BlackRock’s New Custody Rules with Coinbase: Faster Withdrawals & Improved Liquidity

On September 23, 2024, several significant global events are unfolding. Israeli airstrikes have targeted Hezbollah positions in southern Lebanon, escalating tensions in the region as Israel urges civilians to evacuate areas near suspected arms depots. Meanwhile, political discussions in the U.S. focus on the economic ramifications of former President Donald Trump's proposed mass deportation plan, which could drastically impact the economy if implemented. Additionally, Prime Minister Pedro Sánchez of Spain is set to participate in an important economic forum in New York, emphasizing the interconnectedness of global markets.

In today’s email:

• BlackRock: Lays Down The Law

• Telegram: The End Of An Era

• Letta: UC Berkeley’s Newest AI Startup

BlackRock Updates Coinbase Custody Agreement for Faster Withdrawals Amid Debt Speculation

BlackRock has revised its custody agreement with Coinbase to streamline withdrawal processes for its iShares Bitcoin Trust ETF, following concerns about liquidity and recent debt-related rumors. According to a Sept. 16 SEC filing, the amendment to the Coinbase Prime Broker Agreement enhances withdrawal procedures and asset management during unsettled trades.

The new terms require Coinbase Custody to process withdrawals from the Vault Balance to a public blockchain address within 12 hours, even when Trade Credits remain unpaid. Additionally, the agreement allows bitcoin withdrawals from both the Vault and Trading Balances, provided that equivalent assets remain to cover outstanding Trade Credits.

These changes aim to optimize the operational framework of BlackRock’s iShares Bitcoin Trust ETF, ensuring greater liquidity and faster asset access for institutional investors, even during unsettled trades.

The revisions address Section 2.1 of the Custodial Services Agreement, mandating that Coinbase Custody completes digital asset withdrawals within 12 hours of receiving instructions, subject to balance requirements.

This comes amid speculation that Coinbase was not purchasing actual bitcoin for the ETF and instead issuing debt letters. Rumors also suggested that BlackRock’s funds were being used to manipulate Bitcoin’s price.

Bloomberg senior ETF analyst Eric Balchunas dismissed these claims, stating that BlackRock would not tolerate such behavior from Coinbase, and any misconduct would be a serious regulatory violation. He attributed the rumors to investor frustration over Bitcoin’s persistent downtrend and skepticism toward institutional involvement in digital assets.

Coinbase CEO Brian Armstrong addressed the accusations, clarifying that all ETF transactions in the firm’s custody are settled on-chain. He also explained that institutional clients have options for off-chain transactions before trades are settled on-chain, such as through over-the-counter desks. Armstrong emphasized that Coinbase operates with transparency and regulatory compliance.

These updates likely reflect BlackRock’s commitment to meeting regulatory standards and improving operational efficiency, particularly in ensuring timely withdrawals and asset availability during unsettled trades.

Telegram Updates Privacy Policy, Will Share User Data with Authorities

Telegram has announced a major update to its privacy policy, stating that it will now share user data, including IP addresses and phone numbers, with law enforcement in response to valid legal orders. This marks a significant shift for the app, which has been known for its strict stance on user privacy.

The change comes after increasing pressure from authorities, particularly following the arrest of Telegram CEO Pavel Durov by French officials in August, partly due to the company's previous refusal to comply with legal data requests.

According to the updated privacy policy, if Telegram receives a valid judicial order indicating that a user is involved in criminal activities that violate the platform’s Terms of Service, the company will conduct a legal review and may provide the user's IP address and phone number to the relevant authorities.

Truly the end of an era. 😔

Letta Emerges from Stealth with AI Tech to Enhance Memory for User Interactions

Letta, a highly anticipated AI startup from UC Berkeley, has just emerged from stealth mode, unveiling technology designed to help AI models remember users and conversations. The startup, born out of Berkeley's renowned labs, also announced $10 million in seed funding led by Felicis’ Astasia Myers, with a post-money valuation of $70 million.

Letta has attracted backing from prominent angel investors in the AI field, including Google’s Jeff Dean, Hugging Face’s Clem Delangue, Runway’s Cristóbal Valenzuela, and Anyscale’s Robert Nishihara.

Founded by Berkeley PhD students Sarah Wooders and Charles Packer, Letta is closely tied to Berkeley’s Sky Computing Lab and is the commercial arm of the open-source project, MemGPT. The Sky Computing Lab, led by professor and Databricks co-founder Ion Stoica, has a strong track record, with previous projects like Anyscale, Databricks, and SiFive. The lab is also known for producing various open-source large language model (LLM) initiatives, such as Gorilla LLM and vLLM.

MemGPT addresses a significant challenge in the AI space: the stateless nature of models like ChatGPT, which don’t retain information between interactions. MemGPT enables AI agents to manage memory, allowing them to recall previous user interactions, which is critical for applications like customer service bots or healthcare tools. This technology has generated considerable excitement, even going viral before its official release.

Letta plans to launch its commercial product, Letta Cloud, which will provide a hosted agent service allowing developers to deploy stateful AI agents. The platform will support a range of AI models, offering tools for developers to build AI applications with persistent memory capabilities.

Although MemGPT faces competition from companies like LangChain and OpenAI, Letta is positioning itself as an open-source alternative. The startup emphasizes its commitment to open-source technology, distinguishing itself from more closed systems like OpenAI’s. Letta aims to be the go-to solution for developers seeking transparency and flexibility in building AI applications.

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