Ten31 Timestamp 783,778
News on the macro front was relatively quiet this week for the first time in a month, as the size of the Fed’s balance sheet declined slightly W/W (though heightened borrowing from both the Discount Window and the new BTFP facility persisted). Under the surface, headlines continued to point to growing stress in various sectors, including deteriorating performance of assets linked to commercial real estate and a declining capex outlook in the Fed’s latest CFO survey.
A more notable development for bitcoiners (and any Americans interested in the perpetuation of basic individual liberties) is the RESTRICT Act, which appeared to gain more Congressional support this week. The new bill, ostensibly intended to curb the influence of Chinese-owned social app TikTok, includes various new regulations and sweeping powers for the executive branch to engage in expanded surveillance of US citizens. Like most legislation allegedly aimed at promoting “safety” from foreign influence, the law would encroach even further than the Patriot Act on the rights and privacy of ordinary Americans by giving intelligence agencies authority to enforce “any mitigation measure to address any risk” resulting from a “current, past, or potential future transaction” with any party the executive branch (via the Department of Commerce) unilaterally deems to be a foreign adversary. The bill defines “transaction” broadly enough to include virtually any kind of online interaction, and violations of the law could result in prison sentences of up to 20 years and fines of up to $1 million. While the proposed legislation has started to receive some pushback from both the right and left, there is clearly more work to be done to avoid its enshrinement into law.
That said, the cascade of bank failures over the last month, the inevitable currency debasement necessary to respond to those failures, and now this latest piece of overreaching legislation serve as further reconfirmation of the importance of permissionless, censorship-resistant systems like bitcoin and the technologies built on top of it. As Matt Odell pointed out in a piece this week, we cannot expect the architects and beneficiaries of corrupt systems to save us from those same systems.
Selected Portfolio News
Fold announced Fold Global, which expands their exclusive partnership with Visa to new markets in Europe, Latin America, and North America:
Mempool.space released v2.5.0 of their open source software for self-hosted instances:
Samourai Whirlpool unspent capacity reached another all-time high:
Coinkite co-founder and CEO NVK joined the Bitcoin Standard podcast to discuss bitcoin hardware and Coinkite’s history.
StatMuse released its latest monthly Muse Letter, highlighting the platform’s biggest single day and month ever in March, with 45 million searches last month alone.
Bitnob founder and CEO Bernard Parah was featured in a CNBC article highlighting the impact of the lightning network on Africa’s remittance and payments markets.
Forbes named Fold the best bitcoin rewards card in the US.
Bitcoin network hashrate hit another all-time high of over 350 EH/s this week.
Small US banks have seen deposit outflows of more than $100 billion in the past several weeks, much of which flowed to the 25 largest banks in the country. Money market funds took in $220 billion of inflows over the past two weeks.
Meanwhile, money was pulled from European banks at a record pace in February, even before the onset of acute stress on the global banking system.
The size of the Fed’s balance sheet declined slightly W/W after a sharp upward reversal for most of March. Discount window borrowing was down as well to $88 billion, but use of the new BTFP facility rose to $64bn.
The latest Fed CFO survey – fielded just before the collapse of SVB – showed deteriorating expectations for capex and business spending.
Signs of impending stress in the commercial real estate market continue to grow, with the CMBX BBB- index and several office building REITs falling to multiyear lows. This dynamic bears watching given small banks’ significant exposure to commercial real estate lending.
Saudi Arabia and other OPEC+ member countries announced a surprise production cut of over 1 million barrels per day over the weekend, immediately pushing oil prices higher and likely adding upward pressure to final goods prices.
The CFTC filed a complaint against prominent crypto exchange Binance and its CEO Changpeng Zhao, alleging the exchange illegally solicited US users and violated its internal compliance controls.
The European Union Parliament passed a new set of “anti-money laundering” (AML) regulations that will require DAOs, NFT platforms, and “DeFi” platforms to engage in user KYC for payments above €1,000.
In contrast to recent bitcoin-friendly legislation and regulatory developments in Texas, a recently proposed bill seeks to restrict bitcoin miners’ participation in demand response programs in the state.
Former US Treasury Secretary Steve Mnuchin called for the FDIC to insure bank deposits for up to $25 million per account.
The US government reportedly sold 9,800 bitcoin connected to the Silk Road case on March 14 and intends to sell another 41,500 in four batches over the course of this year.
Route blinding, a method for improving receiver privacy on Lightning, was merged into the Lightning specification.
The Wall Street Journal identified significant unrealized losses on over $500 billion of bonds recently reclassified from “Available for Sale” to “Held to Maturity” across six large US banks.
China completed its first LNG trade settled in yuan this week. Notably, the trade’s counterparty was G7 nation France rather than an emerging economy or east Asian neighbor.
China also struck a deal with Brazil, its largest bilateral trading partner, to trade directly in the currencies of the two nations rather than using the USD as an intermediary.