Coindesk

Welcome to The Protocol, CoinDesk’s weekly wrap-up of the most important stories in cryptocurrency tech development. I’m Margaux Nijkerk, CoinDesk’s Ethereum reporter, filling in for Ben Schiller.

In this issue:

Story Protocol launches to let people register IP and get paid for it

Ethereum developers release new initiative to simplify cross-chain transactions

Ethereum L1 monad joins forces with Orderly Network for DeFi boost

How a sitting president became crypto’s most sought-after investor

Network News

STORY PROTOCOL GOES LIVE: Story Protocol launched its intellectual property-focused blockchain and associated IP token last week. The blockchain is positioned as the “world’s intellectual property network,” providing users with a way to register their IP and track how others use it. The aptly named “$IP” token, which Story announced earlier this month, is used for transaction fees and offers users a vote in the platform’s governance system. So far, the IP focused blockchain seems to have had legs — at least with investors. PIP Labs, the chain’s primary developer, raised $80 million in a Series B venture funding round led by Andreessen Horowitz (a16z), bringing the project’s total funding to $140 million. PIP has sought to position Story at the intersection of blockchain and artificial intelligence, a way for people to track and get paid for data used to train AI models. The Story mainnet launch accompanies the first unlock event for the just-announced IP token. “Story is unlocking 25% of the initial 1 billion $IP, with 58.4% devoted to the ecosystem and community, foundation, and initial incentives,” according to the project. — Sam Kessler Read more.

ETHEREUM DEVELOPERS RELEASE NEW OPEN INTENTS FRAMEWORK: A group of top Ethereum developers and leaders released Wednesday a new framework that would simplify and standardize cross-chain token transfers.

The initiative, called the Open Intents Framework (OIF), was kickstarted by contributors from the Ethereum Foundation and is supported by 25 projects including teams building layer-2s like Arbitrum, Optimism, ZKsync, and Scroll, according to a press release shared with CoinDesk.The goal of the initiative is to bring “intents” to all corners of the Ethereum ecosystem, which is a technological feature that lets a blockchain user accomplish a specific goal by asking an intermediary to fulfill that goal (like a trade or transaction they want to make.) There are some standards out there that are already trying to make cross-chain transactions easier by using intents. ERC-7683, which was introduced by the team behind the decentralized exchange Uniswap and the Across protocol, is one of those standards circulating the Ethereum space lately, and is supposed to address fragmentation and allow more chains in the Ethereum ecosystem to interoperate. But the OIF team claims that they will build on that standard through their framework allowing intents to function at scale. “By offering shared infrastructure and execution coordination, OIF makes intent-based transactions permissionless, efficient, and accessible for all projects,” the press release said. — Margaux Nijkerk Read more.

MONAD AND ORDERLY JOIN FORCES: Monad, an Ethereum Virtual Machine (EVM) layer-1 blockchain about to launch its testnet, has joined forces with Orderly Network, a decentralized exchange (DEX) infrastructure supporting a range of other chains, as the platforms spread their nets wide in anticipation of a second decentralized finance (DeFi) summer. The arrival of the Monad testnet on Wednesday will provide traders with a fast EVM-compatible building site and the possibility of airdrops on the L1. Orderly’s band of 20 or so market makers includes Wintermute, Selini and Riverside, according to a press release. Firms in the decentralized trading industry, which includes major exchanges like Coinbase (COIN), are hoping for surge of DeFi activity in the coming months as the crypto-friendly administration of President Donald Trump gives crypto a regulatory tailwind. The first DeFi summer, in 2020, came hot on the heels of Federal Reserve interest-rate cuts in response to the Covid outbreak. Orderly already offers users a shared order book across multiple blockchains, including Arbitrum, Optimism, Polygon, Base, Mantle and Near. — Ian Allison Read more.

TRUMP – CRYPTO’S MOST INFLUENTIAL INVESTOR?: Crypto isn’t all that different from politics. According to Rushi Manche, the founder of blockchain company Movement, “Crypto is an attention game.”It’s fitting, then, that Donald Trump — the master of all things attention — is so at home selling memecoins. But it’s not just Trump’s inner circle that’s managed to capitalize on his crypto ventures, which include the $TRUMP coin and World Liberty Financial. Once a vocal crypto skeptic, the president has become the industry’s largest “key opinion leader” — or KOL, in blockchain industry parlance: a trader whose portfolio is closely watched by other investors deciding what to buy and sell. Trump’s foray into crypto has created a new go-to-market playbook for ambitious token peddlers like Manche — blockchain founders who realize pumping the price of a token can be as simple as elbowing into a sitting president’s crypto portfolio. The president’s primary vehicle for blockchain trades is World Liberty Financial (WLFI), a decentralized finance (DeFi) venture he announced with his sons over the summer. After accruing more than $400 million by selling a token, the company, which does not yet have a product, has built up a portfolio containing millions of dollars in the assets of other crypto projects. On Wednesday, it announced it was launching an official “strategic reserve” of crypto investments. The trades have already raised serious concerns about conflicts of interest, insider dealing, and the very nature of how influence is leveraged in the digital asset space. Trump’s political opponents are calling for investigations into his growing blockchain empire. But crypto founders like Manche see World Liberty’s crypto investments as something different: a once-in-a-generation marketing opportunity. “You need to have a product roadmap that makes sense,” said Manche. “But you also need to have a strategy for your token.” And what better way to boost the price of your cryptocurrency than by publicly tying it to the leader of the free world? — Sam Kessler Read more.

In Other News

Libra Token’s Co-Creator Claimed He Paid Argentinian President Milei’s Sister: It was unclear if any money was exchanged between Davis and Milei’s inner circle in advance of Libra’s launch. Danny Nelson reports.

Will Argentinian President Milei’s Crypto ‘Fiasco’ Be a Deathblow for Memecoin Craze?: The latest frenzy that started with U.S. President Donald Trump’s TRUMP memecoin launch and saw traders making and losing millions within minutes, might have finally come crashing down with the LIBRA token fiasco.

Regulatory and policy: EToro secures MiCA license from Cyprus to offer crypto services across EEA.

Calendar

Feb. 19-20, 2025: ConsensusHK, Hong Kong.

Feb. 23-24: NFT Paris

Feb 23-March 2: ETHDenver

March 18-19: Digital Asset Summit, London

May 14-16: Consensus, Toronto.

May 27-29: Bitcoin 2025, Las Vegas.

Nearly every big name in the crypto industry has signed onto a letter calling for Congress to eliminate a U.S. tax policy they say could jeopardize decentralized finance (DeFi) technology by shoehorning much of that space into the field of brokers subject to data collecting and reporting.

The Internal Revenue Service — the U.S. Treasury Department’s tax arm — pushed through a key digital assets broker rule between Christmas and New Year’s, just days before President Donald Trump’s administration was set to arrive. It was meant to institute similar information-reporting demands on DeFi brokers as would be faced by securities brokers and exchanges.

Recently approved rules can be erased under the Congressional Review Act, and Senator Ted Cruz, the Texas Republican, introduced a resolution last week that would do just that. The unified industry letter on Wednesday — led by the Blockchain Association and joined by Coinbase, a16z, Paradigm, Kraken, Uniswap, Anchorage Digital and dozens of others — asks the rest of Congress to embrace Cruz’s measure.

“The DeFi broker rule, finalized in the waning days of the Biden administration, represents regulatory overreach that fundamentally misunderstands the technology it attempts to regulate and ignores Congress’s intent,” according to the letter, sent to the leadership in both chambers of Congress. Using Congress’s power to reverse federal agency regulations offers “a clear and definitive path to rolling back this damaging rule before it can take effect.”

The businesses collectively argued that the rule unfairly targets U.S. firms with rules that foreign competitors wouldn’t have to follow when servicing U.S. customers.

“This unique burden on American companies alone could cripple DeFi innovation in this country altogether,” they said.

The CRA can be a powerful but sometimes blunt tool that spiked in popularity during President Donald Trump’s first term. Where it’s blunt is in its secondary effect: Any regulatory topic reversed in this way can never be reintroduced in any similar fashion, potentially making it difficult to apply friendlier regulations in the same area.

When Congress sought to use it to repeal the Securities and Exchange Commission’s crypto accounting policy, Staff Accounting Bulletin No. 121, the minority who opposed the effort argued that it would hamstring future SEC efforts to address digital assets accounting. While both chambers did approve that CRA effort, then-President Joe Biden vetoed the attempt, leaving Trump’s interim SEC chief, Mark Uyeda, to move recently to get the same thing accomplished internally.

A CRA resolution needs majority approval in both Chambers of Congress before it can be sent to President Trump for a potential sign-off. After the 2024 elections, many more pro-crypto lawmakers are walking the halls on Capitol Hill, though congressional attention is a hot commodity, and other pressing matters such as the federal budget are looming.

Beyond the letter, other crypto organizations are also weighing in. A spokesperson from the DeFi Education Fund said it’s “thrilled” to see momentum building against the “unworkable, unconstitutional” rule that the group is committed to ensuring doesn’t get implemented.

Read More: U.S. Treasury Issues Crypto Tax Regime For 2025, Delays Rules for Non-Custodians

Bitcoin price may be volatile but it didn’t stop giant financial institutions from continuing to invest more.

Large institutions such as pensions or hedge funds tripled their holdings of spot bitcoin exchange-traded funds (ETFs) in the fourth quarter of 2024, data from 13F filings with the Securities and Exchange Commission (SEC) showed.

Institutional investors bought $38.7 billion worth of the spot bitcoin ETF, according to Bitwise chief investment officer, Matt Hougan. This is more than three times the previous quarter, in which only $12.4 billion worth of holdings were reported.

Investors with assets over $100 million are required by the SEC to report their holdings each quarter.

Several hedge funds and pension funds, among others, have started buying the funds since January 2024, when the bitcoin ETFs were first launched. Since then, some of them have increased their holdings over the past year, like the State of Wisconsin’s investment board, which boosted its holdings to just over 6 million shares of BlackRock’s iShares Bitcoin Trust (IBIT) as of Dec. 31.

Similarly, billionaire hedge fund investor Paul Tudor nearly doubled its stake in IBIT to 8,048,552 shares, up from 4,428,230. Meanwhile, Corvex Management, an asset management firm founded by investor Keith Meister in December 2010, disclosed holding more than a million shares in IBIT at the end of the fourth quarter.

According to Bloomberg Intelligence senior ETF analyst Eric Balchunas, IBIT currently has 1,100 institutional holders that have reported their stake via 13F filings. He said most newly launched ETFs typically have under 10 holders.

“No way to track but my guess is the record for first year prior to this was [probably] like 350 [institutional holders for new ETFs],” Balchunas wrote.

The ultimate goals of tokenization include full-fledged secondary trading markets for alternative private assets, integration and portability into the DeFi ecosystem, and greater investment accessibility. While there are a number of platforms and service providers offering tokenization-as-a-service, there have typically been inherent limitations associated with bringing existing legacy assets on-chain in a dynamic manner.

Tokenizing a portfolio of loans from a middle-market direct lender may create an opportunity to use the portfolio collateral as non-crypto collateral within DeFi applications like Moonwell, Aave or Morpho, for example. The ideal real-world asset lending workflow taken from Blue Water’s Opportunities in Tokenization 2025 report is displayed below.

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Importantly, the concept will likely fail if the direct lender only marks its portfolio holdings quarterly, semi-annually or annually, as that timeline drastically lags the usual real-time execution expected within digital asset markets. To truly unlock the trillions of dollars of current, performing alternative assets in the universe there must be an operating system or systems that enable end-goal applications; these applications include decentralized exchanges, decentralized lending platforms and peer-to-peer collateral transfers from which to constantly draw financial asset data. But doing this for DeFi applications is not feasible by sifting through tens or hundreds of Excel spreadsheets and siloed files in an attempt to ingest asset-level data.

Below are some additional factors for consideration in shifting towards blockchain environments:

1. Transparency and proof-of-metrics — “metric” being anything including reserves, holdings, state, authorization, etc. — are the lifeblood of crypto markets. Bringing legacy assets on-chain in a meaningful way will require above-average levels of transparency, at least for direct investors and participants.

2. Any operational speedbumps inhibiting a 24/7 operating schedule will reduce trust and increase execution risk in the eyes of crypto investors. That means manual employee updates, edits and working hours will decrease the attractiveness of real-world assets to the crypto markets.

3. As a combination of the first two points, seasoned crypto participants will likely require a holistic solution enabling real-time monitoring of the off-chain assets backing their tokens and near real-time execution speed, whether that be trading, subscriptions, redemptions or loan processing.

For example, Inveniam’s blockchain-based operating system displayed here enables private assets to bridge into crypto-native ecosystems that they previously could not.

These points are not as threatening to newly-issued digitally-native assets like Tradable’s $1.7 billion in loans or Figure’s $10+ billion in HELOCs, since the full life cycle and associated data of these products began and still exists on-chain. However, for the trillions of dollars worth of existing assets that many in the field are targeting, porting operating and lifecycle data from an array of Excel sheets to an operating system that can ingest the data, credential it on a blockchain, and ping that data out in real-time will put things at the goal line.

Platforms such as the Inveniam operating system displayed above and Accountable, as well as blockchain layers like Chainlink and Pyth, provide some low-hanging fruit for asset managers and capital markets players to get token-ready by onboarding to blockchain rails.

A group of top Ethereum developers and leaders released Wednesday a new framework that would simplify and standardize cross-chain token transfers.

The initiative, called the Open Intents Framework (OIF), was kickstarted by contributors from the Ethereum Foundation and is supported by 25 projects including teams building layer-2s like Arbitrum, Optimism, ZKsync, and Scroll, according to a press release shared with CoinDesk.

The goal of the initiative is to bring “intents” to all corners of the Ethereum ecosystem, which is a technological feature that lets a blockchain user accomplish a specific goal by asking an intermediary to fulfill that goal (like a trade or transaction they want to make.)

There are some standards out there that are already trying to make cross-chain transactions easier by using intents. ERC-7683, which was introduced by the team behind the decentralized exchange Uniswap and the Across protocol, is one of those standards circulating the Ethereum space lately, and is supposed to address fragmentation and allow more chains in the Ethereum ecosystem to interoperate.

But the OIF team claims that they will build on that standard through their framework allowing intents to function at scale. “By offering shared infrastructure and execution coordination, OIF makes intent-based transactions permissionless, efficient, and accessible for all projects,” the press release said.

“As Ethereum’s ecosystem becomes increasingly multichain, intents help streamline fragmented user experiences by enabling seamless, near-instant cross-chain transactions through specialized solvers. However, integrating intents remains complex and resource-intensive, making an open intents framework essential to standardize infrastructure, reduce barriers to adoption, and foster broader collaboration across the ecosystem,” the team shared with CoinDesk.

Read more: ‘Intents’ Are Blockchain’s Big New Buzzword. What are They, And What Are the Risks?

Monad, an Ethereum Virtual Machine (EVM) layer-1 blockchain about to launch its testnet, has joined forces with Orderly Network, a decentralized exchange (DEX) infrastructure built on the Near blockchain and supporting a range of other chains, as the platforms spread their nets wide in anticipation of a second decentralized finance (DeFi) summer.

The arrival of the Monad testnet on Wednesday will provide traders with a fast EVM-compatible building site and the possibility of airdrops on the L1. Orderly’s band of 20 or so market makers includes Wintermute, Selini and Riverside, according to a press release.

Firms in the decentralized trading industry, which includes major exchanges like Coinbase (COIN), are hoping for surge of DeFi activity in the coming months as the crypto-friendly administration of President Donald Trump gives crypto a regulatory tailwind. The first DeFi summer, in 2020, came hot on the heels of Federal Reserve interest-rate cuts in response to the Covid outbreak.

Orderly already offers users a shared order book across multiple blockchains, including Arbitrum, Optimism, Polygon, Base, Mantle and Near.

“Orderly is an omni-chain trading infrastructure with a focus of solving for fragmented liquidity,” Chief Operating Officer Arjun Arora said in an interview. “With more chains propping up day by day, liquidity continues to get fragmented across DeFi, TVL [total locked value] continues to get moved around.”

In April 2024, Monad Labs raised $225 million in a funding round led by Paradigm.

EToro said it received regulatory approval under the European Union’s Markets in Crypto-Assets (MiCA) framework and will soon be able to provide cryptocurrency trading and custody services across the region. The trading platform announced the approval from the Cyprus Securities Exchange Commission on Wednesday.

The MiCA regulation that requires firms to acquire a crypto asset service provider license (CASP) took full effect in December and established a standardized legal framework for crypto services across the 27-nation trading bloc. Approval under MiCA also opens the doors to Iceland, Liechtenstein, and Norway which are not EU members.

The company joins crypto exchanges Bitpanda, OKX and Crypto.com among others who have obtained a MiCA license.

Israel-based eToro, which offers a mix of traditional and crypto trading services, is building a global presence. It obtained a license in New York in 2023 and landed on the U.K. crypto register in 2022.

Disclaimer: This article, or parts of it, was generated with assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.

Bitcoin rewards financial services firm Fold Holdings (FLD) debuted on the Nasdaq stock exchange on Wednesday with shares surging higher in early action before pulling back.

The firm went public via business merger with FTAC Emerald Acquisition Corp. (FTAC), a publicly traded special purpose acquisition company (SPAC). FLD jumped more than 30% above $13 in the early minutes of trading before pulling back to the $11 area.

Fold is the latest addition of publicly traded companies with bitcoin (BTC) on its balance sheet, following the footsteps of Michael Saylor’s Strategy and smaller companies like Semler Scientific and Metaplanet. Fold holds 1,000 BTC, worth $96 million at current prices, according to public filings.

Crypto investors are still piling into memecoins despite the outsized risks associated with this type of digital asset, Kraken said in a report on Wednesday, after conducting a survey of holders in the U.S..

85% of respondents said that they invested in memecoins, and 76% said they believed the “potential rewards justify the risks.”

Somewhat surprisingly, “44% of crypto holders believe memecoins will improve the credibility of the crypto market,” and 42% said they expected them to outperform other cryptocurrencies this year, the report said.

Fear of missing out (FOMO) was cited as one of the top reasons for investing in these highly volatile cryptos. Recommendations from friends and family, and the fun nature of the tokens were also mentioned as reasons to invest.

Memecoins have been grabbing attention recently, but for all the wrong reasons. The apparent LIBRA token rugpull has engulfed the Argentinian government. The crypto surged to a market cap of around $4.5 billion before crashing 90%.

29% of memecoin holders said short-term gain was the main reason they bought these cryptocurrencies, with 23% citing diversification as another reason to invest.

Women were more likely to buy these cryptocurrencies than men. 86% of female crypto holders said they invested in memecoins versus 84% of men, the survey showed.

Kraken surveyed nearly 800 crypto holders in the U.S. on Jan. 9 2025.

Read more: LIBRA Apparent Rug Pull Is Latest ‘Sordid Episode’ Emerging From Solana’s Memecoin Complex: Galaxy

Wintermute, one of the largest liquidity providers in the cryptocurrency market, is expanding into the U.S. with the opening of a new office in New York and the introduction of over-the-counter (OTC) trading products in the country.

Wintermute has plans for a “new added focus on the U.S.,” CEO Evgeny Gaevoy told Bloomberg during Consensus Hong Kong 2025.

“We are looking to expand in the U.S. with our OTC offering, and we are looking to expand in the U.S. with derivatives offering as well on the OTC side,” Gaevoy said.

The company, which has offices in London and Singapore and employs more than 100 people, is being driven by optimism on potential regulatory changes in the U.S. under the administration of President Donald Trump.

It’s not alone. Other crypto firms now considering U.S. expansion or shares sales to the public include Blockchain.com, Circle, Kraken, Gemini Ripple and BitGo. Bullish Global, the parent of CoinDesk, is also said to be considering an IPO.

The New York office is set to open later this year, with an initial team of between five and 10 employees. Gaevoy said Wintermute won’t be conducting trading activities out of the new office.