April 27, 2022 | Issue #217

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Fidelity to Allow Retirement Savers to Put Bitcoin in 401(k) Accounts

This week, Fidelity Investments announced plans to allow investors to put a bitcoin account in their 401(k)s, becoming the first major retirement-plan provider to do so.
While employees won't be able to start adding crypto to their retirement accounts right away – the launch will actually take place "later this year" – the news represents a massive step forward in terms of adoption. For starters, Fidelity has ~23,000 companies under their belt administering their retirement plans. Furthermore, they are the nation's largest retirement-plan provider, suggesting that crypto is moving even further into the mainstream.
Ironically, the move came a month after the Labor Department expressed concerns specifically about moving crypto into retirement accounts.
"These investments present significant risks and challenges to participants' retirement accounts, including significant risks of fraud, theft, and loss,” a Labor Department note from last month stated.
That said, when Fidelity's offering does go live, it will be interesting to see where companies stand on the matter. How many will choose to add the bitcoin options to their retirement plans? Only time will tell.
For now, or at least according their announcement, one Fidelity client has already signed up – Microstrategy (MSTR). But this decision should come as no surprise, given its already huge bitcoin treasury allocation.
For what it's worth, within the past month, Fidelity also released two new ETFs dubbed the Crypto Industry and Digital Payments ETF (FDIG) and the Metaverse ETF (FMET). Not to be shown up by Fidelity, BlackRock followed up by launching its own blockchain ETF called the iShares Blockchain and Tech ETF (IBLC).

Coinbase Continues to Slide

How's Coinbase (COIN) doing?
Well, from one perspective not so great. The stock is down more than 50% YTD and more than 64% all-time.
From another perspective, one could look at their current revenue, the launch of their NFT platform, and the growth of their venture portfolio to argue that the company is actually doing quite fine.
In classic value investing speak, Benjamin Graham might spew some chatter about the market being a voting machine in the short-run and a weighing machine in the long.
Regardless of your view, it's worth taking a look at the company's less clear endeavors to gain some investor insight. Because at it's current market cap ($27 billion), the company is trading for significantly less than competitor FTX's (and FTX US) valuation of $40 billion. Let's take a look...
The Venture Portfolio is Booming
According to Coinbase Venture's latest Q1 update, the company made the largest amount of new deals in company history, investing in 71 new companies. This continues to put Coinbase at the top of corporate VC funds in the world.
Although a shaky macro picture has put crypto companies and funds on edge, Coinbase Ventures claims they are seeing no downturn in good deals to fund.
And although we don't have much insight into the fund's mark ups (or downs), we have to assume the portfolio is doing quite well on paper. Just their investment in NFT exchange, OpenSea (who just recently acquired Gem) alone has to represent tens, if not hundreds, of millions of dollars.
Speaking of NFTs, Coinbase NFT is Now Live
Last week, Coinbase announced that their new NFT platform was open in beta. Many, including us here at CoinSnacks, have pointed to this as a potential boon for the company. If done right, Coinbase has the potential to onboard millions of new customers and create a new income stream to help smooth out spikes in traditional token trading.
The Company is in Talks to Acquire BtcTurk For $3.2 billion
BtcTurk, Turkey's oldest and largest exchange, could potentially become under the Coinbase umbrella very soon. This comes immediately after reports that Coinbase is also in talks to acquire 2TM, the owner of Mercado Bitcoin, Brazil’s largest crypto exchange. And as we explained last week, the company is also making moves into India as well.
Overall, the stock could have much more room to slide, but at some point, dependent on the macro market, crypto prices, and the company's moves, the stock may just enter into a good buying zone.

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DEEP DIVES

Bored Ape Yacht Club Instagram Hacked, NFTs Worth Millions Stolen

On Monday, unknown hackers stole what will amount to millions of dollars worth of NFTs from Bored Ape Yacht Club (BAYC), one of the most popular NFT projects.
As seems to be the case in recent hacks though, the hackers didn't target the project directly, but rather targeted peripheral services in order to trick users into giving up their holdings. This time, the target was Instagram.
By the end of the hack, more than 90 NFTs were stolen, representing more than $3 million in value. Although it was a small amount compared to some of the more recent hacks we've recently discussed, we felt it was worth covering as the hack is an important representation of why it's important to not get caught up in crypto hype and rather do research before making any moves.
Here's How It Worked
What is clear is that the hackers spent a lot of time preparing for the hack. Not only did they gain control of BAYC's instagram account, but they also created a fake website that looked very much real.
It started when the hackers advertised a fake airdrop on instagram, which tricked users into clicking on a malicious link. Once the user landed on the website, they gave control of their wallets to the hackers, where their valuable NFTs were drained.
Users thought they were claiming a LAND airdrop, thus taking advantage of the Bored Ape roadmap, which includes a metaverse game that will contain virtual land.
Yuga Labs, the maker of BAYC, stated that "two-factor authentication was enabled and the security practices surrounding the IG account were tight. Yuga Labs and Instagram are currently investigating how the hacker was able to gain access to the account."
Not The First Time...
Only earlier this month, multiple NFT project Discord servers were hacked as part of a phishing scam to trick users into handing over their NFTs. In one case, over $790k of NFTs was stolen.
And it's not only the projects directly, as earlier this year a disgruntled user decided to sue NFT exchange OpenSea for $1 million after one of his BAYC NFTs was sold without his permission.
Overall, as these NFT projects continue to hype up these "act now before it's all gone" airdrops such as ApeCoin that are limited in nature, we only expect for more individuals to get caught up in the moment, giving hackers a perfect attack vector. Be safe out there.

ApeCoin & The Death Of Staking

This week, @Cobie came out of the woodwork again to produce another snarky, lengthy, thought-provoking essay.
His latest victim? ApeCoin, the token that members of Bored Ape Yacht Club's ApeCoin DAO must purchase to be included in the community.
This is interesting because not only does he call out the new world of staking, and how over time the word has been repurposed and redefined... he also takes a direct stab at a controversial proposal inside one of the most touted DAOs on web3.

"Instead of receiving rewards for contributing to chain security with collateral at stake, modern “staking” just seems to mean idk we give you more coins as a reward if you don’t sell your current coins lol.
These modern staking mechanisms do not have any function in the ecosystem to which they belong. They don’t do anything in any practical or technical sense. They don’t make an ecosystem more robust. They are a shell game, using the name of a different thing to obfuscate their actual purpose, which is to encourage less selling."

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REGULATORY FRONT

Fort Worth Becomes First City In U.S. To Mine Bitcoin

Fort Worth, Texas, is now the first city government in the U.S. to mine bitcoin. Even better, to publicly show their devotion to the initiative, Mayor Mattie Parker set up the rigs directly in the climate-controlled IT wing of Fort Worth City Hall.
Three Bitmain Antminer S9 mining rigs will run 24 hours a day, seven days a week. The city also states that the miners will be hosted on a private network to minimize the security risk.
With only three S9s that collectively produce $3.39 of profit per day, this move may not seem like anything other than a marketing stunt. But as Marty Bent – a vocal proponent of entities using bitcoin to leverage stranded energy sources – points out, this is still a "very important signal that the city of Fort Worth is sending to cities and small towns across the U.S.; bitcoin is something you should be taking seriously and bitcoin mining is something you should consider."
What's interesting is that while city governments like Fort Worth are welcoming bitcoin mining initiatives with open arms, across the country we have the state of New York moving in the opposite direction.
Yesterday, the New York State Assembly voted to pass a bill that will essentially freeze current levels of crypto mining carbon emissions until the state can act on a comprehensive impact study.
The bill passed with a vote tally of 95 for and 52 against. It aims to impose a two-year moratorium, specifically preventing new permits from being issued to carbon-based fueled proof-of-work mining operations. Additionally, already established sites planning to increase the amount of energy consumed would not be able to get a permit renewal.
Next, the bill will be considered in the New York State Senate. For live updates, we suggest following @BlockchainAssn on Twitter.
Related: EU meeting notes show officials don’t understand how Bitcoin works

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