Blockchain Bites: DeFi’s Dividend, China’s ‘New Battlefield,’ the Big Banks’ ‘Suspicious Activity’

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China sees its digital yuan as a “new battlefield,” DeFi’s Curve has a new dividend program and a yet-to-launch platform is pursuing an “Initial DEX Offering.”

Top shelf

‘New battlefield’
China’s central bank gave an inside look into its motivations for developing a digital currency (CBDC) for retail and governmental use. In a commentary published by China Finance, a local magazine, People’s Bank of China (PBOC) officials said its DCEP (digital currency electric payment) system is essential in weakening the dollar’s role in international finance and could open a “new battlefield” between nations. The DCEP has been in development for six years – during which the government has filed 130 related patents – and is now in testing at banks and corporations in a number of regions. 

DeFi dividend
Curve, the third largest DeFi project by “total value locked,” has instituted a new dividend program for holders of its governance token, CRV. CoinDesk’s Brady Dale reports that trading fees on the platform now will be split between liquidity providers (LPs) and veCRV holders, a form of escrow token that users obtain by staking their CRV to the voting contract. Each trade on the platform incurs a 0.04% trading fee, which has totalled between $70,000 and $150,000 per day last week, based on daily volumes in the $400,000,000 range. “We’ll start moving towards a cashflow-based protocol because the numbers are too sweet to not do it,” Curve founder Michael Egorov told CoinDesk in an email.

Related: First Mover: Digital Gold Narrative Could Be Bitcoin’s Lone Ace as Ethereum Gains

Crypto mining
Three Iranian power plants will allow cryptocurrency miners to buy energy directly from their facilities, in a bid to create new revenue streams. A Thermal Power Plant Holding Company (TPPH), which owns and operates plants all across Iran, executive said, “the necessary equipment has been installed in three power plants of Ramin, Neka, and Shahid Montazeri, and the auction documents will be uploaded on the website in the near future.” Iran recognized crypto mining as a legitimate business activity in July 2019. An estimated 1,000 mining licenses were issued in the first six months under the new rules.

APY.Finance, a yet-to-launch DeFi yield farming aggregator, has completed a $3.6M seed funding round joined by Arrington XRP Capital, Alameda Research, Cluster Capital and CoinGecko. The automated investment service will use the cash to develop and audit its platform, which will offer opportunities to earn yields across a variety of DeFi products in a “in a risk/reward optimized way,” according to its press release. APY.Finance said it’s targeting mid-October for a full-scale rollout of its platform, and has plans for a public sale of its governance token, APY, in what its calling an “Initial DEX Offering” this month. 

Quick bites

At stake

Suspicious circumstances
Cryptocurrencies are often dismissed in the circles of traditional banking and finance for their associations with crime. Earlier this year, the New York Times’ crypto reporter, Nathaniel Popper, penned the article “Bitcoin Has Lost Steam. But Criminals Still Love It.” Implicit in the article: What else could unstoppable, non-state backed money be used for but crime?

Frequently absent from the discussion is the role that the dominant banking infrastructure plays in the world of crime. This weekend, Buzzfeed peaked behind the hood. 

Related: Meet in the Middle: Crypto Companies and Banks Are Evolving Together

According to thousands of documents compiled by the Financial Crimes Enforcement Network (FinCEN), a U.S. watchdog, and seen by Buzzfeed, potentially trillions of dollars of dirty money are flowing through the world’s largest banks. 

From 2011 and 2017, the banks’ internal compliance teams reported to FinCEN thousands of suspicious activity reports (SARs), or activity deemed out of the ordinary and potentially fraudulent. SARs are just the concerns of compliance officers and not necessarily evidence of fraud. 

The files show Deutsche Bank flagged a total of $1.3 trillion, JPMorgan approximately $500 billion and Bank of America another $384 billion. BNY Mellon underlined a total of $64 billion in 325 separate SARs filed with FinCEN, making it the second-most-frequent filer in the leaked documents, CoinDesk reporter Paddy Baker wrote.

Further, between 2012 and 2015, nine big banks paid approximately $20 billion in fines for money laundering, Bloomberg reported.  

While at least one of the SARs related to the multi-billion dollar OneCoin crypto project, determined to be a pyramid scheme by investigators, the report is a reminder that banks, too, aid and abet criminal behavior. 

Market intel

Selling pressure
Bitcoin is facing selling pressure Monday amid coronavirus-led risk aversion in the stock markets, CoinDesk’s Omkar Godbole reports. The cryptocurrency is trading near $10,650 at press time, down 2.9% on the day, having faced rejection near $11,000 earlier on Monday. This follows a decline in European stocks and U.S. stock futures amid news of worsening pandemic conditions across Europe. Bitcoin could suffer a bigger drop if the risk aversion worsens, triggering a dash for the U.S. dollar, as happened in March. Meanwhile, resistances are seen at $11,000 and $11,183 (Sept. 19 high).


Kraken open
CoinDesk’s Director of Research Noelle Acheson thinks Kraken’s application to become the  U.S.’ first crypto bank is not a repudiation of its founding values, but an indication that the world is adapting to crypto. “The SPDI [Special Purpose Depositary Institution] is a new type of bank charter that was created with the crypto industry in mind. A new set of definitions and protections was drawn up to take into account crypto asset characteristics. A state passed financial legislation for the crypto industry,” she writes in the latest Crypto Long & Short newsletter. You can subscribe here.

Podcast corner

Investors expect
With Ethereum 2.0’s much-anticipated move to Proof-of-Stake getting closer, CoinDesk Research Analyst Christine Kim spoke with Ethereum developer Danny Ryan and Liz Steininger, CEO of blockchain security company Least Authority on what users and investors should expect.

Who won #CryptoTwitter?

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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