Crypto commerce: CLARITY bill thwarted and Coinbase in focus

On Tuesday, the CLARITY Act failed to gain traction in the Senate, falling short of the 60 votes needed to bring it up for a full House debate. The defeat significantly shrinks the bill's passage this year as its schedule grows increasingly tense ahead of the November 3 midterm elections.

Strategists believe that crypto exchanges such as Coinbase may face a greater risk of being blocked by this legislation than most companies in the industry.

Meanwhile, Standard Chartered Bank is bullish on Arbitrum, Bitmine is turning its ethereum reserves into a source of collateral revenue and the CEO of Phemex has said that AI will be more beneficial than harmful to the crypto industry.

Sberbank strategist: Coinbase is hit by the CLARITY Act and blocked with greater impact

Saxo Bank strategist Ruben Dalfovo said that Coinbase's risk aperture was greatest after the failure of the CLARITY Act, because its trading business is directly affected by US market structure rules.

Following the failure of a procedural vote on the bill, Dalfovo released research papers Wednesday noting that Coinbase is particularly vulnerable to shocks as the new rules could determine its registration requirements, types of assets it can trade and which users will be able to access its platform. Other crypto-related companies would also be affected, but Dalfove believes their business has less relevance to market structure rules: Circle's risk apertures are mainly tied to USDC adoption and interest reserves, while Strategy relies primarily on its bitcoin holdings and funding channels.

The market reaction confirmed these fears. After the vote, shares of Coinbase, Circle and Strategy fell by 5% to 10%, continuing their decline the next day.

Standard Chartered Bank: Arbitrum could rise to $10 as Wall Street moves up the chain

Standard Chartered expects Arbitrum to outperform bitcoin and ethereum by 2030, driven by traditional financial institutions moving assets onto the chain, a trend that is reshaping the network's economic model.

Jeff Kendrick, Head of Digital Asset Research at Standard Chartered said that Arbitrum can extract 10% of the net deal revenue from companies built on its ecosystem. Robinhood Chain, which went live in July this year, has substantially changed the economic structure of Arbitrums and is expected to reach $5 million in September, more than five times its previous level.

Standard Chartered's judgment is based on the assumption that tokenized assets have reached $39 billion and are projected to grow to $4 trillion by 2028. Arbitrum's two-tier infrastructure and revenue sharing model puts it in a position to benefit, but there remains uncertainty about actual adoption rates.

Bitmine expects its ethereum reserves to generate $334 million in collateral revenue annually

Bitmine predicts that its $15.8 billion crypto reserve could generate $334 million in pledged revenue annually, and more than 5 million ether units have now been completed as collateral to create recurring income even under volatile conditions.

Bitmine added 27,180 ETH last week, bringing its total holdings to 5.95 million ETH valued at about $15.4 billion or approximately 4.9% of the Ethereum supply in circulation. There are currently more than 50.6 million Ether held as collateral with annual revenues of around $334 million at current rates.

Unlike Bitcoin reserve-type companies, Bitmine can earn recurring income from crypto holdings by pledging them. According to Yahoo Finance data, its stock has risen nearly 38% in the past month but is still falling for the year. Meanwhile, Strategy did not buy bitcoin for a second week in a row and instead spent $139.3 million buying back preferred shares.

Phemex CEO: AI is draining crypto liquidity and empowering attackers

Phemex CEO Federico Variola said that AI is a net negative for the crypto industry because it not only diverts liquidity from the sector, but also facilitates criminals to carry out attacks using protocol vulnerabilities.

On Cointelegraph's Chain Reaction program, Variola said that AI has allowed many bad actors to fly like tigers and raised the cost of network defense for small teams. In July this year, an attacker stole about $116 million in bitcoins from more than 5,200 addresses associated with a Coldcard hardware wallet flaw, which is widely believed to have been discovered through malicious use of AI.

Variola warned that the threat of AI could reduce interest in self-hosting and DeFi for ordinary users, thus pushing the industry towards a higher degree of centralization. He believes that AI proxies have practical value in building portfolios and assisting trading decisions but cannot completely replace human judgement. However, Natalie Newson from Certik noted that AI can also be one of Bitcoin's strongest defenses.

Crypto Biz is a weekly newsletter about the business dynamics of blockchain and crypto, delivered directly to your inbox every Thursday.