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This Week in Web3: Wells Notices, Crypto Payments and Usability

bitcoin, web3, cryptocurrency

Crypto goes up, and crypto goes down. Then, often, crypto goes back up.

It can be a dizzying and volatile cycle.

Just collapsed cryptocurrency exchange FTX’s customers, who, having once feared they’d lost their collective billions, can now take solace from the news Tuesday (May 7) that FTX’s bankruptcy team is ready to repay them in full, with interest.

That’s because eighteen months after its collapse, the cryptocurrency exchange now says it has pulled together assets worth between $14.5 and $16.3 billion, enough to pay back 98% of its creditors 118% of what they are owed.

Of course, that “repay in full” refers to the valuation of customer assets at the time of FTX’s November 2022 collapse, when crypto was suffering a bear market, not those assets’ current valuations, leaving many to feel cheated. For example, bitcoin holders will be owed $16,871 for each of their former coins — which are now worth more than 400% more, or around $62,000, as of reporting.

But FTX’s turning back the clock isn’t the only crypto news to hit the industry this week. And from U.S. Securities and Exchange Commission (SEC) scrutiny to new exchanges, earnings announcements, and even hints of the elusive real-world utility for crypto assets, these are the top stories around the Web3 landscape that PYMNTS has been tracking for the past week.

Crypto Payments Look to Unlock Scalable, Real-World Usability

“The internet will have a native currency; it’s just a matter of time. Artificial intelligence systems and agents will have to transact, and the most efficient way to do so will be a common protocol for money movement,” Jack Dorsey, Block head, Square head, chairman and cofounder of Block, said Thursday (May 2) during his company’s first quarter 2024 earnings results.

Dorsey emphasized that, in his view, bitcoin would be that common protocol for the internet’s native currency.

And he wasn’t alone in using a company earnings call as a platform for crypto payments evangelism.

Also on Thursday, Brian Armstrong, the co-founder and CEO of the largest U.S.-based crypto exchange, Coinbase, told investors that crypto payments were emerging as a key opportunity area.

“[We’re] driving utility in crypto. We’re doing this through … building a better payments experience on crypto rails … getting us closer to our goal of having the average crypto transaction take less than one second and cost less than $0.01 anywhere in the world,” Armstrong said on the call.

“It still boggles my mind that every time you swipe your credit card, the merchant is losing 2%,” Armstrong added. “It’s really just moving bits of data, kind of like sending a WhatsApp message, which is free. And so … why does that still exist as a 2% tax on every transaction in the economy?”

Coinbase stores over 12% of total crypto market cap on its platform, and the exchange is working to introduce a smart wallet for crypto this summer.

Elsewhere, the Swiss National Bank is conducting a pilot project that has used wholesale central bank digital currency (CBDC) and successfully settled four tokenized bond issuances and one secondary market transaction.

And with the news Friday (May 3) that telecommunications giant Vodafone is planning to integrate cryptocurrency wallets and blockchain-based payment solutions directly into mobile phone SIM cards, innovative Web3 solutions that can streamline the ease of use for crypto payments are increasingly top of mind for both merchants and consumers.

The timeline across which they’ll make it over to real world usability, however, could be a different matter.

Crypto’s Ongoing Regulatory Troubles

Crypto’s calling card — at least during its early years — was that it was the “Wild West.” But as the industry matures, regulators are taking some of the sector’s cowboys to court.

As PYMNTS reported, on Monday (May 6) Robinhood’s cryptocurrency business could become the latest target of regulatory action, with the trading platform receiving a Wells Notice from the SEC indicating they will recommend that the commission take enforcement action against the company.

“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business,” Dan Gallagher, the company’s chief legal, compliance and corporate affairs officer, said in a blog post.

At the same time, news broke on Tuesday that Nigeria is reportedly stepping up its cryptocurrency crackdown with a proposed ban on peer-to-peer (P2P) trading. The move is the latest effort by the West African country to place tighter controls on the crypto sector, which it blames for the decline of its national currency.

It isn’t just regulatory struggles — crypto firms are subject to run-of-the-mill operational struggles, too. As reported here, Bakkt is cutting staff after warning earlier this year about the future of the company. The cryptocurrency platform said in an April 29 securities filing that it is laying off 13% of its non-call center staff.

Web3 Marketplace Moves

Regulatory struggles aside, the crypto space continues to push forward.

On Tuesday, British FinTech Revolut unveiled a stand-alone cryptocurrency exchange for professional crypto traders. Called Revolut X, the platform designed to compete with other top exchanges by offering easy on and off ramping, and low fees.

And PYMNTS covered Sunday (May 5) how cryptocurrency startups are reportedly engaging in aggressive fundraising as the digital asset space recovers, as well as how Crypto.com wants to increase its sports sponsorships to reach a wider audience.