Welcome to the latest edition of our crypto chronicles digest, where we ride through the latest and greatest from the world of cryptocurrencies. In this edition, we’ll dive into the game-changing announcement from Hermetica about their revolutionary USDh, explore the slump in meme coins amidst Ethereum’s fall, uncover the SEC’s latest standoff with Ripple over its stablecoin plans, and witness the journey of a Japanese crypto exchange as it gears up for its Nasdaq debut. So, let’s jump into the whirlwind of news!
Hermetica’s Revolutionary USDh and the Rise of Bitcoin DeFi
Hermetica has just made a splash by announcing the release of the world’s first synthetic US dollar, backed by Bitcoins, and boasting income-generating features as part of its cutting-edge DeFi (Decentralized Finance) innovation.
According to Hermetica’s announcement, the brand-new synthetic dollar, USDh, set to debut in June, offers users the potential for returns of up to 25%.
Hermetica isn’t your average DeFi protocol for Bitcoin; it’s the brainchild of Stacks, leading the charge in the broader movement known as Bitcoin DeFi (BTCFi). Their goal is to bring DeFi opportunities to the world’s foremost blockchain network.
As Jakob Schillinger, founder and CEO of Hermetica Labs, explains, this novel synthetic dollar empowers Bitcoin holders to store and earn from their US dollars without having to rely on the traditional banking system or delve into non-bitcoin-related products.
Can we trust promises of high returns in the long run?
According to the CEO of Hermetica, the returns are sustainable and depend on the rates of futures financing. Schillinger elaborated:
The returns on Bitcoins fluctuate depending on the market demand for long credit leverage. Our test data from January 2021 to March 2024 show an average APY of 11.71%. During the bullish market of 2022, the annual return was a whopping 26.11%.
Schillinger added that the demand for Bitcoin futures would keep the returns on US dollars steady:
The returns are as solid as a rock thanks to the structural demand for long credit leverage in the Bitcoin futures markets.
More and more protocols are sprouting with useful features and DeFi possibilities around Bitcoin, the world’s safest blockchain network. Schillinger believes that the introduction of ordinals has been one of the most crucial catalysts for BTCFi.
The Slump in Meme Coins Amid Ethereum’s Fall
The meme coin Dogecoin dived by 6.8%, while Shiba Inu dipped by 5.5% on the last day. Meanwhile, Dogwifhat stocks plummeted a whopping 12.3%, even Pepe took a tumble by 7.3%, and Book of Meme went down by 9.6%. The most popular meme coins suffered losses that outweighed Ethereum’s dip on May 8.
This came after a sort of meme crypto hedge fund supercycle. During this supercycle, institutional investors began seeing meme coins as a legitimate investment. Solana, in particular, saw a huge surge in meme activity when memes like Dogwifhat made headlines even before degens started live-streaming token pumps.
It seems memes took the biggest hit, as Ethereum dropped by 4.0%, a modest loss compared to the meme meltdown. But notably, this means ETH dipped below the $3000 mark again for the first time since May 2.
Meanwhile, between May 8 and 9, over $24 million worth of long Ethereum positions got liquidated, totaling $27 million in liquidations, including short positions.
This news comes hot on the heels of Grayscale notifying the SEC of withdrawing its application to convert its Grayscale Ethereum Trust (ETHE) into a spot ETF, the same process it underwent for its Grayscale Bitcoin Trust.
SEC Stands in the Way of Ripple’s Stablecoin
The SEC is throwing shade on Ripple’s plans to launch a new stablecoin amidst their ongoing legal tussle over XRP. On May 7, 2024, in the continuing legal saga between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), a pivotal moment occurred. According to public documents from attorney James Filan, the SEC presented an edited response regarding legal remedies and corroborating evidence against Ripple Labs, its CEO, and co-founder.
In its latest filing, the SEC maintains its stance that Ripple’s primary business involves selling XRP without proper registration. Many speculate this could further impact cryptocurrency regulation in the U.S. The document also highlights Ripple’s plan to launch a new crypto asset.
“Ripple’s primary business remains […] the unregistered sale of XRP. […] It also plans to issue a new unregistered crypto asset,” the SEC stated.
Many believe this asset to be the planned Ripple stablecoin. In early April, Ripple announced its intention to launch a stablecoin pegged to the U.S. dollar.
Ripple has claimed that deposits in U.S. dollars and short-term U.S. government securities will back the stablecoin. However, the asset’s name and launch date remain shrouded in mystery.
Get Ready for Tighter Crypto Control
This development comes as the SEC tightens its oversight of the cryptocurrency industry. SEC Chair Gary Gensler laid out his strategy in a recent CNBC interview, aiming to subject the crypto sector to tougher oversight.
However, Gensler dodged the question of whether Ethereum (ETH) is a commodity or a security, opting instead to highlight the lack of essential investor information. He also took aim at the practice of intermediaries in centralized crypto markets.
Gensler emphasized the SEC’s role in overseeing a capital market worth a staggering $110 trillion. He underscored the significant, albeit problematic, role of cryptocurrencies.
How do we protect the American investor? Right now, they’re not getting the necessary or required information. And the intermediaries in the center of this fairly centralized market typically conflict and do things that we would never allow the New York Stock Exchange to do. The New York Stock Exchange is not allowed to trade against investors.
The SEC chair’s remarks highlight the challenges facing the crypto industry. He believes the sector is susceptible to fraud and deception. The SEC is striving for full disclosure and compliance with the law in all cryptocurrency transactions and offerings.
Japanese Crypto Exchange Are Going to List on Nasdaq
Japanese crypto exchange Coincheck is gearing up for its Nasdaq debut through a merger with special purpose acquisition company (SPAC) Thunder Bridge Capital Partners IV (THCP), set to wrap up in the second or third quarter. The deal has seen its fair share of delays since its announcement back in March 2022.
The timelines are pending approval from Thunder Bridge IV shareholders, the U.S. Securities and Exchange Commission (SEC), and Nasdaq, as per an announcement by Tokyo-based company Coincheck on Wednesday.
The merger was first announced over two years ago in March 2022, with initial plans to wrap up in the latter half of the same year. However, the target was pushed to July 2023 and then extended for another 12 months.
Upon completion of the merger, the Netherlands-based company will be rebranded as Coincheck Group and listed on the Nasdaq Global Select Market under the ticker “CNCK,” joining Coinbase (COIN) as the only other crypto exchange with publicly traded shares in the U.S.
More Info:
- Digest 54: Sweden’s $90M Mining Tax, Binance’s India Return, Omni Network Token Scam & Magic Eden’s NFT Triumph
- Digest 55: Cosmos Protocol Fix, AI Safety Measures for Children, Argentina’s Crypto Adoption and Bitcoin Advances
- Digest 56: BlackRock’s BUIDL Triumph, Artists vs. Deepfakes, Web3 Partnerships, and XRP Market Insights
As we wrap up this edition of the crypto chronicles digest, we invite you to stay tuned with us for more updates on the world of cryptocurrency. From Hermetica’s groundbreaking USDh to the turbulence in meme coin markets, from SEC’s standoff with Ripple to the Japanese crypto exchange’s Nasdaq ambitions. Until next time, folks!
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