Crypto Flipsider News – Coinbase Endorses USDC; Nomad Reimbursement; Shanghai Launch; Market Cap Falls Under $840B; OCC Crypto Remark

Read in the Digest:

Coinbase encourages customers to switch from USDT to the trusted USDC

Nomad Bridge to relaunch and provide a “partial” refund months after hack

Ethereum developers agree on launch date & updates to ship with Shanghai

Crypto derivative data shows neutral trading as market cap falls below $850 billion

U.S. Banking regulator advises investors to be cautious about crypto

Coinbase Encourages Customers to Switch from USDT to the Trusted USDC

The second great stablecoin war appears to be heating up, with America’s largest crypto exchange advising users to switch from Tether (USDT) to the “trusted and reputable digital dollar, USD Coin (USDC).”

In a blog post, Coinbase explained that the events over the past few weeks have put some stablecoins to the test, and it believes “that USD Coin (USDC) is a trusted and reputable stablecoin.”

Coinbase says that USDC is “unique” as it is 100% backed by cash and short-dated U.S. treasuries. To encourage users to swap from Tether’s USDT to Circle’s USDC, Coinbase also launched zero-fee trades.

Coinbase notes that “USDC delivers via monthly attestations by Grant Thornton LLP, one of America’s largest audit, tax, and advisory firms.” In addition, Coinbase users can get up to 1.5 APY for holding USDC on the exchange.

Flipsider:

Coinbase seeks to endorse USDC barely a month after the stablecoin was delisted by Binance to promote its own stablecoin.

Why You Should Care

Coinbase endorses USDC as it believes the stablecoin provides the transparency users are calling for in the crypto industry.

Nomad Bridge to Relaunch and Provide “Partial” Refund Months after Hack

Four months after $190 million was stolen from Nomad Bridge in a frenzied free-for-all attack, the cross-chain bridge protocol prepares to relaunch and provide partial refunds to affected users.

The Nomad team explained that since the August exploits, it “has been working hard on recovering funds and making the necessary updates to safely relaunch the Nomad Token Bridge.”

According to an announcement on Nomad posted on Medium, users affected by the hack can go through the KYC verification process and receive compensation through a special NFT.

After the verification process, users must link their wallet address(es) to their Coinlist account. Nomad says this will ensure that “recovered funds are accessed in a compliant manner.”

Flipsider:

The refund will provide somewhat of a compensation for users, although not everybody impacted by the hack will be fully compensated.

Why You Should Care

The amount of recovered funds users will receive is “determined based on pro-rata shares of recovered funds.”

Ethereum Developers Agree on Launch Date and Updates to Ship with Shanghai

In the last Ethereum All Core Dev meeting of the year, developers agreed to ship the much-anticipated Shanghai upgrade in March 2023 to allow users to unstake their ETH for the PoS chain.

Tim Beiko, who oversees the Ethereum developers, noted that the ability to unstake ETH is the highest priority for the Shanghai update. EVM Object Format (EOF) and proto-danksharding are other updates in Shanghai.

However, according to Beiko if the Ethereum dev team doesn’t meet EOF milestones by January, developers would remove the EIP “so withdrawals ship ASAP” via the Shanghai update.

After Shanghai launches, Beiko says there will be a hardfork introducing EIP-4844 – proto-danksharding. According to the Duna Analytics crypto data tracker, this will consist of 15.57 million ETHER, or nearly 13% of all tokens.

Flipsider:

Although unstaking is being prioritized in the Shanghai update, it could cause a delay for the Surge Phase if other EIPs are not ready in time.

Why You Should Care

The ability to withdraw staked Ether is expected to encourage more users to stake and improve network security.

Crypto Derivative Data Shows Neutral Trading as Market Cap Falls Below $850 Billion

The aftermath of the FTX collapse saw the prices of cryptos fall to multi-year lows. This led to the global market capitalization falling under $850 million for the first time in more than two years.

Despite the bearish outlook of the crypto market, data from the derivative sector has something different to say. Data from CoinGlass shows that the seven-day funding rate was near zero for Bitcoin and altcoins.

This data shows that there has been a balanced demand between leveraged longs (buyers) and shorts (sellers) in the period. Data from Glassnode shows there has been no significant drop in derivative trading.

In addition, over the last two months, Bitcoin derivatives positions worth roughly $3 billion have been closed. This shows that there is no significant decline in crypto products from investors despite the crypto market crash.

Flipsider:

The data shows that crypto investors are repositioning for life after the collapse of FTX.

Why You Should Care

The neutral derivatives show that investors are taking fewer risks with their Bitcoin and crypto trading.

U.S. Banking Regulator Advises Investors to be Cautious about Crypto

Citing the “emerging risks” of cryptocurrencies, the United States States Office of the Comptroller of the Currency (OCC) has warned investors to be cautious when approaching cryptos.

The banking regulator has warned that investors take a “cautious approach” and sometimes seek permission when engaging with crypto or crypto firms.

The major concerns of the regulator are that “stablecoins may be unstable,” a lack of mature risk management practices, and a high risk of contagion due to the “high degree of interconnectedness.”

According to the OCC, “the crypto industry lacks consistent or comprehensive regulation.” The regulator also raised concerns about the volatility of crypto and the increased range of firms offering “bank-like products and services.”