PYMNTS MonitorEdge May 2024

This Week in Web3: Bitcoin Halving, Stablecoins, Bankman-Fried

The bitcoin halving is imminent, and crypto is on everyone’s mind this week.

That’s because the technical event, which happens every four years and serves to create more scarcity of the nominal cryptocurrency asset — of which only 21 million will ever exist — is typically a period when bitcoin’s price surges to new highs.

Only now, with Goldman Sachs issuing a warning that given the prevailing macro conditions, this cycle’s halving may not have the same impact, investors are left clutching their digital assets and watching the market.

A crypto market that is slumping from previous highs, as bitcoin on Wednesday (April 17) dipped to $59,900 for the first time since early March. The cryptocurrency was trading back slightly up above $61,000 as of late Wednesday afternoon.

The halving, which is embedded in bitcoin’s code and causes the rewards for bitcoin miners to be cut in half, is expected to happen in the next few days — around April 19 or 20.

But the bitcoin halving isn’t the only crypto event to hit the industry this week, and from emerging legislation, partnerships, even new product launches and job openings — these are the top stories that PYMNTS has been tracking around the Web3 landscape.

Compliance and Convictions

Bitcoin isn’t the only thing seeking a halving this week, as last Thursday (April 11) Sam Bankman-Fried appealed his conviction and 25-year prison sentence in the hopes of a lighter one.

While the sentence handed down in Bankman-Fried’s case is less than the 40- to 50-year imprisonment that U.S. prosecutors were seeking, and above the five to six years that his defense team had asked for, the criminally convicted entrepreneur and one-time CEO of the FTX exchange is reportedly gearing up for what could be a yearslong process in pursuing the appeal, during which his lawyers will need to convince a court, and potentially the U.S. Supreme Court, that the judge made errors during his trial, depriving him of his legal rights and making the trial unfair.

And while the jury (quite literally) remains out on whether Bankman-Fried’s latest push for freedom will bear any fruit, the chief compliance officers of BinanceCoinbase and Kraken could serve as an example for their former and incarcerated FTX peer.

That’s because, while speaking last Wednesday (April 10) at the Chainalysis’ Links conference in New York, compliance officers for the three exchanges said that cryptocurrency industry can learn lessons from the settlements their platforms reached with regulators

Each of the three companies reached settlements with U.S. regulators within the past two years, and they continue to invest in compliance controls and staffing, with the hope that the rest of the industry can learn from their experiences.

Regulating Stablecoins

Cryptocurrency is an infamously unregulated sector, but that could be about to change in at least a few national jurisdictions — particularly for stablecoin assets.

The British government is reportedly readying legislation for stablecoins and crypto staking, exchange and custody, which could arrive by June or July, Economic Secretary Bim Afolami said Monday (April 15).

In the U.S., Sen. Kirsten Gillibrand, D-N.Y., and Sen. Cynthia Lummis, R-Wyo., announced Wednesday that they have introduced legislation to govern the use of stablecoins.

The legislation would require stablecoin issuers to maintain one-to-one reserves and ban unbacked, algorithmic stablecoins, as well as outlaw “illicit or unauthorized” use of stablecoins by issuers and users and create state and federal regulatory regimes for stablecoin issuers that uphold “the dual banking system,” the senators said. The legislation marks the third time the two senators have introduced crypto regulation rules since 2022.

In other U.S. regulatory news, proposed rules for marijuana banking and cryptocurrency regulation may be combined into a single bill.

As reported on Sunday (April 14), there have been talks in the U.S. Congress about combining a cannabis bill, the “Secure and Fair Enforcement Regulation (SAFER) Banking Act,” and a stablecoin measure. The SAFER Banking Bill has been awaiting action by the Senate since being passed by the Senate Committee on Banking, Housing and Urban Affairs in September 2023.

Although a majority of Americans live in a state that has legalized marijuana, banks won’t do business with cannabis sellers because the drug is still outlawed by the federal government.

Web3 Marketplace Moves

Elsewhere in the Web3 landscape, Kraken, the second-biggest U.S.-based crypto exchange, has developed its own wallet, catching up to its rival Coinbase in the product arena and joining a saturated field that also includes major players like MetaMask, Ledger and Trezor. The new “Kraken Wallet” is being releasing Wednesday and will be available to both Kraken users and nonusers.

And Web3 move-and-earn lifestyle app STEPN on Monday announced the launch of “STEPN x adidas Genesis Sneakers”a limited-edition NFT collection developed in collaboration with Adidas.

As interest in the crypto market returns, firms like Crypto.com now find themselves in the process of adding 1,400 employees — when just little more than a year ago the platform cut one-fifth of its staff. The turnaround at the digital asset exchange began after bitcoin and other tokens rallied, and Crypto.com is not the only company in the crypto sector that is expanding its workforce. Coinbase GlobalKrakenBinance and Gemini have also done so.