A handful of the most interesting and current stories in the blockchain/web3 world not published on Decential this past week in case you missed them

Hello and welcome back to the Web3 Rewind! Per usual with the industry, lots has happened this past week so without further adieu, let’s dive into this week’s news.

The Latest

It’s been nearly impossible over the last few weeks to escape the slew of news reports and editorials about artificial intelligence (AI). A lot of the coverage is a bit breathless and the hype around it has brought to mind how blockchain/crypto/web3 was a media obsession for a while before 2022 did its best to destroy an entire industry’s reputation. Neither crypto nor AI is going away, and they share a few interesting similarities.

People can be hurt by each; the AI-generated deep fakes are concerning and have led to some terrified parents who thought their child had been kidnapped (the kid’s fine, it’s a scam to try to get a quick ransom, but what parent wouldn’t check immediately on their child?) And rug pulls and other fraud have cost crypto users billions in lost funds. Both technologies have a carbon emission problem – a Stanford study found that the “full suite of experiments needed to build and train that AI language system from scratch can generate even more: up to 78,000 pounds [of carbon emissions], depending on the source of power. That’s twice as much as the average American exhales over an entire lifetime.”

And they both share the power to vastly change the world. In one sense, as someone immersed in the crypto world, it’s been nice to have the spotlight shine on a different new technology, with all the attendant fearmongering that web3 has endured for so long. The hype will die down and AI will undoubtedly have a huge effect on our culture and economy. Just as with blockchain or the Internet, it’s the tech behind AI that will endure. And of course someone had to direct an AI to destroy humanity. There’s always one isn’t there?

But as crypto has continued to get kicked around in the press and in the court of public opinion, there are still bright spots to get us through this winter. Like what Glo Dollar is doing, a stablecoin that will pledge all of its interest income to help end extreme poverty. Co-founder Jasper Driessens put it this way to me this week, “crypto allows us to embed values within money.” I’ll gladly take that advancement even if it means the scams and fraud continue. — Matthew Leising, editor in chief, Decential Media

Smooth sailing dept.

Crypto’s Ethereum Network Completes Key Software Upgrade Without a Hitch

The Shanghai upgrade to Ethereum went off exactly as planned on Wednesday, which shouldn't surprise anyone who's watched previous and much more complicated updates come off smoothly (hey there, Merge). It will be fun to see how Bitcoin maximalists pivot to keep moaning about the world's most-used blockchain now that the staked Ether that secures the proof-of-stake Ethereum network is free to be withdrawn. The only thing that seemed up for debate is what Shanghai would do to prices.

Not much, or even some added upward movement, it turns out. There were fears prior to Shanghai that the ability to take Ether out of the staking pool could lead to selling and a drop in price, but so far that's not the case. Ether was up about 5% as of Thursday morning in the U.S., and over 10% by the evening. The fears of a price drop weren't crazy, considering that Ether fell nearly 10 percent after its historic move away from proof of work in September, known as the Merge. Yet the idea that people who had staked Ether in the first round of this historic shift would be dying to pull their coins out and sell never made much sense to me. In fact, as Bloomberg reported, so far the inflow of new Ether to the staking pool is more than the withdrawals, leading to added buying pressure on the world's second-largest cryptocurrency. — ML

Quick Bits

Hong Kong Loves Crypto 🏙️

• With the APAC crypto market capturing the interest of investors and startups from around the world, Hong Kong is looking to become a major hub in the region. Hong Kong Financial Secretary Paul Chan is leading the charge and will be part of the committee looking to invest $6.4 million of the city’s budget in crypto startups and web3 education and development.

• Hong Kong’s virtual asset service provider licenses are likely to be rolled out in June and are another positive indicator for the city, as the applicable guidelines and procedures give a clear path for exchanges regarding regulation.

Crypto Dreams As Big As Texas 👾🪙

• With plans for a U.S. central bank digital currency yet to materialize, the state of Texas is looking to step up and bring crypto to Texans with backing in the form of good old gold. Senate Bill 2334 and House Bill 4903 share the goal of establishing a fractional representation of a troy ounce of gold behind every unit of digital currency - digital currency that is issued by the state.

• The growing cultural and political divide in various parts of the U.S. is palpable. Some states are looking to take a hardline stance against corporations and values that don’t align with their values - the Texas plan could set a precedent. Prior to the Mint Act of 1792, remember, states often issued their own currencies. Could we see that again if the Texas plan moves forward?

Bitget Zeroes In On Asia 🌏

• Centralized exchange Bitget will be rolling out a $100 million fund to bolster the development of crypto and the broader web3 ecosystem in the APAC market. Bitget is the 18th largest crypto exchange by volume, according to CoinMarketCap.

• The APAC region is looking to strengthen its regulatory framework to bring more companies and exchanges to the region, according to a survey by Boston Consulting Group and Foresight Ventures, Cryptoslate reported. With Hong Kong and Japan leading in regulation and showing a clear path forward, further investment in the region is likely.

US Treasury Challenges DeFi 🦅

• When it comes to assessing the DeFi market, it’s safe to say the U.S. Treasury has taken a glass-half-empty perspective. In its first illicit finance risk assessment report, Treasury called out the "dangers" and "nefarious activities" of the DeFi market such as money laundering. Somewhat surprisingly though, the report acknowledged that in comparison to cash, DeFi accounts for still just a sliver of these activities.

• This is not a new take for the government. The market is familiar with this hesitancy, speculation, and skepticism. But what’s happening beyond that? Only a handful of the report's 42 pages were dedicated to mitigation and solutions. What the industry needs isn’t another report calling out dangers, it needs a collaborative action plan.

And last but not least

CryptoGPT raises funds at a $250 million token valuation

CryptoGPT seems to have come out of nowhere with an eye-catching and evocative name and a recent $10 million fundraise. Cleary drafting on the momentum of ChatGPT, the AI application that's making middle-aged male columnists swoon and/or clutch their pearls, CryptoGPT purports to bring AI-powered tech tied to a blockchain to *checks notes* help you sell your data.

Yawn. This idea has been around for several years and comes in many formats right now. There's no need for AI to be a part of this equation. There is a telling line on the startup's website, however...

Note the use of "companies" and not "users" or "individuals." CryptoGPT wouldn't be trying to get rich on individual user data now, would they? The project also has a coin that gained in value on the news of the investment rounds from DWF Labs, which The Block described as "a web3 investment firm that is also a market maker." Ah, so there's a coin that can potentially be rugged and a prime investor that's a market maker for the eventual data-selling business CryptoGPT is building. The signs are just too bright in this case, don't you think? What could go wrong? -- ML 

Out of the Ether: Special NFT Edition

Have you read the definitive history of Ethereum? No? Well then get your special edition of Out of the Ether while you can. There are only 1,000 that were printed and each copy is an NFT that can be registered on the Lukso blockchain’s Universal Profile protocol.