▌PayPal Obtains New York State Trust Charter for Cryptocurrency Custody
The New York State Department of Financial Services (NYDFS) has recently granted PayPal Digital a limited-purpose trust charter, typically held by digital asset custodians and stablecoin issuers. In August of last year, PayPal launched its first stablecoin, PYUSD, issued technically by Paxos Trust Company, which also holds an NYDFS trust charter and has been a partner of PayPal since the launch of its cryptocurrency services. This charter acquisition may be aimed at taking over the custody of PayPal customers’ cryptocurrency assets and internalizing stablecoin issuance. Currently, the market value of PYUSD is close to $400 million, a significant increase from $190 million in early April. The top five wallets account for 71% of stablecoin balances, with major holders including Paxos, Crypto.com, Curve (DeFi), Defiance Capital, and Frax (DeFi). Among them, Crypto.com and Bullish Exchange hold $103 million and $23 million, respectively.
In November of last year, the U.S. Securities and Exchange Commission (SEC) issued a subpoena requesting documents related to the issuance of the PYUSD stablecoin. PayPal did not respond specifically to the purpose of this trust charter before its release.
▌Former FTX Executive Ryan Salame Sentenced to 7.5 Years in Prison
Ryan Salame, former CEO of FTX’s Bahamas subsidiary, has been sentenced to seven and a half years in prison. He is the first person close to SBF, an ally of FTX, to be sentenced after the collapse of FTX. Salame appeared in a Manhattan court on Tuesday, following his guilty plea agreement with federal prosecutors in September last year.
The sentence exceeds the prosecution’s request. The government stated that Salame admitted to violating campaign finance laws and operating an unlicensed money transmitting business, which should result in a sentence of five to seven years in prison, while the defense argued for a sentence of 18 months or less. This ruling may indicate the strong stance of Judge Lewis A. Kaplan on FTX executives.
Market Update
As of the time of writing, according to Coingecko data:
BTC recent trading price is $68,329.04, with a daily change of -1.5%;
ETH recent trading price is $3,840.49, with a daily change of -1.4%;
BNB recent trading price is $601.02, with a daily change of -0.5%;
SOL recent trading price is $168.69, with a daily change of -0.8%;
DOGE recent trading price is $0.165, with a daily change of -2.4%;
XPR recent trading price is $0.5281, with a daily change of -1.1%.
Policy
▌Samourai Wallet Developer’s First Trial: U.S. Department of Justice Prepared to Present Extensive Evidence
On May 28th, the U.S. Department of Justice (DoJ) held the first hearing against Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill in the Southern District of New York. Rodriguez and Hill are charged with money laundering and operating an unlicensed money transmitting business. While Hill is still in Portugal and has not responded to extradition requests, Rodriguez and his lawyer Michael Krouse attended the hearing.
The prosecution stated that they are prepared to present extensive evidence and are awaiting Rodriguez to hand over the 2TB hard drive he possesses. Rodriguez’s lawyer plans to cite letters from Senators Cynthia Lummis and Ron Wyden to the Attorney General, requesting the dismissal of charges against their client, stating that non-custodial cryptocurrency software should not be considered a money transmission service.
The judge announced that Rodriguez will remain under house arrest, and the next hearing is scheduled for September 4, 2024. Fundraising for the legal defense fund for Samourai developers is currently ongoing.
▌Salvadoran President Meets with Cathie Wood to Discuss Bitcoin
Salvadoran President met with Cathie Wood to discuss Bitcoin, new capital markets, and innovative opportunities.
▌Judge Dismisses Debt Box Case, Orders SEC to Pay $1.8 Million in Attorney and Litigation Fees
A U.S. federal judge has ordered the U.S. Securities and Exchange Commission (SEC) to pay approximately $1.8 million in attorney and receivership fees related to the civil case against Digital Licensing, the company operating under the name Debt Box. On May 28th, the U.S. District Court for the District of Utah filed a document, and Judge Robert Shelby signed an order requiring the SEC to pay approximately $1 million in attorney and litigation fees and $750,000 in receiver and litigation fees. The order was issued on the same day the court announced the dismissal of the case.
Blockchain Applications
▌SmartLayer Announces Integration with Multi-Chain Self-Custody Wallet TokenPocket
SmartLayer has integrated with multi-chain self-custody wallet TokenPocket. Users can view and interact with ERC-5169 NFTs through the Smart Token Viewer on the TokenPocket wallet.
Cryptocurrency
▌XRP Ledger Q1 Update: Payment Volume Increases by 350% to 2 Million Transactions per Day
Messari has released the Q1 2024 XRP Ledger update, highlighting a 350% increase in payment volume to 2 million transactions per day. This activity started at the end of the fourth quarter and cooled off by the end of the first quarter. AMMs went live in this quarter, and DEX trading volume on CLOB increased by 41%.
Other key highlights include the announcement of stablecoins pegged to the U.S. dollar on both XRPL and Ethereum, utilizing XRPL native functionality and the ERC-20 token standard, respectively. New features like recall functionality contribute to compliance for asset issuers. The integration of Axelar bridging and new stablecoins can serve as liquidity catalysts for new AMMs and tokenized assets like the upcoming Zioniqx RWA project. rippled 2.0 was released in January, proposing cross-chain bridging (XLS-38), DIDs (XLS-40), and two other amendments for community voting.
▌Luxor Technology and Bitnomial Launch Regulated Bitcoin Mining Derivatives in the U.S.
Luxor Technology and Bitnomial launched the first fully regulated Bitcoin mining derivatives, Bitcoin Hashrate Futures, in the United States on May 28th. This product allows miners to hedge their income and provides investors with a new way to enter the Bitcoin mining market. Each contract represents 1 PH and has a one-month term, settling using Luxor’s Bitcoin hashrate price index.
Matt Williams, Head of Derivatives at Luxor, stated that these contracts will bring more transparent, secure, and liquid hashrate trading. Luke Hoersten, Founder and CEO of Bitnomial, added that hashrate futures meet the mining community’s demand for new hedging tools and enhance Bitnomial’s Bitcoin derivatives portfolio.
▌Two BlackRock Funds Purchased IBIT Stocks in Q1 2024
According to filings with the U.S. Securities and Exchange Commission (SEC), two funds managed by BlackRock purchased shares of the iShares Bitcoin ETF (IBIT) in the first quarter of this year. BlackRock’s Strategic Income Opportunities Fund (BSIIX) acquired iShares Bitcoin Trust (IBIT) worth $3.56 million, while its Strategic Global Bond Fund (MAWIX) purchased iShares Bitcoin Trust (IBIT) worth $485,000.
IBIT stocks make up only a small portion of BSIIX and MAWIX portfolios, which have values of $37.4 billion and $776.4 million, respectively.
▌Bitcoin Faces $6.5 Billion Options Expiry on May 31st
Bitcoin will face a $6.5 billion options expiry on May 31st, with bulls attempting to push the price above $70,000, but facing challenges. Despite investors betting on Bitcoin rising to $80,000 and $90,000, it has recently failed to break the $70,000 resistance. Currently, 91% of call options are set at $72,000 or higher. Comprehensive data shows that if Bitcoin trades above $70,000 on May 31st, bulls will profit $270 million. However, if the price stays around $67,800, the market will be relatively balanced. Deribit holds a 71% share of the Bitcoin options market in May, followed by CME and OKX.
▌Chainlink Co-founder: Cryptocurrency Has Become “More Legitimized” Since the Approval of Spot Bitcoin ETF
Sergey Nazarov, co-founder of Chainlink Labs, discussed the collaboration between DTCC, Chainlink, and ten financial institutions in an interview with CNBC Crypto World. This collaboration aims to bring net asset value (NAV) data onto the blockchain. He also discussed the tokenization of real-world assets and financial and political progress in the crypto space. Nazarov also stated that cryptocurrency has become “more legitimized” since the approval of spot Bitcoin ETFs.
▌Daily Active Addresses for Meme Coins Surge, PEPE Sees 230% Increase
In the past month, the number of blockchain addresses trading with Pepecoin (PEPE) has surged, increasing by over 100% in the past 30 days. According to data from IntoTheBlock, daily active addresses holding PEPE have increased by 230%. This growth rate surpasses other meme coins, such as Floki, which has seen a 179% increase in daily active addresses during the same period. Meanwhile, daily active addresses for Dogecoin have increased by 10%.
▌Volatility Shares: Leveraged Ethereum ETF to Begin Trading on June 4th
Volatility Shares has announced that the first leveraged Ethereum ETF, Volatility Shares 2x Ether Strategy ETF (ETHU), will begin trading in the United States on June 4th. This marks the first leveraged Ethereum ETF in the U.S. market approximately a year after the approval of leveraged Bitcoin ETFs by regulatory authorities.
Stuart Barton, Chief Investment Officer of Volatility Shares, stated that this success could pave the way for the eventual approval of spot Ethereum ETFs. Last week, the SEC approved key regulatory filings related to spot Ethereum funds but has not yet approved their formal launch. Barton noted that while the details of spot ETFs are still being discussed with the SEC, the launch of a leveraged Ethereum ETF indicates an increased interest from the SEC in further launching cryptocurrency-related ETFs.
Important Economic Developments
▌U.S. Stock Indices Close with Mixed Results, Nvidia Closes Gap with Apple to $100 Billion
U.S. stock indices closed with mixed results, with the Dow down 0.55%, the Nasdaq up 0.59%, and the S&P 500 up 0.02%. Most popular tech stocks saw gains, with Nvidia rising over 7% and reaching a total market value of $2.8 trillion, only $100 billion behind Apple. AMD rose over 3%, while Tesla fell over 1%. Google, Amazon, and Meta saw gains of less than 1%.
▌99.2% Probability of the Fed Maintaining Interest Rates in June
According to CME’s “FedWatch,” there is a 99.2% probability that the Federal Reserve will maintain interest rates in June, with a 0.8% probability of a 25 basis point rate hike. The probability of the Fed maintaining interest rates until August is 90.0%, with a 9.2% probability of a cumulative 25 basis point rate cut and a 0.7% probability of a cumulative 25 basis point rate hike.
