This week, "Deconstruction" focuses on SpaceX's historic IPO, new EU sanctions, and a tax proposal in Russia, along with stringent checks in prediction markets, the closed AI network Anthropic, a critical update for Zcash wallets, and the sale of bitcoins by Strategy.
EU Sanctions and the Crypto Tax Proposal in Russia
The European Commission has introduced its 21st sanctions package, which for the first time includes direct restrictions on cryptocurrency platforms and a mechanism to block services from third countries. Transferring funds abroad will become as difficult as it is through banks: users will need to prove the legality of their transactions or switch to non-custodial wallets.
Meanwhile, Russia has held the first reading of a bill on the taxation of crypto transactions. This document makes it feasible to use stablecoins for business, allowing companies to legally deduct expenses related to their purchase.
The main change is the mandatory collection of documents when paying taxes. If an asset is purchased from a private individual without receipts or statements, the tax authority will consider the entire sale amount as income and tax the full withdrawn volume. Users will need to meticulously keep a record of all transactions and receipts.
Two New AI Models from Anthropic
Anthropic has launched its flagship model, Fable 5, designed for long and complex tasks. During testing, the model managed to transfer a codebase of 50 million lines in just one day, while it would take a development team two months to do the same. The second model, the closed flagship Mythos 5, is available only to trusted partners. Both models are priced the same.
The key difference lies in their protective filters. Fable redirects sensitive queries, while Mythos bypasses these filters. This is why the closed model excels at detecting cyber vulnerabilities and accelerates certain stages of drug development by approximately ten times.
SpaceX IPO and the Crypto Market Sell-off
Investor demand for SpaceX's initial public offering exceeded $250 billion. Elon Musk's net worth reached $982 billion, bringing him closer to becoming a dollar trillionaire. Investors are selling off digital assets to purchase Musk's shares. This liquidity outflow has created a cash shortage in the crypto market and is one of the main reasons for Bitcoin's 37% drop from January's highs.
There is also indirect risk from SpaceX's reserves. The company holds over 18,000 BTC on its balance sheet. After the IPO, the board of directors will decide the fate of these assets. If they choose to realize profits and sell these assets to improve quarterly reporting, it could exert additional pressure on Bitcoin's price.
Insiders in Prediction Markets
Prediction markets have grown into a significant financial instrument and are now facing criminal charges. A U.S. Army serviceman earned $410,000 by betting on the outcome of a secret operation in which he was involved. In response, platforms are adapting classic stock market rules to this new environment.
The Kalshi platform has tightened its rules significantly. Each new market is assigned a risk rating. If the score is high, users must verify their employer. The platform checks access to confidential information and may deny trading if necessary.
Zcash Vulnerability and Ironwood Update
An independent auditor discovered a critical vulnerability in the secure pool of the Zcash network that allowed for the creation of an unlimited number of new coins. Hackers did not manage to exploit the bug, but following the news, the cryptocurrency lost over 50% of its value. Developers temporarily disabled the vulnerable part of the blockchain and fixed the error, after which the price recovered by 41.5%.
To address security concerns, developers have agreed on a July update called Ironwood. The old vulnerable pool will be completely isolated. Users must update their software during this period; otherwise, any new transfers to old wallets will be automatically rejected by the network.
Bitcoin's Decline and Strategy's Debt Risks
Bitcoin has lost 28% over the past month. Analysts suggest various bottom levels, ranging from $60,000 to $35,000. Market pressure is coming from capital flowing into tech IPOs, the U.S. Treasury's withdrawal of crypto, and actions by Strategy, which holds 845,000 BTC and has sold part of its reserves for the first time.
The real issue for Strategy lies in its obligations to retail investors. The company has preferred shares with an annual dividend of 11.5%. Its balance sheet has about six months' worth of payouts. In a declining market, the company faces a choice: either cut dividends or sell Bitcoin. The structure relies solely on the continuous rise in the asset's price.
This is a condensed version of the podcast. Watch the full episode:
https://www.youtube.com/watch?v=9zfluUomR4Q
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