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First Mover Asia: Amazon’s Web3 Foray Will Be a Compliance Nightmare; Bitcoin Tops $23.9K

Good morning. Here’s what’s happening:

Prices: Bitcoin tops $23.9K before retreating slightly amid ongoing investor optimism. But one market observer says the largest cryptocurrency by market capitalization could be due for a U-turn.

Insights: Amazon is rumored to be unveiling an NFT initiative, part of the retail giant's larger push into Web3. The project could raise significant regulatory issues.

Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.


CoinDesk Market Index (CMI)



+36.7 3.4%

Bitcoin (BTC)


+636.4 2.8%

Ethereum (ETH)


+60.3 3.8%

S&P 500 daily close


+10.1 0.2%



+16.5 0.9%

Treasury Yield 10 Years



BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

Bitcoin Continues Flying High ... for Now

By James Rubin

On the weekend before the U.S. central bank unveils its latest interest rate decision, crypto investors were in a buoyant mood.

They sent bitcoin as close to $24,000 as it's been since mid-August. The largest cryptocurrency by market capitalization topped $23,900 at one point Sunday before retreating to about $23,760, a nearly 3% gain over the past 24 hours. Markets have remained largely hopeful the past week despite sometimes conflicting economic data and worrisome fourth quarter earnings reports from some of the world's biggest brands.

On Friday, news from the inflation front tilted favorably with the U.S. Commerce Department's announcing that personal consumption expenditures (PCE) excluding food and energy in December had registered its most moderate annual rate increase since October 2021. The PCE, a key inflationary measure that the Federal Reserve weighs heavily in its monetary decisions, offered the latest evidence of a cooling economy, although it also showed services inflation remaining stubbornly resilient.

"The decline in goods inflation is welcome, as it brings inflation closer to the [Federal Reserve's] 2% goal (for reducing inflation), but with services inflation still sticky, it highlights that the Fed has more work to do," First Republic Bank wrote in a weekly note to investors.

Still, Joe DiPasquale, CEO of fund manager BitBull Capital, noted in a text to CoinDesk, that the Federal Open Market Committee (FOMC) was likely to follow through on a widely expected 25 basis point rate hike at its two-day meeting, which begins Tuesday. Investors' hopes for this more dovish tilt in monetary policy after eight months of harsher increases have fueled much of January's surge in crypto prices and other risk assets.

The "more modest increase is part of the reason that many crypto prices have increased," DiPasquale wrote. "It’s seen as a positive economic sign and is now being baked into the demand for bitcoin. It has been positively correlated with the equities markets in recent years and the lower rate is a bullish sign for the stock market."

Ether, the second-largest crypto in market value, fared even better than BTC on Sunday, rising nearly 5% at one point to trade over $1,650 at one point. ETH has risen over this threshold twice in the last nine days. Most other major cryptos by market cap spent much of Sunday firmly in the green with MANA, the token of 3D virtual reality platform Decentraland, and SAND, the native currency of the metaverse game Sandbox, recently jumping more than 15% and 7%, respectively, and SOL, the token of the Solana blockchain, up 8.2%.

The CoinDesk Market Index (CDI), an index measuring cryptos' performance, recently spiked more than 3.3%.

Equity markets furthered their upbeat January on Friday with the tech-heavy Nasdaq and S&P 500, which has a hefty technology component, each closing up the better part of a percentage point. The S&P has reached its highest level in nearly two months, a reversal from its desultory 2022. Investors are cautiously optimistic about inflation and other macroeconomic uncertainties, even as such powerhouses as Amazon, Salesforce and Microsoft have announced job cuts in anticipation of an economic contraction.

In crypto news, the sad saga of Sam Bankman-Fried continued on Friday with federal prosecutors asking U.S. District Court Judge Lewis Kaplan to ban the former CEO of FTX from communicating privately with current and former employees of the embattled exchange and its investment arm, Alameda Research. Prosecutors said Bankman-Fried had reached out to one former FTX employee in what they described as a thinly veiled attempt to “influence potential testimony."

BitBull's DiPasquale said that current market conditions remain ripe for a turn lower after the weeks-long surge fueled by a short squeeze and investor optimism. "Investors might choose to take profits now given the downside potential after several weeks of gains, and the possibility that bitcoin may test $20k again in the near future," DiPasquale wrote.

Biggest Gainers




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Biggest Losers

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Amazon Moves Into Web3. But Is the World Ready for Amazon Web3?

By Sam Reynolds

Amazon is rumored to be unveiling a Web3 initiative, according to a report by Blockworks. What this project will look like when it materializes is unclear: It might involve gaming, a non-fungible token (NFT) marketplace or something in between.

Either the regulatory complexity and uncertainty of doing this will kill the project before it begins, or Amazon has the size and scale to "make the market" on this and bring the Web3 economy into the mainstream.

Flying blind?

Generally speaking, major blue-chip corporations have avoided Web3 because of legal uncertainties. Sure, there have been efforts by payment companies like Visa and Mastercard to integrate stablecoins into their networks, many crypto nodes are hosted on Amazon’s cloud service AWS and Big Tech and traditional finance (TradFi) firms are regular investors in the crypto economy.

But this doesn’t mean they are stakeholders in the Web3 economy, embracing the ethos of decentralized ownership. Regulatory uncertainty and a lack of clarity interferes. Amazon’s efforts are potentially transformational if it can succeed, which will mean addressing the regulatory issues.

Are NFTs securities?

One of the major issues that would deter Amazon from launching NFT endeavors is whether NFTs are securities.

That issue is currently before the courts in the case Friel v. Dapper Labs and has been debated by many great legal minds.

The consensus is, "Maybe, maybe not."

In Friel v. Dapper Labs, the plaintiff, Jeeun Friel, argues that Dapper Labs’ NBA: Top Shot NFTs are securities because their value increases with the success of the project. Dapper Labs also controls the blockchain they are issued on, and takes a cut of every transaction.

The exchanges between Friel and Dapper also involve theories of vertical and horizontal commonality. Horizontal commonality analyzes if the value of each item, in this case, Moments, is independent or dependent on each other (investment contracts issued by the same company would move up and down in sync). Vertical commonality is the link between the value of the Moments and the success of Dapper.

“The proceeds of investors’ purchases in Moments are pooled together in the hands of Dapper Labs, which uses the money to stir up interest in the Marketplace for Moments and build out its Flow blockchain, further driving interest, traffic and money to the NBA Top Shot platform,” the Plaintiffs argue, saying this represents horizontal commonality.

Regarding vertical commonality, Dapper says in the court docket, “There is no vertical commonality because there is no link between the fortunes of each Moments collector and Dapper,” while the plaintiffs contend that the success of Dapper as a company relies on continued sales of these Moments in the secondary market and thus create vertical commonality.

As a recent article in the UNC School of Law’s North Carolina Banking Institute Journal highlights, citing another instance of basketball clubs selling NFTs, the presence of a royalty would encourage the continued promotion and might satisfy the “vertical commonality test because the NFT owner’s fortune would be impacted by the GSW’s effort.”

But that doesn’t mean all NFT transactions would represent securities. In an article published on JD Supra, lawyers Gargi Chaudhuri and James Masella III argue that most buyers – even if expecting to resell the NFT for profit at a later date – are expecting the transaction to be complete at the time of purchase and are not expecting the NFT to evolve or improve over time.

“Although the buyer may be interested in the value of the asset they own and hope to resell it at a later date for a profit, they did not invest in an ongoing, “common enterprise” that would pay the individual some share of profits, they write, cautioning that this is dependent on there not being an active secondary market for the NFTs.

At the same time, OpenSea, one of the largest NFT marketplaces, has been cautioning its staff to avoid using language reminiscent of securities, Fortune reported last year. Speaking with TechCrunch, a former Securities and Exchange Commission lawyer has said that these marketplaces could attract attention with a case involving the sale of unregistered securities, but nothing has happened yet.

Uncertainty is often a killer.

What about copyright?

Copyright and NFTs are a tough one.

On one hand, unless explicitly stated, you don’t control the copyright when you buy a work of art.

But it doesn’t seem like the market understands that. See: Spice DAO’s attempt to purchase the "Dune Bible" and create a new adaption for the screen based on the book.

“From a legal perspective, when a buyer purchases an NFT attached to a copyrightable work, at most they may be purchasing a license to display the copyrighted work in a limited capacity,” IP attorneys Ryan W. McBridge and Silas K. Alexander wrote in a 2021 paper. “The copyright holder typically retains the rights of reproduction, adaptation, publication, and performance of the work. A person who buys an NFT cannot legally edit the digital asset and redistribute the work, even though they paid for it.”

There are some exceptions to this. Yuga Labs has released full commercial rights to NFT holders for their entire collection, including Bored Apes. But this is only a license, and Yuga Labs still "owns" the IP for the Ape.

In an August 2022 report, Galaxy Digital accused the NFT industry of "misleading" the public with its language around NFTs and ownership of copyright.

“The arrangements between NFT issuers and token holders resemble a distinctly Web2 maze of opaque, misleading, complex, and restrictive licensing agreements,” the report said, with Alex Thorn, head of Galaxy Digital Research, telling Decrypt, there’s “a discrepancy between what the public thinks they're buying and what they're really buying”.

A recent judgment in a court case between Yuga Labs and two artists it accused of making knockoffs of its NFTs (which are generated by an artificial intelligence algorithm) and infringing on its copyright further complicated the issue with the court refusing to weigh in on the topic of NFTs and copyright.

“[The] defendants again want an advisory opinion from the Court about copyright and NFTs. But the standing requirement of Article III prevents exactly this use of federal courts to adjudicate hypothetical questions, just as it does in the defamation context, the ruling reads."

Given this minefield, is this really a market that Amazon wants to double down on?

Crypto gaming and gambling

Blockworks’ report mentions that Amazon’s NFT effort might involve some sort of Web3 gaming engagement. A tantalizing possibility, considering that GameFi has a $10 billion market cap according to CoinGecko data.

But Play to Earn – one of the more popular genres of Web3 gaming – has all sorts of legal pitfalls.

In many markets in Asia, there are already specific laws, some first written 20 years ago, on the books involving trading gaming tokens for cash, as CoinDesk has previously reported.

A 2004 game called Seatalk, which had a (physical) token component made the Korean government write specific laws prohibiting converting gaming tokens to cash. China banned it in 2007 after Tencent developed a virtual currency called QQ Coins, used in its online universe and exchangeable for Yuan.

In Canada, lawyers at a firm called Osler highlighted in an October 2022 paper that the entire play-to-earn model might run afoul of the country’s gambling rules.

“Generally, the Criminal Code prohibits games that are fundamentally premised on: the payment of money (or money’s worth) by the user; and the possibility that the user can earn money (or money’s worth) from playing,” they write.

Lawyers at Washington, D.C.-based law firm Ifrah have also said that Play-to-Earn risks violating state and federal gambling law because of the need to pay something of value (the NFT) to participate.

Can Amazon pull this off?

All this isn’t to say that Amazon faces an impossible task.

The company has access to almost infinite legal resources and compliance teams to create a version of Web3 that doesn’t run afoul of the law – despite there being limited legal guidance available and existing paradigms being regulatory and compliance hellscapes.

Some might argue, citing a declining market for NFTs and the overall bear sentiment for crypto, that this is the time to do it. But entering at the bottom of the market can also create market momentum, and there’s nobody like Amazon with its scale in the Web2 world.

Amazon entering this market would certainly legitimize it in the eyes of many, and it would be an important step in creating an institutional-grade asset out of NFTs. But first, they need to push through the regulatory challenges.

Important events

3 p.m. HKT/SGT(7 a.m. UTC): Germany gross domestic product (Q4 preliminary/QoQ/YoY)

6 p.m. HKT/SGT(10 a.m. UTC): European Commission business climate report (January)

6 p.m. HKT/SGT(10 a.m. UTC): European Commission consumer confidence (January)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

Core PCE Price Index Rose 4.4% in December; Aptos Labs CEO on Token Surge

Crypto markets are processing the just-released PCE data showing that core inflation has continued to cool. The personal consumption expenditures (PCE) index rose 4.4% annually last month, compared to 4.7% in November. The report is the last major economic data to be released prior to the Fed's next rate hike decision. Joining "First Mover" to discuss was JMP Securities Director of Financial Technology Research Devin Ryan. Also joining was Aptos Labs co-founder and CEO Mohammad Shaikh.


Sam Bankman-Fried Seeks Right to Transfer FTX's Crypto: Lawyers for the bankrupt crypto exchange's founder said there was no evidence for restricting his access to crypto held by FTX as part of bail conditions in a fraud trial.

DOJ Claims Sam Bankman-Fried Tried to Influence Witness Testimony, Asks for Communications Ban: A court document filed by prosecutors on Friday alleges that Bankman-Fried messaged FTX US General Counsel Ryne Miller on Signal, asking to reconnect and “vet things with each other.”

WazirX Says Binance Lied About Ownership as Dispute About India’s Largest Exchange Escalates: The back-and-forth about the ownership of WazirX could have a devastating effect on the Indian exchange and its users.

Crypto Markets Analysis: Bitcoin, Ether Trading Activity Lessens as Investors Await FOMC’s Next Interest Rate Hike: Bitcoin and ether were trading around new areas of support; markets were quiet ahead of a likely 25 basis point rate increase.

Decentralized Exchange Vela’s DXP Token Surges Ahead of Beta Release on Arbitrum: The utility token has rallied 50% in the past 24 hours and more than doubled since Wednesday ahead of the release of its widely anticipated beta version next week.