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

Twitter has been lit up this week with fears that U.S. regulators are trying to kill crypto. The allegations are speculative at this point but allegedly involve a coordinated plan between the Federal Reserve, its regional banks, other banking regulators and the White House to cut off banking access to crypto companies, according to a series of tweets by Nic Carter, a founding partner at venture capital firm Castle Island Ventures. The concern was bolstered by the Securities and Exchange Commission this week suing and settling charges against crypto-exchange Kraken for its program allowing users to stake digital assets to gain a return. Kraken agreed to pay $30 million in fines and end its staking program in the U.S.

The kill crypto fears and the Kraken case are intertwined, as a long-expressed complaint about the SEC surfaced again – that it’s unwilling to engage with the industry in an open process and would rather lay down its rules through a series of enforcement actions. Respected lawyer and Chief Policy Officer for the Blockchain Association Jake Chervinsky put it this way: “Typically, federal agency overreach comes in the form of ‘regulation by enforcement,’ where agencies state expansive new views of the law in federal complaints unchecked by the public.”

SEC Chairman Gary Gensler released a three-minute video explaining why the agency was taking its action against Kraken. I’m of two minds on this. On the one hand, Gensler makes sound arguments in favor of protecting crypto investors and ensuring they have enough information before they make the decision to stake their coins. A lack of upfront information has doomed users and investors in failed companies from FTX to Voyager to BlockFi to Terra/Luna where billions of dollars of investor money has gone down the drain. Crypto enthusiasts have been far too eager to throw their money at anything that sniffs of outsized returns, and unfortunately they seem to need someone like the SEC to prevent, or at least allay, their worst tendencies.

Yet on the other hand, what is Coinbase supposed to do now in light of the Kraken case? Coinbase has a staking service too. Is it supposed to voluntarily give it up and forgo that revenue? Why won’t Gensler and the SEC engage the public in this debate so the staking providers can have input on this process? Why can’t there be guidelines hashed out in public so Coinbase and any other U.S. staking service knows where they stand?

Gensler came in for some well-deserved criticism and mockery for the SEC decision and his latest video explainer. It would be much preferable if he put the camera down, held public hearings and let the industry have its say. — Matthew Leising, editor in chief, Decential Media

Legal dept.

Did dYdX violate the law by changing its tokenomics?

In a bold stroke, dYdX announced in January that they will be pushing back the release of their dYdX token from the first of this month to the beginning of December, effectively prolonging their vesting schedule and ultimately changing their tokenomics, according to CoinTelegraph.

In the traditional financial world, these sorts of actions, in addition to the length of the lockup period and the information surrounding the hold, are all dictated by law. As these actions begin to mirror those of underwriters, it begins to look as if their financial partners are seeking ways to skirt financial regulation without having to risk regulatory reprisal. As seen over the last year, the various regulatory powers have stepped up their oversight of crypto. When players in the community begin to act in ways similar to the traditional finance world, it shouldn’t come as a surprise when the regulators take note. While that hasn’t happened yet with dYdX, it doesn’t seem beyond the realm of possibility that increasing frequency of this behavior could bring greater oversight attention to the whole ecosystem.— Parker Dresdow, Decential Media

Quick Bits

Binance acquires majority stake in Korean crypto exchange GOPAX

• With the demise of several of the largest players in the ecosystem over the last year, the market has been weakened and valuations have dropped. This presents an opportunity for well-capitalized players like Binance, which is expanding its hold over the Asian market. With GOPAX (one of five exchanges in South Korea) having had exposure to Genesis, it’s desperately in need of capital, despite having one of the smallest shares of the market at less than 4.5 percent.

• Binance was reportedly set to acquire a 41.2 percent stake from GOPAX Chief Executive Officer Junhaeng Lee in January. TechCrunch also notes that Binance had acquired a stake in Japanese exchange Sakura Exchange BitCoin around the end of last year.

• This move presents an interesting change in strategy for Binance, as it appears to have taken the approach of entering markets via acquisition of local players as opposed to establishing a foothold in new markets under its own brand. As the regulatory landscape around the world continues to evolve and governments edge ever closer to establishing their own crypto guidelines, this strategy seems to be a savvy way to take advantage of the ecosystem-wide discounts in valuation while expanding their footprint.

Visa Eyes High-Value USDC Settlement Payments on Ethereum

• Cuy Sheffield, head of crypto at Visa, said, “We’ve been testing how to actually accept settlement payments from issuers in USDC starting on Ethereum and paying out in USDC on Ethereum,” according to a Blockworks report. Sheffield went on to talk about the evolution of neo-banks and the fact that Visa was hoping to get in on the action.

• Visa is undoubtedly a mover and a shaker in the payments sector. Given its market share, the impact of the company leveraging its platform and network to further assist in the building of new highways for crypto would be tremendous. Furthermore, with Visa’s established infrastructure, processing payments and exchanging tokens, coins, or fiat could become so seamless that consumers wouldn’t even need to know that their transactions were carried out using blockchain.

Meta’s Reality Labs lost $13.7 billion on VR and AR last year

• It is common knowledge that Meta has had a rough go with its endeavor into the metaverse. According to TechCrunch, Meta has shown “$13.7 billion in operating losses for Reality Labs [its virtual and augmented reality division] for 2022, more than the already jaw-dropping $10.2 billion it sunk into the division in 2021. Reality Labs brought in $2.16 billion last year in revenue, a drop from $2.27 billion in 2021.”

• As we noted previously, Meta has been making headcount cuts across different groups and despite the lack of return and interest in Reality Labs and its projects, Meta (think Zuckerberg) is determined to make it work. Perhaps Meta saw the writing on the wall for web2 and realized that if it was hoping to stay in the race, then it needed to pivot. The problem is that even after a rebrand, Meta is still Facebook.

Latest Podcasts

Decent People Podcast With Seth Goldstein of Bright Moments

On the latest DeCent People podcast, Seth talks about founding Bright Moments, an NFT gallery, in Venice, California at the height of the covid-19 pandemic. A serial entrepreneur and photographer, he quickly understood the power of non-fungible tokens but wanted the unveiling, or minting, of the digital assets to be a communal and in-real-life event. The response has been incredible and has now spanned quite a bit of the globe as Bright Moments has gone from Venice to temporary residences in New York, Berlin, London, Mexico City and soon, Tokyo.

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

Lights Camera Crypto With Shaun Falcone

On the latest episode of Lights Camera Crypto, Stephen Laddin speaks with Shaun Falcone, the co-founder of the Dazed Ducks Metagalactic Club. They discuss how Falcone’s Antigua roots and background in web development aided his rise as an entrepreneur, ultimately aligning with his foray into the world of NFTs and creating a company that gives back to its community.

You can listen and subscribe Apple Podcasts and Spotify.

And last but not least

Ethereum (ETH) Outlook: Will Network Upgrades Be Enough to Boost the Price?

Despite ether (ETH) not having the same yearly gains as Polygon, Matic, and Cardano, ETH has held its gains steady with its price around $1,600. Furthermore, BeInCrypto notes, “On-chain data from Santiment shows that large transactions between $100,000 and $1 million have persistently dropped since the middle of January.” This lack of larger transaction volume likely can be seen as reflective of the pullback in the larger market, but also indicative of uncertainty about ETH’s scheduled upgrades and their economic impact, once they go through.

Interestingly, BeInCrypto also points out, “In/Out of the Money (IOMAP) data from IntoTheBlock shows that ETH is likelier to crack the $1,700 resistance than to lose its $1,400 support. IntoTheBlock estimates IOMAP data by comparing purchase prices of ETH held in wallets to the current prices.

So, despite the lack of larger transactions and with prices seeming to stagnate, it seems that there is still plenty of positive sentiment for ETH as largescale upgrades are set to take place as soon as next month. ETH and the roadmap set out by the Ethereum Foundation are still as aggressive and reliable as ever. — 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.