Crypto markets endured yet another week of weakness with bitcoin struggling below $42k.

It looks likely that the reversal will be excruciatingly slow with some market spectators hinting at further price declines. What does this mean? Don't wait until market turns green to start apeing into projects.

This morning, we were thrilled to announce Copper as the official Digital Asset Services Partner of ABB FIA Formula E, the world's first fully electric race series. Just like Copper, Formula E is new, dynamic and moving quickly - making this partnership the perfect fit for two thriving organisations to collaborate on technology.

In other exciting news, there's only a few days to go until the start of Miami Hedge Fund Week on Monday where several big crypto and alternative investment events are taking place.

In parallel to these events, Copper and our partner, AYU, will be setting up a Yacht HQ that'll be live all week. Moored in the marina outside the Fontainbleu hotel, this is where I'll be posted for much of the week, and where we will be hosting breakfasts through to nightcaps every day. There’s an open invitation to funds, family offices and institutional investors to join us on the yacht for any of our sessions throughout the week. Just drop us a message!

Best Regards,

Iva Lila

Beneath the headlines

Crypto.com CEO confirms 483 accounts were compromised in a multi-million dollar hack. Could the breach of a major exchange knock investor confidence for the entire sector?

Security concerns have long been a central topic in the crypto adoption conversation and it looks set to remain that way in 2022. The high profile exchange, Crypto.com, is the latest digital asset platform to have been hit by a multi-million dollar security breach owing to a 2FA flaw.

The exchange first paused withdrawals on its platform on Sunday after noting via Twitter that some users were reporting suspicious activity on their accounts. Before the company revealed the scope of the hack in terms of funds lost, blockchain security analytics company PeckShield, said Crypto.com may have lost digital assets worth $15m. Bitcoin research firm, OXT Research, speculated the loss could have exceeded $33m.

It was actually only yesterday that the exchange's CEO, Kris Marszalek, officially came forward (via Bloomberg) to admit that hundreds of user accounts had indeed been compromised by hackers.

Marszalek did not confirm the exact monetary value of the theft in the interview but earlier today, Crypto.com issued a report confirming that about $33.8m in ETH, BTC and other digital assets had been stolen. The report also clarified that the incident affected 483 Crypto.com users – all of whom have been fully reimbursed. According to the official post-mortem, Crypto.com has since migrated to an entirely new 2FA infrastructure.

Crypto.com has faced huge criticism in its handling of the breach after having stayed silent for so long – even as on-chain data showed the stolen ETH was being laundered using Tornado Cash by the hackers. Rekt yesterday published a scathing post about the incident, condemning Crypto.com for quietly refunding the affected users while simultaneously assuring them that their funds were safe, tweeting: 'They’re lying to you.' Rekt also raised concerns that as a household name, Crypto.com's security failure could cause serious damage to confidence in crypto from the retail market.

I don't really agree with the latter part as despite its long silence on the matter, Crypto.com actually did well to swiftly detect and remedy the issue. I also take the view that smaller organisations (both crypto and non-crypto) are more likely to be sunk by security breaches than their larger peers.

Where I believe Rekt has a solid point, is in the importance of firms being open about hacks to bolster education and the overall security of the space. This is especially crucial given that the incident is hardly the first 2FA-linked exploit to have hit a crypto exchange. Last year, hackers stole funds from thousands of Coinbase users by exploiting a flaw to bypass 2FA authentication.

Fighting cybercrime will take a global village, and all digital asset firms—large and small—have to be part of it. If nothing else, the Crypto.com incident will hopefully serve as a renewed reminder that 1) enabling 2FA on a custodial account is not a panacea, and 2) the importance of keeping assets off-exchange has never been greater.

Andreessen Horowitz seeks record $4.5bn for new crypto funds. Does this mean that more crypto lobbying and advocacy efforts are on the way in 2022?

A headline that piqued my interest came out of the FT today relating to one of the largest and most scrutinised venture capital firms on earth, a16z. According to the report, Andreessen Horowitz is taking a massive leap to further solidify itself as the poster child for crypto.

The Menlo Park firm reportedly plans to raise a mammoth $4.5bn for two new crypto funds. This is more than double the amount it raised less than a year ago and also eclipses the $2.5bn raised by Paradigm in November, its closest contender in the blockchain realm.

FT wrote that $3.5bn will be allocated to its recently-launched crypto fund, while the remaining $1bn will be reserved for a separate fund focused on seed investments in startups across the digital asset space. This seed fund would be the largest ever raised that is focused on that level of startup investment. Until now, the largest seed fund was the $500m raised by Greylock Partners in the fall of 2021.

Andreessen hasn't yet confirmed the FT report and is expected to make its plans public sometime in March.

Crypto become a massive hotbed for venture capital investment in 2021, with VCs having poured more than $30bn in the industry – a 445% increase from 2020 and more than all previous years combined. Already in 2022 (and even with the current market downturn), activity in this arena is continuing with that same energetic frenzy.

Earlier this week, Crypto.com confirmed that it'll be boosting the size of its VC arm from $200m to $500m. Meanwhile just last week, crypto exchange FTX launched a spectacular $2bn fund to invest in crypto projects, joining rivals Coinbase and Binance, which already offer funding to start ups.

With these two new enormous crypto funds from a16z, the stage looks set for even more lobbying muscle in DC in 2022. As one of the industry’s largest players with at least 55 crypto companies in its portfolio, the VC firm (understandably) was one of the most vocal crypto proponents in Washington last year.

Having recently beefed up its team by onboarding the former CFTC commissioner, Brian Quintenz, and former Department of Justice section chief, Jai Ramaswamy, I think we can definitely expect to see a16z step up its DC game this year. In the meantime, I'm genuinely excited to see what value the tsunami of VC capital entering our industry will unlock.

Roundup of other key developments

INSTITUTIONAL

Grayscale taps Bloomberg for Future of Finance Index launch amid ETF push. More

21Shares launches world’s first cosmos crypto ETP. More

BNY foresees digital assets as a 'source of meaningful revenue' by 2023. More

SEC rejects Skybridge's application for spot Bitcoin ETF. More

LEGAL + REGULATORY + GOV + CBDCs

Russia's central bank calls for blanket crypto ban. More

Rio de Janeiro mayor plans to invest 1% of the city's treasury in crypto. More

OCC Comptroller calls for federal collaboration with crypto intermediaries. More

UK government to strengthen rules on misleading cryptocurrency adverts. More

Iran to reportedly pilot central bank digital currency soon. More

EU should ban energy-intensive mode of crypto mining, regulator says. More

NYC mayor Eric Adams receives first paycheck in the form of BTC and ETH. More

COMPANY + CeFi

Binance partners with Thai billionaire to set up local crypto exchange. More

Gemini introduces Prime Brokerage following 2nd acquisition in a week. More

BitMEX Group plans to acquire a German bank. More

Paradigm leads $110m Series B round for Bahraini crypto exchange. More

BlockFills raises $37m to support global expansion. More

DeFi + WEB3 + NFTs + METAVERSE

Microsoft makes massive metaverse push with $69bn Activision buy. More

Walmart signals Metaverse plans with trademark applications. More

Meta is reportedly looking to launch NFT marketplace. More

Privacy-focused Secret Network announces $400m in funding. More

Land prices surge on Cardano Metaverse project Pavia. More

Coinbase partners with Mastercard for NFT marketplace purchases. More

OpenSea confirms acquisition of Dharma, sets sights on fiat onramps. More

Turkish ruling party holds meeting in Metaverse, talks crypto regulation. More

NFT platform Autograph raises $170m in Series B funding. More

What to watch out for this week

FRIDAY 21 JANUARY

Cosmos AMA. More

MONDAY 24 JANUARY

Day One of the Context Miami Summit. More

The Copper x AYU Yacht HQ goes live for the week in Miami, FL. Moored in the marina outside the Fontainbleu hotel, we will be hosting breakfasts, brunches, lunches, drinks and dinners every day for funds, family offices and institutional investors attending the Battlefin and Context conferences in the city. More

TUESDAY 25 JANUARY

At 9:50am, our Head of Sales Americas, Glenn Barber, takes the stage at the Context Summit Miami to discuss custody and security. More

WEDNESDAY 26 JANUARY

Our CRO, Boris Bohrer-Bilowitzki, joins Blockchain.com's Peter Smith and Skybridge's Anthony Scaramucci on stage at the BattleFin Digital Asset Discovery Day in Miami to explore how the digital asset ecosystem will play out in 2022. More

AYU x Copper After Dark Beach Party at The Miami Beach Edition Hotel. The revelry starts from 7pm. If you'd like to join us, drop me a message to register your interest.

THURSDAY 27 JANUARY

The SEC is due to make a ruling on Fidelity’s ETF.

Commissioner Hester M. Peirce will participate in Arca's Finance on the Blockchain event. More

FRIDAY 28 JANUARY

The Copper and ABB FIA Formula E partnership commences at the opening race of the season at Diriyah, Saudi Arabia. More