Hallo! That's "hello" in German. Thought I'd mix it up a little 😉 This is Taylor, CEO of Hedgehog, where you can track everything going on with your crypto portfolio.

Straight to business, by which I mean reminding you of the giveaway at the end of every newsletter. Answer my question of the week for your chance to be clad in Hedgehog finery! You know what, the water bottle would be a decent weapon in a duel, if you want to go full medieval noble…

So, how 'bout that crypto?

Bad news Binance

Mega-exchange Binance has been getting beat up lately. This week Signature Bank decided to cut off Binance users from making SWIFT bank transfers of less than $100,000. The bank "has advised that it will no longer support any of its crypto exchange customers with buying and selling amounts of less than 100,000 USD as of February 1st, 2023," Binance told Decrypt.

Man, does this sound familiar? To me it sure does, because Hedgehog encountered the same issue — our banking partner suddenly discontinued service for crypto-related businesses. "It's almost funny, since crypto was created to avoid being surprised by banks," I said. "​​But the way things have evolved, the fiat and crypto systems need to be able to talk to each other for the sake of customer convenience." Welp.

Binance is looking for a replacement ASAP, hoping to avoid a significant disruption of USD transfers. The exchange sent an email to customers outlining the alternatives that are still available.

CoinDesk reported on Signature Bank's decision:

In recent weeks, Signature and other financial services firms have been ratcheting back their involvement in crypto markets, part of the ongoing fallout from crypto exchange FTX's implosion and other industry debacles.

In December, Signature, which has been among Wall Street’s most crypto friendly banks, said it would shrink its deposits tied to cryptocurrencies by $8 billion to $10 billion.

Nearly a quarter of the New York-based bank's $103 billion in total deposits, or roughly 23.5%, came from the crypto industry as of September 2022. But given the recent "issues" in the space, Signature will reduce that amount to under 20% and potentially under 15% eventually, Signature CEO Joseph J. DePaolo said at a New York conference hosted by investment bank Goldman Sachs.

Patrick McKenzie, an advisor to the payment processor Stripe, speculated "that a regulator recently asked a pointed question and did not like the answer it got back. (Or, in the alternative, that someone likely anticipated the question and reaction to the answer.)"

He continued, "I would assume that $100k is the threshold where a bank might choose to identify in its AML policy that any wires above will undergo secondary screening (sometimes called 'enhanced due diligence') at the bank," as opposed to relying on the crypto exchange's compliance policies.

Similar speculation came up in our behind-the-scenes discussions of Hedgehog's predicament — that regulators, never big fans of crypto, are getting even stricter with tradfi institutions that touch this industry. Depending on how those conversations go, a bank might prefer to just step back from crypto.

We're solving Hedgehog's fiat problem, by the way, but not without complications. As a startup that has invested deeply in following all the rules, it's frustrating, to say the least. Based on our research so far, there are two viable pathways:

  1. Go full DeFi, leave fiat behind.
  2. Only handle fiat through the established fintech companies like Plaid and Stripe, or even Apple Pay, because banks consider those big kahunas to be worth the hassle.

Tldr: If you have enough money the bank will allow you to deposit anything, anywhere. If you don't have enough money, well… sigh.

Bad news Binance #2

But wait, there's more! And this time I struggle to sympathize. "Binance has acknowledged an error that means it currently keeps reserves for almost half of its 94 Binance-peg tokens ⁠— worth over $539 million ⁠— mixed up with customer funds inside a $16.5 billion exchange wallet," a Bloomberg reporter found. "B-Tokens are supposed to be backed one-to-one by locked reserves of the coins they're based on, and reserves should be stored in dedicated wallets to keep them separate from customer and exchange funds, according to processes posted on Binance's website."

A spokesperson said, "Binance is aware of this mistake and is in the process of transferring these assets to dedicated collateral wallets," but like, come on. Is it too much to ask that a crypto exchange keep the correct money in the correct buckets?

Tldr: Maybe this is why regulators don't like crypto…

DAO dreams

Phew, that was heavy. How about some optimism? Or should I say Opolis-timism…

Opolis is a worker-owned professional employer organization (basically an outsourced HR department) that wants to become a DAO. The cooperative specializes in serving freelancers and solopreneurs who need benefits like health insurance and 401k plans.

Opolis already integrates crypto: "Participating members are rewarded with Ethereum-based WORK tokens — to be precise, a member receives 1.05 work tokens for every dollar they run through Opolis. In addition, members can earn WORK through referrals and staking."

My teammate Sonya interviewed an Opolis contributor and member to find out how it all works. Learn about this unorthodox organization's vision for the future of employment.

Tldr: In the immortal words of Rihanna, "Work, work, work, work, work, work." Surely she was referring to Opolis WORK tokens.


Reply to this email for the chance to win a bundle of sweet Hedgehog swag. The winner gets to pick three prizes from this list:

  • insulated stainless steel water bottle with Hedgehog logo
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Question of the week: Who would you hire as your personal celebrity spokesperson and why?

For me, I'm torn between Channing Tatum and Zendaya.

Best regards,

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