The company announced Tuesday (July 30)  it was shuttering the marketplace, along with Reignmakers, a fantasy sports game based around NFTs, due to “recent legal developments.”

“This decision was not made lightly, and we believe it is the right course of action,” DraftKings said in its announcement. “Due to this update, we have decided to offer all holders of Reignmakers digital game pieces the opportunity to relinquish those game pieces to DraftKings in exchange for a cash payment (subject to certain conditions).”

DraftKings says Reignmakers and the NFT marketplace will be discontinued effective immediately, customers can still access their Reignmakers digital game pieces and other NFTs through the My Portfolio page.

While the company did not specify the nature of the legal developments, a report Tuesday by Coindesk noted that DraftKings is the subject of a federal class action lawsuit claiming the company’s NFTs are unregistered securities.

NFTs first emerged during the cryptocurrency bull market of 2021, with advocates promoting them as a way for everyday customers to play a role in the digital currency market. Since then, they’ve plummeted in popularity, with sales of NFTs dropping by 63% in 2023.

Earlier this year, GameStop, which had introduced an NFT marketplace in the summer of 2022, decided to exit the non-fungible token business, citing the ongoing regulatory uncertainty around the larger cryptocurrency market.

Meanwhile, the U.S. Treasury Department released an assessment in May which found that NFTs are “highly susceptible” to theft and use in fraud and scams.

“Additionally, criminals use NFTs to launder proceeds from predicate crimes, often in combination with other techniques or transactions meant to obfuscate the illicit source of funds,” the assessment said. “Criminals can exploit vulnerabilities related to characteristics of NFTs, the assets or entitlements that they reference, and regulatory frameworks in the United States and abroad.”

The treasury found that cybersecurity vulnerabilities, challenges connected to copyright and trademark protections, and hype and fluctuating prices of NFTs can allow criminals to commit fraud and theft related to NFTs and their platforms.

Making matters worse, the treasury said, NFT companies and platforms lack internal controls to prevent threats to market integrity, sanctions evasion, terror financing and money laundering.

The post DraftKings Shutters NFT Marketplace Amid Legal Headaches appeared first on PYMNTS.com.

Kennedy, an independent candidate, called for launching a multi-million-dollar U.S. strategic reserve of bitcoin that matched the government’s current stake in gold.

Republican candidate Trump refrained from calling for a full-on strategic reserve, pledging instead to maintain the U.S. government’s current stash of bitcoin rather than selling it off, calling it a national “stockpile” of cryptocurrency.

The U.S. government, through various agencies, has increasingly seized significant amounts of cryptocurrencies in the course of financial crime enforcement. These assets are typically auctioned off, with proceeds going to the Treasury Forfeiture Fund or other government accounts. The current approach treats these digital assets as financial gains rather than strategic reserves.

The notion of potentially integrating digital assets into the U.S. government’s strategic reserves presents a disruptive approach that recognizes the evolving financial landscape and sees a role in it for cryptocurrencies. That’s something that proponents of the sector have been working toward, but skeptics remain wary in the face of crypto scams and other illicit activity in the sector.

Read more: Crypto’s Three Priorities for 2024: Interoperability, Acceptance, Regulation

Crypto and Global Financial Crime

According to a report by Chainalysis, $24.2 billion of illicit cryptocurrency was transferred in 2023, with over 60% of illegal crypto activity being tied to sanctioned groups or terrorist organizations.

Financial crime remains a challenge for financial institutions (FIs) worldwide, evolving in complexity and scale with each passing day. The U.S. government, through agencies such as the Department of Justice (DOJ) and the Treasury Department, has increasingly encountered cryptocurrencies in its enforcement actions against financial crimes. These assets are often seized during investigations related to money laundering, drug trafficking, and other illegal activities. Traditionally, seized cryptocurrencies are auctioned off, with proceeds directed to government funds.

But as digital assets become more integral to the global financial system, the question arises: Should the U.S. government consider stockpiling cryptocurrencies as part of its strategic reserves?

Holding cryptocurrencies could provide the U.S. government with a flexible financial tool. Unlike traditional reserves, which are often physical commodities, cryptocurrencies are highly liquid digital assets. They can be quickly converted into fiat currencies or used directly in transactions that accept digital payments. This flexibility could be invaluable during financial crises or emergencies, providing the government with a readily accessible source of funds.

Establishing a cryptocurrency reserve would signal the U.S. government’s recognition of the growing importance of digital assets. This could encourage further development of blockchain technology and related innovations within the U.S.

But there is considerable public skepticism about the government’s involvement in holding digital currencies, given their association with illicit activities — and the ongoing rise in frequency of those illicit activities, particularly in the financial sector.

Read more: Blockchain’s Benefits for Regulated Industries

Countries around the world, including the U.S., have expressed concern that privately operated, highly volatile digital currencies could undermine government control of the financial and monetary systems, increase systemic risk, promote financial crime and hurt investors.

After all, on Thursday (July 25) cryptocurrency exchange Coinbase was fined $4.5 million by a U.K. regulator for serving “high-risk” customers. And this past April, U.S. Treasury Deputy Secretary Wally Adeyemo testified that cryptocurrency is increasingly becoming a safe haven for “malign actors” such as terror groups.

As a result, FIs have needed to step up their financial crime defenses. Seven in 10 FIs are now using AI and machine learning (ML) to fend off fraudsters, according to the PYMNTS Intelligence and Hawk collaboration, “Financial Institutions Revamping Technologies to Fight Financial Crimes.”

In an interview with PYMNTS, Wolfgang Berner, co-founder and CPO of Hawk, discussed the opportunities that large transaction models (LTMs) — generative artificial intelligence (AI) models adapted to financial crime — represent in establishing more robust, accurate and comprehensive detection and prevention mechanisms.

“The core idea is we treat transactions as sentences, teaching the transformer model the language and grammar of transactions, similar to how large language models like GPT-4 are trained on the text of the web,” Berner said. “And by doing that, it develops a very good understanding of the transactions, how transactions relate to each other, and what is genuine or possibly suspicious with them.”

The post Bitcoin Jumps on Calls to Integrate Crypto Into US Asset Arsenal appeared first on PYMNTS.com.

The reason? Saturday (July 27), at 2 p.m., is when U.S. Republican presidential nominee Donald Trump will give a keynote address to the conference.

The former president and current hopeful, who once dismissed bitcoin as a “scam” competing against the U.S. dollar, is now positioning himself as a proponent of the crypto industry.

Trump has already raised more than $4 million in crypto for his campaign war chest, and the crypto audience represents an attractive and lucrative voting bloc, particularly given their ongoing disillusionment with the current state of existing domestic digital asset policy.

A free T-shirt being offered to attendees of the conference reads “Vote Trump.”

Per a Barron’s report, the prevailing sentiment among certain bitcoin investors and enthusiasts is that Trump will use his speech to make a major announcement, something along the lines of throwing his support behind having the U.S. government buy bitcoin as a “strategic reserve” asset, akin to foreign currencies, or oil.

Central banks’ investment in bitcoin would lend credibility to cryptocurrency, potentially elevating it to a status similar to gold in terms of being a store of value. Any such move could have a far-ranging influence on discussions around digital currencies and monetary sovereignty.

Trump, who has pitched himself as the “crypto president,” isn’t the only politician speaking at the crypto festival. Republican former candidate Vivek Ramaswamy, independent U.S. presidential candidate Robert F. Kennedy Jr., and lawmakers from both parties — including Sen. Cynthia Lummis of Wyoming — are also slated to speak.

See also: Trump Running Mate J.D. Vance’s Antitrust Views Divide Business Leaders

Crypto Industry Looks to Increase Beltway Influence

Trump’s rebranding as a crypto-friendly candidate is part of a larger trend among Republicans to embrace digital currencies and blockchain technology. This strategy aims not only to attract a young and tech-savvy demographic but also to tap into the substantial financial resources of the crypto sector. By aligning with the interests of cryptocurrency enthusiasts, Trump and his party are seeking to leverage the political and economic potential of this burgeoning industry.

Trump’s running mate, J.D. Vance, has maintained a positive view on the digital asset sector throughout his political career, and voted as a senator accordingly.

The Republican Party’s platform states that the GOP will “end Democrats’ unlawful and unAmerican Crypto crackdown” and “defend the right to mine Bitcoin.”

And as PYMNTS wrote earlier this month, the need for clear regulatory frameworks remains one of the most pressing issues facing the crypto industry.

“What we are seeing, where it’s the UK, Japan, Singapore … even the European Union, more than two dozen countries have come together to provide a framework for crypto regulation,” Ripple’s CEO Brad Garlinghouse said last week (July 17). “It’s frustrating that we as a country can’t get that framework in place. And instead, we have this interminable litigation coming from the SEC that really isn’t solving the problem.”

Ripple earlier this year donated $25 million to the crypto industry super PAC Fairshake, with Garlinghouse saying at the time that those donations would continue each year, as long as the sector had its naysayers.

Read more: Blockchain’s Benefits for Regulated Industries

As the 2024 elections approach, the cryptocurrency sector is poised to play an increasingly significant role in American politics, across both parties.

Per a Politico report on Tuesday (July 23), billionaire investor and bitcoin enthusiast Mark Cuban believes that Democratic Presidential Nominee Kamala Harris would be “far more open” to crypto, though he noted that was “certainly not confirmed by the VP.”

Potentially contributing to the more mainstream embrace of crypto is the fact that institutions are starting to warm up to digital assets, too.

Coinbase Asset Management is reportedly creating a tokenized money market fund, while asset manager BlackRock introduced a tokenization of real-world assets: a fund called BUIDL that holds U.S. Treasurys and gained $500 million of assets following its launch in March.

The tokenization of real-world assets is a function of the blockchain landscape that has captured the imagination of various players across payments, finance and commerce, PYMNTS reported in April.

As PYMNTS Intelligence’s latest report revealed, regulated industries, including healthcare and financial services, must adhere to numerous requirements, such as know your customer (KYC), anti-money laundering (AML) and data privacy regulations. Blockchain could help these industries in that regard.

The post Why Bitcoin and Trump Are Once Again Crypto’s Biggest Story appeared first on PYMNTS.com.

The fine, announced Thursday (July 25) by the Financial Conduct Authority (FCA), was levied against a subsidiary of the cryptocurrency exchange, CB Payments Limited (CBPL), which the FCA says repeatedly violated a requirement preventing the company from doing business with high-risk clients.

“The money laundering risks associated with crypto are obvious and firms must take them seriously,” Therese Chambers, joint executive director of Enforcement and Market Oversight at the FCA, said in a news release.

“Firms like CBPL that enable crypto trading need to have strong financial crime controls. CBPL’s controls had significant weaknesses and the FCA told it so, which is why the requirements were needed. CPBL, however, repeatedly breached those requirements.”

According to the FCA, CPBL agreed not to take on new high-risk customers in 2020, after the regulator expressed concerns about the company’s financial crime control network.

But despite this agreement, the FCA said, CBPL onboarded and/or provided e-money services to 13,416 high-risk customers, who made multiple crypto asset transactions through other Coinbase Group entities, totaling around $226 million.

The FCA said CBPL demonstrated a “lack of due skill, care and diligence in the design, testing, implementation and monitoring” of its financial controls, with “repeated and material breaches” going undiscovered for nearly two years.

“We take the FCA’s findings and our broader regulatory compliance very seriously and CBPL continues to proactively enhance its controls to ensure compliance with its regulatory obligations,” Coinbase said in a statement posted to its blog.

The FCA notes that this action was taken under the U.K.’s 2011 electronic money regulations, and marks the first time the regulator has taken enforcement action using these powers.

The fine comes as the need for clear regulatory frameworks remains one of the most pressing issues facing the crypto space, as PYMNTS wrote earlier this month.

“Clear regulations can protect consumers, reduce fraud and encourage institutional investment, while regulatory uncertainty or overly restrictive regulations can stifle innovation and hinder technological advancements, lead to market instability and drive businesses to more crypto-friendly jurisdictions,” that report said.

The report added that the U.S. Securities and Exchange Commission (SEC) and other regulatory bodies are working on frameworks for cryptocurrencies, but there is still substantial uncertainty, while Europe’s Markets in Crypto-Assets (MiCA) regulation offers a more unified regulatory approach.

The post Coinbase Fined $4.5 Million Over ‘High Risk’ Customers appeared first on PYMNTS.com.

The company, which is an arm of cryptocurrency exchange Coinbase, is working on the project with Bermuda-based Apex Group, CoinDesk reported Wednesday (July 24).

This effort follows another move in the tokenization space by Coinbase Asset Management, according to the report. The company received in-principle approval from an Abu Dhabi regulator in December 2023 to tokenize traditional assets on its ethereum scaling network called Base.

It also comes after asset manager BlackRock introduced a tokenization of real-world assets: a fund called BUIDL that holds U.S. Treasurys and gained $500 million of assets following its launch in March, per the report.

Tokenization of real-world assets has become a big trend in crypto, the report said.

It was reported in May that Coinbase has been diversifying its revenue sources and generated about a third of its sales in the first quarter from sources other than trading fees.

These sources include revenue share on USDC stablecoin and revenue from its Base blockchain. Coinbase also serves as the custodian for most U.S. spot bitcoin ETFs and is listed as a custodian for spot ether ETFs that are expected to be OKed by regulators.

In another move in the tokenization space, Ripple and Archax said in June that they extended their existing collaboration in an effort to bring hundreds of millions of dollars of tokenized real-world assets (RWAs) onto the XRP Ledger (XRPL) over the coming year.

“We have hit the tipping point for mainstream adoption of digital assets for real-world use cases,” Graham Rodford, CEO at Archax, said in a press release. “There is clear real-world utility in use cases like RWA tokenization for the operational efficiency, access to liquid markets and transparency inherent to crypto, and Archax has already tokenized assets such as equities, debt instruments and money market funds.”

The tokenization of real-world assets is a function of the blockchain landscape that has captured the imagination of various players across payments, finance and commerce, PYMNTS reported in April.

Tokenized RWAs have the potential to make assets more liquid, accessible and efficient while enhancing transparency, security and global reach.

The post Report: Coinbase Asset Management Creating Tokenized Money Market Fund appeared first on PYMNTS.com.

The company plans to list on Nasdaq after merging with publicly-traded special purpose acquisition company (SPAC) FTAC Emerald Acquisition Corp, Fold announced in a news release Wednesday (July 24).

“By integrating bitcoin across traditional financial services, Fold acts as a key point of entry for consumers and businesses to engage with and integrate bitcoin into their everyday activities,” the release said.

“Fold customers can seamlessly accumulate, manage, and spend their bitcoin through merchant rewards, debit cards, and bill pay services.”

According to the release, the transaction implies a pre-money equity valuation of $365 million for Fold, which has processed more than $2 billion in volume and has distributed over $45 million in lifetime bitcoin rewards to customers since its founding in 2019.

The company’s services include earning bitcoin rewards on card spending, earning bitcoin for paying bills, rounding up purchases into bitcoin, buying bitcoin with zero fees and storing funds in insured accounts.

Fold’s SPAC comes as other crypto companies are preparing to go public. For example, Circle, issuer of the stablecoin USDC, earlier this year filed paperwork for an initial public offering (IPO) with the Securities and Exchange Commission (SEC).

The company had planned to go public in 2022 through a $9 billion SPAC merger, though that deal was put on hold as it waited for the SEC to approve its S-4 registration document. Circle later said it understood the necessity of a thorough review.

And last month saw reports that the cryptocurrency exchange Kraken was considering embarking on a $100 million funding round before launching a possible IPO.

PYMNTS earlier this month examined the state of the crypto world, 15 years after bitcoin was first minted.

“In the years since, while the adoption of crypto as a mainstream payment mechanism has yet to displace more traditional methods despite the rise of digital transactions, cryptocurrencies have started to find their own success as financial assets,” that report said.

“As crypto increasingly finds its niche as an asset class, industry participants are hoping that the sector can find the runway and land the plane on the rest of blockchain’s transformative potential, too.”

The post Crypto Company Fold Set to Go Public in SPAC Merger appeared first on PYMNTS.com.

As Bloomberg News reported Tuesday (July 23), two Swiss banks — Amina Bank and Sygnum Bank — have recently launched real-time payment and settlement networks, targeting a gap left by the closure of Silvergate Exchange Network (SEN) and Signature Bank’s Signet platform.

Before their collapse in March of last year, those banks played a key role in providing liquidity to the crypto market, the report said.

SEN facilitated $117 billion in transfers in the quarter before Silvergate voluntarily liquidated, while Signet processed $275.5 billion before Signature was taken over by U.S. regulators.

According to Bloomberg, the end of those networks left bitcoin liquidity even worse off than it was following the collapse of cryptocurrency exchange FTX in 2022.

Now, crypto players are still seeking alternatives. Amina and Sygnum, both of which went live in recent weeks, are hoping to fill that void, offering a 24/7 network for instant transactions in both fiat currencies and cryptoassets, with no fees for transfers between network members.

The aim is to help crypto companies “execute trades and settle positions more quickly,” said Kok Kee Chong, chief executive of Singapore-based crypto exchange AsiaNext, which has partnered with Sygnum Connect.

“This improves market liquidity, as traders can respond to market movements in real-time without having to wait for settlement,” he added.

Meanwhile, PYMNTS wrote earlier this month on the state of the crypto industry as it struggles to gain wider acceptance.

That report pointed to research by PYMNTS Intelligence showing “that using cryptocurrencies for cross-border payments could be the winning use case that the sector has been looking for.”

According to the research, blockchain-based cross-border solutions, particularly stablecoins, are being increasingly embraced by companies seeking a better way to transact and expand internationally. The Solana network processed $1.4 trillion in stablecoin cross-border payments this past March alone — a sign of the technology’s scalability.

At the same time, the industry continues to argue that regulators such as the U.S. Securities and Exchange Commission (SEC) need to provide more regulatory clarity.

“What we are seeing, where it’s the U.K., Japan, Singapore … even the European Union, more than two dozen countries have come together to provide a framework for crypto regulation,” Ripple CEO Brad Garlinghouse said last week. “It’s frustrating that we as a country can’t get that framework in place. And instead, we have this interminable litigation coming from the SEC that really isn’t solving the problem.”

The post Swiss Lenders Aim to Fill Crypto Payment Gap appeared first on PYMNTS.com.

The company added that it reached its goal of having at least 8,000 Bitcoin ATMs five months ahead of schedule, according to a Monday press release.

“Surpassing our deployment goal well ahead of schedule is a testament to the relentless dedication of our team and our strategic initiatives aimed at expanding Bitcoin’s accessibility,” Brandon Mintz, CEO at Bitcoin Depot, said in the release.

Bitcoin Depot kiosks allow users to convert cash into bitcoin, which can be used for payments, transfers, remittances, online purchases and investments, according to the release.

Since the beginning of the year, the company has expanded its number of kiosks by 900, expanded into Australia and Puerto Rico, and announced retail partnerships with national and regional convenience store brands, per the release.

“Building on the momentum we’ve already cultivated in the first half of 2024, we have no intention of slowing down as we gear up to provide even more customers with seamless access to the digital financial system,” Mintz said in the release.

This news comes about nine months after it was reported that the number of bitcoin ATMs — from all suppliers — had hit a two-year low.

At that point, over the previous year, the number of bitcoin ATMs available had declined by 7,000, or 17%, leaving a total of 32,500 machines, Coindesk reported in October 2023.

Mintz said at the time that the decline was due in part to operators shutting down unprofitable ATMs or going out of business entirely. He added that he viewed this trend as an opportunity for Bitcoin Depot to expand its market share through acquisitions and kiosk growth in additional retail locations.

In May, Bitcoin Depot formed a retail partnership with Nouria Energy Corp., which operates 175 company-owned convenience stores and fuel retailers in the northeastern United States. Bitcoin Depot will deploy its kiosks into 57 of those locations.

In April, the company formed its first retail partnership with a major grocery chain: Fareway Stores, which operates more than 130 grocery stores in the Midwest. Bitcoin Depot will add Bitcoin ATMs to 66 of those locations.

The post Bitcoin Depot Surpasses 8,000 Bitcoin ATMs in Operation appeared first on PYMNTS.com.

Speaking with Bloomberg News Wednesday (July 17), Brad Garlinghouse said America lags behind other countries that have already adopted crypto regulations.

“What we are seeing, where it’s the UK, Japan, Singapore … even the European Union, more than two dozen countries have come together to provide a framework for crypto regulation,” Garlinghouse said.

“It’s frustrating that we as a country can’t get that framework in place. And instead, we have this interminable litigation coming from the SEC that really isn’t solving the problem.”

Ripple has been the target of some of that litigation. The Securities and Exchange Commission (SEC) sued the company in 2020, accusing it of conducting a $1.3 billion unregistered securities offering tied to its XRP token.

However, a judge last year ruled that only Ripple’s institutional — and not retail — sales of XRP violated the law, a decision widely considered a victory for the cryptocurrency space.

As PYMNTS noted at the time, that ruling has “far-ranging repercussions across the digital asset ecosystem, which has long argued that its tokens do not represent securities contracts.”

Still, Garlinghouse told Bloomberg Wednesday that the company can’t mount multi-million-dollar court battles for every token.

He spoke with the news outlet from the Republican National Convention in Milwaukee, with the party backing the ticket of former President Donald Trump and Ohio Senator J.D. Vance, both seen as pro-crypto candidates.

But Garlinghouse argued that crypto “shouldn’t be a partisan issue,” and noted that he recently attended a conference in D.C. where Democrats, including representatives from the White House, were in attendance.

“I think they were there, listening to the industry … it was refreshing to start to have that conversation,” he said.

President Joe Biden earlier this year vetoed a measure that would have ended the SEC’s special rules for custodians of crypto assets. This legislation was supported by both the digital asset sector and the banking industry.

Ripple earlier this year donated $25 million to the crypto industry super PAC Fairshake, with Garlinghouse saying at the time that those donations would continue each year, as long as the sector had its naysayers.

According to Open Secrets, which monitors spending on campaigns, that PAC has spent $13.4 million this year, much of it to help defeat the U.S. senate campaign of Rep. Katie Porter (D-Calif.).

The post Ripple CEO: US Crypto Rules Lag Amid ‘Interminable’ Lawsuits appeared first on PYMNTS.com.

As the Financial Times (FT) reported Wednesday (July 17), these miners operate vast, powerful computing sites and have struggled to turn a profit due to high energy costs and reduced rewards for mining.

Now, the report says, the miners seek to capitalize on rising demand for chips known as graphics processing units (GPUs), used in both their field and in artificial intelligence (AI) processing. 

Core Scientific, one of the world’s largest bitcoin miners, is “aggressively pursuing” AI deals, CEO Adam Sullivan told the FT. 

“It’s an incredibly important part of the business,” he added.

The company, which has data centers in Georgia, North Carolina and Texas, recently reached an agreement with AI cloud provider CoreWeave last month that the companies project will be worth $4.7 billion in revenue over 12 years. 

CoreWeave itself is a former crypto miner that made the move to AI and saw its valuation climb to $19 billion in May, when it raised $7.5 billion in debt financing.

The FT report notes that AI firms need a lot of energy and computing infrastructure, both of which crypto miners can offer, a better proposition than AI firms building their own high-performance computing (HPC) data centers. 

(Big tech companies such as Google and Microsoft are nonetheless spending billions on AI data centers. And as PYMNTS argued in April, they will likely also make their own AI chips.)

“It [normally] takes 3-5 years to build an HPC-grade data center from scratch,” J.P. Morgan analysts wrote in a recent note, per the FT. They added that this timeline has grown even longer due to rising AI demand.

An analysis earlier this year by the Energy Information Agency (EIA) estimated that large-scale cryptocurrency operations in the U.S. eat up more than 2% of America’s electricity, roughly the equivalent of adding another state to the nation’s power grid.

Meanwhile, the International Energy Agency (IEA) issued in January published projections for global energy use over the next two years, including estimates for electricity consumption from data centers, crypto and AI.

The IEA said that, put together, this usage was the equivalent of nearly 2% of the world’s energy demand in 2022, and that this demand could double by 2026. That would be almost the same amount of electricity used by Japan.

The post Floundering Crypto Miners Look For AI Company Lifelines appeared first on PYMNTS.com.