The US economic picture continues to look precarious, as leading indicators extended their record-long streak of sequential declines and existing home sales cratered to new 13-year lows – but as the Wall Street Journal suggests, you can always consider selling your kidney if times get tight.
It was a short but big week for US regulators, who finally reached a substantial settlement with massive crypto exchange Binance after years of escalating scrutiny and formal charges earlier this year. The exchange agreed to plead guilty to various violations of the Bank Secrecy Act and pay over $4 billion in fines, while Changpeng Zhao (“CZ”), one of the last remaining charismatic figures of the “crypto” movement of the past five years, agreed to step down from his position as CEO. Regulators also brought new charges against US exchange Kraken, alleging that the company has been market-making in unregistered securities and co-mingling user funds. While we have no position on the validity of any of the charges, guilty pleas, or new allegations leveled by regulatory bodies this week, we’re once again not surprised to see this kind of activity and view it as further validation of our thesis that the only companies with a chance of withstanding growing regulatory hurdles will be those that focus exclusively on bitcoin while minimizing leverage, single-party custody, and rehypothecation of user funds. Whether the defanging of Binance – which appeared to be a priority of US regulators earlier this year – will clear the path for the approval of spot bitcoin ETFs in the US remains to be seen.
It was also a busy week for financial gatekeeping more broadly, including new evidence of transaction filtering by large mining pool F2Pool, Tether’s largest asset freeze in the stablecoin’s history, and the sudden withdrawal of Wallet of Satoshi from US app stores for unspecified reasons (but likely related to current or anticipated regulatory pressure). Meanwhile, the US economic picture continues to look precarious, as leading indicators extended their record-long streak of sequential declines and existing home sales cratered to new 13-year lows – but as the Wall Street Journal suggests, you can always consider selling your kidney if times get tight. With all that as backdrop to this year’s Thanksgiving festivities, we’re thankful this week for bitcoin, the developers and builders working tirelessly to extend it to more people (particularly as permissioned rails and walled gardens become more restrictive), and all members of the Ten31 Tribe helping us support that mission.
Mutiny Wallet is a self-custodial lightning wallet combining privacy best practices built in by default with accessibility for new bitcoiners, the importance of which has been thrown into sharp relief this week on the back of Wallet of Satoshi’s sudden withdrawal from US app stores. Mutiny is currently standing up native builds for iOS and Android, but the wallet leverages BDK and LDK to offer a unique web-first design, functioning as a progressive web app (PWA) capable of running on virtually any smartphone without the need for a third-party app store, enhancing both new user onboarding and censorship resistance. The team – composed of lightning veterans Tony Giorgio, Ben Carman, and Paul Miller – is also working on a variety of new features including a next-generation node implementation tailored to Mutiny Wallet, a dedicated lightning service provider (LSP), various forward-thinking Nostr integrations, built-in fedimint functionality, DLC applications, and more.
Strike added Send Globally support for users in Argentina:
Mutiny Wallet kicked off the TestFlight rollout of its native iOS app:
Strike Founder and CEO Jack Mallers appeared on Fox Business to discuss the launch of Strike’s global wallet and new international on-ramps.
Ten31 Advisor and Zaprite Head of Business Development Parker Lewis joined the What Bitcoin Did podcast to expand on his view that “bitcoin is not a hedge” and discuss the importance of making merchant acceptance of bitcoin payments easy and intuitive.
StatMuse published the latest iteration of its monthly Muse Letter.
Start9 CEO Matt Hill hosted a Twitter Spaces to dig into the future of self-hosting and the company’s near-term roadmap.
Bond yields got more relief this week after significant turbulence last month, as the latest auction of 20-year Treasuries came in much stronger than the very weak 30-year auction from a few weeks ago.
Underlying macro trends continued to look challenged, as major key US leading economic indicators largely worsened M/M for the 19th consecutive month, the worst streak since the period leading up to 2008’s financial crisis (though absolute levels remain well above 2008’s trough).
Existing home sales, meanwhile, fell to another 13-year low on the back of elevated mortgage interest rates. Commercial real estate continues to face major headwinds as well, with prices for office square footage declining precipitously to levels well below the pre-pandemic trendline.
A set of concerning data points for the global banking system trickled through this week, including Wynn Resorts delaying direct deposits because of unspecified issues with Bank of America, UBS’s CEO indicating the bank would prefer a takeover from a private buyer if it needed an emergency rescue, and thousands of HSBC clients being locked out of online banking services. While none of these issues by themselves indicate a crisis, we think they bear monitoring given the near-overnight failure of some of the world’s largest banks earlier this year.
Overseas, the People’s Bank of China and the central bank of Saudi Arabia signed a 50 billion yuan (~$7 billion) currency swap agreement to “help strengthen financial cooperation” between the two countries, the latest signpost in the two countries’ growing commercial and diplomatic relationship.
US regulators were very active in the “crypto” space this week. Long-brewing tensions between multiple government agencies and massive exchange Binance finally came to a head with the Department of Justice reaching a settlement of over $4 billion regarding the exchange’s violation of various anti-money laundering laws.
Under the deal, Binance founder and CEO Changpeng Zhao (“CZ”) – one of the most prominent figures in the “crypto” industry – will step down while he and Binance plead guilty on a variety of charges. The exchange will also be required to appoint an independent compliance monitor to audit the company for the next three years.
Binance users withdrew over $1 billion from the platform following the news.
Elsewhere, the SEC sued US exchange Kraken for allegedly operating an unregistered securities platform and inappropriately co-mingling user funds.
In Argentina, libertarian candidate Javier Milei – an outspoken critic of central banking and proponent of bitcoin – won the country’s presidential election. Milei has proposed eliminating Argentina’s central bank and dollarizing the economy; it remains to be seen what his formal policy proposals around bitcoin might look like.
Pseudonymous bitcoin developer and on-chain analyst 0xB10C released a new report indicating that mining pool F2Pool – responsible for ~14% of blocks over the past year – has been “filtering” transactions from OFAC-sanctioned addresses, effectively censoring those transactions from blocks it produces.
Notably, all transactions were picked up by other pools in later blocks, illustrating the censorship resistance bitcoin can offer even in the midst of active filtering from large pools (though the incident still highlights the need for greater hashrate decentralization and the importance of initiatives like StratumV2).
In a now-deleted tweet, F2Pool founder Chun Wang said the pool would disable this feature “for now.”
Elsewhere in transaction censorship, stablecoin issuer Tether froze $225 million of assets – its largest seizure in history – allegedly tied to human trafficking in Southeast Asia, once again highlighting the risk of unilateral confiscation inherent to financial claims issued by centralized counterparties.
Wallet of Satoshi, a highly popular, custodial lightning wallet, withdrew from Apple and Google app stores in the US and announced it would no longer serve US customers. The exact rationale for the decision was not specified, but likely relates to the regulatory burdens that generally fall on non-KYC custodial wallets sooner or later.
On a similar theme, Apple locked the developer account of the team behind Zeus, a non-custodial lightning wallet. While the app is still available on the App Store, both of these incidents highlight the importance of censorship-resistant fallback options including progressive web apps (PWAs) like Mutiny Wallet.
This was originally published in Ten31 Timestamp