The Weekly Wrap - 20 August 2021

1. DeFi under SEC oversight?

The Facts:

• The chairman of the SEC, Gary Gensler, said that some projects in DeFi had features that resemble entities that the SEC oversees.
• He mentioned that many DeFi protocols had centralized aspects, such as who is developing the software behind the projects.
• Additionally, Gensler noted that there were incentive structures for “promoters and sponsors” in the middle.

Why it’s important:

• Regulatory frameworks around DeFi are still in their infancy.
• While clearer regulations might pave the way for institutional investors to get more involved in DeFi, there are also concerns that the SEC’s potential actions might stifle innovation or force teams to move away from the U.S..

2. Dogecoin foundation reestablished

The Facts:

• After six years of inactivity, the Dogecoin foundation has been reestablished.
• Vitalik Buterin will be the foundation’s “blockchain and crypto adviser”.
• The foundation’s focus will be on improving Dogecoin integration tools and supporting the development of the cryptocurrency.

Why it’s important:

• Dogecoin was originally launched as a “meme coin” and has attracted a lot of attention this year. Much of it has likely come from Elon Musk, who tweeted repeatedly about Dogecoin.
• The reestablishment of the Dogecoin foundation might help to Dogecoin to retain its popularity.

3. Binance accused by Dutch central bank

The Facts:

• The Dutch central bank said that Binance was operating without the required registrations in the Netherlands.
• Binance responded by saying the exchange would seek registration and the required licenses.
• Among Binance’s issues with regulators, they have hired former IRS officer Greg Monahan to lead their AML efforts.

Why it’s important:

• Binance’s regulatory issues over the past months might show that regulators are uncomfortable with the way that Binance is set up and conducts business in various countries.
• Improved AML/KYC standards appear to be necessary, and Binance’s recent hirings and decrease of the non-KYC’ed withdrawal limit to 0.06 BTC are steps in that direction.

4. DEX aggregator 1inch deploys to Optimism

The Facts:

• 1inch, an aggregator for various decentralized exchanges, has announced their deployment to second layer (L2) solution Optimism.
• The goal is to save transaction fees and improve speed for users in the long run.
• Besides 1inch, Uniswap has already launched an alpha version on Optimism.

Why it’s important:

• As more projects make the move to L2, the composable DeFi ecosystem on the Ethereum mainnet is rebuilt on L2.
• The move to Optimism has been slower than expected and L2 adoption metrics are still fairly low – however, a gradual shift can be seen and might continue over the next months.

5. Diem’s Novi secures licenses

The Facts:

• Novi (formerly Calibra), the wallet designed for Diem (formerly Libra), has secured approvals or licenses in almost every U.S. state.
• David Marcus, who leads Novi, also commented on the need for properly designed stablecoins.
• The timeline for go-live of the product is still unclear.

Why it’s important:

• Diem, which started out as Libra in 2019, had come under immediate regulatory scrutiny after going public with the plans.
• A fully permissioned version, however, is more akin to traditional payments rather than stablecoin/crypto payments on permissionless blockchains.

In other news

• Bitpanda raises $263 million at $4.1 billion valuation (via The Block)
• Tiktok partners with music streaming platform Audius (via CoinTelegraph)
• NFT marketplace SuperRare announces airdrop (via CryptoBriefing)