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Welcome to The Node! This is Marc Hochstein to take you through the latest crypto news. In today's news: Russia is about to try using crypto to get around sanctions; U.S. House Committee plans a heap of crypto hearings in September; a clue about Trump's crypto project; and Elon Musk "doges" a bullet. The Takeaway: Could more robust prediction markets have mitigated the Covid pandemic? One statistician argues they might have. Read more below.👇 Holiday notice: We're off Monday for Labor Day in the U.S. The Node will return on Tuesday, Sept. 3. |
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Russia Ready to Try Crypto to Skirt Sanctions |
Russia will begin trialing cross-border crypto payments next week in an effort to circumvent international sanctions – but this effort may not work, several policy and legal experts told CoinDesk. Legislation passed at the end of July and swiftly signed into law by President Vladimir Putin does not lift an existing ban on using cryptocurrencies as legal tender for regular payments within Russia, but instead allows cross-border payments with crypto. How the law will allow such payments remains unclear because the legislation doesn’t specify rules for such transactions. Instead it hands power to Russia’s central bank to oversee an “experimental” regime, experts said. Russia's economy has been hit hard by a suite of sanctions imposed by the U.S. and other nations following its invasion of Ukraine. Since Russia’s invasion of Ukraine in February 2022, it’s faced 16,500 sanctions from the U.S., U.K., European Union, Australia, Canada and Japan. "The passing of these bills by the Russian government signals a continuation of Russia’s evolving strategy to circumvent Western sanctions," blockchain analytics firm Chainalysis’ director of investigations, Valerie Kennedy, told CoinDesk. |
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U.S. House Committee Plans Crypto Hearings |
The U.S. House Financial Services Committee is poised to hold a series of crypto hearings digging into several aspects of the industry, according to a person briefed on the planning, including decentralized finance (DeFi), the Securities and Exchange Commission's oversight of digital assets businesses and the implications of "pig butchering" scams. The congressional panel, which has oversight over U.S. securities and most financial products, will set a September hearing calendar jammed with crypto-relevant topics, the person said. The committee chairman, Rep. Patrick McHenry (R-N.C.), is retiring at the end of the year and has said one of his top remaining priorities is finishing one of the bills to begin establishing tailored federal rules for crypto. The first of the hearings on Sept. 10 will be a long-awaited subcommittee examination of DeFi, an aspect of the crypto industry that's received mostly negative attention from regulators to date. A number of proposed rules at various federal agencies could have existential consequences for DeFi projects, including at the SEC and Internal Revenue Service. |
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New Clues About Trump's DeFi Project |
Former U.S. President Donald Trump's mysterious new crypto business plans to offer access to "high-yield" opportunities, according to a clue embedded in the website for the project called World Liberty Financial. Metadata on worldlibertyfinancial.com says "the only crypto DeFi platform supported by Donald J. Trump" will connect users to "decentralized finance's best tools for secure, high-yield crypto investments." It calls on users to "join the financial revolution today!" A trademark filed for World Liberty Financial in mid-July also points to an association with DeFi. The lawyer who filed the trademark papers, Alex Golubitsky, confirmed to CoinDesk on Thursday that the trademark relates to Trump's crypto ventures and directed further inquiries to a press office associated with worldlibertyfinancial.com. |
Elon Musk 'Doges' a Bullet |
A Manhattan judge permanently dismissed a lawsuit alleging Elon Musk and his electric-car company, Tesla, manipulated the price of dog-themed token dogecoin (DOGE) using postings on X (then Twitter) and in public appearances. U.S. District Judge Alvin Hellerstein issued the decision on Thursday night. In 2022, investors accused Musk of using his Twitter following and a 2021 appearance on NBC's "Saturday Night Live," among other instances, to influence the memecoin's price and allegedly take profits on his suspected DOGE holdings at their expense. Some of Musk's statements in that lawsuit included his claims to "become Dogecoin's CEO," put a "literal Dogecoin in SpaceX and fly it to the moon," and that "Dogecoin might become the standard for the global financial system." Hellerstein said the statements were "aspirational and puffery, not factual and susceptible to being falsified," adding that "no reasonable investor could rely upon them." |
The Takeaway: Prediction Markets and Covid |
The Commodity Futures Trading Commission received more than 800 comments on its proposal to ban prediction markets on political contests. Below is a salient passage from a letter submitted by Harry Crane, a professor of statistics at Rutgers University. – M.H. In early 2020, the U.S. government’s official public announcements on Covid-19 was that the threat to the public “was low." This official position remained, with news coverage by and large downplaying the threat of Covid in the United States, until March 2020, at which point the previously low threat turned into a threat so dire that it led to mass lockdowns and numerous drastic measures to control the spread of Covid. In addition to raising questions about the competence and honesty of the government in its response, the delayed response likely contributed to tens or hundreds of thousands deaths that could have been avoided by an earlier response. Event contract markets are especially equipped for assessing the likelihood and potential consequences of such a seemingly unpredictable and uncontrollable event. On February 27, 2020, PredictIt launched a market on the event “Will WHO declare COVID-19 to be a ‘pandemic’ before Mar. 6?” According to conversations with PredictIt, someone from the Commission expressed disapproval about the market. The market resolved on March 6, 2020, and PredictIt did not subsequently offer any further Covid markets, even as widespread confusion persisted for the months and years to follow. At least some of the damage, and many of these deaths, may have been avoided if the Commission had not intervened to prevent PredictIt from offering a market on the Covid pandemic in early March 2020. At a time when the government and media were either ignoring or downplaying the threat to Americans as low or non-existent, the market price signal of the above and similar markets would have been invaluable in either corroborating or refuting these official claims in real time. By simply operating such a market, hundreds of thousands if not millions of lives could have been saved. Instead, the Commission, for unknown reasons, chose to deprive the public of such a powerful and informative mechanism, to the public’s great detriment. Read the rest of Crane's letter, and the other public comments, here. |
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