Next Gen Investing

From Elon Musk's thoughts on regulation to a $162 million DeFi bug: 6 key things that happened in crypto this past week

SpaceX owner and Tesla CEO Elon Musk poses as he arrives on the red carpet for the Axel Springer Awards ceremony, in Berlin, on December 1, 2020.
Britta Pedersen | AFP | Getty Images

Many of the top cryptocurrencies by market value, like bitcoin and ether, are up over the last seven days.

Bitcoin, up over 14.8% in the last week, is currently trading at around $49,365, as of 2:51 p.m. EST according to CoinMarketCap, and ether, up 14%, is trading at around $3,425.

And it's been a busy week in the crypto space.

Along with price movement, here are six key things that happened, from Elon Musk sharing his thoughts on regulation to a massive decentralized finance, or DeFi, bug.

1. Coinbase will let users deposit paychecks into their accounts

On Sept. 27, Coinbase announced that its U.S. users will be able to deposit any percentage of their paycheck directly into their accounts.

Users can hold their money in dollars or immediately convert their paycheck into cryptocurrencies like bitcoin without fees, the cryptocurrency exchange said.

"With direct deposit, customers can more easily access our crypto-first financial services and be ready for any trade or purchase," Max Branzburg, vice president of product at Coinbase, said in a blog post. "We're determined to deliver the most trusted full suite of crypto-first financial services to our 68 million users."

The launch will go live in the coming weeks. Though it didn't specify which, Coinbase said it will use an FDIC-insured bank partner for its direct deposit.

2. Elon Musk says the U.S. government should avoid regulating crypto

On Tuesday, Tesla and SpaceX CEO Elon Musk said the U.S. government should avoid trying to regulate the crypto market.

"It is not possible to destroy crypto, but it is possible for governments to slow down its advancement," Musk said at the Code Conference in Beverly Hills, responding to a question from New York Times columnist Kara Swisher about whether the U.S. government should be involved in regulating the crypto space.

"I would say, 'Do nothing,'" Musk said.

Musk weighs in on crypto and China
Musk weighs in on crypto and China

Musk has long been a supporter of cryptocurrencies.

Despite his recent criticism of bitcoin mining and its environmental impact, Musk confirmed that he personally owns the cryptocurrency, along with ether and dogecoin.

Early this year, Tesla said it had purchased $1.5 billion worth of bitcoin. The value of those holdings swelled to about $2.5 billion in the second quarter as bitcoin prices surged, though its price has since dropped.

3. TikTok launches its first NFT collection

On Thursday, TikTok announced it will launch its first-ever NFT, or nonfungible token, collection called TikTok Top Moments.

The collection will include six NFTs "designed by some of our community-defining creators and inspired by the trending videos they created," the company wrote in a blog post. Each featured TikTok creator is partnering with prominent NFT artists. Big-names involved include Lil Nas X, Gary Vaynerchuk, "Kombucha girl" Brittany Broski and Grimes, to name a few.

The first drop will be on October 6, and the others will take place weekly through the end of the month.

Proceeds will "largely" go directly to the creators and NFT artists involved, TikTok said.

4. Jerome Powell says he has "no intention to ban" cryptocurrencies

During his testimony before the House Committee on Financial Services on Thursday, Federal Reserve Chair Jerome Powell clarified that he has "no intention to ban" all cryptocurrencies.

However, he said that stablecoins, which are supposed to be pegged to reserve assets like the U.S. dollar, should be subjected to more regulation.

"Stablecoins are like money market funds, like bank deposits. But they're to some extent outside of the regulatory perimeter and it's appropriate that they be regulated," Powell said. "Same activity, same regulation."

On Friday, the Wall Street Journal reported that the Biden administration is "considering ways to impose bank-like regulation on the cryptocurrency companies that issue stablecoins."

5. El Salvador has started mining bitcoin using energy from volcanoes

On Friday, El Salvador president Nayib Bukele tweeted that the country mined 0.00599179 bitcoin, or about $269, with power harnessed from a volcano.

This came after Bukele tweeted that he had instructed state-owned geothermal electric company LaGeo SA de CV to "put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos" in June.

Bukele said in his tweet Friday that the volcano mining project was still a work in progress and that the country was still "testing and installing" new mining equipment.

6. Bug allows for up to $162 million to be claimed after DeFi upgrade gone wrong

In what some deem the biggest-ever fund loss in a smart contract incident, about $162 million was accidentally distributed to users of decentralized finance, or DeFi, protocol Compound. Late last week, an upgrade with a bug in its code allowed Compound's pool of funds to be claimed by users accidentally.

"If you received a large, incorrect amount of COMP from the Compound protocol error: Please return it," Robert Leshner, founder of Compound Labs, tweeted late Thursday.

Leshner offered for users to "keep 10% as a white-hat" in his tweet, but added that "otherwise, it's being reported as income to the IRS, and most of you are doxxed."

While Compound works to fix the bug, some users have returned claimed funds. In addition, no user funds are or were at risk, as the bug impacted the protocol's pool rather than supplied or borrowed funds.

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