Hong Kong and Europe Lead the Way in Digital Asset Adoption

Degenerates,

Welcome back to Web3 Wednesday, your weekly dose of crypto insights that are actually worth reading.

Here’s what I have for you today 👇

• 🚀 Hong Kong and Europe lead the way in advancing digital asset adoption and regulation while the UK struggles with banking infrastructure and venture capital investment.

• 🐢 Using Bitcoin as the foundation for Web3 apps can boost its visibility and adoption. However, resistance to innovation hinders its use for wider Web3 apps.

• 🖼️ OpenSea and MetaMask introduce new features to simplify the management and transfer of NFTs for professional collectors and the everyday user.

• 🍟 Extra Fries: Delphi Labs raises $13.5M to build an accelerator for Web3, Disney closes down metaverse unit, and Senator Elizabeth Warren builds an anti-crypto army.

• 🖤 +2 M&A Transactions

• 💸 +10 Funding Rounds

Challenges and Advancements in the Global Crypto Landscape

Hong Kong is legalizing crypto retail trading and introducing a licensing regime for digital asset providers.

• Motivations: Hong Kong's GDP shrank by 3.5% in 2022 and the city is in need of new growth stimulus.

• The city is allocating HK$50 million ($6.4 million) to support the web3 ecosystem.

• Hong Kong is well-positioned to serve as a sandbox for China. It claims to have attracted over 80 virtual asset-related companies to establish their presence in the city. These companies include VA exchanges, blockchain infrastructure and network security firms, as well as virtual currency payment and wallet companies.Please provide content to be revised.

• Is this a good move? 100%, Yes. Of course, China is fully aware of the volatile nature of cryptocurrencies, but it is also likely afraid of missing out on a potentially disruptive technology.

Crypto entrepreneurs are finding more success in Europe, especially in France, where the country is actively promoting labor-market reforms, tax cuts, and a larger banking sector as incentives to set up shop.

• The EU's regulatory framework for digital assets, called MiCA, will come into force in 2024 and cover multiple tokens, including stablecoins, which has instilled confidence in the EU's ability to reduce the crypto risks.

• Circle is doubling down on Europe with applications for multiple licenses in France, an "innovation-forward" country, according to co-founder Jeremy Allaire.

• However, there is a risk of overconfidence and backlash if something goes wrong. Pressure from nervous French lawmakers on the Macron administration has led to tighter oversight of the NFT sports app Sorare and a tougher registration process for digital asset firms before MiCA goes live.

Despite progressive signs in Europe, the UK's ambition to become a global crypto tech hub may be hindered by its own banking infrastructure.

• Crypto startups in the UK are facing difficulties in obtaining bank accounts, with some companies being forced to rely on payment service providers instead of traditional banks to meet their banking needs.

• SavingsBlocks is now exploring banking licenses in France after being denied accounts from nine UK banking service providers.

• According to Bloomberg, Nephos Group, a UK-based accounting and professional services firm that serves the crypto industry, had its account with money transfer platform Wise Plc locked for over three months, starting in November of last year.

• Furthermore, UK venture capital investment in digital asset businesses experienced a 94% drop to $55 million in Q1 of this year, while funding across the rest of Europe increased by approximately 31% (YoY).

Overcoming Resistance to Innovation: Key to Bitcoin's Success in Web3

• According to Lolli CEO Alex Adelman, Bitcoin should be used as the foundation for Web3 applications in order to leverage its secure and liquid network.

• His argument? Bitcoin has the most secure and economically viable blockchain network.

• To date, Ethereum has become the preferred platform for building Web3 applications due to its flexibility in supporting smart contracts, which Bitcoin cannot do because of its limited programmability.

• The main obstacle to applying Bitcoin's power to broader Web3 applications is cultural, as the Bitcoin community resists innovation due to a purist appreciation for Satoshi's original mission.

• By not building beyond financial use cases, Bitcoin risks losing out to other protocols despite having the greatest head start.

• As of late 2022, DeFi alone accounted for $35 billion of Ethereum's $200 billion market cap, while only $550 million of Bitcoin's $400 billion market cap has been utilized by the four major layer 2 Bitcoin scaling systems - Liquid, RSK, Lightning, and Stacks - which were designed to run more complicated applications.

• Building on Bitcoin as a base layer for DeFi, payments, and NFTs will help catapult Bitcoin to even greater levels of visibility and adoption.

• The scalability potential of Bitcoin has been unlocked thanks to the Taproot upgrade. However, it still requires a concerted effort from participants to onboard builders into the ecosystem.

NFT Market Leaders OpenSea and MetaMask Roll Out New Features

• OpenSea has launched OpenSea Pro, its new NFT marketplace aggregator aimed at serving the needs of professional users.

• The platform plans to offer a suite of improved features that allows collectors to discover the best deals and insights across 170 marketplaces.

• OpenSea Pro allows users to discover cross-marketplace data on user and collection activity in real-time, and provides advanced order capabilities to offer more control over purchases, (trait) collection offers, and listings.

• The launch of OpenSea Pro is the result of OpenSea's acquisition of Gem in 2022. OpenSea acquired Gem to improve the experience of its more seasoned "pro" users. Gem enabled traders to purchase NFTs across various collections and multiple marketplaces in a single transaction, thereby lowering gas fees.

• OpenSea is not the only company with tricks up its sleeve. MetaMask has recently released version 10.28 of its browser extension, which includes a dedicated NFT tab, simplified sending of ERC-721 NFTs, and NFT auto-detection.

• The NFT tab makes it easier for users to view and manage their NFTs within the wallet, and ERC-721 NFTs can be transferred without relying on external platforms or smart contracts.

• The new features eliminate the need for users to rely on platforms like OpenSea or interact with smart contracts to transfer their NFTs, making the process simpler and more secure.

• The enhanced user experience helps MetaMask stay competitive with newer wallets and mobile alternatives like Rainbow.

• 💰 Get that bag. Delphi Labs, the incubation arm of crypto research firm Delphi Digital, has raised $13.5 million in funding from P2P and Jump Crypto to build out an accelerator aimed at fostering growth of teams working to launch Web3 projects. The accelerator will provide $200,000 in funding to each team and hands-on advice from a core team of experts in various fields (Read More)

• 💔 No Mickey Mouse NFTs. Disney is closing down its metaverse unit as part of its plan to lay off 7,000 workers, a move that is expected to save the company around $5.5 billion. The metaverse division was responsible for exploring new technologies and developing strategies to create interactive stories using the company’s intellectual property library. (Read More)

• 🫣 No one can hide. Insiders at Signature Bank sold over $100 million of shares after the bank pivoted to attract cryptocurrency companies, with sales over the past three years by the bank’s chairman, its former CEO and his successor accounting for about half of the amount sold. The insider transactions at Signature weren’t widely known because of where they were filed and how the transactions were described in the documents. (Read More)

• ☢️ The war is on. Senator Elizabeth Warren is reportedly building an "anti-crypto army" in response to warnings from crypto lobby group Coin Center that a crackdown on TikTok could lead to a bitcoin ban. The crypto industry is concerned that a newly introduced bill, known as the Restrict Act, could pave the way for a future bitcoin and crypto ban. (Read More)

• 🥇 You can’t defeat NFTs. Tokenized gold assets have surpassed $1 billion in market capitalization as gold’s price nears its all-time high. The largest gold stablecoins are Pax Gold (PAXG) and Tether Gold (XAUT), with a combined market cap of $518 million and $499 million, respectively. (Read More)

• Digital asset startup Bakkt has completed its acquisition of Apex Crypto in a deal worth up to $200 million. Apex Crypto provides a turnkey platform for integrated cryptocurrency trading and has dealt with over $12.5 billion in crypto trades since its launch in 2019. Through the acquisition, Bakkt aims to tap into a universe of 5.8 million crypto-enabled accounts and further establish itself as the business-to-business-to-consumer crypto provider of choice. (Read More)

• OneOf, a Web3 platform, has acquired TAP Network, a software company that creates customer loyalty programs for major brands using blockchain technology. OneOf will use TAP Network's technology to create a new product called OnePlatform, which aims to revolutionize the brand/consumer relationship by rewarding consumers for interacting with brands. (Read More)

• LayerZero | $120m Series B: blockchain messaging protocol developer that allows decentralized applications build across multiple blockchains (link)

• Ledger | $100m Series C extension: security and infrastructure solutions to critical digital assets for consumers and institutional investors (link)

• Fetch.ai | $40m: decentralized network for digital representatives to find, communicate, and trade with each other (link)

• Li.fi | $17.5m Series A: multi-chain DeFi middleware for the application layer (link)

• Polyhedra Network | $15m Pre-Series A: infrastructure for Web3 interoperability through the use of advanced zero-knowledge proof protocols (link)

• Econia Labs | $6.5m Seed: Aptos ecological DeFi protocol that aims to develop a back-end protocol (link)

• Cega | $5m: decentralized exotic derivatives protocol (link)

• Polytrade | $3.8m Seed: trade finance platform allowing users to lend stablecoins to safe, underwritten investment options based on real world businesses (link)

• Ecosapiens | $3.5m: the world's first carbon backed collectible (link)

• Franklin | $2.9m Seed: hybrid cash & crypto payroll (link)