The Crypto Compass Issue #42

Hello to our dear readers!

Welcome back to our weekly crypto and Web3 newsletter! As Bitcoin makes significant strides in price and a renewed optimism for ETF approvals in the U.S., Tether promises greater transparency with real-time reserve attestations. However, as the industry grapples with its core tenet of decentralization, the emergence of "social recovery" in Web3 prompts deeper examination, advocating for a balance between self-custody convenience and the pitfalls of potential centralization. Let's delve into these topics and more.

Bitcoin Tops $35K, Hitting 16-Month High

Bitcoin surged past $35,000 this Monday, its highest since May 2022, amid growing optimism for a U.S. approved Bitcoin ETF. This bullish sentiment was further buoyed by a favorable court ruling for Grayscale and BlackRock's ETF application progress. While other major digital assets like Chainlink, Polkadot, and Polygon also witnessed gains, there's a mix of predictions regarding BTC's future, with some experts cautioning about its short-term sustainability.

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Tether's Push for Transparency Under New Leadership

Tether's incoming CEO, Paolo Ardoino, has pledged to offer real-time transparency of the company's reserves, addressing longstanding concerns about the opacity of the stablecoin's financial backing. This move comes amid growing calls for increased clarity, especially given Tether's prominence in the cryptocurrency sector—where its USDT stablecoin boasts roughly 67% market share.

Past regulatory actions, including a $41 million fine from the U.S. Commodity Futures Trading Commission, initiated Tether's shift towards publishing quarterly reserve updates. This commitment to transparency intensifies amidst recent crises in the crypto world, such as Terra’s UST stablecoin collapse and issues faced by rival USD Coin (USDC). Tether's ties to Alameda Research, a now-dissolved crypto trading firm suspected of minting a significant USDT supply, further underscores the need for clarity and investor assurance.

The Evolution and Limitations of Social Recovery in Web3

In the decentralized world of Web3, the complexities of self-custody have led many to rely on centralized exchanges. Addressing this, "social recovery" emerges, allowing users to appoint "guardians" for account recovery in case of lost keys. Popularized by Ethereum's ERC-4337 and multi-signature wallets, this method eases the risk of lost crypto assets.

However, it's not without pitfalls. Concerns rise as newcomers may lack crypto-savvy guardians, and there's potential for centralized entities to intervene, potentially diluting Web3's core decentralization principle. As the digital realm evolves, the industry seeks a balanced approach, merging ease-of-use with decentralized ideals.

Happenings of the week

• PetroChina Completes First International Crude Oil Trade in Digital Yuan: Report

• Deutsche Bank and SC Ventures complete first stablecoin swaps on UDPN: report

• IRS proposes unprecedented data-collection on crypto users

• A new EIP aims to revamp the tokenized vaults standard for RWAs

• The State of Tokenization

Will Crypto Spring Ever Come?

While cryptocurrency used to make headlines for its radical performance, these days it’s often in the news because of lost fortunes, exchange bankruptcies and business fraud. As investors monitor the crypto market, now is a good time to search for insights from past cryptocurrency trading cycles to understand what may lie ahead.

Stay tuned for more updates next week! If you haven't yet, hit that subscribe button to ensure you never miss an issue. Found value in this edition? Please consider sharing it with your friends, colleagues, and fellow crypto enthusiasts. Together, let's navigate the world of crypto with clarity and insight!