Onchain: Do Kwon on the run, US crypto regs, the Merge wash-up
Catch me if you Kwon
I will not apologise for that headline.
Anyway, Terra founder Do Kwon’s very bad year continues with South Korean prosecutors issuing a warrant for his arrest, quickly followed by a request for Interpol to slap a red notice on him, which obligates members to arrest and extradite Kwon if they happen to come across the guy.
Kwon has apparently been less than forthcoming with investigations into the wholesale collapse of the LUNA-UST ecosystem, hence the new urgency to track him down before he slips into the jungles of the Central African Republic (or some similarly obscure and difficult to extradite from locale). While it was thought Kwon was currently chilling in Singapore, the authorities there have said that he’s no longer on the island.
For his part, Kwon responded to accusations that he was on the run by tweeting “Tbh havent gone running in a while, need to cut some calories”, which goes to show that just because you single-handedly immolated around US$40 billion in client value doesn’t mean you have to be all like serious about it.
The US gets serious about crypto
Back in March the Biden administration gave a veritable army of federal acronyms six months to create a raft of new frameworks for the crypto economy. Well, six months have passed and the report is in. So, what are some of the takeaways?
- Despite the usual bromides about supporting innovation, the focus very much remains on fraud, consumer protection and illicit finance. As Axios Crypto points out, it’s like saying we should invest in car manufacturing even though cars are good for little more than killing the people who drive them.
- They’re a lot more excited about the prospects of FedNow, a government clearing house, and the digital dollar than they are the cryptocurrency economy at large.
- Stablecoins can also expect some serious new restrictions, while a two year ban on algorithmic (i.e. UST-like) stablecoins is being proposed.
- The Chamber of Commerce sees potential in supply chain and intellectual property management and not much else. It reckons banks are doing a gung-ho job of managing payments, so value transfer doesn’t make the cut. Cool cool cool.
- Stricter regulation is coming for Proof-of-Work mining operations. Chug through that coal while you still can miners.
Overheard on Twitter
I’ve been a broken record but markets don’t bottom simply when selling stops
You need a bid. You need liquidity. An absence of headwinds isn’t enough
The quickest way to be victim of a slow bleed is to think that no headwinds = bottom
I got wrecked in 2018 thinking like this
Dispatches from a land beyond Merge
The Merge happened last week and nobody died or did an absolutely mortifying rap routine, so I guess we’ll count that as a win. So what does the post-Merge world look like?
Well, a fair bit like the pre-Merge world but with ETH trading at a fun 20% discount. Luv u bear market.
There had been a bit of conjecture about how Proof-of-Stake could lead to centralization of the Ethereum network and that appears (in these early days) to have played out, with two nodes – Lido and Coinbase – producing more than 40% of the blocks. We’re also yet to enter the era of deflationary ETH, although the amount of ETH actually being produced is around 5% of what it would have been under Proof-of-Work.
Speaking of which, the much maligned ETHPOW fork has justified our opprobrium, suffering a string of technical faults and a more than 80% price collapse. Let it shrivel up and die with utmost haste.
Meanwhile, local Voldemort Gary Gensler has made comments that the technicalities of the new PoS system make Ethereum look like a security (as opposed to a commodity), which more than anything speaks to the abject confusion under which the crypto economy is currently labouring. Destroying environment: commodity. Not destroying environment: security. Got it. Glad we had this chat.
Luke from CoinJar
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