This Week in Crypto – 10th May 2024

Need to know what happened in crypto this week? Here is the latest news on weekly trends and events impacting Bitcoin, blockchain, DeFi, NFTs, Web3 and crypto regulation.

Bitcoin historically hits one billion transactions since going live. Collapsed crypto exchange FTX plans to pay back its creditors over 100% of their claims, with the plan still awaiting approval by court. 

Meanwhile, Robinhood is facing a threat of being the next exchange to go down by US SEC hands and the ETH market faces wild volatility as Grayscale withdraws its proposal for an Ethereum Futures ETF. 

1. Bitcoin Reaches One Billion Transactions Milestone

Bitcoin, the world’s first and largest cryptocurrency, achieved a significant milestone on May 5th, 2024, its 5,603rd day of existence. 

The Bitcoin network processed its one billionth transaction, marking a momentous occasion for the pioneering blockchain technology 15 years after its creation by the pseudonymous Satoshi Nakamoto.

The one billionth transaction was processed in block 842,241 at 9:34 pm UTC, according to Clark Moody’s Bitcoin dashboard. Over its lifespan, the Bitcoin network has maintained an average of 178,475 daily transactions, demonstrating its resilience and widespread adoption.

While Bitcoin has reached this milestone, it’s worth noting that its closest rival, Ethereum, has processed well over two billion transactions since its launch in July 2015, according to Etherscan data.

Lightning Network’s Contribution

The Lightning Network, a second-layer scaling solution for Bitcoin, has played a significant role in facilitating faster and cheaper transactions. 

Data from the Bitcoin-only exchange River revealed that the Lightning Network processed a lower-bound estimate of 6.6 million transactions in August 2023 alone. 

This suggests that hundreds of millions of transactions have been facilitated on the Lightning Network since its launch in January 2018, further increasing Bitcoin’s transaction throughput.

Surges and Dips in Daily Transactions

Bitcoin’s daily transaction count experienced a surge around the network’s fourth halving event on April 20, 2024, with a record high of 926,000 transactions processed on April 23. 

This spike in demand was primarily driven by the launch of the Runes protocol at block 840,000. However, the daily transaction count has since cooled off to 660,260 on May 4, 2024.

A Milestone for Blockchain Technology

The processing of one billion transactions on the Bitcoin network is a significant achievement for the pioneering blockchain technology. It highlights the network’s resilience, scalability, and widespread adoption over the past 15 years. 

As the cryptocurrency ecosystem continues to evolve, milestones like this will serve as a testament to the transformative potential of decentralized digital currencies and their underlying blockchain technology.

2. Dormant Satoshi-era BTC wallet wakes up after 10 years 

On May 6, 2024, a dormant Bitcoin wallet dating back to the era when Satoshi Nakamoto was active transferred its holdings of 687 BTC (worth approximately $43.9 million) to two different wallets.

The term “Satoshi era” refers to the early days after Bitcoin’s creation, when Nakamoto was actively engaged in online forums. 

While some speculate that these old wallets could be linked to Satoshi himself, experts suggest they are more likely associated with early miners or buyers seeking to capitalize on their holdings.

According to a Chainalysis report, there are a total of 1.75 million dormant Bitcoin addresses that have been inactive for over a decade. Many of these wallets contain significant BTC holdings, estimated to be worth around $121 billion at current prices. 

These bitcoins were likely acquired when the price was trading in double digits, representing a substantial increase in value for their holders.

Over the past couple of years, numerous Satoshi-era wallets have been activated, with their BTC holdings transferred to new addresses or crypto exchanges, suggesting that some early adopters are looking to cash in on their investments after nearly a decade of dormancy.

In August 2023, a wallet dormant for almost 14 years woke up and transferred 1,005 BTC mined in 2010, creating a buzz on social media with speculation that it could be linked to Satoshi. 

However, experts dismissed this possibility, stating that it was more likely associated with early miners or buyers.

Similarly, in July 2023, a wallet dormant for 11 years transferred $30 million in BTC, while in November 2023, three Satoshi-era BTC wallets transferred a combined $230 million in BTC after six years of dormancy. 

These three wallets are believed to be connected to the same individual or organization, as they made their last transactions on November 5, 2017.

The revival of these dormant wallets has not only sparked curiosity but also highlights the potential wealth accumulated by early adopters of Bitcoin, who acquired their holdings at a fraction of today’s prices.

3. Research by Visa finds that 90% of stablecoin transactions are not from real users 

Visa’s recently launched dashboard has sparked a debate within the cryptocurrency community by claiming that as much as 90% of stablecoin transactions over the last 30 days have not been made by genuine users. 

The credit company collaborated with Allium Labs to develop an adjusted stablecoin transaction metric, which aims to remove potential distortions arising from bot activity and automated transactions by entities such as centralized exchanges.

Adjusting for Inorganic Activity

According to Visa’s dashboard, the total volume of stablecoin transactions in April was around $2.2 billion. However, less than 10% of that volume ($149 billion) has been classified as genuine by the credit company, with the rest attributed to bot activity and automated transactions. 

The dashboard applies two filters to its stablecoin data: a single directional volume filter that only counts the largest stablecoin amount transferred within a single transaction, and an inorganic user filter that aims to remove bot activity and automatic transactions from large entities like centralized exchanges.

Stablecoin Adoption and Competition

Despite the concerns raised by Visa’s adjusted metric, the dashboard reports that the total monthly stablecoin transaction volume, both genuine and spurious, has almost doubled since the beginning of 2024, with most of the activity concentrated in Tether (USDT). 

This growth in stablecoin adoption has attracted the attention of other payment giants, with PayPal launching its PYUSD stablecoin in 2023 and Stripe announcing plans to allow merchants to accept stablecoins for online transactions in April. 

Additionally, Ripple announced plans to launch a United States dollar-backed stablecoin to compete with market leaders.

Stablecoin Market Overview

According to CoinGecko, the current stablecoin market capitalization stands at around $161 billion, with a daily trading volume of $37 billion. 

While Visa’s adjusted metric has raised questions about the authenticity of stablecoin transactions, the growth in adoption and competition within the stablecoin market suggests a continued interest in these digital assets.

Cointelegraph reached out to Visa and leading stablecoin issuer Tether for further comments but did not receive an immediate response.

4. Robinhood receives wells notice from US SEC

The United States Securities and Exchange Commission (SEC) issued a Wells notice to the popular trading platform Robinhood, indicating that the regulator is planning to file an “enforcement action” against Robinhood’s cryptocurrency business. 

The news of the Wells notice, which was issued on May 4, according to a regulatory filing, sent Robinhood’s share price down 2.5% in pre-market trading to $17.95 as of 12:50 pm UTC.

A Wells notice is a letter sent by the SEC that concludes its investigation of the respondent and outlines the regulator’s preliminary determination to recommend an enforcement action related to alleged securities violations.

Robinhood’s Response and Regulatory Clarity Concerns

In response to the Wells notice, Dan Gallagher, the chief legal, compliance and corporate affairs officer at Robinhood Markets, expressed disappointment in a May 6 blog post:

 “After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business.”

Gallagher further stated that Robinhood firmly believes that the assets listed on its platform are not securities and looks forward to engaging with the SEC to clarify the weaknesses in any potential case against Robinhood Crypto.

Efforts to Avoid Securities Violations and Regulatory Uncertainty

Robinhood has been actively trying to avoid securities violations by refraining from listing certain tokens or providing crypto lending and staking services that the SEC has previously alleged to be securities offerings during lawsuits against other platforms.

However, Gallagher, who previously served as an SEC commissioner from 2011 to 2015, acknowledged the challenges posed by the lack of regulatory clarity at the federal level. In a June 6 court testimony, he stated:

 “Unfortunately, Robinhood and other digital asset market participants in the U.S. face a patchwork of state regulatory frameworks, not all of which are consistent, as well as a lack of regulatory clarity at the federal level. In many ways, the regulatory landscape for digital assets is like it was for the equities markets in 1932.”

The SEC and the Commodity Futures Trading Commission (CFTC) have yet to issue clear guidelines on what they deem as securities and commodities in relation to digital assets, creating an uneven playing field for market participants and hindering mainstream crypto adoption.

5. FTX proposes ‘billions in compensation’ but not everyone’s happy

FTX, the bankrupt crypto exchange, has unveiled a plan to fully repay all its creditors’ claims, along with “billions in compensation for the time value of their investments.” 

The proposed plan, which is subject to finalization and approval by a Delaware Bankruptcy Court, aims to provide a 118% recovery for creditors holding claims under $50,000, a category that FTX estimates comprises 98% of its creditors by number.

John J. Ray III, the FTX CEO and chief restructuring officer, expressed satisfaction with the plan, stating, “We are pleased to be in a position to propose a Chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors.”

Value Distribution and Potential Backlash

According to FTX’s estimates, the total value that will be distributed to creditors will range between $14.5 and $16.3 billion. 

However, the plan still reimburses creditors for the value of their assets at the time of FTX’s bankruptcy in November 2022, a decision that has drawn some backlash on social media.

While the proposal to offer a bonus interest payment of 18% for smaller creditors with claims under $50,000 is noteworthy, the broader implications of the plan and the potential for objections from larger creditors remain to be seen.

Creditor Recovery and Bankruptcy Proceedings

The FTX bankruptcy case has garnered significant attention due to the high-profile nature of the collapse and the subsequent revelations surrounding the mishandling of customer funds. 

The proposed creditor repayment plan represents a significant step forward in the bankruptcy proceedings, aiming to provide a measure of relief to those impacted by the exchange’s downfall.

However, the success of the plan hinges on its approval by the Delaware Bankruptcy Court, and it remains to be seen how various stakeholders, including larger creditors and regulatory authorities, will respond to the proposed terms.

As the bankruptcy proceedings continue, the crypto community will closely monitor the developments surrounding FTX’s creditor repayment plan, seeking transparency and accountability in the aftermath of one of the industry’s most significant collapses.

The crypto industry continues to evolve rapidly, with major milestones and challenges emerging almost weekly. As the space matures, it will be fascinating to observe how regulators, established players, and innovative protocols shape the future of decentralized finance and digital assets.

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What are your thoughts on this week’s crypto news? Did any particular development stand out to you? Leave a comment below and let us know your perspective!