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Avalanche Unveils $40M Grant Program Ahead of ‘Avalanche9000’ Upgrade

The program, called Retro9000, is supposed to encourage developers to build on Avalanche ahead of a much-anticipated upgrade known as Avalanche9000.

The foundation supporting the Avalanche network is releasing a $40 million grant program to reward developers for building new protocols in the blockchain ecosystem.

The program, called Retro9000, is supposed to encourage developers to build on Avalanche ahead of a much-anticipated upgrade known as Avalanche9000, the Avalanche Foundation said Thursday in a press release.

“Normally, you ship a big upgrade to testnet, and if everything looks good, you immediately ship it to mainnet, and then you hopefully get adoption for it,” said Luigi D’Onorio DeMeo, chief operating officer at Ava Labs, the main developer firm behind Avalanche, in an interview with CoinDesk. “We kind of want to spin that on its head a little bit, and instead elongate the testnet process and do sort of what you can call an incentivized testnet.”

Builders and users will have to register with the Retro9000 platform to build on Avalanche, where the users receive some voting credits, based on their activity on the network.

“They’ll be able to effectively vote with those credits during the incentivized testnet on the builders, and this is going to be used as a signal for the Avalanche Foundation to then retroactively grant the participants afterwards,” D’Onorio DeMeo said.

“For a builder to actually qualify for the retroactive grant, they will have to eventually deploy on mainnet,” D’Onorio DeMeo said. “That is a prerequisite. The goal here is to allocate a substantial amount of funds, to build up a strong pipeline on testnet, so that when we go to mainnet, there’s a bunch of stuff to launch.”

AVAX Price

Avalanche9000 is expected to be Avalanche’s largest upload since its mainnet launch in 2020. It’s supposed to make launching layer 1s on Avalanche cheaper, easier to customize and smoother to maintain.

The project’s native token, AVAX, is down about 29% this year – underperforming Ethereum’s ETH, which is up about 13%.

The date for Avalanche9000 has not been set, but the testnet will be launched in October, D’Onorio DeMeo told CoinDesk.

“Once the incentivized test net closes, we will hope that people will deploy their projects at mainnet and then reward them retroactively,” he said.

Read more: Avalanche Becomes Latest Blockchain to Support Franklin Templeton’s Tokenized Money Market Fund

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The Fed Pivot is Finally Here

Last week, the Fed cut its federal funds target rate by 50 bps to 5.00% p.a. (upper limit) which could have strong implications for the crypto community, says Andre Dragosh, head of research Europe, CoinShares.

“The time has come,” stated Fed chairman Jerome Powell back in August at the Jackson Hole central bank symposium. Last week, the Fed cut its federal funds target rate by 50 bps to 5.00% p.a. (upper limit) which was slightly more than markets had priced in before the FOMC meeting. In other words, the Fed positively surprised markets with this rate cut.

It is quite likely that the Fed is just getting started with rate cuts. At the time of writing, the market already expects 3 additional cuts (75 bps) by year-end and another 5 cuts (125 bps) next year through December 2025. The Fed has also telegraphed additional cuts via its latest Summary of Economic Projections (SEP) (aka “dot plot”).

Nonetheless, despite this more-than-expected interest rate reduction of 50 bps, it is quite likely that the Fed still remains “behind the curve.”

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For instance, a standard Taylor rule based on the unemployment rate and core PCE inflation implies that a fed funds target rate of around 3.6% p.a. is already warranted based on the underlying economic and inflationary momentum.

In addition, the latest fund manager survey by Bank of America indicates that monetary policy was still “too restrictive” in September 2024 – in fact, the most restrictive since October 2008 according to this survey.

There still remains an increased risk of a recession as several reliable indicators such as the prominent “Sahm rule” remain triggered.

That being said, our quantitative analyses imply that global growth has become less relevant for the performance of bitcoin while other factors like monetary policy or the US dollar have become more important.

In other words, a US recession might not be as negative as widely anticipated for bitcoin and other cryptoassets. To the contrary, it may lead to even more Fed rate cut expectations and US Dollar weakness which could provide even more tailwind.

With the latest move by the Fed and other major central banks, the global liquidity tide is clearly turning; global money supply has already reached new all-time highs and is accelerating. Expansionary money supply growth periods are usually associated with bitcoin bull runs.

The re-steepening of the US yield curve which tends to be a recessionary indicator is also an indicator for increasing liquidity and therefore bullish for scarce assets like bitcoin.

What is more is that the increase in global liquidity is coinciding with the increasing supply scarcity of bitcoin which has been intensifying since the latest halving in April 2024.

Our analyses have shown that there tends to be a significant lag between the halving event itself and the moment the supply shock starts to become significant, as the supply deficit only tends to accumulate gradually over time.

So, it appears as if there is a perfect confluence between an increase in potential demand via global money supply and a simultaneous reduction in available supply via the halving.

The market has been mired in “chopsolidation” – a choppy consolidating range-bound market – since the latest all-time high in March 2024. This was due to several factors such as government sales of bitcoin, Mt. Gox trustee’s distribution of bitcoins, or the macro capitulation in early August 2024.

In this context, the summer months have generally been one of the worst performing months for bitcoin historically with September being the worst month of the year.

However, Q4 tends to be the best month for bitcoin from a pure performance seasonality perspective and we also expect bitcoin to break out of this chopsolidation in Q4.

It seems as if the wait for a new break-out to the upside is finally over. The Fed pivot may have just delivered the perfect catalyst for that.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

Ethereum’s Changing Landscape

For investors, ETH’s future depends on how Ethereum balances innovation with maintaining healthy economic policy, says Matthew Kimmel, digital asset analyst, CoinShares.

Ethereum’s ability to host a wide-range of applications and assets has been evident for years, but the investment case for its native token, ETH, has become increasingly complex. In the wake of key protocol changes, particularly the hardforks activating EIP-1559 and EIP-4844, investors are asking how Ethereum’s adoption will translate into ETH’s long-term value.

While the platform has scaled, the relationship between its growth and ETH’s supply and demand — and thus its price — is no longer as straightforward as it once seemed.

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The EIP-1559 revolution: linking utility to token value

When Ethereum implemented EIP-1559 in 2021, it introduced a burn mechanism where the overwhelming majority of transaction fees (base fees) would be permanently removed from circulation. This created a direct relationship between Ethereum usage and ETH’s supply. As users paid for transactions on the Ethereum network, the burn would act as a deflationary force, reducing ETH’s supply and putting upwards pressure on its price.

In 2023, our valuation model at CoinShares showed that under the right conditions, where Ethereum generated $10 billion annually in L1 transaction fees, something it achieved at its 2021 heights, ETH could reach a value near $8,000 by 2028.

Since then, however, optimism has waned due to the Dencun hardfork and the rise of Layer-2s (L2), which have upended the fee burn and altered ETH’s value potential.

The rise of layer-2s: a double-edged sword

L2 platforms were designed to scale Ethereum by moving transactions off the main chain (L1) and onto faster, cheaper networks. Initially, L2s complemented L1, helping the network handle more transactions without clogging the base chain — like a pressure release valve giving balance in times of high usage.

But with the introduction of “blob space” in 2024, L2s could now settle transactions on L1 at much lower costs, reducing their requirement to pay expensive L1 fees. As more activity migrated to L2s, the supply burn that EIP-1559 was designed to instill began to drop, weakening the downward pressure on ETH’s supply.

The reality of Ethereum generating high L1 fees to support ETH’s value is now looking bleak. L1 transaction fees have steadily collapsed, leading to questions about what differentiates the services offered at each layer, and what will drive the L1 fee landscape moving forward.

A path forward: restoring the burn or adapting to new realities

Despite these challenges, there are potential paths forward to restore demand for L1 transactions and, in turn, ETH valuation.

One option is developing high-value use cases that rely on L1’s security and reliability, yet, given current trends, this appears unlikely in the near future. Another possibility is that L2 adoption grows so rapidly that the sheer volume of transactions compensates for the discounted fees — but this would require extraordinary L2 growth, beyond near-term expectations.

The most likely, and perhaps the most controversial, solution is repricing blob space to increase L2 settlement fees. While this would restore some of the L1 supply burn, it risks upsetting the economics of L2s that have been key to Ethereum’s recent success and enhanced its ability to compete as an ecosystem with alternative platforms (like Solana, Binance Chain, etc.).

The uncertain future of ETH

While L2s have scaled Ethereum, they have also disoriented the mechanisms that tie ETH’s value to its utility. For investors, this means that ETH’s future depends on how Ethereum balances innovation with maintaining healthy economic policy.

For now, ETH’s investment case is unsettling, and risks remain high as the Ethereum community decides its path forward.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

Stablecoins Will Drive Institutional Adoption in Asia: Chainalysis CEO

In an interview, Michael Gronager also said it doesn’t matter who wins the U.S. presidential election.

SINGAPORE — Stablecoins will drive institutional adoption in Asia, “even if regulators are not happy with it,” Chainalysis co-founder and CEO Michael Gronager said in an interview at Token2049 in Singapore. Yet, while more users in the region have leaped into cryptocurrency than elsewhere, the U.S. is still the industry’s most influential geography.

Stablecoins, crypto tokens whose value is pegged to a real-world asset like the dollar or gold, underpin the crypto trading system. Also, because their value is fixed – or meant to be – they can be used as a store of value and a medium of exchange.

“One of the things we have seen as the biggest trends in crypto right now, and probably the killer app, is something as mundane as stablecoins,” he said. “Two-thirds of all transactions in transaction volume on blockchains are stablecoins.”

Chainalysis, a blockchain analytics company, regularly releases reports on the state of crypto and its adoption across the world. The most recent listed five Asian countries in the top 10 of the Global Adoption Index. India and Nigeria have kept the top two positions for two years in terms of grassroots crypto adoption, and Indonesia, a new No. 3, is the fastest growing.

“Last year, one or two banks in Japan said they wanted to launch a U.S. dollar-backed stablecoin within a year. It hasn’t happened yet,” Gronager said. “I had conversations last week in Japan and now we have 10 banks wanting to launch such stablecoins.

“Why hasn’t it happened yet? (Because) banks are slow. They talk to the regulator.”

Regulators definitely have “some level of concern” and many things will need to be ironed out, he said. In the meantime, banks have to face growing competition from stablecoins when it comes to remittances, according to Gronager.

While Asia appears to dominate in terms of adoption, the U.S. which ranks fourth in the Chainalysis report, is the most influential region because that’s where the trading volumes come from and the crypto economy looks to institutions like the U.S. Congress and Securities and Exchange Commission (SEC) for big signals.

“The real volume of crypto is tied to countries like the U.S. and others,” Gronager said. “The story we are trying to tell you is more like saying crypto users per capita. So basically, how many people using [crypto] within the country. The adoption is, like, who’s holding crypto for the average people in countries. In the U.S., that’s less than it is, for example, in India.”

Despite the regulatory influence and despite crypto influencers’ focus on the U.S. presidential candidates’ positions on the industry, the November election isn’t a big deal, Gronager said.

“It won’t matter much,” whether Donal Trump or Kamala Harris wins, Gronager predicted. “Just getting on the other side” of this election will be healthy for everyone.”

Former Government Employees, Compliance Officers Rally for Detained Binance Executive

Tigran Gambaryan has been detained in Nigeria since February.

A group of former government employees and compliance officials, now working in the crypto industry, rallied in front of the United Nations on Wednesday to show support for Tigran Gambaryan, Binance’s head of financial crime compliance who’s been detained in Nigeria since February.

Gambaryan is being held as a representative of the company he works for, with prosecutors trying him on money laundering charges brought against Binance. He is being held in the Kuje Prison, which is notorious for holding terrorists and other criminals, where his health has deteriorated heavily; in a recent video, he was struggling to walk with a crutch. A spokesperson for his family said he has also suffered multiple infections, as well as a herniated disc in his back.

Despite this, the U.S. government only publicly acknowledged his detention earlier this month, though Secretary of State Antony Blinken has discussed Gambaryan with Nigerian officials in May, the New York Times reported.

Amanda Wick, a former federal prosecutor and government investigator who organized the protest, noted that Gambaryan used to work for the U.S. government.

Prior to his role at Binance, Gambaryan was an investigator with the IRS’s Criminal Investigation wing.

“America has fought harder for people who committed crimes [in the countries they were detained in] than for someone who fought for his country,” Wick said.

Nigeria prosecuting someone to get the attention of their employer is “truly unjust,” said Chris Tyrrell, the chief risk and compliance officer at Ondo Finance.

Gary Weinstein, the founder of Infinity Advisory LLC and former state assistant attorney general, said all of the attendees present were in favor of consumer protections and “high-integrity” markets, including Gambaryan. He noted that Gambaryan had been invited by the Nigerian government when he visited in February and was given a “false assurance of safe passage.”

“One cannot do their job if one is in fear of getting snatched by a nation-state,” he said.

Protocol Village: Theta Labs Launches ‘EdgeCloud for Mobile,’ Implements AI Video Detection

The latest in blockchain tech upgrades, funding announcements and deals. For the period of Sept. 26-Oct. 2.

Theta Labs Launches ‘EdgeCloud for Mobile,’ Allowing Android Users to Contribute Spare GPU Power

Theta Labs, the developer behind the entertainment-focused blockchain project Theta Network, has launched EdgeCloud for Mobile, allowing Android users to contribute spare GPU power to the Theta EdgeCloud network and earn TFUEL tokens. According to the team: “Available on Google Play, the app lets users provide resources during idle times, supporting AI research in media, healthcare and finance. Using a Decentralized Physical Infrastructure Network (DePIN), Theta EdgeCloud cuts GPU-intensive task costs by over 50% compared to traditional cloud providers, offering scalable, decentralized AI model training and inference services.” The blog post reads: “For the first time ever, the Theta team has implemented a video object detection AI model (VOD_AI) that runs on consumer grade Android mobile devices, delivering true computation at the edge and enabling unparalleled scalability and reach. VOD_AI is a computer vision technique that uses AI to analyze video frames to identify objects by scanning video frames, looking for potential objects and drawing bounding boxes around them. This process is similar to how the human visual cortex works.” (THETA)

Protocol Village is a regular feature of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Project teams can submit updates here. For previous versions of Protocol Village, please go here.

The Protocol: When Trump Bought Red-Meat Bitcoin Burgers, He Called It ‘Crypto’

Republican U.S. presidential candidate Donald Trump won chits from the Bitcoin community for reportedly purchasing smash burgers at a Bitcoin-friendly New York pub. But in a way, the whole episode was about damage control.

Bitcoiners aren’t usually the forgiving type – especially toward perceived apostates who ape into other cryptocurrencies. That’s why Republican U.S. presidential nominee Donald Trump’s visit last week to a beloved Bitcoin bar in New York appeared so well timed – to repair any lost credibility after he and his family started promoting a decentralized-finance project that appears rooted in other blockchain ecosystems.

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Screenshot of the Zaprite invoice used by Republican U.S. presidential nominee Donald Trump to buy burgers and Diet Cokes at the bar PubKey in New York (PubKey/X)

LESSER EVILISM – It goes without saying that many Bitcoin purists do not like to mingle their business, politics or even company with users of other blockchains or cryptocurrencies. Which is partly why the Republican U.S. presidential nominee Donald Trump garnered so much scorn from Bitcoiners last week for promoting a very-much-NOT-Bitcoin decentralized-finance project, World Liberty Financial – complete with its own token, and a pre-mined allocation to insiders. “Trump launching a sh*tcoin may have been the final straw to lose my vote,” tweeted Bitcoin-friendly author Mitchell Askew. Responses on the thread ranged from total agreement to what one might call lesser evilism – the rhetorical contrast of one bad option with an even worse option: “True but it’s that or WW3 with commie Kamala,” wrote @FrictionlessBTC.

The DeFi dalliance threatened to undo much of the goodwill Trump built up at the Bitcoin Nashville conference in July, when he tossed out a series of red-meat pledges, including commuting the rest of Silk Road creator Ross Ulbrecht’s life sentence and creating a “strategic national bitcoin stockpile.” Multiple standing ovations ensued.

So it was fortuitous timing for Trump that his campaign scheduled a stop, later in the week, at the Bitcoin-friendly New York City bar, PubKey. According to the bar’s official X account, Trump bought 50 smash burgers and Diet Cokes for people in attendance, at a total cost of $998.77 including tax and tip, and then paid for it all in bitcoin. Fox News posted a video of the entire scene, leading a sharp-eyed reporter from CryptoSlate to quickly point out that Trump’s role mainly consisted of standing by at the counter while handlers actually performed the transaction, passing smartphones back and forth between them. Whatever. The bar crowd cheered. “Crypto burgers!” Trump said as he handed them out. A voice from behind the camera corrected him, “Bitcoin burgers!”

As much as it was a second chance for Trump to prove his Bitcoin bona fides, the choreographed transaction served as a sort of benchmark for the blockchain’s evolution as a viable payments option for a retail-facing business in the U.S. Will Cole, head of product at the Bitcoin payments app Zaprite (who happens to be Bitcoin-friendly U.S. Senator Cynthia Lummis’s son-in-law), described what he called the “Trump stack:” PubKey, running a node on Bitcoin’s Lightning Network on Voltage Cloud, used Zaprite to provide an invoice for the purchase, and Trump paid using a Strike wallet. (Official spokespeople for the Trump campaign didn’t respond to CoinDesk’s email asking where the bitcoin originated from.)

Asked whether the episode might have helped erase any lingering disgust among Bitcoiners over the World Liberty Financial rollout, PubKey founder Thomas Pacchia didn’t exactly dispute the premise of the question: “The other stuff that the family has going on is sort of outside our purview and scope,” he said in an interview. “Everybody is on a journey toward understanding the difference between Bitcoin and crypto. I like to meet people where they are.”

ELSEWHERE:

Caroline Ellison exits a Manhattan courthouse after being sentenced to two years in prison on Sept. 24, 2024. (Victor Chen/CoinDesk)

Huddle01, Blockchain Video Conferencing Project That Seeks to Outdo Zoom, Targets $37M Node Sale

Huddle01 CTO Susmit Lavania, left, and CEO Ayush Ranjan, on a Huddle video conference call. (Huddle01)

Huddle01, a blockchain project to provide decentralized audio and video conferencing – aiming to provide lower latency virtual meetings than Zoom and Google Meet – plans to raise as much as $37 million in a sale of network nodes.

The 49,600 “media nodes” being sold offer operators a way to contribute excess internet bandwidth the communication network, in exchange for token rewards. According to a litepaper, some 21% of the project’s HUDL tokens will be distributed to media nodes.

“These nodes will power a network that already outperforms the incumbent Web2 competitors on latency where there is a large cluster of nodes, and is capable of improving lags across the globe,” Huddle01 CEO Ayush Ranjan said in the release, shared exclusively with CoinDesk.

The project is built using technology borrowed from the Ethereum layer-2 network Arbitrum. A test network will launch two weeks after the sale completes, according to the press release.

Huddle01 becomes the latest in a growing trend of blockchain projects conducting node sales as a way to raise funds while simultaneously decentralizing their networks.

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Screengrab from Daylight blog post with examples of personalized transaction recommendations (Daylight)

Deals and grants

Deus X CEO Tim Grant (Deus X)

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PayPal Enables U.S. Business Accounts to Buy, Hold and Sell Crypto

The service won’t be available to New York state in the beginning.

Payments giant PayPal (PYPL) will enable its business clients to buy, hold and sell cryptocurrency directly from their accounts in the U.S., potentially opening up a larger market for the firm.

After letting its retail users do the same via PayPal and Venmo accounts, the company said that it also saw demand from business owners to buy, hold and sell crypto. “Business owners have increasingly expressed a desire for the same cryptocurrency capabilities available to consumers,” said Jose Fernandez da Ponte, SVP of blockchain, cryptocurrency, and digital currencies at PayPal in a statement on Wednesday.

The payments company will also let U.S. merchants to externally transfer cryptocurrency on-chain to third-party eligible wallets, according to the statement.

PayPal has been active since 2020 to let its users buy hold and sell crypto currencies directly from their accounts. Last year, it unveiled its U.S. dollar-denominated stablecoin, PayPal USD (PYUSD), which reached a $1 billion market cap this summer.

Utah Judge Rules SEC’s Case Against Alleged Crypto Mining Scam Green United Can Proceed to Trial

And no, she didn’t rule that crypto mining devices were securities.

The U.S. Securities and Exchange Commission’s (SEC) lawsuit against Green United can proceed to trial, a Utah judge ruled Monday.

Last March, the SEC accused the Utah-based operation of scamming investors out of $18 million by selling them phony crypto mining equipment via a multi-level marketing scheme in which the company’s affiliates received a portion of the proceeds from each of the $3,000 “Green Boxes” they sold.

According to the SEC’s complaint, investors were told that the so-called Green Boxes were specialized crypto miners that mined GREEN tokens on the Green Blockchain – which they allegedly claimed supported a “public global decentralized power grid” – and could generate 40% to 50% monthly returns. Investors never physically received their equipment, and were told that the machines would be remotely hosted at a Green United-controlled data center.

In reality, the Green Blockchain didn’t exist, but the Green Boxes did – sort of.

Green United’s founder, Will Thurston (who, along with promoter Kristoffer Krohn, is also named as a defendant in the lawsuit), allegedly used the money investors gave him for the phony Green Boxes and used it to buy S9 Antminers – commercially-available bitcoin mining machines – which he then used to mine bitcoin for himself. According to the SEC, investors didn’t see any of the actual bitcoin (BTC) their purchases mined, but instead received periodic distributions of worthless GREEN tokens created by Thurston on the Ethereum blockchain.

Though Green United’s lawyers attempted to have the case dismissed, U.S. District Court Judge Ann Marie McIff Allen ruled that the SEC has “sufficiently alleged a security in the form of Green Boxes” to allow the case to proceed to trial, as well as its allegations of fraud.

The ruling caused something of a stir in online crypto circles, with at least one large X account claiming (in a since-deleted post) that the “SEC says crypto mining devices are securities.”

“This is wrong. Remain calm,” responded Neeraj Agrawal, director of communications at crypto lobbying group Coin Center. “This has no bearing on managed crypto mining. It’s garden variety ‘cloud mining’ scamming.”

The judge’s Monday ruling makes no mention of the real S9 Antminers – or bitcoin – Green United was allegedly buying with investor funds.

NYDFS ‘More Eager Than Anyone’ for Federal Legislation, Chief Says

NYDFS Superintendent Adrienne Harris said any federal legislation should still keep a role for state regulators.

NEW YORK — New York Department of Financial Services Superintendent Adrienne Harris said federal legislation addressing cryptocurrencies would be welcome, but maintained that states should keep their existing roles overseeing digital assets.

States have been able to move more quickly while conventional wisdom that allowing states to regulate digital assets may create a “race to the bottom” in terms of regulatory oversight hasn’t been borne out, Harris said at the Digital Asset Compliance and Market Integrity Summit in midtown Manhattan Wednesday.

“We are maybe more eager than anyone to have a federal partner and to see federal legislation and regulation,” Harris said. “I think it’s really important that legislation gets passed, regulations get written, but it is still important that there is a role for the states.”

Harris said she was “optimistic” that the House and Senate might move legislation soon, saying NYDFS has spoken to both parties in both houses of the legislature over the past few years.

BitLicense evolution

New York’s BitLicense, which is nearly a decade old, has evolved over the years but the regulator’s view of it has stayed the same, Harris said.

“I think our approach hasn’t evolved that much. The approach was always about, how do you sort of square these competing objectives of fostering innovation, but protecting consumers and markets,” she said. “And so that means you really have to stay abreast of developments in industry, but also be the cop on the beat and strike that balance.”

NYDFS has one of the world’s largest crypto units, Harris said, with 60 full-time staffers dedicated to the crypto sector.

Harris said the general public’s views on the BitLicense have similarly become more accepting since its introduction, a change she called “gratifying.” Even federal lawmakers have pointed to the BitLicense as an example.

“[That’s] not to say that it’s perfect, right? There are some really valid critiques, both in terms of the rule and the way it has been operationalized,” she said. “But it’s been so gratifying to see California, Illinois, Nebraska, and then the EU and Singapore; everybody sort of takes pieces.”