Here’s What You Missed in Crypto This Week

As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week’s top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.

COINBASE TO TAKE STAKE IN CIRCLE: Coinbase (COIN) said in a Monday blog post: “Circle and Coinbase, the founding companies behind Centre Consortium, a jointly managed self-governance consortium for USDC, have agreed that with growing regulatory clarity for stablecoins in the U.S. and around the world, the requirement of a separate governance body like Centre, is no longer needed. Centre will no longer exist as a stand-alone entity and Circle will remain as the issuer of USDC, bringing any Centre governance and operations responsibilities in-house. As part of this next chapter, Coinbase and Circle have reached a new agreement. Reflecting Coinbase’s belief in the fundamental importance of stablecoins to the broader cryptoeconomy, Coinbase is taking an equity stake in Circle. The nature of the investment means that Coinbase and Circle will now have even greater strategic and economic alignment on the future of the financial system. Coinbase is committed to the long term success of the stablecoin ecosystem and USDC, specifically. Coinbase and Circle will continue to generate revenue from USDC reserves interest income. Under the parties’ new arrangement, this revenue will continue to be shared based on the amount of USDC held on each of our platforms, and additionally we will now equally share in interest income generated from the broader distribution and usage of USDC.” (read more)

Following the news, Barclays analyst Benjamin Budish kept an Underweight rating on Coinbase with a $70 price target. A new commercial arrangement, in which issuance-related income will be shared equally, could be low-single-digit accretive to fiscal 2024 revenue, and high-single-digit to EBITDA if the total share gets to 50%, the analyst said. The updated agreement means that not only will Coinbase receive the revenues it would have under the previous agreement pertaining to USD coin held on its platform but will also receive an equal share of interest income generated from the broader distribution and usage of USD coin, said Barclays. (read more)

Meanwhile, Mizuho kept an Underperform rating on Coinbase with a $27 price target. The positive of the agreement is reducing uncertainty regarding the company’s economic share of USD coin and there could be a modest uptick in Coinbase’s interest income, the analyst said. However, the firm believes the negatives outweigh the positives. The Circle equity stake deepens Coinbase’s exposure to a “dwindling asset class,” casting doubt about the standalone business model of stablecoins, said Mizuho. (read more)

MASTERCARD, VISA STEP BACK FROM BINANCE PARTNERSHIPS: MasterCard (MA) and Visa (V) have stepped back from their card partnerships with cryptocurrency platform Binance Holdings, as the platform is threatened by regulators globally, Bloomberg’s Yueqi Yang reported Thursday, citing a Binance spokesperson. Visa stopped issuing co-branded cards with Binance in Europe as of July and Mastercard will end its partnership with the company entirely in September. The moves come as Binance faces heavy scrutiny from financial watchdogs worldwide amid a broader crackdown on the cryptocurrency industry. (read more)

MAWSON DOWNGRADE: On Thursday, Cantor Fitzgerald downgraded Mawson Infrastructure (MIGI) to Neutral from Overweight with a price target of $1, down from $12. The analyst expects the company’s hosting revenue, which currently represents 50% of its total revenue, to drop to zero, after August 23. Celsius Mining, Mawson’s only hosting partner, notified the company in July that it would not be renewing the hosting agreement, the analyst said. The firm said that while management noted the possibility of utilizing its hosting infrastructure for self-mining, it would need to raise a significant amount of capital to finance and acquire the hardware to fill these plugs. Cantor thinks Mawson will face liquidity concerns in the near term. (read more)

BIGG DIGITAL ASSETS TO FULLY ACQUIRE TERRAZERO: BIGG Digital Assets (BBKCF) announced Friday it has entered into a definitive amalgamation agreement to acquire all the outstanding shares of TerraZero Technologies not already owned by BIGG, for total consideration of approximately 62M common shares of BIGG, valued at approximately $20M. The transaction is expected to close in September and is subject to TerraZero shareholder approval, notification to the Canadian Securities Exchange and other customary closing conditions. In Q1 and Q2 of 2023, TerraZero generated an aggregate of approximately $1.5M in revenue and 161% growth year over year for the same period. TerraZero expects to spend the second half of 2023 expanding its business plans to focus on the development of its own highly scalable Intraverse technology ecosystem, which is expected to launch in 1Q24. Upon closing, TerraZero will become a wholly-owned subsidiary of BIGG. Each TerraZero common share and TerraZero preferred share not owned by BIGG or dissenting shareholders of TerraZero will be exchanged for approximately 1.69 BIGG Shares for a total of approximately 62M BIGG Shares. The consideration represents a total offer value of approximately 54c per TerraZero Share, which is calculated based on the volume weighted average price of BIGG Shares on the CSE for the 20 trading days preceding August 22 of approximately $32c per BIGG Share.  Each outstanding option of TerraZero shall be exchanged for options of BIGG that will entitle the holder to acquire and receive, upon the exercise thereof, BIGG Shares. Each outstanding warrant of TerraZero will automatically become exercisable into BIGG Shares pursuant to their existing terms. At closing, existing BIGG and TerraZero shareholders will own approximately 80% and 20% of BIGG, respectively. (read more)

TORNADO CASH FOUNDERS CHARGED WITH MONEY LAUNDERING: The Department of Justice’s Office of Public Affairs announced Wednesday that a Russian national and a Washington man were charged with conspiracy to commit money laundering, conspiracy to commit sanctions violations, and conspiracy to operate an unlicensed money transmitting business. According to the indictment, unsealed in the Southern District of New York, Roman Storm, of Auburn, Washington, and Roman Semenov, of Russia, created, operated, and promoted Tornado Cash, a cryptocurrency mixer that facilitated more than $1B in money laundering transactions, and laundered hundreds of millions of dollars for the Lazarus Group, the sanctioned North Korean cybercrime organization. “Today’s announcement should remind criminal organizations everywhere in the world that they are neither untraceable nor anonymous,” said FBI Director Christopher Wray. “You can’t hide from us behind a keyboard — whether you’re a hacker or facilitator. Those charged today engaged in a conspiracy to launder money for cybercriminals, including for a North Korean cybercrime organization seeking to evade sanctions. As we have with this operation, the FBI is going to keep dismantling the infrastructure used by cyber criminals to commit and profit from their crimes, and holding anyone who assists those criminals accountable.” (read more)

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital (BTBT), Coinbase, Core Scientific (CORZ), Greenidge Generation (GREE), Marathon Digital (MARA), MicroStrategy (MSTR), Riot Platforms (RIOT), Stronghold Digital Mining (SDIG) and TeraWulf (WULF).

PRICE ACTION: As of time of writing, bitcoin rose roughly 1% this week to $26,155 in U.S. dollars, according to CoinDesk.