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- > Silvergate enters voluntary liquidation
- > Mt. Gox to start repaying Bitcoin this week
- > Amazon to launch NFTs
- > Coinbase unveils its own Layer-2 Network
- > PayPal pauses its stablecoin launch
Silvergate enters voluntary liquidation
Crypto-friendly bank Silvergate’s shares plummet as the company begins to wind down operations.
It’s been a rather unpleasant month for Silvergate Capital, as the bank slowly edged toward total collapse. On 9 March, Silvergate representatives confirmed their demise, announcing the institution had entered voluntary liquidation.
Silvergate’s crash may be the biggest bank failure since the Global Financial Crisis in 2008-9.
Silvergate was one of the first crypto-friendly banks to introduce a digital currency payment network, building strong partnerships with industry giants Coinbase, FTX and Galaxy Digital. But amid the current chaos, the institution has been dropped by several of these businesses.
The bank’s collapse was collateral of FTX’s downfall, which lead to investors pulling $8B+ in cash out of Silverbank over the past few months. The ripple effect is being felt by crypto assets, with Bitcoin and Ethereum down about 5% over the past week.
The company took out a massive $4.3B in loans from San Francisco-based Federal Home Loan Bank over the past few months as it struggled to keep its head above water. But as of 9 March, the bank’s story has officially reached its end.
Mt. Gox to start repaying Bitcoin this week
$3 billion worth of Bitcoin is set to be distributed to the Mt. Gox hack victims, nine years after losing everything.
Mt. Gox was one of crypto’s OG exchanges, selling BTC to investors way back in 2010. Once upon a time, it accounted for 70+% of all Bitcoin transactions. However, like the industry itself, blockchain security was in its infancy and in 2014, Mt. Gox was the target of a catastrophic hack. This resulted in:
- Approx. 650k Bitcoins were “lost”.
- Mt. Gox filed for bankruptcy and entered a 7-year legal tiff with the Tokyo District Court.
- The crypto market spiralled into a 2-year bear market.
Nearly a decade later, Mt. Gox is paying back the people it owes. The company is unlocking 137k worth of Bitcoin (valued at $3B USD) to distribute to its creditors. Interestingly, Mt. Gox may actually pay off its debts AND make off with a profit given the growth in BTC’s value price of BTC since the exchange paused transactions.
Repayments are set to begin on 10 March.
Amazon to launch NFTs
Amazon continues its adoption of blockchain technology, announcing a marketplace for NFTs tied to real world assets.
Jeff Bezos is not one to sit idly by and let a money-making opportunity pass, and true to form, this week Amazon announced they are introducing a digital collectibles marketplace that will launch on 24 April.
Amazon has a few grand ideas for setting up its NFT marketplace:
- Blockchain-based gaming NFTs will be a key feature.
- NFTs will be tied to real-world products. For example, someone could buy a fashion NFT and receive actual clothing.
- Digital collectibles can be bought with cash and credit card.
- NFTs will be used to track delivery and support the supply chain.
This could be a big deal for the Web3 industry, as Amazon can immediately expose 300 million active users to its new blockchain-based content.
15 NFT collections will be available on launch – but only to US customers. The rest of the world will have to wait patiently until they are available elsewhere.
Coinbase unveils its own Layer-2 Network
Coinbase has teamed up with optimism to launch its own Ethereum layer-2 network called Base.
The world’s most popular decentralised finance blockchain, Ethereum, has long suffered from congestion issues and expensive transaction fees. Layer 2 solutions have been in vogue for a while now – $6B worth of ETH is held on L2s – and last week Coinbase threw its hat into the ring.
The new network, aptly named Base, is powered by the popular L2 solution Optimistm. All of Coinbase’s on-chain products will now be hosted on Base. The hope is the ecosystem will evolve to support millions of dApps.
Analyst coin watch: Optimism (OP).
The Base Mainnet is slated for release in the next couple of months, but won’t have a native token. CEO Brian Armstrong has suggested the network will be monitored by centralised entities for AML and KYC purposes.
PayPal pauses its stablecoin launch
Payment gateway giant PayPal has delayed the launch of its flagship stablecoin amid US regulation concerns.
The world’s largest payment solution, PayPal, has been an ally to the crypto community for quite a while. Their latest innovation is set to be a stablecoin backed by the US dollar that can be seamlessly used on their platform.
PayPal’s stablecoin has a few intended purposes:
- To increase adoption.
- The normalisation of crypto payments.
- A “safe and reliable alternative” to traditional fiat currency.
- To be purpose-built for payments, rather than a store of value or DeFi token.
But in light of the 2022 FTX collapse, US regulators are bringing the hammer down on regulatory requirements for new currencies.
PayPal is working alongside blockchain firm Paxos Trust Co., to release the coin. However, the New York State Department of Financial Services was not so thrilled about this partnership and is currently investigating Paxos. The purpose of the investigation is still under wraps, but spells a hefty delay for PayPal’s stablecoin launch.
Swyftx
