September 23, 2020 | Issue #136

MUST READS

A Bitcoin ETF Finally Launches... in Bermuda

A partnership between Hashdex, a Brazilian-based fund manager, and American stock exchange Nasdaq, has spawned the world’s first crypto asset exchange-traded fund (ETF) in Bermuda.

Companies have struggled for years to get a Bitcoin ETF approved in the US. But now, it looks like the Bermuda Stock Exchange (BSX) has beat everyone to the punch.

Key takeaways:

The crypto ETF on BSX will cover "a portfolio of cryptocurrencies and blockchain-based assets that are tracked by the [Nasdaq Crypto] Index," according to an explanatory document.
Some three million Class E shares will be available to trade on the Hashdex Nasdaq Crypto Index at $1,000 per share, according to the announcement.
It is not yet clear which cryptocurrencies will be represented.

Introducing UNI

The increasingly popular exchange Uniswap just launched its highly anticipated governance token last week, and it's already had a massive impact on the booming DeFi industry.

What's Uniswap?
Uniswap is a decentralized exchange built on Ethereum that utilizes an AMM (another DeFi term of art) system rather than a traditional order-book. Instead of matching individual buy and sell orders, users can pool together two assets that are then traded against, with the price determined based on the ratio between the two.

What Happened?
For the launch of Uniswap's governance token, every ETH address that has ever interacted with a Uniswap contract was airdropped 400 UNI – currently worth more than $1,700. It was basically stimulus for Ethereum users.

What's The Big Deal?
That batch of 400 tokens offers thousands of users around the world a sizable windfall just for being early adopters of the popular token exchange platform. It’s a pivotal moment in the still short saga of decentralized governance, as the industry’s leading DEX makes a bold move to solidify its position as the beating heart of DeFi.

The Insanity Continues
We won't bore you with more DeFi/AMM trickery. Instead, we'll highlight just how crazy things are.

A cryptocurrency that didn't exist a week ago – advertised as a voting token for an exchange that has operated without voting for two years – now has a $625.75M market cap.
The Unicorn Token (UNI), which ironically shares the same ticker-symbol as Uniswap (UNI), rallied over 10,000% on the confusion.
Uniswap (UNI) is up nearly 15% over the last 24hrs, though still well off its high of near $7.

FinCen Files

In another example of "Do as I say and not as I do," banks around the world are AGAIN caught allowing mass global corruption and money laundering. Oh, and governments are letting it flourish.

Buzzfeed News this week published a trove of secret government documents that reveal how giant Western banks are moving trillions of dollars in suspicious transactions.

This includes money garnered for or from drug wars, Ponzi schemes, terrorist organizations, and more. The story notes:

"In all, suspicious activity reports in the FinCEN Files flagged more than $2 trillion in transactions between 1999 and 2017. Western banks could have blocked almost any of them, but in most cases they kept the money moving and kept collecting their fees."

The whole piece is worth a read... and in case you're asking yourself if crypto is directly involved, the answer is: yes.

Mayzus Financial Services, an online payment processing company that allegedly served clients involved in the infamous BTC-e money laundering ring is mentioned in the files.

Bank of New York Mellon, one of America’s oldest banks, was shown to have reportedly wired over a hundred million dollars linked to alleged crypto ponzi scheme OneCoin.

Want more?:

Buzzfeed News has published an entire site digging into FinCen files
Marty Bent discusses two-tiered justice and the failure of KYC/AML
Andreas Antonopoulos on how this will be used against cryptocurrencies

Tax-Free Investing in Crypto

Wish you could invest in crypto tax-free? If you have an IRA or 401(k), here's your chance.

If you're like most people, your IRA or 401(k) is a place where money is blindly stashed away. The tax benefits are undeniable, so year after year, you invest in the usual mix of stocks and mutual funds. But what if you could invest that money in crypto?

WELCOME TO A CRYPTO IRA – from BitIRA.

You see, we've discovered a little-known IRS Tax Law that actually lets you convert your IRA or 401(k) into crypto. Get all the upside of crypto, get all the tax benefits of an IRA – with ZERO tax consequences.

In the next few weeks, we're giving away a free info guide that reveals exactly how to make this move and how to get started.

Click here to get your FREE GUIDE on tax-free crypto investing.

SPONSOR

DEEP DIVE

🚜 Yield Farming Survey 2020

Crypto market data aggregator, CoinGecko, performed a yield farming survey with 1,347 participants last month.

To no surprise, the team suggested that the majority of yield farmers do not understand the smart contracts underpinning the DeFi protocols they use.

Here are the key findings:

23% of the respondents have participated in yield farming in the past 60 days, illustrating that yield farming is still a niche but growing trend.
Each yield-farming token made up less than 10% of the farmers’ holdings.
52% of farmers put up less than $1,000 in capital to farm and the high gas fee is one of the biggest concerns.
40% of farmers do not know how to read smart contracts and the associated risks despite claiming that they do.

Zcash Thesis

"It’s not just the engineering chops that draw us to Zcash; it’s the heart and commitment to the societal cause, with a multi-decadal plan to succeed."

Chris Burniske of Placeholder VC just published an investment thesis on Zcash (ZEC). Here's the link.

Introducing the DeFi Pulse Index on TokenSets

There's a new DeFi basket in town that gives investors exposure to tokens like YFI, LEND, SNX, and more – all in a single ERC20 token.

The index utilizes a capitalization weighted index where the value weight is based off of a DeFi projects market cap. The full methodology details are listed here.

Related: Options for Hedging the DeFi Market Risk

REGULATORY FRONT

⚖️ The Department of Justice Announces a Slew of Crypto Arrests

The US Department of Justice (DOJ) has been busy...

On Tuesday, they announced the results of Operation DisrupTor. The operation resulted in the seizure of over $6.5 million in both cash and virtual currencies, approximately 500 kilograms of drugs worldwide, and 63 firearms. Although this sounds like a win for law enforcement, not everyone is so impressed.

The DOJ also sentenced UK national, Nathan Wyatt, to five years in prison after pleading guilty to being a member of the notorious “The Dark Overlord” hacker outfit. The Dark Overlord is the group that recently stole medical records from US companies before demanding over $300,000 worth of Bitcoin.

Stablecoins Get Some Attention

Stablecoin issuers have been using U.S. banks for years, but in an unclear regulatory environment. Now, the Office of the Comptroller of the Currency (OCC) wants federally regulated banks to feel comfortable providing services to stablecoin issuers.

Further, the SEC said certain stablecoins might not be securities under federal law, but advised issuers to work with the agency and legal counsel to ensure this is the case.

In other stablecoin news, the European Central Bank said yesterday that the term “stablecoin” can be “confusing, even misleading.”