Last week saw some of the world’s largest companies (Facebook, Microsoft and Nike) spearhead the Metaverse drive, a meme token based on a TV show get rug pulled, the release of two major reports, and Circle's Jeremy Allaire rapping.

So just a normal week in crypto really.

Scam coin SQUID had all the trappings of a rug pull. Even so (and despite warnings from CoinMarketCap), major mainstream media outlets ran pieces about the new token and how it had soared spectacularly. Some articles didn't even clarify that the cryptocurrency had no official ties to the hit Netflix series, Squid Game. This led to more people buying in due to FOMO and false association with the show.

Sadly, the SQUID rug pull is just another in what has become an all-too-familiar tale. Most of us with an interest in this sector know that anything marketing on popular culture should always be viewed with suspicion. This latest event once again raises the question of whether the crypto community is doing a poor job at explaining itself to the world.

With the digital asset ecosystem now worth over $2.7T, it's our job, as a community, to provide the resources and create an open environment that allows mainstream media journalists and individuals who are interested in decentralised technology to better understand what is going on. The best way of facilitating maturity in crypto markets, besides better regulation, is education.

On that note, why not take a few minutes from your schedule to hear from Arvind Silva, who is part of Copper's Strategy and Fundraising team? Arvind recently appeared on the Barclays Rise podcast to share his views on institutional adoption trends in crypto, barriers to entry for traditional financial institutions, potential solutions, and tips for those looking to innovate in the space. You can listen to the podcast here.

Finally, apologies – our newsletter this week was delayed due to illness. We'll be back in your inbox on Tuesday.


Iva Lila

Beneath the headlines

The PWG finally published its long-awaited report on stablecoins. Is the $135bn industry  caught in the midst of a turf war between regulators? It certainly looks like it.

Stablecoins continue to be the topic du jour after weeks of simmering tension over their regulation in the US.

According to a much-anticipated report released last week by the President’s Working Group (PWG), the administration of President Joe Biden is urging Congress to pass legislation that ensures stablecoins are subject to a 'consistent and comprehensive' federal framework.

The most important takeaway from the report is perhaps the call for Congress to place stablecoin issuers under a regulatory framework similar to the one governing the banking sector, and it does so with a sense of urgency. What does this ultimately mean? Well, we could soon be welcoming a whole new class of companies to the stablecoin arena – U.S banks.

Another key highlight from the report is the PWG publicly acknowledging that when regulated, stablecoins may 'support faster, more efficient, and more inclusive payments options.' In other words, they recognise the potential role stablecoins could play in enhancing the existing financial ecosystem. A huge statement.

Elsewhere in the report, there is unease among the administration that if left unchecked, stablecoins could make it easier to conduct illicit activity. While well intentioned, we believe these concerns are somewhat misguided given that digital assets are far more transparent than traditional financial infrastructure. After all, stablecoins would need to be off-ramped into a regulated exchange and already completed their KYC and AML requirements before re-entering traditional bank accounts.

Where things get really interesting is the discussion that stablecoins may be securities, commodities and/or derivatives – indicating that both the SEC and CFTC may have supervision over the market.

In recent weeks, we've heard Gary Gensler reiterate his belief that stablecoins are securities and that the SEC should have jurisdiction. Meanwhile, the acting chair of the CFTC recently commented that he thinks stablecoins are commodities and fall under CFTC oversight.

Industry commentator, Nic Carter, remarked on his Castle Island podcast that stablecoins don't strike him as something the SEC should be covering: "To me, you look to the FDIC or the OCC or some other more bank-focused regulator to actually be the primary regulator for stablecoins. Don’t be fooled by the name, stablecoins are just a bank deposit that circulates on an alternative ledger, that’s all."

As we've said again and again at Copper, stablecoins – like other digital assets – do not fit neatly into a traditional regulatory framework. With the $135bn stablecoin market only continuing to grow in adoption and popularity, every financial regulator will want to have a claim on being the primary agency to oversee this asset class. What we can say for certain is that whichever body ultimately ends up overseeing the growing stablecoin market, will wield substantial influence.

To learn more about the recent expansion of the stablecoin space, check out Copper's latest In-Depth report here.

Facebook rebrands to Meta. Should we be cynical or optimistic about what’s coming for the Metaverse?

Social media giant Facebook recently announced its plan to invest $10bn on the development of 'the Metaverse'. For those of you who haven't had a chance to look into what this is, you can think of the Metaverse as a connected network of physical and virtual worlds that are bridged seamlessly. To reflect its bold new ambition, the world's seventh largest company also changed its name to Meta.

As more and more of our activity shifts online, Zuck's ambition to dominate the new, more digital world really shouldn't have come as much of a surprise. Historically, the social media company was all about digitising offline relationships. However, now that post-COVID the primary driver is to interact with people virtually, the Meta rebrand really makes perfect sense.

Since the official announcement on Friday, there's been a tidal wave of attention on Metaverse innovations and a spectacular rally across digital assets that belong to virtual world projects such as Decentraland (MANA) and Sandbox (SAND). Since Facebook's announcement, MANA has skyrocketed by over 400% while SAND tapped record highs above $3, taking its seven-day gains up 133%.

Speculative rallies aside, what makes Facebook's rebrand particularly compelling for the digital asset/web3 community is that it demonstrates that 1) incumbents have realised the web2 model is dying, and 2) dramatic technological change may be coming sooner than most people conceived.

The rebrand has also generated important conversations about the distinction between the 'open' and 'closed' Metaverse. Despite Zuck's promise that Meta will be a decentralising force that connects people all over the world, many argue that Facebook and other social media giants promised this same vision previously, and what we ended up with instead are a few entities that extract all the value and capture all the data.

The Metaverse – though it may be years away from actualisation – offers an opportunity to rethink and improve on aspects of today’s web that are suboptimal. Facebook/Meta may have brought newfound attention and enthusiasm for the Metaverse, but there's now a real opportunity for independent developers and individual users to define the future via blockchain enabled Meta-worlds... Let's not end up with centralisation and censorship again.

FATF released its updated guidance on virtual assets. Are the revised guidelines practically enforceable?

On Thursday, the Financial Action Task Force (FATF) published its long-awaited revised guidance on virtual assets and virtual asset service providers (VASPs) to guide how countries implement their crypto regulations. Without further ado, some highlights from the 'riveting', 109-page document (I use the word 'highlights' loosely):

Stablecoins: Countries are to take measures to mitigate ML/TF risks posed by stablecoins, particularly those with potential for mass adoption that can be used for p2p transactions.

P2P transactions: Although not explicitly subject to AML/CFT controls, national regulators will need to understand the risks associated with P2P transactions in their jurisdiction and consider imposing requirements such as additional record-keeping or limiting transactions to only certain approved addresses. The global agency has scrapped the controversial suggestion in its March 2021 private sector consultation that countries may consider 'denying licensing of VASPs if they allow transactions to/from non-obliged entities (ie, private/unhosted wallets)'.

NFTs: On the growing NFT market, FATF says digital collectibles are generally not considered virtual assets unless when used for payment, investment purposes, or to transfer value. Jurisdictions would need to consider the application of the FATF standards to NFTs on a case-by-case basis.

DeFi: The guidance states that a DeFi application is not a VASP but creators, owners, operators or persons who hold control or considerable influence over the DeFi arrangement would be considered a VASP and be subject to AML regulations.

The Travel Rule, which requires crypto companies to share identifying information on the originator and beneficiary of crypto transactions, remains largely unchanged from the March edition. FATF does however delve deeper on the data required from both counterparts and acknowledges that jurisdictions work at different paces, meaning some VASPs will be required to comply with the Travel Rule before others. This has been described as the 'sunrise issue', when VASPs complying with the Travel Rule deal with VASPs in other countries where this legislation has not yet come into force.

In the DeFi community, the guidance has sparked huge debate. Since the concept of 'involvement or control' is not further defined, a number of market observers are lamenting that this could be interpreted pretty broadly by regulatory authorities and be applied to open source developers and DAO members. Meanwhile, on the subject of NFTs, many have noted that people primarily invest in NFTs with the hope that they appreciate in value and can be traded or sold. Surely this then means that the majority of art and collectible NFTs are VAs?

Despite often being lauded as the 'UN for anti-money laundering', FAFT doesn't actually have the power to enforce binding laws or policies. But as we've seen previously, the organisation can apply substantial pressure on non-compliant member states in the form of blacklists and failing grades in policy audits.

With this comprehensive guidance, FATF is sending a clear message to crypto companies about how seriously it takes bringing digital assets within the regulators’ perimeter. Firms currently operating in the digital asset space as well as those getting ready to launch would be wise to begin making the necessary compliance preparations now to avoid challenges later.

Roundup of other key developments


Valkyrie pulls leveraged ETF application at SEC’s request.

Goldman Sachs is giving hedge fund clients crypto research from The Block.

CME to launch micro ether futures next month.

SEC extends decision deadline for Valkyrie bitcoin ETF to 2022.


NYC mayor-elect Eric Adams says he will take his first three paychecks in bitcoin.

Australia’s securities regulator issues new positive guidelines on bitcoin and ethereum ETPs.

India likely to regulate crypto, not ban it, in upcoming budget: report.

Hong Kong regulator re-evaluates retail crypto ETFs laws.

French central bank completes CBDC bonds pilot.

China’s CBDC has been used for $9.7bn of transactions.

Saudi Arabia exploring CBDC to reduce cash usage.

JPMorgan report says CBDCs can save firms $100bn a year in cross-border costs.


SoftBank, Alphabet join $700m investment in Digital Currency Group, valuing DCG at $10bn.

NYDIG acquires British bitcoin startup Bottlepay in $300m stock purchase.

Coinbase users can borrow up to $1m with bitcoin as collateral.

Former Binance US CEO Brian Brooks takes top job at BitFury.

MicroStrategy adds almost 9,000 bitcoins to its holdings in third quarter.

Australia's CBA offers crypto trading.

Alchemy clinches unicorn status in $250m fundraise led by a16z.


Firm backed by Alan Howard, Winklevoss twins closes $100m metaverse fund.

Justin Sun withdraws billions of dollars worth of crypto from Aave's lending pools.

DeFi exploits total $680m so far in 2021 ($1.4bn was initially stolen but $760m has been returned).

Three Arrows Capital backs $10m raise for DeFi on Cardano.

Ethereum is now the primary collateral for decentralised stablecoin DAI.

What to watch out for this week


Day one of the highly-anticipated, four-day Solana Breakpoint Conference will be taking place in Lisbon. From the Copper team, Boris Bohrer-Bilowitzki and Mike Milner will be attending so say hello if you see them there.


Day one of the SEC Regulation Think-In 2021. One of the sessions in the conference will include fireside panel conversation with the SEC's Lisa Kohl that touches on digital assets.  More details here.


Yahoo Finance and Decrypt present Crypto Goes Mainstream, a day of live conversations with some of the biggest names in crypto to talk investing, mass adoption, NFT collecting and more. Copper's Glenn Barber joins a speaker lineup that includes Sam Bankman-Fried, Christine Brown, Brett Tejpaul, Anatoly Yakovenko and many more. More details here.

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