False hope

Hello, everyone. We could all use a pep talk right about now, and luckily Vitalik Buterin gave crypto just that with a blog post urging the DeFi sector to replicate the success of stablecoins with other real-world assets like real estate or even stocks. Real economic activity is needed to ensure crypto's long term returns—and for the crypto faithful, this could be that moment. Cheers to that.

Here’s what’s happening today: Goldman Sachs wants to purchase cheap blockchain tech, a hedge fund is suing Grayscale, and Nigeria is forcing a CBDC onto its people.

—Angelina & Vincent

Goldman Sets the Record Straight

Remember that feeling from when you were in elementary school and mom said she’d pack you the best lunchbox ever? You expected Fruit Roll-Ups and Dunkaroos. You got celery sticks and a hummus sandwich. Crypto is experiencing the same amount of disappointment right about now.

You might have seen some big headlines earlier this week proclaiming that Goldman Sachs is buying the dip, setting aside tens of millions of dollars to invest in crypto firms. But just as quickly as hopes were raised, they were shattered.

Expectation: In a story published on Wednesday, Reuters reported that Goldman was planning a Christmas shopping spree to buy or invest in struggling crypto firms. It seemed like the Wall Street heavyweight was stepping in as the trustworthy, regulated player that the industry desperately needs right now.

Reality: Goldman cleaned up the headlines later that day with a Forbes article, clarifying that it had not put aside piles of money to go crypto bargain hunting.

• Rather than bailing out struggling crypto firms, Goldman is planning to instead build out blockchain infrastructure for capital markets—so if it does scoop up a firm or two, it’ll be because their technology could benefit the bank in future.

• FYI: Goldman Sachs is no stranger to the digital asset industry. It already has 11 crypto firms in its investment portfolio and has been bullish on blockchain tech for the long run.

Big picture: Since SBF’s fall from grace, crypto seems to be on the lookout for a new knight in shining armor—and it seems Goldman isn’t as heroic as some had hoped. But there’s a lesson in this disappointment at Goldman’s lukewarm approach. As an industry, crypto has often put singular entities on a pedestal—and it’s time to rethink that inclination. Relying too much on the actions of individual people or businesses can go south quickly (as the past weeks have demonstrated rather painfully).

—Angelina

Hedge Funds Want Their Bitcoin

The cool thing about being an asset manager? The designer suits. The not cool thing about being an asset manager? Your rich customers can sue you if you don’t perform as promised. No surprise, then, that hedge funds work hard to fulfill the promises they make to clients—even if that means taking their counterparties to court.

This is why the hedge fund Fir Tree Capital Management is suing Grayscale for less-than-ideal returns from its Grayscale Bitcoin Trust (GBTC).

Here’s what’s going on:

• Fir Tree filed the suit claiming it needed to investigate potential mismanagement at Grayscale because GBTC has been trading far below the value of the Bitcoin held at the trust.

• Grayscale also won’t let shareholders redeem their shares for Bitcoin. It hasn’t done this since 2014, because the SEC warned Grayscale not to issue and redeem shares of the trust at the same time.

• Fir Tree thinks Grayscale could let shareholders redeem if Grayscale stopped issuing new shares of the trust.

• Meanwhile, Grayscale is raking in a 2% management fee on the funds that are being held in GBTC.

What’s Grayscale to do? The digital asset manager has had plans to convert GBTC into an ETF, which would allow people to easily sell shares. But given the SEC's reluctance to approve a Bitcoin ETF even before the FTX crash, approval seems unlikely in the near-term.

In its lawsuit, Fir Tree requests that Grayscale allow GBTC shareholders to redeem their shares for Bitcoin and to abandon the ETF plans. Depending on what the court grants Fir Tree, Grayscale could end up offering GBTC redemptions again—which would cost it a ton in fee revenue.

—Vincent

(En)forcing CBDCs

Nigeria is going hard—maybe too hard—in its efforts to push its central bank digital currency (CBDC).

To increase the use of the eNaira, Nigeria’s government is limiting citizens’ ATM cash withdrawals to $225 per week and $45 per day.

Zoom out: eNaira launched in October of last year, but Nigerians have been reluctant to use it. The fact that regulators are forcing citizens to adopt their unpopular CBDC just goes to show that people don’t seem to be on board with more financial surveillance.

—Angelina

Crypto Job Board

• Autonomy Network, a protocol for the decentralized automation of dApps, is hiring a business development lead.

• Want to help others stay up to date on crypto? Crypto News is looking for an editor.

• Break into the crypto space as a 2023 summer intern at Binance.

In other news:

• The US Senate Banking Committee said it will subpoena SBF if he does not testify voluntarily.

• ETH devs are aiming to allow stakers to retrieve their ETH starting in March 2023.

• The bankruptcy management team for FTX has hired forensic investigators to track down missing funds.

• The European Union may soon require crypto companies to report data about users to tax authorities.

• Decentraland now lets users become virtual landlords.

And that’s what you need on your radar today in crypto. Which government will force the adoption of its CBDC next? Shoot us a reply with your thoughts. We’ll see you Sunday!