Cryptocurrency-focused investment firm Paradigm, which was co-founded by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang, is in talks to raise a new fund of between $750 million and $850 million.

The Bank for International Settlements (BIS), along with central banks from major economies including France, Japan, and the United States, has embarked on a groundbreaking initiative called Project Agora to explore the potential of asset tokenization within the monetary system.

Fueled by the ongoing cryptocurrency bull market, insurance funds held by major crypto exchanges have ballooned by over $1 billion, with Binance’s Secure Asset Fund for Users now boasting over $2 billion.

Top stories in the Crypto Roundup today:

• Paradigm Seeks Up to $850 Million for Crypto Fund
• BIS and Seven Central Banks Join Forces to Explore Digital Currency Innovation
• Crypto Exchange Insurance Funds Soar By Over $1 Billion
• Chart of the Week: Ethereum Fees See Minor Decline After Dencun Upgrade

Paradigm Seeks Up to $850 Million for Crypto Fund

Cryptocurrency-focused investment firm Paradigm, which was co-founded by Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang, is in talks to raise a new fund of between $750 million and $850 million.

If successful, this would be the largest crypto venture capital fund raised since the industry's downturn in 2022. In May 2022, venture firm Andreessen Horowitz set a record with a $4.5 billion crypto fund, shortly before a steep decline in digital asset prices.

Paradigm itself raised a then-record $2.5 billion fund in 2021. The firm faced criticism last year for seemingly distancing itself from crypto when it removed mentions of the technology from its website to instead focus on artificial intelligence, only to reinstate them shortly after.

Paradigm's fundraising efforts come amid a wider trend within the venture capital space. Hivemind Capital is currently raising a $50 million fund focused on non-fungible tokens, and Hack VC announced a $150 million fund in February, with plans to raise at least $100 million more for a separate vehicle, while Galaxy Digital is itself looking to create a new $100 million fund.

BIS and Seven Central Banks Join Forces to Explore Digital Currency Innovation

The Bank for International Settlements (BIS), along with central banks from major economies including France, Japan, and the United States, has embarked on a groundbreaking initiative called Project Agora to explore the potential of asset tokenization within the monetary system.

This collaboration, which also involves private financial institutions, builds upon the BIS's concept of a unified ledger, which envisions seamless integration of tokenized commercial bank deposits with tokenized central bank reserves.

This, according to the BIS, has the potential to streamline the monetary system and introduce new functionalities through smart contracts and programmability, all while preserving the current two-tier structure.

Specific details and participation requirements will be released in the future, with a window for private banks to join the partnership. 

Project Agora underscores the BIS's recent interest in cryptocurrency innovations tied to financial centralization. The BIS Innovation Hub recently added six new projects to its portfolio, focusing on cybersecurity, financial crime prevention, central bank digital currencies (CBDCs), and green finance.

Crypto Exchange Insurance Funds Soar By Over $1 Billion

Fueled by the ongoing cryptocurrency bull market, insurance funds held by major crypto exchanges have ballooned by over $1 billion, with Binance’s Secure Asset Fund for Users now boasting over $2 billion.

Binance’s insurance figure, based on holdings of Bitcoin, BNB, Tether, and TrueUSD as of April 3, reflects a significant increase from its $1 billion starting point in January 2022. Similarly, Bitget's protection fund, launched in November 2022 with an initial $300 million, has risen to $612 million, primarily driven by Bitcoin’s price rise.

While most crypto exchanges offer some form of user protection, transparency around these funds varies. Binance and Bitget are currently among the few major players to publicly disclose the on-chain addresses of their holdings.

In 2019, Huobi (now HTX) announced a 20,000 BTC reserve, but questions remain about whether the exchange maintained that balance. BitMEX is also well-known for having a large insurance fund protecting users.

Meanwhile, OKX offers a $700 million "Risk Shield" program for user protection, but the composition of those funds (tokens, stablecoins, fiat, or a combination) remains unclear. Exchanges including Coinbase provide insurance policies with limitations based on user location and the type of currency held (fiat or crypto).

The decision to disclose on-chain addresses can be a complex one for exchanges, as doing so may expose them to various risks. Conversely, withholding this information renders the insurance fund’s status ambiguous.

This ambiguity has previously led to unfavorable outcomes, as collapsed cryptocurrency exchange FTX claimed to have a $100 million insurance fund, which its Chief Technology Officer Gary Wang admitted later was fabricated.

Chart of the Week: Ethereum Fees See Minor Decline After Dencun Upgrade

The Ethereum 'Dencun' upgrade on March 13th notably reduced fees for Layer 2 solutions like Arbitrum and Optimism, boosting on-chain activity.

This surge in Layer-2 activity has also slightly decreased fees on Layer-1 Ethereum, making the network more accessible.

State of the Crypto by Top Tier Exchange Volume

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