Day: May 28, 2024

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Russian commodities firms facing challenges in executing financial transactions with Chinese counterparts are turning to stablecoins as a new method for settling deals. At least two major metals producers have begun utilizing Tether Holdings Ltd.’s stablecoin and other cryptocurrencies to settle cross-border transactions with primarily Chinese clients and suppliers. These settlements, in some cases, are routed through Hong Kong.

The shift towards blockchain-based transactions highlights the enduring impact of international restrictions imposed in response to the 2022 invasion of Ukraine on the Russian economy. Even unsanctioned Russian companies dealing in commodities such as metals and timber have encountered difficulties in receiving payments for their goods and procuring equipment and raw materials. Challenges persist despite China’s stance of not joining international sanctions, as the US Treasury Department’s threats of secondary sanctions on lenders facilitating sanctions evasion have led to increased compliance measures.

Stablecoins offer a faster and more cost-effective alternative for transactions, with transfers taking just seconds and costing only a few cents. Tether’s USDT stablecoin, pegged to the US dollar, provides added convenience for exporters. The alternative of traditional banking transactions carries the risk of account freezing, with some companies experiencing the frustration of multiple frozen accounts in various countries.

The growing role of cryptocurrencies in settlements is not unique to Russia, as countries under sanctions like Venezuela have increasingly turned to Tether for transactions, often brokered through intermediaries in Dubai. This trend reflects a broader shift in the Russian central bank’s stance towards the cryptocurrency industry. While previously considering a blanket ban, Governor Elvira Nabiullina now supports experimenting with cryptocurrency payments in international transactions.

However, the central bank has emphasized that cryptocurrency payments are acceptable only for cross-border transfers and should not be promoted domestically. Legislation is being considered to establish a legal framework for stablecoin use in international transactions.

Meanwhile, cryptocurrency-linked banking services in Russia are expanding, with Rosbank becoming the first Russian lender to initiate cross-border payments with cryptocurrency for businesses in June last year. Other banks have followed suit since then.

In contrast to stablecoin adoption, some commodities firms are opting for barter deals to settle transactions, entirely avoiding cross-border transfers. This approach, once considered exotic, involves swapping commodities for goods shipped to Russia.

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Semler Scientific (NASDAQ:SMLR) witnessed a remarkable 25% increase in its stock price during early U.S. trading hours on Tuesday following its announcement of purchasing 581 bitcoins for its treasury.

Before the surge, the company boasted a market capitalization of under $200 million. In its most recent earnings statement, Semler revealed holding cash and cash equivalents amounting to $62.9 million at the end of the first quarter. The company reported first-quarter revenue of $15.9 million, with operating cash flow standing at $6.1 million.

According to a press release issued this morning, Semler acquired 581 bitcoins for $40 million, implying an average price of approximately $68,850 per token.

Eric Semler, the company’s Chairman, highlighted Bitcoin’s emergence as a significant asset class, boasting a market value exceeding $1 trillion. He emphasized Bitcoin’s unique attributes as a scarce and finite asset, capable of serving as a viable hedge against inflation and a haven amidst global uncertainty. Additionally, Semler expressed a preference for Bitcoin over gold, citing Bitcoin’s digital resilience compared to the traditional precious metal.

Despite today’s impressive gain, Semler’s stock remains just 2% lower on a year-over-year basis.

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Maple Finance, a cryptocurrency lending firm, has introduced Syrup, a new loans platform and rewards token aimed at integrating institutional-friendly yield-bearing digital assets with the decentralized finance sector.

Maple’s Syrup platform offers users up to 15% yields by depositing Circle’s USDC stablecoin. Users receive LP tokens (syrupUSDC) and additional yield in the form of “Drips,” a loyalty payment derived from the usage of the SYRUP rewards token, as announced in a press release on Tuesday.

Holders of MPL, Maple’s native token, will be able to migrate to the SYRUP token on a one-for-one basis.

While many centralized crypto lending firms have struggled over the past few years, Maple has endured the bear market by maintaining a stringent approach, accepting deposits only from accredited investors with comprehensive know-your-customer checks. This method allows Maple to operate within the U.S. and serve regulation-conscious institutions, according to Maple co-founder Joe Flanagan.

“We aim to keep our institutional focus while staying true to our DeFi origins,” Flanagan said in an interview. “The launch of Syrup allows us to function within the broader DeFi ecosystem. This enables us to bring institutional-quality yields sourced from over-collateralized loans to the largest institutions and a DeFi audience.”

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Riot Platforms Inc. (NASDAQ:RIOT) has made an unsolicited $950 million bid to acquire Bitfarms Ltd. (NASDAQ:BITF), following the smaller Bitcoin miner’s rejection of a previous takeover proposal last month.

Riot offered $2.30 per share in cash and stock for Bitfarms, representing a 20% premium over Bitfarms’ trading price before Riot’s initial April offer, which was privately submitted to the board.

Riot has accumulated a 9.25% stake in Bitfarms, becoming its largest shareholder, according to a statement on Tuesday that confirmed an earlier Bloomberg News report.

Citing recent management turnover at Bitfarms as evidence of corporate governance issues, Riot announced plans to call for a shareholder vote to add new directors to Bitfarms’ board.

This bid is part of a trend of consolidation in the cryptocurrency mining sector, spurred by a Bitcoin code update known as “the halving,” which is expected to reduce revenue for miners significantly. Large-scale mining companies are seeking acquisitions to expand their operations and adapt to the industry’s evolving economics.

If successful, the merger would create the world’s largest Bitcoin miner based on projected computing power growth, significantly increasing Riot’s Bitcoin production capabilities alongside major players like Marathon Digital Holdings Inc. (NASDAQ:MARA) and CleanSpark Inc. (NASDAQ:CLSK).

Bitfarms shares rose 3.3% in Toronto on Monday to C$2.86, approximately $2.10 USD, giving the company a market value of about $750 million. Riot’s shares rose 4% in New York on Friday, with a market capitalization of around $3 billion.

Management Changes

The potential deal follows Bitfarms’ dismissal of interim CEO Geoffrey Morphy, who has filed a lawsuit against the company seeking $27 million in damages for breach of contract.

Riot’s offer, made on April 22, was rejected by Bitfarms’ board without engaging in substantive discussions, according to Riot. Under the proposed terms, Bitfarms shareholders would own approximately 17% of the combined entity.

Riot also plans to request a special shareholder meeting to consider appointing new independent directors after Bitfarms’ annual meeting on May 31.

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