Ten31 Timestamp 827,662

While this week was filled with the typical variety of macro headlines – including record federal interest payments that are set to balloon exponentially higher and the officially confirmed end of the BTFP program that has kept regional banks afloat over the past year – the key highlight for anyone paying attention to bitcoin was the letter Ten31 and 25 bitcoin companies submitted to FinCEN. We and our co-signers are proud to have spearheaded a push on behalf of the entire industry to call out and oppose the latest attempt at federal overreach that would negatively impact all Americans’ privacy and financial lives, and we encourage everyone to read the letter here. While we do not necessarily expect the submission by itself will alter the course of FinCEN’s rulemaking, we believe it exhibits the growing strength of the bitcoin ecosystem, which is quickly becoming populated by a wide array of high leverage, zero-to-one founders obsessively focused on building tools to give Americans and the rest of the world an alternative to an increasingly permissioned, unstable, and confiscatory financial system. The diversity of companies signaling their support on the letter speaks to the unique position Ten31 has within the bitcoin ecosystem, and we’re more passionate than ever about funding and supporting the companies building the sly roundabout way toward a better financial future. 

Portfolio Company Spotlight

Samourai Wallet offers a suite of tools to allow users to manage and spend bitcoin with an extremely high degree of privacy. The company’s flagship wallet app natively integrates Whirlpool, Samourai’s non-custodial CoinJoin implementation, and a host of other features – including PayNyms, Stonewall, and Stealth Mode – to smoothly facilitate anonymity-enhancing transactions that mitigate blockchain surveillance by potentially malicious actors. Samourai's tools can also be integrated into other applications through APIs and licensing, as in the case of Sparrow Wallet, a high quality desktop coordinator software that comes with Whirlpool functionality conveniently built in. 

Selected Portfolio News

Strike launched its full suite of services for users in Puerto Rico:

Bitwise announced a Proof of Reserves partnership with Hoseki, making it the first ETF issuer to provide publicly auditable transparency of its assets:

Primal rolled out its latest Android update, which includes an integrated lightning wallet:

Mutiny released its latest version, which includes new support for Payjoin. Mutiny also launched two new experimental features leveraging DLCs:

Media

In conjunction with 25 bitcoin companies, Ten31 submitted a letter to the Treasury Department’s FinCEN group regarding the agency’s proposal for a new set of overly broad and invasive surveillance requirements that would adversely affect a wide array of lawful transactions. 

Strike Founder and CEO Jack Mallers appeared on a Yahoo Finance news segment to discuss bitcoin’s recent performance and his expectations for the coming year. 

Ten31 Principal John Arnold joined Managing Partner Marty Bent on the TFTC podcast to discuss his recent piece Bitcoin Is Eating the World.

Mutiny Co-Founder and CEO Tony Giorgio published an essay outlining a new way to conceptualize the custodial trade-offs of Fedimints and federated ecash. 

StatMuse published its latest Muse Letter, which highlights the launch of English Premier League data on the site and the continued growth of the Muse Network, which just surpassed 1 million followers. 

Strike CTO Tom Kirkpatrick wrote a deep dive on bitcoin fee estimation. 

Market Updates

US GDP for the fourth quarter came in at +3.3% Y/Y, well ahead of consensus expectations for +2%. As is increasingly the case, the positive headlines were something of a mirage, as government spending outpaced consumer spending for the sixth consecutive quarter and private investment remained stagnant and well below the pre-COVID trend.

Meanwhile, the latest data showed that annualized federal interest payments now exceed $1 trillion for the first time in history on the back of elevated interest rates and deficit to GDP ratios generally not seen outside recessions. 

After months of speculation and an unintended arbitrage play by US banks, the Federal Reserve confirmed that its BTFP program would indeed cease making new loans on March 11 as previously scheduled. While banks can continue to take out new one-year loans or refinance existing ones through the sunset date, the confirmation comes at a time when reserves at regional banks remain highly troubled. 

That said, borrowing volume through the facility took another leg up this week, even as the Fed raised interest rates to stamp out banks’ favorite recent trade. 

Overseas, Chinese stocks continued to sputter this week, extending recent pressure that has led to declines of more than 25% in major Chinese indices over the past year. In response, the PBOC lowered its required reserve ratio by 50bps and signaled room for additional easing. 

China’s government is also reportedly weighing a plan to backstop markets with a 2 trillion yuan ($278 billion) stimulus program. Amid the macro headwinds, Reuters ran a story this week surveying Chinese investors “rushing into bitcoin,” which has ostensibly been banned in the country for several years. 

Regulatory Update

Donald Trump, apparent frontrunner for the Republican Presidential nomination, reiterated his opposition to CBDCs during campaign stops this week.

Bitcoin advocate Avik Roy published an op-ed in Forbes highlighting that ETF approvals further cement bitcoin’s regulatory status in the US and would complicate attempts at a more adversarial posture from regulators. 

Noteworthy

The US government announced another sale of a portion of its stockpile of seized bitcoin, with  this slug amounting to more than $130 million. This represents the latest instance of a long-established pattern of federal agencies auctioning off confiscated bitcoin, an action generally not associated with goods the government considers illicit. 

Palantir Co-Founder Joe Lonsdale spoke on the likelihood of autonomous AI agents using bitcoin to transact and coordinate, a concept we explored in some depth early last year. 

Hardware wallet manufacturer Trezor notified users of phishing scams targeting a subset of its customers, once again highlighting the security hole of centralized repositories of sensitive customer information. 

In related news, reports surfaced this week of a massive data breach that may have affected 26 billion records from across popular platforms including Twitter, Dropbox, Linkedin, and Telegram.

OpenSats announced a new long-term support grant for bitcoin and lightning researcher René Pickhardt. 

Travel

• Austin BitDevs, February 15

• Nashville BitDevs and Meetup, February 20-21

• Bitcoin Asia Conference, May 9-10