Scenius Sync (Issue #121)

FTX Reorganization Plan Approved, UAE Exempts Crypto From VAT Tax, Grayscale Launches Aave Fund, Robinhood CLO Could Succeed Gensler, & CryptoPunk Exchanges Hands For Whopping $56.3M

Scenius: The intelligence and the intuition of a whole cultural scene. The communal form of the concept of genius.

Welcome to The Scenius Sync.

Our mission with this concise publication is twofold:

1. Share the essential stories driving the crypto industry and markets.

2. Highlight innovative applications and mainstream adoption of crypto and blockchain technology.

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Essential News 🗞

1. US bankruptcy judge approves FTX reorganization plan, two years after the exchange's collapse

   • About 94% of creditors in the “dotcom customer entitlement claims” class who returned their ballots — representing about $6.83 billion in claims by value — voted in favor of the reorganization plan. Judge John Dorsey in the U.S. Bankruptcy Court for the District of Delaware decided to approve the plan during a hearing on Monday in a move to start distributing funds to creditors. Under that plan, 98% of creditors will receive at least 118% of their claim value in cash. However, the plan garnered criticism from Sunil Kavuri, a representative of the largest FTX creditor group. Kavuri said the estate should pay out crypto in kind, rather than the dollar value. 

2. United Arab Emirates Exempts Crypto Transactions From Value-Added Tax

   • The United Arab Emirates has amended its value-added tax (VAT) regulations to exempt transactions involving virtual assets, including cryptocurrencies. On Oct. 2, 2024, the UAE’s Federal Tax Authority announced the changes under Cabinet Decision No. (100) of 2024. These amendments, effective November 15, 2024, are intended to bring clarity to the tax treatment of digital assets while aligning with previous updates to tax laws in the country. Among the key amendments, Article 42 stands out, adding the VAT exemption for transferring ownership of virtual assets and their conversion.

3. Robinhood Chief Legal Officer Dan Gallagher could be tapped to lead SEC if Trump wins presidency

   • Robinhood Chief Legal Officer Dan Gallagher could be the next U.S. Securities and Exchange Commission chair if former President Donald Trump is back in office next year, according to Politico. Gallagher has become a top contender for that spot, Politico reported on Monday. That would be an interesting move given that the SEC signaled charges could be incoming. Robinhood's crypto unit, Robinhood Crypto, received a Wells Notice from the SEC in May. “It is an honor to have my name included in any discussion of who may be the next SEC Chairman," Gallagher said in an emailed statement to The Block. "I’ve had the privilege to serve in various roles at the SEC, including as a commissioner. I care deeply about the agency, and my hope for any new SEC Chairman would be that they foster access to the markets, and ensure the U.S. remains at the forefront of financial innovation.”

4. Coinbase to Delist Unauthorized Stablecoins in EU by December

   • Crypto exchange Coinbase plans to de-list any unauthorized stablecoins in the European Union by December 30. Crypto companies are racing to comply with the European Union's Markets in Crypto Assets (MiCA) rules, which require firms to be authorized in at least one EU country. Tether, which is the largest issuer of stablecoins, doesn't have the necessary e-money license yet in the European Union. Tether said MiCA introduces some complexities for stablecoins operating in the region and will introduce "a technology-based solution" to counter those challenges.

5. IMF Urges El Salvador to Narrow Bitcoin Experiment

   • The International Monetary Fund (IMF) is still not pleased with El Salvador’s Bitcoin experiment but will continue to work with the country. At a press conference Thursday, the body’s spokesperson Julie Kozack was quoted saying that the IMF had recommended “limiting public sector exposure to Bitcoin,” according to a Reuters report. El Salvador made Bitcoin legal tender in the country back in 2021. The IMF—which has been in talks with El Salvador for years about a fund-supported program to strengthen growth prospects in the country—has been one of the loudest critics of the Bitcoin move. 

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Innovation & Adoption 💡📈

1. NFT Mania Is Back? Maybe Not, but a CryptoPunk Just Exchanged Hands for a Record $56.3M

   • A hallmark of the last cryptocurrency bull market was the remarkably high sale prices for various non-fungible tokens (NFTs). The world has largely moved on from NFTs, with enthusiasm for crypto products embellished with quirky images now directed toward memecoins – so, so many memecoins. Yet, on Thursday, a sign of bull markets past returned: A CryptoPunk NFT just exchanged hands for a record price of $56.3 million. The prior all-time high of $23.7 million was set in February 2022, months before the crypto winter got truly dark. A flash loan was apparently used to make the Punk 1563 transaction possible, blockchain data shows. The seller listed their punk for 24,000 ETH, while another "buyer" contract took out a flash loan for the same amount from decentralized finance protocol Balancer, paid for the NFT, and received it in their account. The borrowed ether was transferred to the seller's wallet, who promptly returned the amount to Balancer. That means no funds were paid out-of-pocket and cannot be considered a straight sale. It's not clear what the motivations for using such a process were.

2. Ethereum proposal ‘EIP-7781’ calls for slot time reduction from 12 to 8 seconds to boost transaction throughput

   • A new Ethereum proposal, EIP-7781, suggests reducing the blockchain’s slot time from 12 seconds to 8 seconds. Slot time refers to the interval at which new blocks are proposed on the Ethereum network. Shortening this interval would produce more blocks more frequently, increasing the network’s overall efficiency. In the proposal, researcher Ben Adams highlighted that the objective is to lower latency for rollups — Layer 2 scaling solutions that leverage the sequencing capabilities of the Ethereum mainnet — while boosting transaction throughput by about 33%.

3. Aerodrome tops $1 billion in deposits, dominating DeFi on Base

   • Base, a Layer 2 Ethereum network incubated at Coinbase, saw its total value locked (or user deposits) surge to $2 billion — over five times the network’s deposits year-to-date. Decentralized exchange Aerodrome accounts for almost half of Base’s TVL, contributing over $1 billion in deposits, up from $120 million in January. Its deposits make up more than 50% of the total TVL within the DeFi ecosystem on Base. DeFiLlama data shows that Aerodrome is the largest decentralized exchange protocol on Base, not only in terms of total value locked but also in terms of volume and fees, surpassing DeFi giants such as Uniswap and Aave on the network.

4. Grayscale launches Aave fund amid DeFi surge

   • Asset manager Grayscale Investments launched its new Aave investment fund for the protocol’s governance token, according to an Oct. 3 news release. The release said the new Grayscale Aave Trust will allow investors to “gain exposure to AAVE, the governance token for Aave’s platform.” The asset management firm recently established a United States-based XRP trust, increasing its investors’ exposure to DeFi via the XRP Ledger. 

5. Swiss-based Taurus and Chainlink partner to drive tokenized asset adoption

   • Taurus will use Chainlink’s platform to enhance tokenized assets with real-world data and enable compatibility across different blockchains. Fidelity International and crypto bank Sygnum partnered with Chainlink earlier this year.