The Scenius Sync (Issue #39)

A Banking Crisis as Signature & Silicon Valley Bank are Shut Down with Depositors To Be Made Whole, USDC Reclaims 1:1 Peg, & Crypto Prices Soar as Rate Expectations Flip

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. SVB, Signature Bank Losses Will Not 'Be Borne by the Taxpayer', Insists President Biden

   • Following several chaotic days, SVB was shut down on Friday and Signature Bank was shuttered on Sunday, inflicting damage throughout the crypto industry with impacts to vc firms and U.S. tech startups as well. U.S. Treasury Secretary Janet Yellen also approved a "systemic risk exception" action that would see depositors at these banks made whole, insisting that none of these losses "will be borne by the taxpayer."

   • Ex-congressman and the man behind the Dodd-Frank Act, Barney Frank, claims Signature Bank Was Shut Down to Send 'Anti-Crypto' Message. New York regulators decided to abruptly shut down the crypto-friendly bank on Sunday, citing system risk—which surprised management at the firm, according to a Bloomberg report. It is the third-largest bank failure in U.S. history, with SVB being the second. Regulators have not yet provided any further reasoning for shuttering the bank.

2. Investor Mints $407.8M in USDC as Stablecoin Recovers Dollar Peg

   • Circle's USDC repegged after regulators intervened to protect deposits in the now-collapsed Silicon Valley Bank. When Circle disclosed on Friday night that it held some $3.3 billion in cash reserves in the now-collapsed Silicon Valley Bank (SVB), its stablecoin, USDC, which is normally redeemable 1:1 with the greenback, fell to $0.87, its lowest value since 2019. In reality, Circle’s exposure to the beleaguered bank accounted for less than 10% of the total $42.1 billion cash reserves underpinning the value of USDC. This weekend, Circle also vowed to cover the shortfall through corporate resources and “external capital, if necessary.” 

3. Fed Rate Expectations Flip as US Inflation Data May Take Backseat to Banking Tumult

   • Expectations about rate hikes have been slashed in light of recent events across U.S. regional banking. Crypto prices soared throughout the day on Monday as the turmoil in U.S. regional banking continued and interest rate hike expectations were recalibrated. 

4. OKCoin Causes Dollar Deposits, OTC Services After 'Managing' Silvergate Situation

   • OKCoin, a U.S.-based crypto exchange affiliated with the much larger OKX, temporarily paused deposits of U.S. dollars following Sunday's failure of Signature Bank. 

5. EU Parliament passes smart contract regulation under Data Act

   • The European Parliament adopted legislation under the Data Act on Tuesday, with 500 votes in favor and 23 against. The legislation, and its provisions on smart contracts, is not explicitly aimed at the crypto industry, but focuses on data from connected devices, or the Internet of Things. Provisions include “rigorous access control mechanisms” and protection of trade secrets integrated into the design of smart contracts. There would also need to be a possibility to terminate or interrupt transaction mechanisms, and lawmakers will need to decide which conditions would make that permissible. Some worry the Data Act may have far-reaching effects on crypto if the scope isn’t clearly defined, especially as smart contracts — automated executions written into software — underpin the infrastructure of DeFi. 

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Innovation & Adoption 💡📈

1. Brave Browser Now Lets Users Sell Crypto Within the Wallet

   • Privacy-focused web browser Brave announced on Friday the rollout of a new feature that allows users to not only buy cryptocurrency but also now sell it for fiat—including U.S. dollars, euros, and the British pound—without leaving the integrated Brave Wallet. Brave said it aims to make crypto self-custody easier with this new desktop browser feature, which is powered by crypto on-ramp startup Ramp Network.

2. Brevan Howard Takes Over Dragonfly Capital Crypto Fund

   • Brevan Howard, which manages more than $30 billion in assets, has entered into an agreement to assume control of Dragonfly’s “Liquid Opportunities” fund.

3. Starbucks Odyssey Releases ‘The Siren Collection,’ Its First Limited-Edition NFT Drop

   • Starbucks Odyssey, the coffee company’s Web3 loyalty program released its first limited edition NFTs, which it calls “Stamps.” The program, still in invitation-only beta, allows members to complete activities such as quizzes and in-store purchase to earn Stamps, which can be collected or resold on Nifty Gateway.

4. Securities Platform DEFYCA to Release Tokenized Private Debt Protocol on Avalanche

   • DEFYCA says it is the first company to offer digital securities to professional investors under the European Union’s upcoming, comprehensive crypto regulation, MiCA, and the current blockchain laws of Luxembourg.

     The announcement comes as crypto and traditional capital markets are increasingly getting commingled in decentralized finance with protocols offering tokenized versions of real-world assets such as bonds and credit on the blockchain for investors. Private debt funds, which DEFYCA is aiming to bring to Avalanche, manage $1.6 trillion of assets, according to a report by Broadridge.

5. Framework Ventures Leads $15.8 Million Round Into 'Proof of Solvency' Startup

   • Proven, a firm providing zero-knowledge proof technology so that crypto firms can prove solvency, raised a $15.8 million round led by Framework Ventures. A ZK proof is a cryptographic technique that confirms whether a statement is true or false without revealing that statement’s contents. While these are often used in crypto for Layer 2 scaling solutions, Proven's so-called "Proof of Solvency" claims to enable firms to show both assets and liabilities without needing to publicly disclose their balance sheets.