#281—A blockchain revival at Davos
Jamie Dimon loves programmable money
Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out our last report here.
This week:
A blockchain revival at Davos
Jamie Dimon loves programmable money
Tether in the crosshairs
The InterPlanetary File System enters space
Custodia Bank’s fight with the Fed
Stuff happens
1. A blockchain revival at Davos
It’s been a tough few years for the digital assets space the last couple of years, but the signals out of Davos is that this is beginning to turn.
Here’s Politico:
The cryptocurrency industry is experiencing a moment of resurgence in the Swiss Alps.
Its presence at this year’s World Economic Forum is no doubt diminished compared to the more heady days of crypto hype, following a dramatic price crash and the tectonic implosion of the FTX exchange in 2022.
But some of the biggest crypto players left standing cruised into Davos this week with a powerful wind at their backs. Just days before the elite confab, the U.S. Securities and Exchange Commission approved the trading of investment funds backed by bitcoin. It was one of crypto’s biggest Washington victories, after years of clashes with regulators and skeptical lawmakers.
“We all feel that the products and services we are providing have now firmly woven into the fabric of financial services,” Grayscale Investments CEO Michael Sonnenshein said of the big crypto firms present in Davos. His company spearheaded litigation that triggered the SEC’s approval of the bitcoin investment funds.
It underscores how crypto is moving toward a level of global credibility despite the cloud of fraud, mismanagement and reckless speculation that’s hung over the space in the last few years.
Part of it is also maturation of the ecosystem and tech stack:
“There’s an AI house every block, whereas historically there was a blockchain foundation or a web3 house or a crypto house,” Circle chief strategy officer Dante Disparte told POLITICO. “I take that to mean the technology stack has arrived, when the technology can sort of recede to the background.”
…
As Ripple global head of public policy Rob Grant said: “Boring is good.”
2. Jamie Dimon loves programmable money
One of the leading voices out of Davos on the subject was Jamie Dimon. He’s still not a fan of Bitcoin but is bullish on programmable blockchains (such as Ethereum and Solana).
Here’s CNBC:
Bitcoin does nothing, JPMorgan Chase CEO Jamie Dimon said Wednesday on the sidelines of the World Economic Forum.
“I call it the pet rock,” he added.
…
“This is the last time I’m talking about this with CNBC, so help me God,” Dimon said. “Blockchain is real. It’s a technology. We use it. It’s going to move money, it’s going to move data. It’s efficient. We’ve been talking about that for 12 years, too, and it’s very small.”
“I think we waste too many words on that,” Dimon added.
The bank chief went on to distinguish bitcoin from the other class of cryptocurrencies, the ones by which blockchain has enabled the use of smart contracts. Smart contracts are a programmable piece of code written on a public blockchain, such as ethereum
, which executes when certain conditions are met, negating the need for a central intermediary.
“There’s a cryptocurrency which might actually do something,” Dimon said of smart chain-enriched blockchains. “You can use it to buy and sell real estate and move data — tokenizing things that you do something with.”
Relevant:
PayPal’s Stablecoin Grows by Over 70% in 30 Days - The Defiant
SEC Chair Gensler on bitcoin ETF approval: The underlying asset is highly speculative and volatile
SEC and Ripple ‘at an impasse’ as legal drama moves closer to an end
Spanish central bank unveils partners for wholesale CBDC pilot
Bitcoin ETF approval closes decade-long crypto saga with SEC
‘Tyranny’: Trump vows to block any Fed effort to launch digital currency
Senator Warren: SEC is 'wrong on the law' approving bitcoin ETFs
BlackRock on pace to become largest bitcoin holder in the world
3. Tether in the crosshairs
But there’s still work to be done, according to the latest report from the UN.
Tether wasn’t thrilled. Here’s Coindesk:
Tether, the issuer of the world’s largest stablecoin USDT, has challenged the United Nations' (UN) report on the role of USDT in underground banking and money laundering infrastructure in East Asia and Southeast Asia.
Tether said it was “disappointed” that the report had singled out its stablecoin and ignored the role it played in helping developing economies in emerging markets, and its record of collaborating with law enforcement.
The report by the UN Office on Drugs and Crime (UNODC) said that “Online gambling platforms, and especially those that are operating illegally, have emerged as among the most popular vehicles for cryptocurrency-based money launderers, particularly for those using Tether or USDT on the TRON blockchain” in the region.
Tether asked the UN to engage in collaborative dialogue and touted its “collaboration with global law enforcement including the DOJ, FBI, and the United States Secret Service (USSS).” The company blog said USSS was also recently onboarded on the Tether platform. The firm also highlighted its work with authorities, including the freezing of more than $300 million in the last few months.
Relevant:
4. The InterPlanetary File System enters space
One of the cooler announcements at Davos: We’re one step closer to being interplanetary.
From the press release:
Today, Filecoin Foundation (FF) announced a successful first-of-its-kind mission deploying the InterPlanetary File System (IPFS) in space. The recent demonstration involved sending files from Earth to orbit and back using an implementation of the IPFS protocol designed for space communications.
This mission, conducted with Lockheed Martin-developed software, demonstrated how IPFS – a decentralized content distribution system – can bring the benefits of decentralized technologies to space to enable better communications across long distances and resilience in challenging environments.
5. Custodia Bank’s fight with the Fed
Here’s Cowboy State Daily:
A Custodia Bank spokesman told Cowboy State Daily that Custodia Bank’s motion was based on facts revealed during the discovery process, which showed several instances where the Federal Reserve Board and the White House had inserted themselves into a process that was supposed to be overseen by the Kansas City Federal Reserve Bank.
In many cases, the federal agency simply took the Kansas City Fed’s conclusions and rewrote them to their opposite, without any supporting documentation to justify the changes, according to court documents Custodia has filed in the case.
For example, where the Kansas City Fed had concluded Custodia Bank’s capital was “adequate,” the federal reserve instead rewrote the state-chartered bank assessment to say there was a “lack of a robust capital requirement framework.”
“Strong” risk management, meanwhile, turned into “significant risk management gaps” and “liquidity risk is relatively low” became insufficient “liquidity risk management processes.”
An assessment that Custodia’s management experience was “impressive” and “extensive” transformed to a “lack of collective depth of relevant banking experience.”
That last example has been particularly irksome to Custodia Bank, given that bank CEO Caitlin Long is herself a Wall Street veteran with more than two decades experience.
Custodia Bank described it as “arbitrary” and “odd” in court documents to make such a claim, given that 100% of the Wyoming digital asset bank’s senior management has decades of relevant banking experience.
Relevant:
Banks need new liquidity rules to guard against runs -regulator
Wall Street’s Counterattack on Gary Gensler Strikes at SEC’s Foundations