Chase Crypto Ban: Why Are We Here?

ETH Transaction Censorship | Celestia 60M Airdrop

Marco Manoppo & Karon Pangestu
September 27, 2023

📢 Sponsor | 💡 Telegram | 📰 Past Editions

Good Morning,

The US government is entering a shutdown, which will impact the work of government agencies. Thus, the SEC made its move and delayed its decision on ARK-21Shares Bitcoin ETF to next year. This decision came just hours after a group of lawmakers pressed Gary Gensler to approve a spot Bitcoin ETF.

In Today's Email:

What Matters: Chase UK to ban crypto ⚠️
Case Study: The future of ETH staking 🔎
Governance & Features: Celestia 60M airdrop 🪂

Narratives: Arbitrum is set to inject ~$40M in stimulus to projects building in the ecosystem. Find a way to capitalize on this.

NOTEWORTHY READS

Multicoin Capital’s read on the dawn of on-chain FHE.
Evanston Capital’s read on blockchain VC investor participation trend.
Pantera Capital’s read on blockchain compensation survey.

BROUGHT TO YOU BY

Cloaked

In crypto, protecting your privacy is extremely important.

Without a proper tool, your onchain activities can be used to track your identity, increasing one’s safety concerns.

Today’s sponsor helps you alleviate that concern.

It’s essential to protect your personal information because data breaches have become extremely common.

Cloaked is your shield against unwanted intrusions.

Easily set up email and phone aliases that Cloak your real info whenever you give out your contact details. That way, even if there’s a data breach, your personal data remains safe.

With a browser extension, mobile app, and web view, Cloaked is more than just a password manager.

Cloaked ensures your identity remains uncompromised and your peace of mind is intact.

Readers also get 20% off your first 3 months with Cloaked (code: LAUNCHY20).

WHAT MATTERS

Chase UK to Ban Crypto Transactions

@CryptoVonDoom

State of play: Starting October 16, Chase UK will prohibit customers from making crypto-related transactions. This ban also encompasses wire transfers to crypto exchanges.

Chase spokesperson said the reason behind the crypto ban is to protect customers from fraud and scams.
Citing a study from Britain's Action Fraud, the bank noted a 40% rise in consumer losses linked to fraud, exceeding £300M.
In an email, Chase advised customers they could switch banks but warned that funds linked to fraud or scams might not be recoverable.

Earlier this year, several banks imposed restrictions on crypto transactions for UK customers.

The Royal Bank of Scotland limited transfers to crypto exchanges.
Santander blocked payments to Binance (though it allows incoming funds from Binance).
NatWest, another major UK consumer bank, has also restricted customer transactions to crypto exchanges.

Why it matters: Chase UK's warning about non-recoverable funds linked to fraud seems like fear-mongering, especially as a forthcoming UK bill will empower law enforcement to retrieve crypto assets tied to criminal activities.

The Economic Crime and Corporate Transparency Bill would give courts and law enforcement agencies powers to freeze crypto linked to money laundering, drug trafficking, cybercrime, and terrorism.

For builders and investors: Let's pause and recall why we work in crypto.

This situation mirrors news outlets banning AI content. Thoughtful regulation is key, but you can't stop the technology.

CASE STUDY

The Future of Ethereum Staking

Coinshares - Ethereum Foundation

Credit to Luke Nolan and CoinShares for the original piece.

State of play: Concerns around ETH staking related to "centralization", "cartelization", and the continual increase in validators that may propel us into an “untested economic regime”.

Lido's 32% market share raised centralization concerns. Despite low governance attack risks, the community calls for preventative measures, with no official response from Lido yet.
There is also fear of "cartelization," where Lido could potentially manipulate block-timing and coordinated MEV extraction, further solidifying its dominance.
With rising staking demand, the staked ETH market cap could surpass the unstaked which may push us into an “untested economic regime”.
A growing number of Ethereum validators may reduce rewards, risking exits if yields fall below 2%.
With Treasury Bills at 4.0–5.5%, staking demand is stable, though this might change if these yields decrease.

What’s next: A short-term solution proposed by Dapplion, EIP-7514, proposes modifying the validator churn limit to slow down the growth of active validators.

The idea is to buy time for the Ethereum developer community to craft long-term solutions.

Our take: It goes against basic business principles to ask a protocol like Lido to impose self-limitation on its growth.

Core developers and market participants need to create new incentive mechanisms that will organically curtail growth from going to one entity.
We’ve seen “institutional only” stakers such as Alluvial and Figment taking away market share from Lido.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

INSIGHTS

Rising Ethereum Transaction Censorship

@nero_eth

Credits to @nero_eth for the original tweets.

Recent months have seen a rise in censorship with five of six major block builders adhering to OFAC (Office of Foreign Assets Control) sanctions, leaving TitanBuilderXYZ as the lone entity processing OFAC-sanctioned transactions.

Censorship, occurring at various levels in the blockchain, threatens the ecosystem's political neutrality and decentralization.
While relay-level improvements have been made, censorship by builders is increasing.
Proposed solutions include Inclusion Lists, providing deniability for sanctioned transactions, and Encrypted Mempools, protecting unconfirmed transaction data from censorship.

Why it matters: Ethereum values censorship resistance, yet users can face censorship at various stack layers.

Builders, relays, and validators can selectively exclude transactions, especially with 95% MEV-Boost adoption.

FEATURES & GOVERNANCE UPDATE

Celestia Airdrops 60M Tokens

Celestia

L1 blockchain Celestia has launched its genesis airdrop campaign, distributing 60M of its native tokens called TIA (6% of total supply) to incentivize participation.

TIA will be available to 7,579 developers and 576,653 on-chain addresses on Ethereum rollups, Cosmos Hub, and Osmosis.
Participants in Celestia's Genesis Drop can acquire TIA, enabling them to buy blobspace and secure the network from the start.
The drop offers 60M TIA until Oct. 17.

Why it matters: Celestia is one of the few high profiles project that have raised tremendous capital in the past year. It aims to advance blockchain infrastructure by making it easier to deploy and scale blockchain.

Other notable feature updates:

GammaSwap goes live on Arbitrum mainnet.
DeFi Saver launches savings protection automation.
Uniswap Wallet launches Swap Protection.
Radpie Mainnet goes live.
Poolshark Labs launches Limit Pools.
VMEX goes live on Base.
Vara L1 goes live.
Votium launches V2.
Factor Leverage goes live.

QUICK BITES & MEME

Chase UK to ban crypto-related payments.
SEC extends Ark and Global X ETF deadline.
MicroStrategy bought 5,445 Bitcoin for $150M.
Lawmakers push SEC to approve spot Bitcoin ETF.
Binance seeks to launch stablecoins in Japan with MUFG.
SEC questioned Coinbase's role in Celsius’s bankruptcy plan.
Bernstein says crypto fund management could be worth $50B.
Coinbase successfully registered with Spain's Central Bank.
Ripple taps former White House official to head US public policy.
JPM states that stablecoin issuer risk disrupting funding markets.
Taiwan releases guidelines for crypto exchanges.
Binance reopens in Belgium.

The $BTC ETF completes one mini narrative cycle in 40 minutes.
— Hsaka (@HsakaTrades)
8:39 PM • Sep 26, 2023

If you enjoy reading this issue, please consider subscribing. It takes 1 minute of your time but it would mean the world to us 🙇

Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.