05 August 2022 |

Another Crypto Bill & Robinhood’s Busy Week


Yet Another Crypto Bill

  • Introduced on August 3rd by Senators Boozman, Stabenow, Booker, and Thune. The objective of the Bill is to give the CFTC new tools and the authority to regulate digital commodities in order to safeguard the wellbeing of consumers and the markets. 
  • A couple of important points from the regulatory perspective:
    • As of now, authority to regulate digital assets falls upon every State, which of course leads to a lack of uniformity and certainty around the industry. However, this bill seeks to bestow a federal regulatory agency (CFTC) with exclusive jurisdiction over the space, an important step towards a standardized regulatory landscape. 
    • This bill is also relevant from the standpoint of the long-lasting debate of cryptocurrencies being securities vs. commodities. Passing this legislation might lean the debate towards them being commodities per the CFTC’s authority to regulate them, although the SEC might have something to say about that. Our perspective at Vol 1. Ventures is that the vast majority of cryptocurrencies are securities, and should be regulated as such, which will be thoroughly explained in our upcoming research memo on US Crypto Regulatory Landscape. 
  • The proposed legislation adds to the relatively large amount of attention given by policymakers towards the crypto space during the last months (i.e. Lummis Bill and Virtual Currency Fairness Act). Although it is a positive sign for the industry to be among the topics being discussed in the public arena, it is important to take these proposals into the perspective of the political landscape; with important geopolitical issues, such as the Russia-Ukraine war, the energy crisis, and the upcoming presidential elections, it seems unlikely that any of these bills will be a priority for law-makers and their constituents. 

Hackers Attack Solana Wallets

Via TechCrunch and CNBC

  • Hackers targeted and successfully attacked Solana wallets and drained them of funds totaling around $8M USD, in an ongoing attack that started during the early hours of Wednesday, August 3. 
  • Solana’s official twitter account announced that an unknown actor hacked into nearly 8,000 Solana wallets, and has been draining funds from them. The attackers have targeted Solana native tokens $SOL, as well as $USDC among several wallets that support the blockchain, such as Phantom, Slope, Solflare, and TrustWallet. 
  • The attack comes shortly after the $200M Nomad exploit, raising concerns around cybersecurity practices in the crypto/blockchain space. 
  • As the general population has historically raised concerns around security of funds in crypto, and the presence of malicious actors or hackers taking advantage of new technologies to commit these sorts of crimes, it becomes very important for the industry to advance their cybersecurity protocols and best-practices in order to protect their consumers. Also, this might be an issue to be addressed by the DOJ (on the criminal side), Homeland Security, regulatory agencies such as the SEC and CFTC, as well as legislators in order to protect users from these kinds of attacks. 

Robinhood Layoffs, SEC Probes, & Stock Price

  • It was a busy week for Robinhood. They reported a YoY decrease on Q2 revenue (44%), a 7 million decrease on monthly active users (from a previous 21m), and a $295M loss during Q2. They also revealed that the SEC has been probing them with requirements around their compliance around short-selling rules since October 2021 and inquiries about their trading reporting requirements during this second quarter. To top it all off, they laid of 23% of their staff.
  • Despite negative earnings reporting, their stock managed to rise up to 17% a day after their announcement to reduce workforce by 23%, which adds to their previous 9% layoff during April of this year. 
  • Robinhood CEO, Vlad Tenev, said layoffs were a difficult change and named macroeconomic environment, high inflation, and the crypto crash as causes for this decision.