Hello and welcome back to the Web3 Rewind! Per usual with the industry, lots has happened this past week so without further adieu, let’s dive into this week’s news.

The Latest

So it’s come to this for the crypto industry: we are reliant on the courts to inject reason and parity into the ongoing debate about regulation. There’s good news and bad news here. In the overall sense, though, it’s been exhausting and quite dispiriting to witness the never-ending assault on an industry that is pushing the envelope in both technological and cultural terms. The shadow system in action at the moment is also an affront to the transparency that’s a pillar of what true crypto offers, as opposed to the bs version of FTX.

The good news first. Michael Wiles is a U.S. bankruptcy judge who’s overseeing the unwinding of Voyager, the crypto-credit firm that failed last year. The U.S. Securities Commission objected to the judge’s decision to allow Voyager to sell assets of over $1 billion to exchange Binance.US, claiming that Voyager issued a non-registered security and that Binance.US is an unregistered securities exchange, both of which would violate SEC rules if true. After many hearings and arguments, Judge Wiles wasn’t having any of it. The agency has been publicly criticized for its habit of regulating through enforcement actions and for its lack of clear guidance on what makes a digital token a security. It was apparently no different in the courtroom, as Wiles pointed out in abundance.

As to the two SEC allegations, Wiles wrote “the SEC confirmed that it was not authorized, and did not intend, to present any evidence on these issues, or even any further explanation as to the bases for whatever beliefs the SEC staff may have.” SEC lawyers, in other words, just said the Voyager token and Binance.US were breaking the law but didn’t care to offer any evidence to prove their assertions. “I do not know how any party could possibly be expected to address the SEC’s comments with the limited guidance that the SEC has provide,” Miles wrote. Amen, brother.

The bad news comes in the form of Elizabeth Warren, the grandstanding senator from Massachusetts who clearly covets the White House. Warren, with two other Senators, sent a letter in late January to now-insolvent Silvergate Bank about its ties to its customer FTX and effects from it’s implosion. The attention grabbing had an effect Warren must have known would follow, it undermined confidence in Silvergate at exactly the time that would expose the wobbling firm to a bank run. I’m by far not the first to point this out, and an excellent newsletter from Blockworks put it better than I could.

“The real issue here is that three sitting U.S. Senators helped undermine confidence in Silvergate, specifically because it had a crypto-focused clientele,” Jon Rice wrote in the newsletter. “This is the important part: They deliberately, and publicly, targeted a bank because its customers were having a tough time (emphasis his).”

Warren then took a few shots at crypto in a New York Times op-ed. She took umbrage that the blockchain firms that had money at Silicon Valley Bank, which was taken over by regulators earlier this month, would be paid alongside “small businesses and nonprofits.” As if! She then elided her own role in sowing doubt in this part of tech sector banking, instead putting the blame on venture capital firms. “It’s no wonder the American people are skeptical of a system that holds millions of struggling student loan borrowers in limbo but steps in overnight to ensure that billion-dollar crypto firms won’t lose a dime in deposits,” Warren wrote.

No, Senator, the skepticism comes from legislators like yourself who haven’t bothered to understand the tech you’re attacking, who willfully undermine confidence in crypto’s banking partners and seem hellbent on doing everything you can to push this emerging sector overseas. Crypto is not going away and the U.S. should be leading efforts, as it did with the nascent Internet, to sensibly regulate and foster its growth. — Matthew Leising, editor in chief, Decential Media

Bank run dept.

US Fed announces $25B in funding to backstop banks

Over the course of the weekend, the Fed “created a $25 billion Bank Term Funding Program (BTFP) offering loans of up to one year to “‘banks, savings associations, credit unions, and other eligible depository institutions.’” Moreover, Cointelegraph states, “‘Eligible firms must pledge U.S. Treasuries, agency debt and mortgage-backed securities or other “qualifying assets’” as collateral, which will be valued “at par” — the price at which the assets were issued.”

This action seems to have provided some reassurance in the markets early in the week, but as the Fed moved to shut down other institutions, the markers have receded. Only time will tell how effective this program is, but based on the lookback to par value, this could be a good deal for institutions.

Outside the US., prominent Swiss bank Credit Suisse has indicated that it will be raising around $53.7 billion to help shore up its liquidity, though this action has been called preemptive, the move causes concern over other similar international banks. – Parker Dresdow, Decential Media

Quick Bits

Breaking: Signature Bank closed by New York regulators, citing 'systemic risk'

• In what can only be described as another swift move by the Fed, New York regulators have shuttered Signature Bank. The bank had $88.6 billion worth of deposits, all of which the Fed has promised to backstop.

• Systematic risk has been cited yet again as the reason for the action; however, Cointelegraph notes that “Signature Bank…[was] much more diversified than the likes of Silvergate Bank, with only 25 percent of its deposits coming from crypto.”

What Is Cross River Bank, USDC Stablecoin Issuer Circle’s New Partner?

• In a scramble to recover from the collapse and subsequent liquidity crunch facing their banking partners, Circle has announced a new partnership with Cross River Bank to assist with “payment infrastructure.”

• CoinDesk notes that Cross River is venture-backed and known to be both fintech and crypto-friendly, supporting Coinbase, Stripe and Affirm, to name a few. Cross River appears to have a solid level of assets behind it and is noted to have “$9.9 billion in assets and has originated more than $100 billion in loans.” Additionally, Circle has selected BNY Mellon to hold its reserves. Circle had been holding roughly $33 billion of its USDC reserves with Silicon Valley Bank.

UK to mandate declaring crypto holdings in tax forms

• We’re in the throes of tax season, and while filings are certainly already hairy, they’re about to get even harrier for anyone involved with crypto in the U.K. as the government is looking to “mandate the declaration of crypto holdings in Self Assessment tax return forms.”

• The decision comes with a two-part reasoning: first, to raise more money for the government (around £10 million, to be exact) and second, further the development of regulation for the industry. While the specifics of the rules are still fuzzy, it’s clear that the government does not intend to leave a stone unturned. According to CryptoSlate, the government has indicated that under the rules, “both exchanges and firms offering services in the country will have to secure a license from the Financial Conduct Authority (FCA) to operate in the U.K.”

Ethereum Developers Confirm April 12 for Shanghai Hard Fork

• If you’ve been waiting for your staked ETH to unlock, Ethereum developers have announced April 12th as the date to perform the Shanghai hard fork.

• BeInCryoto noted “The upgrade will unlock over 16 million ETH, which makes up 14 percent of the current supply.” This upgrade will have tremendous impact not only on the ETH ecosystem, but also the broader crypto market. The upgrade to withdraw staked ETH has been in the works for around two years now and is the next milestone before developers pivot to focus on sharding.

Latest Podcasts

Decent People Podcast With Neil Berkeley

On the latest DeCent People podcast, we sit down with Neil Berkeley, co-founder of Decential Media and a documentary filmmaker. Neil and I both attended ETHDenver, the largest and longest-running Ethereum conference, last week and we spoke about our experiences and how the conference has grown over the years. We also try to identify the pungent smell that filled the air outside the conference center.

You can download and subscribe to the podcast here on Spotify, Apple Podcasts or Amazon Music and Audible.

Lights Camera Crypto With Nyla Hayes

On the latest episode of Lights Camera Crypto Digital Artist Nyla Hayes discusses how she started down the path of art as way to help her cope with difficult emotions, becoming Time Magazine’s first ever Artist-In-Residence, being inspired by Frida Kahlo, and the importance of family in her life both supporting her art and inspiring her to be an amazing young woman.

You can listen and subscribe Apple Podcasts and Spotify.

Big Brother and the Hodling Company With Alex Roth

On the latest episode of Big Brother and the Hodling Company, we talk with a composer, guitarist, and producer Alex Roth. He recently formed Zyla, a blockchain-supported metalabel for experimental artists. We chatted about what that means and how he got here, from growing up a musical household where he jammed in a trio with his brothers to playing with a community big band that his mom has been running for 42 years to onboarding experimental artists into web3.

You can listen and subscribe Apple Podcasts and Spotify.

And last but not least

Silicon Valley Bank Contagion: Crypto Companies Affected Include BlockFi, Circle, Avalanche, Ripple

While the broad strokes of what took place with Silicon Valley Bank (SVB) are well known to almost everyone, the impact on individual depositors is a little less known. BlockFi, which has been in bankruptcy since November of 2022 has “$227 million in funds held at SVB…which itself may constitute a violation of bankruptcy law.” Circle, the USDC issuer, had around 25 percent of its reserves tied up in the bank, not to mention that it also had reserves with the recently collapsed Silvergate Bank.

The list goes on and on, but the point that resounds is one of widespread impact, and this is just to crypto-specific firms, not even factoring in the broader impact on other tech firms. It is also important to note that while this recent collapse is still playing out, it appears that while many crypto firms may have had exposure, relatively few will see major disruptions to their businesses as a result. —PD

Out of the Ether: Special NFT Edition

Have you read the definitive history of Ethereum? No? Well then get your special edition of Out of the Ether while you can. There are only 1,000 that were printed and each copy is an NFT that can be registered on the Lukso blockchain’s Universal Profile protocol.