11.8 AI Daily OpenAI Credit Crisis Resurfaces, Encryption Regulation Process Fluctuates Unpredictably

1. Headline

1. OpenAI is reported to have requested loan guarantees from the White House, contradicting the public statement of the CEO.

A letter from OpenAI to the White House Office of Science and Technology Policy, submitted on October 27, has been made public. The letter explicitly requests the government to provide loan guarantees and direct funding support for AI infrastructure development. However, just ten days later, CEO Sam Altman publicly stated on social media that “OpenAI does not need and does not want government guarantees,” emphasizing that “taxpayers should not bear the cost of companies' poor business decisions.”

This incident has raised doubts about Altman's transparency from the outside world. OpenAI's CFO, Sarah Friar, mentioned at a Wall Street Journal event that federal “guarantees” could reduce the financing costs of AI infrastructure, and then quickly retracted her statement due to controversy. This incident again reminds people of Altman's brief dismissal in November 2023 due to “inconsistent candor.”

OpenAI, as a leading enterprise in the field of artificial intelligence, has attracted significant attention from the outside world regarding its development. The contradiction between internal information and senior executives' statements has raised public concerns about its decision-making transparency and leadership consistency. This incident may impact OpenAI's ability to raise funds in the capital market and could also negatively affect its leading position in the AI sector.

2. Fetch.ai sues Ocean Protocol: Accuses of improper sale of 263 million FET tokens

Fetch.ai has filed a class action lawsuit against Ocean Protocol in the Federal Court for the Southern District of New York, accusing it of misleading the community and mishandling tokens within the Artificial Intelligence Alliance (ASI). The lawsuit claims that Ocean transferred approximately 700 million OCEAN tokens originally promised for community rewards to a Cayman Islands entity, which were then converted into about 286 million FET and approximately 263 million were sold on the market, resulting in a drop in FET prices.

Fetch.ai's lawyers stated that Ocean misled the token community and merger partners, profiting millions of dollars from it. Ocean Protocol denied the allegations, stating that the lawsuit is merely a social media hype.

The case has once again raised the attention of the crypto community towards the transparency of token issuance and distribution. The design and execution of the token economic model are directly related to the interests of investors; any improper operation may lead to fluctuations in token prices, harming the rights and interests of investors.

In addition, the escalation of disputes between blockchain projects into legal litigation also reflects the maturation and standardization of the cryptocurrency industry. In the future, the establishment of relevant laws and regulations will help protect investors' rights and promote the healthy development of the industry.

3. Monad Joint Creation: Locked MON tokens cannot participate in staking.

Keone Hon, co-founder of Monad, stated in a post, “As the public mainnet is about to launch, I want to share an important principle in the design of the Monad token economy: locked MON tokens will not be able to participate in staking. This will help Monad achieve long-term success through healthier token distribution.”

Hon revealed that the Monad network will have 200 validation nodes distributed globally and running on consumer-grade hardware when it goes live. This move aims to address the widespread concerns in the crypto community about insiders profiting from locked tokens through staking, and to set a new standard for the industry.

The design of the token economic model is directly related to the long-term development of the project. Monad's approach this time aims to prevent internal personnel from gaining improper benefits through staking, maintaining the fairness of token distribution, which is conducive to the long-term sustainable development of the project.

However, this practice may also affect the project's short-term incentive mechanisms, requiring a balance between token distribution and community incentives. In the future, innovative designs of token economic models may become a key area of focus for blockchain projects.

4. Labs initiates the USDX recovery plan and opens the application registration window.

Labs stated that due to the market liquidity situation and the impact of liquidation dynamics, the market price of USDX has deviated from its reference value. The team has initiated a recovery plan aimed at providing affected holders with a recovery path based on a reference value of 1 dollar, depending on resource availability.

This arrangement is voluntary in nature and does not constitute any form of guarantee, redemption obligation, acceptance of deposits, or collective investment products. To ensure transparency and verifiability, the following measures will be taken: application registration window, phased recovery progress disclosure, etc.

Stablecoins serve as a bridge between cryptocurrencies and traditional finance, and their price stability is crucial. The launch of the recovery plan for USDX aims to maintain its reference value and rebuild investor confidence.

However, this practice also reflects the vulnerability of algorithmic stablecoins under extreme market conditions. In the future, prudent regulation of stablecoins may become a key area for compliance development in cryptocurrencies to maintain the stability of the financial system.

5. 21Shares submitted an application for a spot XRP ETF, which may be listed in 20 days.

Bloomberg ETF analyst Eric Balchunas stated that 21Shares has just submitted its spot XRP ETF document 8(a), which may be listed after the 20-day period takes effect.

If the U.S. Securities and Exchange Commission does not raise objections to the application within 20 days, the registration will take effect automatically, and the ETF can be listed. Once listed, it will provide investors with a new channel to invest in XRP.

The launch of cryptocurrency ETFs is expected to drive crypto assets into the mainstream investment arena. Compared to cash or futures ETFs, spot ETFs can directly track the spot prices of cryptocurrencies, providing investors with a more direct investment channel.

However, the regulatory issues surrounding cryptocurrency ETFs remain a significant challenge. In the future, the clarification of relevant regulatory policies will help the development of crypto assets in traditional financial markets.

2. Industry News

1. Bitcoin briefly broke through the $104,000 mark, with an increase of over 2.5%

The price of Bitcoin briefly broke through the $104,000 mark last night, reaching a high of $104,200, with a 24-hour increase of 2.58%. Analysts believe that this rise is mainly driven by improving macroeconomic data and a cooling expectation of interest rate hikes by the Federal Reserve. As inflationary pressures ease, the market expects the Federal Reserve to slow down the pace of interest rate hikes, which is beneficial for the rebound of risk assets.

However, Bitcoin has pulled back after breaking through $104,000, currently trading around $103,400. Analysts point out that Bitcoin still faces significant psychological pressure at the $100,000 mark in the short term and needs further positive news to consolidate its upward momentum. In addition, investor sentiment remains cautious, and trading volume has not seen a significant increase, reflecting a divergence in the market regarding future trends.

Overall, Bitcoin is expected to fluctuate within the range of $100,000 to $104,000 in the short term. If it can effectively break through the $104,000 level and gain trading volume support, there is hope for further upward movement toward the $110,000 resistance level. However, if it loses the key support at $100,000, it may trigger further corrections.

2. Ethereum rose more than 4% to surpass $3400, with the established public chains seeing widespread increases.

Ethereum's price performed strongly yesterday, reaching a daily high of $3460, with an increase of 4.21%. Most established public chain tokens also experienced varying degrees of increase, with DOT rising by 14.1% in a single day, DOGE increasing by 11%, ADA up by 9%, LTC rising by 17.7%, AVAX increasing by 11.1%, and ICP up by 21.1%.

Analysts believe that the rise of Ethereum is mainly influenced by the positive expectations of the Shanghai upgrade and the continuous development of the DeFi ecosystem. The Shanghai upgrade will allow validators to withdraw staked Ether, which is expected to release a large amount of liquidity and drive up the price of Ethereum. In addition, the DeFi ecosystem continues to grow, with new protocols and applications emerging one after another, providing sustained demand support for Ethereum.

However, some analysts are cautious about Ethereum's upward trend. They point out that Ethereum's current trading volume has not seen significant growth, reflecting the market's ongoing divergence regarding future trends. Additionally, uncertainties in the macro environment may also limit Ethereum's upward potential.

Overall, Ethereum is likely to oscillate in the range of $3300 to $3500 in the short term. If it can effectively break through the $3500 mark and gain volume support, it is expected to further test the $4000 resistance level. However, if it loses the key support at $3300, it may trigger a pullback.

3. Solana is facing selling pressure, down over 5% intra-day.

The Solana ecosystem token SOL faced selling pressure yesterday, dropping 5.3% during the day to a low of around $155. Analysts pointed out that the decline of SOL is mainly influenced by two factors: first, the new Solana ecosystem project Bonk faced community skepticism, raising investors' concerns about the development prospects of the Solana ecosystem; second, the Solana network has experienced multiple outages recently, leading investors to doubt its security and reliability.

In addition, the SOL price has recently faced some technical selling pressure. SOL encountered an important resistance level around $160, making it difficult to effectively break through in the short term. Some investors have chosen to take profits, further exacerbating the downward pressure on SOL.

However, some analysts hold an optimistic view on the future prospects of SOL. They believe that the Solana ecosystem still has strong support from a developer community, with new projects and applications continuously emerging, which will provide long-term support for the price of SOL. In addition, the Solana Foundation is also actively working to improve network stability and security.

Overall, SOL is likely to fluctuate and consolidate within the range of $150 to $170 in the short term. If it can effectively break through the $170 level with trading volume support, it is expected to further test the resistance level of $200. However, if it loses the key support at $150, it may trigger further pullbacks.

4. The privacy coin ecosystem is experiencing a general rise, with ZEC increasing by over 30% within the day.

The privacy coin ecosystem performed strongly yesterday, with ZEC rising by 31.2% during the day, RAIL up by 26.3%, ROSE up by 40%, SCRT up by 28.7%, and NEAR up by 29.1%. Analysts believe that the rise of the privacy coin ecosystem is mainly driven by the tightening regulatory environment and the increasing demand from investors for privacy protection.

Recently, the U.S. Securities and Exchange Commission has taken a tough stance on cryptocurrency regulation, requiring cryptocurrency exchanges to delist certain privacy coins. This has sparked investor interest in privacy coins, with the belief that they may have greater development potential in the future. Additionally, as more and more people accept and use cryptocurrencies, the demand for privacy protection among investors is continuously increasing, which provides new support for the demand for privacy coins.

However, some analysts are cautious about the rise of the privacy coin ecosystem. They point out that privacy coins face significant uncertainty and risks from regulatory bodies, which may lead to stricter regulations in the future. Additionally, the current trading volume and application scenarios of the privacy coin ecosystem are limited and require further development to gain long-term value support.

Overall, the privacy coin ecosystem may continue to show an upward trend in the short term. However, in the long run, the development prospects of privacy coins still need time for verification. Investors need to closely monitor regulatory trends and the actual application scenarios of the privacy coin ecosystem.

3. Project Highlights

1. OpenAI is reported to have requested loan guarantees from the White House, contradicting the public statement of the CEO.

A letter from OpenAI to the White House Office of Science and Technology Policy, submitted on October 27, has been made public. The 11-page letter explicitly requests the government to provide loan guarantees and direct funding support for AI infrastructure development. However, just 10 days later, CEO Sam Altman publicly stated on social media that “OpenAI does not need and does not want government guarantees,” emphasizing that “taxpayers should not have to pay for the poor business decisions of companies.”

OpenAI is an artificial intelligence research company co-founded by Elon Musk and others in 2015, aiming to advance the development of artificial intelligence. In recent years, OpenAI has made significant breakthroughs in fields such as natural language processing and computer vision, launching well-known products like ChatGPT.

The company has previously stated multiple times the need for significant funding to support AI infrastructure development and is seeking external financing. Requesting loan guarantees from the White House is seen as an attempt to alleviate financial pressure. However, CEO Altman's subsequent public denial raised doubts from the outside and once again highlighted issues with OpenAI's transparency and decision-making consistency.

Industry insiders believe that OpenAI's move reflects the funding difficulties faced by AI companies during their development. As AI technology continues to advance, the demand for hardware and computing power keeps increasing, leading to soaring operational costs. How to address the funding bottleneck while ensuring technological innovation will be a major challenge that AI companies like OpenAI need to confront.

2. Fetch.ai sues Ocean Protocol, accusing it of improperly selling 263 million FET tokens

Fetch.ai has filed a lawsuit against Ocean Protocol in the Southern District of New York Federal Court, accusing it of illegally selling approximately 263 million FETs and misleading the community, which led to a drop in token prices. The lawsuit claims that Ocean transferred 700 million OCEAN tokens originally meant for community rewards to a Cayman entity, where they were exchanged and sold off, thereby depressing FET prices and undermining ASI alliance governance.

Fetch.ai and Ocean Protocol are both blockchain AI projects that jointly launched the ASI( AI Singularity Initiative) alliance in 2021, aiming to promote the development of decentralized AI. However, recently, the two parties have diverged due to token allocation issues, ultimately leading Fetch.ai to file a lawsuit.

According to the lawsuit materials, Ocean Protocol transferred 700 million OCEAN tokens, originally intended for community rewards, to its entity registered in the Cayman Islands without authorization, and profited millions of dollars by selling them through exchanges. Fetch.ai believes that this action goes against the original intention of both parties, undermines the governance structure of the ASI alliance, and leads to a significant drop in the price of FET tokens.

Ocean Protocol denies the above allegations, stating that the lawsuit is “baseless” and that it will actively respond. The case has once again raised concerns in the crypto community regarding token distribution and governance transparency. Analysts indicate that this dispute may have some impact on the future development of the ASI alliance, and it also highlights that the decentralized AI ecosystem still needs improvement in aspects such as token economic models.

3. Labs launches USDX recovery plan, opens application registration window.

Labs published a statement on platform X, indicating that due to the market liquidity conditions and clearing dynamics, the market price of USDX has deviated from its reference value. The team has initiated a recovery plan aimed at providing affected holders with a recovery path referenced to a value of 1 dollar, depending on resource availability.

USDX is an algorithmic stablecoin launched by Labs, designed to maintain its peg to the US dollar through collateral positions and hedging strategies. However, under recent extreme market conditions, the price of USDX has experienced significant fluctuations, at one point deviating severely from the reference value of 1 US dollar.

In response to this situation, Labs has launched a “Recovery Plan” that allows affected USDX holders to obtain a recovery based on a reference value of 1 dollar, depending on their financial situation. This arrangement is voluntary in nature and does not constitute any form of guarantee, redemption obligation, or collective investment product.

The affected holders' balances will be identified through an on-chain snapshot, and the claims registration window has been opened. The recovery will be carried out in phases, depending on resource allocation, liquidity conditions, and cooperation arrangements, with progress publicly disclosed.

Analysts point out that this move aims to mitigate the risk of USDX decoupling and maintain trust in algorithmic stablecoins. However, due to complex factors such as fund allocation, the recovery process may be lengthy. The USDX incident again highlights the vulnerability of algorithmic stablecoins in extreme market conditions, and will also drive the industry to accelerate the improvement of related risk control mechanisms.

4. Economic Dynamics

1. Federal Reserve Governor Milan: The development of stablecoins may lower the neutral interest rate.

Economic Background: In recent years, the stablecoin market has rapidly expanded, having a certain impact on the traditional financial system. According to the latest data, the global stablecoin market capitalization has exceeded 140 billion USD, accounting for more than 15% of the total cryptocurrency market capitalization. Meanwhile, the inflation rate in the United States reached a nearly 40-year high in 2022, GDP growth has slowed, and there have been some signs of weakness in the labor market.

Important events: Federal Reserve Board member Stephen Miland recently gave a speech, pointing out that the development of stablecoins could potentially lower the neutral interest rate of the economy. He explained that the issuance of stablecoins requires reserve cash and government bonds, which will increase the demand for government bonds, thereby raising bond prices and lowering yields. Once the neutral interest rate declines, the central bank's policy interest rate should also be adjusted accordingly; otherwise, it will create contractionary pressure on the economy.

Market reaction: Milan's speech has sparked attention in the market regarding the influence of stablecoins. Some analysts believe that the development of stablecoins could indeed change the transmission mechanism of monetary policy, and central banks need to reassess interest rate policies. However, there are also viewpoints that suggest the current scale of stablecoins is relatively limited, and their impact on neutral interest rates has yet to materialize. Overall, there is a divergence in the market regarding the role of stablecoins in the future financial system.

Expert Opinion: Columbia University economics professor Saskia stated that the development of stablecoins will make the money supply more flexible and help improve the efficiency of the financial system. However, it is also necessary to strengthen regulation to prevent potential financial risks. Former Federal Reserve Governor Mester believes that stablecoins could reduce the deposit base of the banking system, affecting the money multiplier and credit creation capacity, which is an area that central banks need to focus on.

2. The U.S. Senate delays key cryptocurrency regulation bill

Economic Background: As an emerging financial asset, cryptocurrency has always attracted high attention from governments around the world regarding its regulatory issues. As the largest economy globally, the regulatory stance of the United States on cryptocurrency will have a significant impact on industry development. Currently, the U.S. cryptocurrency market lacks a unified regulatory framework, and there are divergences among institutions regarding their jurisdiction.

Important event: The U.S. Senate was originally scheduled to vote on a key cryptocurrency regulatory bill in the near future, but the vote has been postponed due to internal disagreements. The bill aims to establish the first comprehensive regulatory framework for the U.S. cryptocurrency market, clarifying the responsibilities of various regulatory agencies. The postponed vote means that uncertainty regarding cryptocurrency regulation will continue for some time.

Market Reaction: The news of the bill's postponement has caused some fluctuations in the cryptocurrency market. Some investors are concerned that regulatory uncertainty will exacerbate market risks, leading to capital outflows. However, some analysts believe that the delay is merely to give all parties more time to reach a consensus, which will ultimately be beneficial for establishing a clear and unified regulatory framework that is conducive to the long-term development of the industry.

Expert opinion: Former chairman of the U.S. Commodity Futures Trading Commission, Giancarlo, stated that the complexity of cryptocurrency regulation lies in its cross-domain nature, requiring cooperation among various regulatory agencies. Harvard Law School professor Griffin believes that the key to regulation is balancing innovation and risk management, creating a favorable environment for the development of cryptocurrency while protecting investors' interests.

3. Japan plans to tighten cryptocurrency regulations, with new restrictions on public token sales.

Economic Background: As the world's third-largest economy, Japan's changes in cryptocurrency regulation policies will have a certain impact on the global market. In recent years, Japan's cryptocurrency market has developed rapidly, with both users and trading volume leading globally. However, at the same time, there have been cases of violations and harm to investors' rights.

Important event: According to reports, the Japanese government is brewing new policies to tighten cryptocurrency regulation. One important measure is to set new investment restrictions on public token sales to strengthen the protection of investors. In addition, major banks in Japan are also collaborating to develop a government-supported stablecoin network.

Market reaction: News of changes in Japan's regulatory policies has sparked interest in the country's cryptocurrency development prospects. Some investors are concerned that excessive regulation could stifle innovation and affect Japan's position as a cryptocurrency hub. However, there are also views that reasonable regulation is beneficial for rectifying market order and creating a good environment for the industry's long-term healthy development.

Expert Opinion: Professor Kiyoshi Ito of the University of Tokyo believes that Japan's cryptocurrency market was once overly relaxed and needs to be re-regulated to protect investors' rights. He expects that future regulations will be stricter but will not completely ban cryptocurrency trading. Analyst Kobayashi from Nomura Securities stated that the Japanese government's goal is to make the country a global model for transparent and secure cryptocurrency management.

5. Regulation & Policy

1. Federal Reserve Governor Miyan: The expansion of stablecoins may lower the neutral interest rate.

Federal Reserve Governor Stephen Milan stated that the widespread use of stablecoins could increase the risk of the economy hitting the zero lower bound on interest rates. He explained that as the scale of stablecoins expands, the market demand for U.S. Treasury bonds will also rise, thus driving up bond prices and lowering yields. This change means that the Federal Reserve's policy rate should also be correspondingly adjusted downward; otherwise, it will create a contractionary pressure on the economy.

Milan pointed out that even under a “relatively conservative” forecast, the expansion of the stablecoin market would increase the net supply of lendable funds in the economy, thereby putting downward pressure on the neutral interest rate. He emphasized that if the neutral interest rate falls, the policy rate should also be lowered in sync to maintain the healthy operation of the economy. If the central bank continues to refuse to cut interest rates after the neutral interest rate falls, it constitutes a tightening action.

As a Federal Reserve governor appointed by the Trump administration, Milan has recently called for the Federal Reserve to quickly implement several consecutive 50 basis point rate cuts to bring the policy interest rate back to what he considers to be a “more neutral” level. He emphasized that adjustments in immigration policy, changes in tariff policy, and other factors are driving the neutral rate down, while the current policy interest rate of the Federal Reserve is “far above neutral levels,” placing a “heavy constraint” on the economy.

2. Japan has redefined digital asset regulations, integrating cryptocurrency with traditional finance.

The Japanese Financial Services Agency is reformulating the regulatory framework for digital assets, aiming to better integrate cryptocurrencies with traditional finance. The new framework will tighten regulations on cryptocurrency exchanges and issuers to ensure risk management and investor protection. At the same time, public token sales will face new investment restrictions, while major banks are developing a government-backed stablecoin network.

This initiative reflects the Japanese government's vision of integrating cryptocurrencies into the mainstream financial system. The new regulations equate crypto assets with non-physical assets such as patents, copyrights, trademarks, software, stocks, bonds, and other digital financial instruments. This landmark decision aligns the token with non-physical assets such as patents, copyrights, trademarks, software, stocks, bonds, and other digital financial instruments.

The Japanese cryptocurrency industry is entering a more regulated and professional stage. The Financial Services Agency is tightening regulations to ensure risk management and investor protection. Public token sales are facing new investment restrictions, while major banks are developing a government-supported stablecoin network, making Japan a model for global transparency and security in cryptocurrency management.

3. Secretary for Financial Services and the Treasury of Hong Kong: Considering the application of AI and blockchain technology to existing products.

The Secretary for Financial Services and the Treasury of Hong Kong, Hui Ching-yu, stated that the market response and feedback regarding the application of AI, blockchain, and tokenized products are very positive and rapid. The next step will be to consider applying these technologies to some existing products. For example, potential long-term revenues, such as income from charging stations, could be converted into tokenized investment products, allowing investors to participate. Through blockchain, long-term income can be transformed into a verifiable income for investors to invest in.

Xu Zhengyu believes that applying emerging technologies such as AI and blockchain to existing products and services can improve efficiency, reduce costs, and bring new investment opportunities for investors. The Hong Kong government is exploring how to leverage these innovative technologies to promote the development of financial technology.

Previously, the Hong Kong Securities and Futures Commission approved the listing of the first cryptocurrency futures ETF. Hong Kong is accelerating its efforts to include crypto assets within the regulatory framework and provide more avenues for institutional investors to participate. Experts believe that the support from the Hong Kong government and regulatory clarity will help attract more crypto companies to set up in the region, driving Hong Kong to become the center for crypto assets in Asia.

4. The U.S. Senate delays key cryptocurrency regulation bill due to internal disputes.

A milestone bill aimed at creating the first comprehensive framework for regulating the U.S. cryptocurrency market has encountered setbacks in the Senate. Due to disagreements between the Democratic and Republican parties over key provisions, the “Responsible Cryptocurrency Regulation Act,” which was scheduled for a vote in mid-November, has been postponed.

The bill was jointly introduced by Senators Gillibrand and Lummis, aiming to clarify the regulatory responsibilities for cryptocurrencies and establish rules for areas such as consumer protection and anti-money laundering. However, there are disagreements between the two parties on how to define cryptocurrencies and which agencies should be responsible for regulation.

Republicans want to hand most regulatory authority over to the Commodity Futures Trading Commission, while Democrats advocate for the Securities and Exchange Commission to be in charge of regulation. The two sides also have differences on issues such as consumer protection, energy use, and taxation.

Industry insiders expressed disappointment, stating that the delay in regulatory laws will exacerbate uncertainty and hinder the development of the cryptocurrency industry in the United States. Some companies may consider relocating their businesses to other countries with clearer regulatory environments. Experts are calling on Congress to expedite the legislative process to create a favorable environment for the cryptocurrency industry.