Stripe will reintroduce crypto payments later this year, initially only for Circle's USDC stablecoin, on the Solana, Ethereum and Polygon blockchains.

The fintech giant stopped supporting bitcoin in 2018 during the first crypto winter.

Six years after dropping support for bitcoin {{BTC}} and, thus, crypto payments altogether, Stripe is bringing back the service later this summer, though initially only for Circle’s USDC stablecoin.

“We’re excited to announce that we’re bringing back crypto as a way to accept payments, but this time with a much better experience,” Stripe co-founder and President John Collison said Thursday in a keynote address at the company’s Global Internet Economy conference.

The payments processor has a long history in crypto, first tapping the bitcoin ecosystem in 2014. Four years later, in 2018, it discontinued all of those efforts, arguing that bitcoin was too volatile and would function as an asset rather than a medium of exchange. It had also criticized its lengthy transaction times and growing fees at the time.

That year saw bitcoin’s first “crypto winter” with the token dropping from a high of $19,650 in December 2017 to $3,401 at the end of 2018.

The fintech giant took a step toward re-entering the market the following year by becoming a co-founder of Facebook’s Libra project, but it stepped away later that year and Libra never got off the ground. In 2022, Stripe introduced a project to facilitate fiat-to-crypto payments.

“Crypto is finding real utility,” Collison said in his keynote Thursday. “With transaction speeds increasing and costs coming down, we’re seeing crypto finally making sense as a means of exchange.”

Payments will be available on the Solana {{SOL}}, Ethereum {{ETH}} and Polygon {{MATIC}} blockchains, Stripe said.

The company is currently valued at $65 billion, according to Bloomberg, and is one of the biggest payments providers in the world with over $1 trillion in transactions in 2023.

Ethereum developer Consensys has filed a lawsuit against the U.S. Securities and Exchange Commission, striking back against what the company calls an “unlawful seizure of authority” over Ethereum by the federal regulator.

The company wants a federal court to declare that ETH {{ETH}} is not a security, any investigation of ConsenSys based on the idea that ETH is a security "would violate" the company's fifth amendment rights and the Administrative Procedures Act, that MetaMask is not a broker under federal law, that MetaMask's staking service does not violate securities law and an injunction against the SEC investigating or bringing an enforcement action tied to MetaMask's Swaps or Staking functions.

In the complaint filed Thursday against the SEC and all five of its commissioners, Consensys revealed it received a Wells notice from the SEC on April 10, indicating its intention to bring an enforcement action against the company for violating securities laws via its MetaMask wallet product. Consensys denies that it acts as a broker, stating that the wallet is “simply and interface” and “neither holds customers’ digital assets nor carries out any transaction functions.”

The complaint adds that the SEC’s encroaching authority over Ethereum goes against its own past statements that the cryptocurrency is a commodity, not a security (citing former director Bill Hinman's 2018 speech), as well as the SEC’s sister regulatory agency, the Commodities Futures Trading Commission (CFTC), own authority over Ethereum, which oversees derivative products tied to ether.

In its suit, Consensys claims that it “built its business against the backdrop of this regulatory consensus”, and the SEC’s new grab for power – which it calls an “about-face” – over Ethereum would therefore “violate the Constitutional requirement of fair notice under the Due Process Clause.”

"The SEC’s unlawful seizure of authority over ETH would spell disaster for the Ethereum network, and for Consensys," the suit claims.

The suit also leans on the "major questions doctrine," a Supreme Court ruling barring federal regulators from dramatically exceeding the scope of their Congressional mandates. Two judges have already rejected the idea that crypto falls under the doctrine during arguments brought by Terraform Labs and Coinbase.

ConsenSys filed the suit in the District Court for the Northern District of Texas, joining groups like the Blockchain Association and companies like Legit Exchange, which filed similar preemptive suits seeking to block the SEC from treating certain crypto companies or assets as securities.

In recent months, the SEC has also brought suits against crypto exchanges like Binance.US, Binance and Kraken. Uniswap Labs revealed earlier this month it had also received a Wells Notice from the regulator.

Asset manager Franklin Templeton said Thursday that it has enabled peer-to-peer token transfers for its $380 million tokenized money market fund, a key step to make the offering more interconnected to the broader digital asset economy similar to rivals.

The move allows investors of the Franklin OnChain U.S. Government Money Fund (FOBXX) to transfer the fund's BENJI token between each other without any intermediary. The BENJI token, available on the Stellar {{XLM}} and Polygon {{MATIC}} blockchains, represents shares in the fund that holds government securities, cash and repurchase agreements and pays out a steady yield to token holders.

"Allowing fund shares to be transferred peer-to-peer puts Franklin Templeton on the cutting edge of the financial sector where tokenized real-world assets are an industry staple and more open, transparent, and accessible," Jason Chlipala, chief business officer of Stellar Development Foundation, said in an email.

The development is important because transferability allows to expand the token's utility in the future such as trading on secondary markets or using it as collateral for loans in the decentralized finance (DeFi) platforms.

"Eventually, we hope for assets built on blockchain rails [...] to work seamlessly with the rest of the digital asset ecosystem," Roger Bayston, head of digital assets at Franklin Templeton, said in a press release.

Tokenized U.S. Treasuries are at the forefront of the race to bring traditional financial assets such as bonds to blockchain rails – also known as tokenization of real-world assets. The market for tokenized Treasuries have mushroomed to $1.2 billion, growing tenfold since early 2023, as digital asset investors have been seeking safe yields for their blockchain-based cash holdings.

BENJI, launched in 2021, is the largest and oldest of them with a $380 million market capitalization, rwa.xyz data shows. Newcomers like Ondo Finance's tokens and BlackRock's new BUIDL fund with Securitize, which have already allowed peer-to-peer token transfers, carved out a significant market share and are closing in on Franklin Templeton's offering.

Tech journalist and author Kara Swisher downplayed crypto's transformative potential, comparing it to a minor eruption versus the internet's major explosion.

Swisher criticized crypto's hype and "scammery," predicting digital assets will settle as a niche within the broader tech landscape.

AI is now the focus, attracting major tech interest and investment, though it faces its own inflated hype cycle.

In an interview with CoinDesk's First Mover, technology journalist Kara Swisher, author of the New York Times bestseller "Burn Book," said that she is skeptical that cryptocurrencies have transformative potential, calling digital assets important but not world-changing.

"The internet was a major Cambrian explosion. This is a tiny one. I guess a volcanic eruption on Indonesia," she said on First Mover. "It's a very important area of technology, but it's not the most important. It's not the center of everything."

Swisher argued that the cryptocurrency sector has been caught up in a "huge hype cycle" with a considerable amount of "scammery" involved.

"Crypto people really overplayed their hand in that regard, saying it's going to change everything," she said. "This is a typical thing of technologists … [saying] that it's going to change the whole world."

Swisher believes crypto will ultimately settle into being just another niche within the broader tech landscape, comparing it to many other technological innovations that have come and gone without reshaping the world.

"It needs to replace something that's better. Digital downloads of books, for instance, aren't necessarily better than physical books, but they are very good," she said. "[Crypto] overstepped itself, but it will settle into a nice, small corner."

What follows crypto?

So if crypto is fizzing out, and is yet to fulfill the grand visions of its most ardent supporters, where is the the hype going?

Artificial intelligence, says Swisher.

AI isn't profitable yet because "these ventures are very costly, requiring substantial investment in computing power and development," she said.

"Unlike the early internet era, where anyone could launch ventures like Uber or Airbnb inexpensively, AI requires significant capital," she continued, citing OpenAI's Sam Altman wanting to raise enormous sums for projects like chip manufacturing.

"Only the big companies can afford to lose this money and afford to pay for this," she said.

But AI has captured the interest of the public and major tech companies in a way that's taken some of the momentum away from blockchain and crypto, albeit not without its own hype and exaggerated claims similar to those seen in the crypto space.

"AI is a big deal in comparison," she said. "It's just that everyone has to slap AI onto their company name, and then they're an AI company."

Mining pool ViaBTC won the race to mine the first satoshi after last week's halving, which it has now sold at auction for $2.13 million.

The Ordinals protocol allowed individual satoshis to be identified and traded, attaching value to particularly notable sats for the first time.

ViaBTC, the mining pool that mined the first block after the Bitcoin halving on April 20, sold the "epic" satoshi it contained for 33.3 BTC ($2.13 million).

An auction for the satoshi, or "sat," which has a face value of around $0.0006, ended at 16:00 UTC on crypto exchange CoinEx following a flurry of competing bids during the final few hours.

There was an expectation the first sat produced by the Bitcoin network after its fourth halving event on April 20 would attract considerable interest with some commentators estimating that it could fetch millions of dollars.

In the three previous halvings, there was little up for grabs other than bragging rights for mining the first block. However, the advent of the Ordinals protocol meant sats – the smallest denomination of bitcoin, equal to 0.00000001 BTC – could be identified and traded as if they were unique tokens, similar to non-fungible tokens (NFTs) on other networks.

Casey Rodarmor, the creator of Ordinals, formed a system for categorizing the rarity of sats. These could be "uncommon," the first sat of each block; "rare," the first one after Bitcoin's fortnightly difficulty adjustment; or "epic," the first after a quadrennial halving.

Read More: Bitcoin Transaction Fees Come Crashing Down Post Halving

With so much to learn about in the crypto space and so little time, how do you create investment strategies for your clients? Eric Ervin, CEO of Onramp Invest, provides an overview of crypto investment models that advisors can consider as clients’ interest in crypto investments grows.

Leo Mindyuk, CEO of ML Tech, covers active vs passive bitcoin and crypto investment strategies in Ask an Expert.

–S.M.

You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday.

The Tip of the Iceberg: Building a Crypto Strategy Without Burning Out

My team and I have been talking a lot about the tangible shift in the crypto market. In contrast, a year ago, it felt like everyone was speaking directly to investors, pushing them towards numerous exchange applications and autonomous investing. Now, we’re seeing a focused attempt to empower professionals in the space. Whether it’s tokenized securities, crypto-forward financial products from the world’s largest asset managers, or platforms that help financial advisors access this new market directly, there’s no question that the professionalization of crypto is here.

This is great news for advisors. Not only does it mean broader access to an array of digital assets for clients, but it also means advisors can now build out a new offering in their business, serving clients by giving them what they’re looking for and capturing more assets under management (AUM) along the way. Firms that are equipped with access solutions are set up to thrive. As we’ve clearly seen with the bitcoin ETFs, investor demand for exposure to crypto is palpable, and it’s starting to open the door to the broader world of digital assets for advisors. However, there are a lot of digital assets out there to learn about, and cryptocurrencies are still only estimated at a recommended 1-6% allocation in a portfolio. When you’re managing a book of business that’s 95% traditional market funds, how are you supposed to learn about every coin or every top-mover in a market that moves 24/7?

In the traditional market, there are expert asset managers to do this for you. So why not leverage the same tools for crypto?

Applying the tools you know to the market you don’t know (yet)

Just like in the traditional market, while SMAs are not meant to replace due diligence in practice; they allow advisors to leverage meticulously researched strategies built to cover the best parts of the digital asset market. Let’s break down how RIAs can apply this old tool to the new asset class:

5 ways crypto strategies from asset managers can be useful for advisors

Diversification: Crypto models allow advisors to offer their clients exposure to a diversified portfolio of cryptocurrencies. This diversification can help reduce overall risk by spreading investments across multiple assets with different risk profiles.

Customization: Advisors can tailor crypto models to meet the specific investment goals and risk tolerance of individual clients. They can adjust the portfolio composition based on factors such as market conditions, client preferences, and investment strategies.

Transparency: Many crypto asset managers provide real-time transparency into portfolio holdings and performance. This transparency helps build trust with clients by allowing them to track their investments and understand how their money is being managed.

Professional Management: Advisors can leverage the knowledge and insights of top asset managers to make informed investment decisions on behalf of their clients.

Time savings: Because asset managers provide up-to-the-minute market insights, automatic rebalancing, and thoughtful allocations without the need for hours of research on the advisor's part, they can save a considerable amount of time and let advisors focus on the larger portions of client portfolios.

Making the most of this asset class for clients

I know the saying “your money isn’t working hard enough for you” is cliche at this point, but the truth is that digital asset investing is no exception to the rules of portfolio diversification. Having all of your assets in bitcoin could be considered the same as having all of your funds in one stock. The digital asset market has seasons, meaning sometimes lesser-known cryptocurrencies or altcoins have higher performance than bitcoin or ether. When investors don’t consider a holistic crypto investment strategy, they are neglecting the potential to harness the market in a meaningful way. As a professional, you can now help them make the most of these opportunities by offering access to the larger ecosystem.

Meet demand and build expertise

It’s understandable to feel daunted by the amount of education needed to understand cryptocurrencies truly. Each one has a different purpose and a different value. Through asset manager strategies, you can tackle the market head-on and gain knowledge along the way while still meeting demand and keeping your firm relevant. This market is constantly growing, and leaders in the space, including all of us at Onramp Invest, a Securitize company, are committed to keeping you ahead of the curve.

- Eric Ervin, CEO, Onramp Invest

Ask an Expert

Q. What are the key differences between active and passive crypto investment strategies, and how do they impact risk and potential returns in the volatile cryptocurrency market?

Similar to the traditional markets, active and passive investment strategies in the cryptocurrency market offer contrasting approaches to building and managing a portfolio.

Passive crypto investment strategies involve selecting a portfolio of cryptocurrencies and holding them over a long period, regardless of short-term market fluctuations. Passive strategies can be implemented through buying an ETF or holding a diversified portfolio of cryptocurrencies, whether through the fund or an SMA structure. This approach typically requires minimal ongoing management, low transaction costs and simpler tax implications due to infrequent trading. In a successful passive strategy, the returns are generally close to the respective benchmark. For example, for a bitcoin ETF, the returns should be very close to the buy-and-hold strategy. In crypto markets, there are a lot of short-term price fluctuations, so passive strategies are typically associated with higher volatility and higher drawdowns.

Actively managed crypto strategies aim to generate attractive absolute returns or outperform the market by capitalizing on market inefficiencies and utilizing risk-management practices. Typically, an active approach is associated with constant monitoring and active risk management, higher transaction fees and higher performance and management fees paid to a professional asset manager. However, if implemented successfully, an active approach typically mitigates the volatility and drawdowns of the asset class and achieves higher risk-adjusted returns. There are various types of actively managed strategies which suit different investment objectives and risk-return targets.

In the volatile world of cryptocurrencies, the choice between an active and passive approach can significantly impact the results the investor can achieve.

Q. What types of active investment strategies are out there?

There are numerous actively managed strategies with different risk-return profiles for investors. Some actively managed strategies, such as funding rate arbitrage, basis arbitrage, statistical arbitrage, long-short, and short-term directional strategies, aim to achieve absolute returns. Typically, those are sophisticated strategies, involving various quantitative methods, complex and optimized execution as well as advanced risk-management techniques. These strategies are often not highly correlated with cryptocurrency prices and are able to achieve absolute returns with higher Sharpe ratios and lower drawdowns by monetizing the inefficiencies of the nascent asset class.

Another good example of actively managed strategies is strategies that aim to outperform the benchmark, e.g., bitcoin buy-and-hold strategy or market-cap weighted buy-and-hold strategy. Those strategies typically involve some sort of returns prediction, market-timing, and risk-management framework. If successful, an actively managed approach helps to achieve better risk-adjusted returns compared to the respective passive strategy. For example, a properly executed smart risk-managed exposure to bitcoin helps investors achieve higher returns with lower volatility than holding bitcoin ETFs.

Investors can typically get exposure to a variety of actively managed strategies through fund structures or separately managed accounts on spot or futures markets. Over time, I expect actively managed ETFs will be available for investors.

- Leo Mindyuk, CEO, ML Tech

Keep Reading

Bitcoin’s fourth halving occurred Friday, April 20th, 2024, without a hiccup.

BlackRock’s spot bitcoin ETF continues to break records as it reached 70 days of inflows.

Paypal proposed an incentive program to incentivize low-carbon Bitcoin mining.

The U.S. government has put to rest any doubts that any involvement in or profiting from privacy tools beyond authoring code for crypto mixers is off limits.

Call it an assault on privacy or attack on free speech, but the reality on the ground is that any money that flows into an application designed to mix funds to shield user addresses is being treated as laundered funds, no matter the purpose or destination.

Bitcoin Fog. Tornado Cash. Now Samourai Wallet.

Samourai Wallet was (its servers have been seized) a bitcoin wallet that promised to "keep your transactions private and your identity masked” through a privacy-preserving service called "Whirlpool."

Authorities say the wallet processed over $2 billion in unlawful transactions, including at least $100 million via illegal dark web marketplaces like the Silk Road and Hydra Market. Similar arguments were made about Tornado Cash, when it was sanctioned by the U.S. Treasury, which essentially counted every dollar that flowed through it as criminal in nature.

“Together with our law enforcement partners, we will continue to relentlessly pursue and dismantle criminal organizations that use cryptocurrency to hide illicit conduct," U.S. Attorney Damian Williams said in a statement on Wednesday.

See also: Crypto OG Zooko on State of Digital and Financial Privacy

Op-sec

There is much to say about Samourai Wallet’s co-founders Keonne Rodriguez, 35, and William Lonergan Hill’s, 65, op-sec (i.e. “operational security), or apparent lack thereof. Rodriguez was arrested in Pennsylvania and will be arraigned this week, while the U.S. is still working to extradite Hill from Portugal.

“I don’t know how they thought they wouldn’t get arrested and prosecuted for this. It sounds like the DOJ has direct evidence of them saying they knew they were helping people conceal illegal transactions and charging for the service,” University of Kentucky law professor Brian Frye told CoinDesk in an interview.

The DOJ alleges that Rodriguez and Hill actively solicited criminal customers in their marketing and social media posts. Hill, for instance, reportedly said "At Samourai we are entirely focused on the censorship resistance and black/grey circular economy. This implies no foreseeable mass adoption,” in an intercepted internal message.

“Ultimately if you’re knowingly facilitating illicit finance and profiting from it, which is alleged in the complaint, the outlook is bleak,” venture capitalist Nic Carter said in a direct message. “Nevertheless it’s disturbing the extent to which the Biden Admin[istration] is attempting to criminalize privacy.”

The Biden Administration has seemingly ramped up efforts to knock down mixing services. That includes arresting Russian-Swedish national, and Bitcoin Fog operator, Roman Sterlingov in April 2021 and participating in the arrest of the co-founders of Tornado Cash in 2023. However, crypto mixers have long been in the sights of criminal prosecutors. In Sterlingov’s case, investigators worked to establish evidence over a period of years.

See also: How a Bitcoin Mixer Laundering Conviction Might Be Appealed

As far back as May 2019, the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has been concerned about cryptocurrency “tumblers,” finding that that “persons who accept and transmit value in a way ostensibly designed to protect the privacy of the transmittor [sic] are providers of secure money transmission services and are not eligible for the integral exemption.”

In other words, mixers are money transmitters, even though a person is generally only transmitting funds between two addresses they control to anonymize their funds. And if you’re deemed a money transmitter, FinCEN noted, you’re expected to comply with the Bank Secrecy Act.

“My opinion is that the crypto industry should treat regulation as 'de force majeure' and adjust to it,” Tal Be’ery, co-founder and chief technology officer of the ZenGo wallet, said. [Force majeure is a common legal clause absolving parties from liability.] “The U.S. government made it very clear that operating a mixer is unacceptable with the prosecution of Tornado Cash operators and therefore going after other mixers could be very much expected.”

Privacy dragnet?

Others are concerned that it isn’t just mixing services being targeted, but all privacy-preserving blockchain tech.

“From the cases against Tornado Cash to the IRS 'broker rule' to the arrest of Samourai Wallet's founders, it's clear that the U.S. government is moving aggressively against privacy tools in crypto,” Galaxy Digital head of research Alex Thorn told CoinDesk.

See also: Privacy Isn't Just an Edge Case for Crypto

It’s worth noting that, while Rodriguez and Hill remained active in overseeing the protocol since it launched over a decade ago, the Samourai wallet was non-custodial and open-source. The code was "self-hosted” on the company’s open source GitLab repository, although the provided link no longer appears to be working. The Samourai apps have also been removed from the Google and Apple app stores, though theoretically the software can be built, run and hosted by anyone.

Some experts contacted by CoinDesk, including Frye, believe that crypto mixers could theoretically be legal to code, but likely not to market or maintain. Releasing software is generally protected by the First Amendment in the United States, because code is a language and language is speech.

“While crypto mixers might in theory be legal, if used only for protecting the privacy of legal transactions, using them to conceal illegal transactions is definitely illegal,” Frye said.

“It's clear that if developers maintain any involvement in privacy tools beyond authoring code – whether that be operating front-ends, facilitating any kind of money movement or taking fees – they will be targeted. For on-chain privacy to succeed in the future, tools must be completely decentralized,” Thorn echoed.

Others, like TradeLayer founder Patrick Dugan, noted that it also matters whether authors of crypto mixer code profit from their inventions. Samourai allegedly earned at least $4.5 million in fees from its wallet and mixer services, according to the indictment.

“The case will ultimately come down to any revenue mechanism the developers may have used that might constitute an operating enterprise in the eyes of prosecutors, making them culpable for money laundering done by proxy,” Dugan said, mentioning that, unlike Tornado Cash, Samourai did not have a token.

Fighting for privacy

Despite the realpolitik of the situation, many in the crypto community see the targeting of crypto mixers as an infringement of the basic human right to privacy.

“The government's seizure of Samurai and the arrest of the folks running it is troubling. It feels more like what an authoritarian regime would do rather than a free country. I think people have a fundamental right to privacy in their financial transactions, whether digital or physical,” crypto sleuth Ogle told CoinDesk in an interview.

“I'm a big fan of privacy services so I have no moral concerns about what was happening,” said one Bitcoin Lightning developer, who asked to remain anonymous in order to discuss the situation more candidly. “But it seems a bit silly on their part. If I understand the situation correctly these are two American citizens who didn't even do that great a job of covering their tracks. So an arrest is pretty unsurprising.”

Others noted that despite the increased heat on privacy services, there will always be demand for these protocols – from legitimate and criminal users.

See also: Privacy-Preserving Payments Shouldn't Be 'Niche', Monero Dev Says

“Given how easy it is to spin up or use another mixer, this doesn't solve the problem of illicit funds being washed," Ogle said. "It just pushes it to another service.” Dugan noted that there are also privacy coins already in circulation for "for those seeking pure Exit via cryptocurrency privacy," though "it ain't easy." He added, "use monero, it's been delisted almost everywhere, so you know it's legit."

Zooko WIlcox, founder of privacy coin Zcash, told CoinDesk: “It’s legal to create privacy technology in the USA, and we’re going to keep doing it, because privacy and freedom are core parts of American civilization.”

Additional reporting contributed by Cheyenne Ligon and Nikhilesh De.

Movement Labs, a blockchain company that aims to bring Facebook's Move Virtual Machine to Ethereum, has secured $38 million in a Series A financing round led by Polychain Capital.

The firm was founded by Rushi Manche, 21, and Cooper Scanlon, 24 – Vanderbilt college dropouts who say they are on a mission to "make blockchain security sexy" with the launch of Movement L2, their new layer-2 Ethereum blockchain based on the Move programming paradigm.

Manche said he got interested in Move after reading an article a few years ago, when he was still in college, about Facebook's efforts in the blockchain space.

"Security has never been a priority for the industry," Manche said in an interview. "It's always, like, '$100 million hack,' '$20 million attack' – we're so succumbed and numb to the attack issue when in reality, that's a huge issue for retail."

Move is today best known for its association with Aptos and Sui, layer-1 blockchains with a focus on low fees and high throughput. By extending the tech to an Ethereum layer-2 – a blockchain that writes data to Ethereum but offers faster and cheaper transactions – the Movement team hopes to achieve greater security and transaction speeds than layer-2 incumbents.

Movement's funding round saw participation from venture capital firms including Hack VC, Placeholder, Archetype, Maven 11, Robot Ventures, Figment Capital, Nomad Capital, Bankless Ventures, OKX Ventures, dao5, and Aptos Labs – the company behind Aptos.

"Between 2022 and 2023, hackers exploited smart contracts for over $5.4 billion, affecting major protocols like Curve and KyberSwap through common reentrancy attacks," Movement explained in a statement. "Movement’s EVM allows Move and Solidity developers to deploy code that is fully verified at runtime, preventing attack vectors like reentrancy from executing."

"With embedded firmware application runtime, we can stop 90% of attack vectors or more," Manche told CoinDesk. Move also uses parallelization – a method for processing multiple streams of activity at once that's used by Solana and Move-based chains to achieve greater transaction throughput. "This combination of speed and security makes for a really powerful VM," said Manche.

Move is the stand-out product of Meta's ill-fated foray into blockchain technology. Then still called Facebook, the company made a big splash in 2019 with the announcement that it was launching a cryptocurrency called "Libra" (later renamed "Diem"). Diem's blockchain was supposed to use Move, a new open-source programming language based on Rust that Meta designed to make the entire process of coding up a blockchain more secure and efficient.

"In August 2022, I was in college with my co-founder at Vanderbilt and I read this article, 'Facebook is building a new programming language,'" recalled Manche. "I would use Cosmos and the [Ethereum Virtual Machine], but there weren't a lot of users – wasn't a lot of volume."

"To me, it was like, okay, Facebook, the biggest consumer app, they're all trying to get on-chain. They're doing this new initiative, new language, new VM. So I started digging," said Manche.

Though Meta's virtual currency plans were ultimately scrapped under regulatory pressure, some of the company's employees jumped ship to found the Move-based blockchain companies Aptos and Sui.

Before discovering Move, Manche says he experimented with crypto in college, mostly in the Cosmos blockchain ecosystem. Cooper was the first of the pair to build using Move – creating a yield aggregator for Aptos.

Barely old enough to drink, Manche says he and his co-founder's ages were initially a big quesion for investors as the pair were navigating the fundraising circuit. "When we were first starting off, it was like, 'Who are these kids? What are they doing? How can we trust them?,'" said Manche.

"I think over time, especially me and Cooper, we've built a lot of trust up because we're category leaders. We showed a lot of traction in terms of development, traction in terms of the community ecosystem," said Manche. "The age question was always a sticking point, but I think now everyone's pretty bullish."

Aptos and Sui were the first to put Move to the test in the real world, and Movement Labs is the first to bring Meta's Move tech to a layer-2 network on Ethereum. The network will support programs developed using Move or Solidity, Ethereum's native programming language.

In addition to the Movement L2, the company is introducing the Move Stack – a blockchain execution environment that can be used to build other chains and has been designed for compatibility with popular blockchain-building frameworks such as the OP Stack and Arbitrum Orbit. It's also building a shared sequencer, meaning the method it uses to communicate between the L1 and L2 chains will have elements of decentralization.

Movement L2 will be "one of the first main flagship L2s prioritizing decentralization and decentralized sequencers" from the start, said Manche.

The Movement L2 will enter its testnet phase this summer.

Bitcoin {{BTC}} dropped briefly below $63,000 on Thursday as cryptocurrencies tumbled following fresh data showing hotter inflation and slower growth in the U.S. in the first quarter.

The U.S. government's preliminary report for first quarter GDP showed growth of just 1.6%, substantially lower than the 2.5% analysts estimated and down from 3.4% in the fourth quarter of 2023. Meanwhile, the GDP price index came in slightly hotter than expected at 3.1% and up from 1.6% in the previous quarter.

The disappointing inflation data report spooked investors, with hopes for interest rate cuts this year dimming further, hitting risk assets across all markets. Major U.S. stock indexes such as the S&P 500 and the tech-heavy Nasdaq began the trading session down nearly 2%, while the 10-year U.S. Treasury bond yield jumped 8 basis points to 4.73%, its highest reading since November.

BTC at one point slid more than 4%, hitting a $62,800 low before recovering to $63,700 recently. Ether {{ETH}} was also down 4% during the same period, changing hands at around $3,100.

Altcoin majors tumbled even more, led by native tokens of layer-1 network's Solana {{SOL}}, Avalanche {{AVAX}} and Aptos {{APT}}, all of which fell 8%-9% before paring some of the losses. The broad-market benchmark CoinDesk 20 Index (CD20) declined 6%.

When I read about the U.S. Federal Trade Commission’s new rule banning non-compete agreements, I was reminded of when I left a blockchain startup a few years ago to join another early-venture company. My old employer sent me a cease-and-desist letter stating that I had breached a non-compete clause in my old employment contract.

There was little legal merit to their arguments. The non-compete clause was overly-broad and would probably have been unenforceable in court. The companies’ markets and products were distinctly different, and I was not a software engineer but a lawyer – a profession that is generally not subject to non-competes.Linda Jeng is the Founder & CEO of Digital Self Labs, a blockchain advisory firm.

Nonetheless, this led to a protracted ordeal that kept me from working for many months. I lost over $80,000 in income, used up my savings, and bore the legal costs of hiring an employment attorney. But, worse than the financial costs, was the emotional distress.

I was fortunate that my new employer stood by me. Not everyone in my situation is so lucky. On their end, they shouldered the costs of hiring legal counsel and time spent negotiating with my old employer. More importantly, they lost months of what would have been my contribution to the company. The ordeal ended when my new employer realized that this was probably a delay tactic on the part of my old employer, which had rejected reasonable financial offers to settle.

The federal and local government were also losing parties. They lost tax revenue from my months of unemployment. In the third month, I had even begun the paperwork for unemployment benefits. Other losing parties include the venture capital investors whose funds were being deployed to handle the matter rather than on developing products and going to market.

I have never publicly written about these events. It was perhaps the most stressful period of my 20 year career. There are few statistics on how non-competes are used against departing employees, but I know I’m not alone. Nearly one in five Americans are subject to non-competes, and a 2023 US Government Accountability Office survey of 247 employers found that only 39% responded that they have never tried to formally or informally enforce a non-compete agreement. FTC chair Lina M. Khan says the new rule, once enacted, will create 8,500 new startups through greater competition.

I work in the blockchain and digital assets industry. Looking back, I see the irony that a blockchain startup violated the foundational principle of our innovative industry’s open-source ethos. Another irony was that the CEO was based in the State of California, which has not enforced a non-compete since 1872. Imagine what Silicon Valley would be today if California had been banning non-compete agreements all along.

Avail, a blockchain project known for data availability (DA), shared Thursday that five major layer-2 networks in the Ethereum ecosystem will integrate with its Avail DA solution.

Those chains include Arbitrum, Optimism, Polygon, StarkWare and zkSync. Users will be able to opt in or out to use Avail for data availability – a service needed by these "rollup networks" to stash the reams of data produced on all the transactions taking place. A key driver for DA solutions is that they can provide a cheaper and faster way of storing data than on the main Ethereum blockchain.

Avail came into the limelight alongside other DA projects, which have gained buzz over the past few months with protocols like Celestia that went live in October, and Eigenlayer’s EigenDA that went live earlier this month. Avail’s DA is still in testnet, but is expected to go live very soon, according to Anurag Arjun, the co-founder of Avail.

Avail last week released its plan for a token airdrop, and one of the groups that will be eligible for the AVAIL token are users of these rollups.

In February, Avail announced that it would be coming out with two more core products: Nexus, a layer that connects different rollups to each other through the Avail ecosystem (similar to Polygon’s AggLayer), and Avail Fusion, which will borrow the security of crypto assets like ether (ETH) or bitcoin (BTC) and contribute them to Avail’s security (similar to EigenLayer).

“DA is more production ready, because DA is going out soon," Arjun said in an interview with CoinDesk. "Nexus is something we have is still in development. We are working with some of these teams to integrate the Nexus piece more closely."

Read more: Avail Confirms Token Airdrop Plans, a Week After Leaked Screenshots

MicroStrategy could boost earnings by over $3 billion if it chooses to adopt new standards, the report said.

Benchmark said if the company reports positive earnings it meets the final condition for S&P 500 inclusion.

This would boost MicroStrategy’s valuation as index funds would be forced to buy the stock, the broker said.

MicroStrategy (MSTR) could surprise Wall Street analysts and report better-than-expected earnings if the software company chooses to adopt new accounting standards, a move that means it could qualify for inclusion in America’s most important stock index, the S&P 500, broker Benchmark said in a research report on Thursday. The company will report results for the first quarter 2024 after the close of markets on April 29.

MicroStrategy’s corporate strategy is partly based on the acquisition and holding of bitcoin. As of March 19 it held 214,246 bitcoin worth $13.9 billion at current prices. Benchmark notes that since the software company started holding bitcoin on its balance sheet it has recorded $2.27 billion in cumulative impairment losses due to a Financial Accounting Standards Board (FASB) rule called ASC 350. The FASB issued new guidance in December last year that allows companies that hold digital assets on their balance sheet to measure them at fair value, and record changes in fair value in net income in each reporting period. The new rules become effective as of Jan. 1, 2025, but early adoption of the standard is allowed. “The impact of doing so on MSTR’s reported earnings per share would be massive: the company in its 2023 10-K report estimated that early adoption would increase its 2024 beginning retained earnings balance by ~$3.1 billion,” analyst Mark Palmer wrote.

Analyst consensus is for MicroStrategy to report a first-quarter 2024 loss per share of $0.55. Benchmark estimates that if the company decides to opt for early adoption of the new standard it could report a gain of more than $300 per share for the quarter. MicroStrategy currently meets nearly all of the criteria for S&P 500 inclusion, the report said. The company is based in the U.S., its shares are highly liquid, 50% of its outstanding shares are available for trading, and its market cap is greater than $18 billion.

For the index committee to consider a stock for inclusion in the S&P 500 it must also report positive earnings in its most recent quarter. Benchmark notes that MicroStrategy has reported losses in 10 of the past 14 quarters. Early adoption of the new standards means the software company could meet this final criterion. “Inclusion in the S&P 500 would position MSTR’s stock valuation to receive an ongoing boost from the price-agnostic purchases of its shares resulting from enormous passive inflows,” Palmer wrote. Still, uncertainty around the tax impact of adopting the FASB’s updated guidance could cause MicroStrategy to hold off on early adoption, the report added

Read more: MicroStrategy Should Continue to Rally as Bitcoin Halving Nears: Benchmark

This article originally appeared in First Mover, CoinDesk’s daily newsletter, putting the latest moves in crypto markets in context. Subscribe to get it in your inbox every day.

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Bitcoin, the world’s largest cryptocurrency by market value, has dropped 4% over the last 24 hours to less than $64,000. Ether also saw a significant downside, losing 6%, and the CoinDesk 20 Index, a measure of the broader crypto market, lost 6% as well. Reuters reported that U.S. issuers expect the Securities and Exchange Commission to deny their applications to launch spot ether exchange-traded funds (ETFs) after discouraging meetings with the agency in recent weeks. In traditional markets, tech stocks declined after Meta failed to live up to high expectations for its first-quarter earnings report.

BlackRock’s spot bitcoin exchange-traded fund (ETF), which trades under the ticker IBIT on Nasdaq, fell out of favor on Wednesday, preliminary data published by Farside Investors showed. For the first time since going live on Jan. 11, the fund did not draw any investor money, snapping a 71-day inflows streak. Seven of the other 10 funds followed IBIT’s lead. Fidelity’s FBTC and the ARK 21Shares Bitcoin ETF (ARKB) registered inflows of $5.6 million and $4.2 million, respectively, while Grayscale’s GBTC bled $130.4 million, leading to a net cumulative outflow of $120.6 million, the highest since April 17.

U.S. House Representative Maxine Waters (D-California) indicated that the final version of a stablecoin bill could be ready soon. "We are on our way to getting a stablecoin bill in the short run,” the top Democrat on the House Financial Services Committee told Bloomberg on Wednesday. Waters has previously called a version of the stablecoin bill “deeply problematic and bad for America." “It’s about making sure investors and that the people are protected,” Waters told Bloomberg. “We have to ensure that they have those assets to back up stablecoins,” she said. The latest development strengthens hopes that the U.S. can get a new stablecoin law before the elections this year, which was considered a longshot at the start of the year.

Chart of the Day

The chart shows CryptoQuant's Coinbase premium index, which tracks the spread between bitcoin’s prices on the Nasdaq-listed Coinbase (COIN) exchange and the offshore giant Binance.

The indicator shows bitcoin is again trading at a discount on Coinbase, reflecting a weaker net buying pressure from U.S. investors.

Source: CryptoQuant.

Trending Posts

EigenLayer-Powered Aligned Layer Raises $20M to Make ZK Proofs Faster, Cheaper on Ethereum

'Buy Bitcoin' Sign Sold for Over $1M at Auction

Spot Bitcoin, Ether ETFs Get Official Approval in Hong Kong; 'Potential Fee War' Unfolding, Says Analyst

Aligned Layer aims to help engineers avoid bottlenecks when proving their code.

The $20 million Series A was led by Hack VC.

Aligned Layer is an EigenLayer "actively validated service" (AVS).

Ethereum verification protocol Aligned Layer has raised a $20 million Series A to enable faster and cheaper zero-knowledge (ZK) proofs on the world's second-biggest blockchain.

The fundraiser was led by Hack VC and included contributions from DAO5, L2Iterative, NomadCapital_io, FinalityCap, Symbolic VC and Theta Capital.

ZK proofs refer to protocols in which one party can verify the truth of a statement to the other party without conveying any further information about it.

Aligned Layer’s aim is to help engineers avoid bottlenecks in proving their code while making it cheaper to build applications atop Ethereum that use ZK proofs, according to a blog post on Thursday.

“We verify proofs cheaply and quickly and post their results in Ethereum and any DA (data availability) layer that the developer wants," Aligned Layer said.

Aligned Layer is an EigenLayer “actively validated service" (AVS). EigenLayer is a crypto project focused on "restaking”, where ether {{ETH}} is deposited as security for the main blockchain and can be repurposed to secure other networks.

The project’s developer, Eigen Labs, has also been the recipient of substantial investment, raising $100 million from crypto VC kingpin Andreessen Horowitz (a16z) in February.

Read More: EigenLayer, Crypto's Biggest Project Launch This Year, Is Still Missing Crucial Functionality

A U.S. district judge sentenced Jabara Igbara to seven years in prison.

He purported to be a crypto millionaire and targeted Muslims through a company called Halal-Capital LLC.

Jabara Igbara, also known as “Jay Mazini,” who claimed to be a crypto millionaire on Instagram, was sentenced by U.S. District Judge Frederic Block to seven years in prison on wire fraud and money laundering charges. The sentence also requires Igbara to forfeit $10 million.

Igbara, 28, carried out multiple fraud schemes and scammed investors of at least $8 million, the United States Attorney's Office said on Wednesday. He pleaded guilty to the charges in November 2022.

Through a company called Halal-Capital LLC, Igbara ran a Ponzi scheme that targeted Muslims, the Attorney's Office said. He posted on his Instagram account and other social media offering above-market prices for cryptocurrencies and sent doctored images of wire-transfer conformations suggesting he had sent the money. In reality this was not the case.

“Igbara was a crypto con man. He not only created a fake online presence to purport that he was a wealthy crypto investor, he used his Instagram persona as proof of success when convincing his unsuspecting victims to invest in his schemes," Internal Revenue Service Criminal Investigation Special Agent-in-Charge Thomas Fattorusso said in the statement.

The top Democrat on the U.S. House Financial Services Committee has told Bloomberg that a stablecoin bill could be ready soon.

The latest development strengthens hopes that the U.S. can get a new stablecoin law this year, before the elections, considered a longshot at the start of the year.

U.S. House Representative Maxine Waters (D-California) indicated that the final version of the stablecoin bill could be ready soon. "We are on our way to getting a stablecoin bill in the short run,” the top Democrat on the House Financial Services Committee told Bloomberg on Wednesday.

Waters has previously called a version of the stablecoin bill “deeply problematic and bad for America."

“It’s about making sure investors and that the people are protected,” Waters told Bloomberg. “We have to ensure that they have those assets to back up stablecoins,” she said.

The latest development strengthens hopes that the U.S. can get a new stablecoin law before the elections this year, which was considered a longshot at the start of the year.

Congressional movement, both in the Senate and the House, on stablecoin legislation picked up pace in the past few weeks. Waters said that the U.S. Federal Reserve, the Treasury Department and the White House have all had input in crafting the bill, the report said.

Waters and House Financial Services Committee Chairman Patrick McHenry (R-N.C.), who have been negotiating for 22 months, reportedly met with Senate Majority Leader Chuck Schumer to get the legislation moving by tying it to a must-pass Federal Aviation Administration reauthorization due next month.

Last week, in the Senate, U.S. Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced a new stablecoin bill, which proposed a ban on algorithmic stablecoins and required tokens of issuers to be fully backed by reserve assets.

Waters also told Bloomberg that she has discussed stablecoins with the Senate Banking Chairman Sherrod Brown. Earlier this month, Brown told Bloomberg he was open to advancing the stablecoins legislation.

A marijuana banking bill could also be paired with the stablecoin legislation. Brown’s committee has advanced the marijuana legislation but it could face opposition from Republican leader Mitch McConnell. However, Waters said she was hopeful of overcoming that resistance if it were to come.

In March, McHenry said the stablecoin bill is largely worked out in the Republican-controlled House and just needs a scheduled floor vote.

Read More: U.S. Senators Lummis, Gillibrand Take on Stablecoin Legislation With New Bill

The bank has allowed ETF buying since the start, but only if the customer approaches them directly.

Morgan Stanley could become the first among its peers to allow bitcoin ETF solicitation.

The move could push substantial inflow into the ETFs.

Morgan Stanley (MS) is looking to allow its 15,000 brokers to recommend bitcoin {{BTC}} exchange-traded funds (ETF) to their customers, according to a report from AdvisorHub.

The Wall Street giant opened up bitcoin ETF purchases after they had been approved earlier this year. However, this was done only on an unsolicited basis. The bank is now looking to let its brokers pitch bitcoin ETFs directly to its customers, the report added.

The move is a testament to the demand for the spot ETFs and could bring additional inflows into the funds. The ETFs allow the customers to reap the benefits of investing in the oldest cryptocurrency without direct exposure.

“We’re going to make sure that we’re very careful about it...we are going to make sure everybody has access to it. We just want to do it in a controlled way,” AdvisorHub reported, citing a Morgan Stabley executive.

The Securities and Exchange Commission (SEC) approved 11 spot bitcoin ETFs in January. The firms that got the approval include investment behemoths BlackRock (BK), Fidelity, Invesco (IVZ) and others.

The approval brought massive inflows into the funds and, subsequently, bitcoin. However, the inflows have been dwindling for some time, with BlackRock registering zero daily inflow for its ETF for the first time ever on Wednesday, according to Farside.

Morgan Stanley allowing its brokers to recommend bitcoin ETFs could bring back momentum into the funds.

Morgan Stanley did not immediately respond to CoinDesk's request for comment.

Read more: BlackRock's Bitcoin ETF Snaps 71-Day Inflows Streak, Data Show

The iconic 'Buy Bitcoin' sign that was held up behind Janet Yellen was sold at an auction for 16 BTC.

Proceeds from the auction will go to fund a Bitcoin layer-2 startup called Tirrel Corp.

The iconic 'Buy Bitcoin' sign held behind Janet Yellen during her televised Congressional testimony in July 2017 has been auctioned off for 16 BTC, or just over $1 million.

Scarce.City, the auction house that facilitated the deal, said it was a record amount for the auction platform.

And that's a wrap on one of the most ICONIC pieces of Bitcoin history. 🏆🍾Made a little history of our own ... meet the official new https://t.co/rNz9DWL5WE record. 🏅 pic.twitter.com/3ixQmEHbd0

— Scarce.City (@scarcedotcity) April 24, 2024

The auction itself was held at PubKey, a Bitcoin-themed bar in New York City.

Congratulations to Justin, A.K.A. Squirrekkywrath, winner of the #BitcoinSignGuy auction for 16 #BTC. 🏆@tpacchia Get this man a Whale! 🐳 pic.twitter.com/DPpczcEzkJ

— PUBKEY (@PubKey_NYC) April 24, 2024

The sign’s new owner is someone who goes by the handle of Squirrekkywrath, according to a tweet from PubKey.

Not much is known about its new owner. The head of research at Galaxy, Alex Thorn, said he’s a “bitcoin OG that no one has ever heard of.”

In a prior interview with CoinDesk, Christian Langalis, who held up the sign, said the proceeds would go to fund his startup, Tirrel Corp, which is developing a Bitcoin Lightning network wallet on Urbit.

After holding up the sign during a 2017 House Financial Services hearing, Langalis was escorted out of the building for violating committee rules – all the while, the image was going viral on the web.

BlackRock's spot bitcoin ETF did not draw any investor money on Wednesday, the first such instance since the fund's inception three months ago.

Inflows have slowed this month, taking the wind out of the bitcoin bull run.

BlackRock’s spot bitcoin exchange-traded fund (ETF), which trades under the ticker IBIT on Nasdaq, fell out of favor on Wednesday, preliminary data published by Farside Investors showed.

For the first time since going live on January 11, the fund did not draw any investor money, snapping a 71-day inflows streak. Seven out of the other ten funds followed IBIT’s lead.

Fidelity’s FBTC and the ARK 21Shares Bitcoin ETF (ARKB) registered inflows of $5.6 million and $4,2 million, respectively, while Grayscale’s GBTC bled $130.4 million, leading to a new cumulative outflow of $120.6 million, the highest since April 17.

Spot ETFs debuted in the U.S. on January 11 with much fanfare, promising to pull billions of dollars in institutional money. To date, BlackRock’s IBIT has alone amassed more than $15 billion, while the 11 funds taken together have registered a net inflow of over $12 billion.

However, most inflows happened in the first quarter, and the uptake has slowed this month, taking the wind out of the bitcoin bull run.

Bitcoin {{BTC}}, the leading cryptocurrency by market value, has traded primarily between $60,000 and $70,000 this month, CoinDesk data show, marking a weak follow-through to the first quarter’s near 70% rally to record highs above $73,500.

April 24: SEDA, a data transmission and computation network that enables a permissionless environment for developers to deploy data feeds, announced the launch of its mainnet genesis event. According to the team: "By mitigating native deployments via a modular and chain-agnostic design, SEDA is building to offer complete developer flexibility with chain-agnostic integrations alongside completely programmable data feeds, enabling a 'permissionless optionality' that promotes Web3's ethos for builders. Mainnet will see the deployment of SEDA’s solvers, an overlay network offering one-click node spinups for community and bespoke mechanics for network OEV capture and value redeployment back into the hands of network participants."

Protocol Village is a regular feature of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Project teams can submit updates here. For previous versions of Protocol Village, please go here. Also please check out our weekly The Protocol podcast.