Skip to content

Crypto Currents: Coinbase, FTX, Spotify

Other crypto stories breaking waves this week...

Table of Contents

Base Layer 2 Rollup Launch by Coinbase on Ethereum Has Rocky Start

Coinbase, one of the largest cryptocurrency exchanges in the world, has announced the launch of "Base," a layer 2 rollup it describes as a "secure, low-cost, developer-friendly Ethereum L2 built to bring the next billion users to web3."

The technology is built on top of Optimism OP layer 2 rollups, which can increase the capacity and scalability of the Ethereum network. The launch of Base is a big endorsement for both ETH and the Optimism protocol, as Coinbase's scale of over 100 million users and $100 billion in assets can help drive high volume on the Ethereum ecosystem.

Read more: Regulatory Scrutiny Puts Coinbase's Revenue Plans at Risk

However, the launch did not go as smoothly as expected, as the smart contract powering Base was not fully baked, leading to the rollback of many early transactions. Additionally, Coinbase initially announced that 20% of sequencer revenue would go toward funding public goods, but this was later changed to a "significant percentage." Despite the technical issues and miscommunication, the launch of Base is still a significant development for the cryptocurrency industry and the Ethereum ecosystem.

Top US banking regulators, including the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, have issued a fresh warning to banks to be on guard for any liquidity risks from cryptocurrency-related clients.

In a joint statement, the regulators cautioned that deposits placed with banks for the benefit of crypto consumers, as well as stablecoin reserves, could be subject to rapid outflows and urged banks to have robust tools in place to monitor funds placed by crypto-asset related entities. It also highlighted that stablecoin reserves could see large and rapid outflows in cases of unanticipated stablecoin redemptions and turmoil in crypto markets.

The regulators noted that recent events in the crypto sector have highlighted volatility risks and emphasized that the guidance does not include new requirements and banks are not prohibited from providing services to particular sectors. However, it does mark the latest in a series of moves from bank regulators urging caution in any crypto dealings.

This is the first time that banking regulators have highlighted deposits linked to stablecoins as susceptible to volatility during periods of stress in the crypto market, Reuters noted in a report Thursday.

OKX Eyes Hong Kong License

Last week, we reported that Huobi was applying for a crypto trading license in Hong Kong. The move came as the Hong Kong Securities and Futures Commission (SFC) allowed retail investors to access the two largest crypto tokens - Bitcoin and Ethereum.

Retail customers are required to pass a knowledge assessment or else only be offered access after training is provided. The SFC also requires all digital asset trading platforms operating in Hong Kong or actively marketing to Hong Kong-based investors to obtain a license from the SFC.

It has since been reported that OKX is also after a Hong Kong license. Company officials revealed OKX began preparatory work for a license in the region back in 2022.

OKX founder Star Xu made the announcement on Twitter whilst Lennix Lai, the firm’s managing director, retweeted the message adding that OKX has a team of over 20 people working on compliance in Hong Kong.

Over $50M Withdrawn From FTX Japan

FTX Japan users have flooded back to the exchange to withdraw their money. Earlier this week, we reported that FTX Japan users would be able to withdraw from 21 February.

The Japanese subsidiary paused withdrawals in November 2022 when FTX filed for bankruptcy along with its 134 subsidiaries. The Japanese subsidiary had only launched in June 2022.

Crypto platform Liquid Japan, purchased by FTX last year, facilitated the withdrawal process.

Read more: FTX Japan Users Can Start Withdrawing From Tomorrow

On 22 February, FTX Japan announced users had withdrawn roughly JPY 6.6 billion (US$50 million) in cryptocurrency and fiat.  7,026 account holders moved funds from FTX Japan to Liquid. 5,697 transactions involving cryptocurrencies and 1,947 instances of users withdrawing fiat were reported.

Metaverse & NFT News

Spotify Tests Exclusive NFT Playlists

Music streaming service Spotify is testing a new feature that requires an NFT to unlock playlists. Metaverse band Kingship, which is signed to Universal Music Group (UMG), is part of the experiment. Kingship has released a special playlist which can only be accessed by owning a Kingship key card NFT.

A crypto wallet including MetaMask, Trust Wallet, Rainbow, Ledger Live and Zerion are required to authenticate the NFT in order to unlock the playlist.

Currently, the pilot is only available to Android users in he U.S., the U.K., Germany, Australia and New Zealand.

Other communities such as Overlord, Fluf and Moonbirds are also publishing NFT locked playlists.

“At Spotify, we routinely conduct a number of tests in an effort to improve our user experience. Some of those end up paving the path for our broader user experience and others serve only as important learnings. We have no further news to share on future plans at this time,” a Spotify spokesperson said.

TikTok Integration to Boost Reach of Artists on Audius

Web3 music streaming platform Audius announced this week that it is adding support for the popular social-media platform TikTok. Users can now sign up for the application with their TikTok profiles and use the streaming service’s songs in their videos on the social-media platform. This integration is expected to boost the reach of artists on the platform, which allows both musicians and listeners to accumulate the $AUDIO while streaming. The token received a 20% boost on the announcement to reach US$0.38.

“Anything that’s good for artists is good for the Audius community, and by letting artists import their verified status from TikTok, we think it’ll attract an even wider group of talent,” Forrest Browning, chief product officer and co-founder at Audius, told Coindesk.

Dapper Labs Cuts 20% of Staff

Another day, another firing spree. Dapper Labs is the latest crypto firm to announce a slew of layoffs, letting go of 20% of its staff.

CEO Roham Gharegozlou made the announcement in an email to investors on Wednesday.

Gharegozlou cited a corporate restructuring and said that “as part of this restructure, we have made the difficult decision to part ways with team members representing 20% of full-time employees."

He reassured investors that the company remains in a “strong cash position with no outstanding debt.”

"With the right cost structure, we can think long term," Gharegozlou wrote. "Our goal is to grow our communities sustainably. The shift we’ve undergone over the past several months has not been easy, but it was necessary to get us in fighting shape for the path ahead."

The news coincides with Polygon's job cuts, whose 20% layoff was executed with a "lack of compassion" according to one employee.

Read more: Polygon: "Lack of Compassion" as Cuts Hit 20% of Workforce

Ordinals Hit Up MetaMask

Blockhead loyalists may recall we discussed Bitcoin loyalists kicking up a fuss about Bitcoin Ordinals.

The new development which brought NFTs to the OG blockchain divided the Bitcoin community and continues to cause a stir.

Read more: Bitcoin Ordinals Are Disrupting NFTs But Here's Why Bitcoin Maxis Hate It

The latest update to the saga sees Ordinals being stored on MetaMask, widening the access to the controversial NFT tech.

Blockhead doesn't really have a dog in this fight, but we nonetheless love to watch the drama unfold.