in Asia", but Cypher is particularly unique because of its resource accumulation.

Last year, the market capitalization of the crypto market fell from about $1,000 billion on November 8 to $840 billion, with $160 billion evaporating in about the past week and a half, equivalent to Hungary's GDP for a year in 2021. Even more prosperous than the U.S. stock market, the bubble layer of the crypto market is stacked very high. When the liquidity crisis comes to the crypto market, after the tide, you can see who is swimming naked, and the naked swimmer is likely to be the former predator.

Speculation can indeed bring huge benefits in the short term, but everyone who has taken Finance 101 knows that returns and risks must be directly proportional. In addition to high-frequency short-term trading, there is another way to survive the bulls and bears. Value is the vane, and an upward arrow points directly to the value mark.

-What is Central Bank Digital Currency (CBDC)-

Central Bank Digital Currency (CBDC), as the name suggests, is a virtual currency "issued" by the central bank, borrowing blockchain technology. Central bank digital currency is essentially different from private virtual currency (cryptocurrency). The essence of virtual currency is decentralized and completely democratic currency. Although most virtual currencies and tokens now cannot be counted as "currency", they have become assets for speculation and investment. Cryptocurrency is theoretically not subject to central jurisdiction, while central bank digital currency is exactly the opposite. It is a centrally-led and supervised currency. Although technically both rely on blockchain, they are completely different in meaning. The central bank's digital currency is also a column of the central bank's balance sheet. It is one of the many forms of currency we use (cash, short-term lending, etc.). The central bank can similarly schedule and adjust the central bank's digital currency through its package of strategies, such as interest rate increases. Liquidity and total volume in the market. Ordinary virtual currencies are not controlled by a central organization to regulate the supply and demand of currency. Whether it is a PoW or PoS cryptocurrency, theoretically its supply and demand are determined by the market "system", which depends on the specific algorithms and rules of the private company that issues the currency. Cryptocurrencies are generated through "mining." Central bank digital currency is generated by the central bank's expansion of its balance sheet, which is what we call "printing money." Of course, everyone does not need to be so disgusted with "printing money", because "printing money" is not necessarily a bad thing. Although excessive currency issuance will indeed cause a lot of inflation, slight inflation is necessary for economic growth. You can think about an economy that continues to expand. The amount of money it requires must increase. Otherwise, an expanding economy will have insufficient money.

I still remember the days when the bull market took off in 2021. The most mentioned name, besides Cathie Wood, was Buffett. Of course, in the cryptocurrency industry, Buffett is more often scolded for his negative remarks. At the craziest time, people regarded ARK's Cathie Wood as a god, and looked down upon Buffett, thinking that he had failed to keep up with the times and could not understand new things. At that time, any child's income from Tesla in the US stock market could make I muttered to myself that Buffett was nothing more than that, let alone the exaggerated fluctuations of altcoins.

Neutrino USD (USDN) currently ranks 9th on Coinmarketcap in terms of stablecoin market capitalization, with a volume of approximately $630 million. It is a regional and global force that cannot be ignored in the stablecoin market. Neutrino, also known as "Russian Ethereum", mainly supports transactions in the huge Waves ecosystem. Waves Protocol was founded by Ukrainian Sasha Ivanov in 2016 and has now evolved into a very large virtual finance and pan-financial system. Waves uses a proof-of-stake evolution method called LPoS (Liquid Proof-of-Stake), so the delegation right of Waves is optional, and users can delegate the verification right to other token holders.

The story of the Chinese in the encryption industry is full of twists and turns. The Chinese have helped the development of the booming encryption industry, but now the Chinese forces are somewhat drifting.

The encryption industry started in mainland China and Japan around 2013, and then Hong Kong started to gain momentum. After the collapse of Japan's Mt Gox in 2014, U.S. dollar trading began to gain momentum in Hong Kong through Bitfinex. In 2016, Bitfinex became the largest non-RMB exchange. Bitfinex is backed by Greater China and has a close relationship with Tether, which also started in Hong Kong, providing a series of support. Mainland China was also the starting point of the encryption industry, and Vitalik, the founder of Ethereum, also traveled to China many times to try to raise funds.

Two of the three major CeFi platforms have gone bankrupt and liquidated, leaving only Nexo with $2 billion in assets. After the FTX thunderstorm, the dark clouds extended to many platforms, and Genesis, BlockFi, etc. were in emergency; Celsius, one of the three major CeFIs, had gone bankrupt and liquidated during the last round of Luna thunderstorms. Since 2022, 80% of the market value of Nexo’s token NEXO has evaporated.

Questions about Nexo’s liquidity gradually began to emerge on Twitter. Looking at Nexo's Twitter before the end of November, most of the comments below are the voices of doubts from Twitter users or the customer service needs of Nexo platform users, reflecting certain technical loopholes. The Nexo token continued to fall in the seven days before December 1st, and then increased significantly after December 01st, with the latest reported increase of 9.16%. There has been no Nexo available for short sale on Binance in recent days.