Newsletter Volume 31
Article 1: The Market This Week.
Bitcoin (BTC) had a positive start last week, reaching a three-week high of $28,500, but ended on a low note after tumbling to a weekly low of $26,500 on Friday. However, BTC initiated a leg-up that drove it to a multi-day high of just under $27,500, but was intercepted by bears, causing it to head south and reach its lowest position since Friday, below $27,000. BTC’s market capitalization has declined by over $5 billion in a day to $520 billion, and its dominance over altcoins has also taken a slight hit, down to 45.8%.
The decline in BTC’s market value has also affected the altcoin market, with most altcoins following BTC’s decline. Ethereum is down below $1,900, and Binance Coin is close to breaking below $300. Other altcoins such as Cardano, Dogecoin, Polygon, Polkadot, and Shiba Inu have all declined by similar percentages, while Litecoin is down almost 3% in a day.
However, some altcoins have posted insignificant gains, such as Ripple, Solana, Tron, and Avalanche. The Sandbox is the only notable gainer, up by more than 5% and trading at $0.6. The total crypto market cap has seen over $15 billion gone since yesterday’s peak and is down to $1.135 trillion.
BTC’s decline in market value can be attributed to bearish sentiment in the market, as investors become cautious due to the volatility of the crypto market. Additionally, concerns over regulatory crackdowns on cryptocurrencies have also contributed to the decline in market value. Despite this, some analysts remain optimistic about the long-term prospects of BTC and other cryptocurrencies. They believe that the current decline in market value is temporary and that the crypto market will eventually recover. They point to the growing adoption of cryptocurrencies by institutional investors and the increasing use cases for cryptocurrencies as evidence of the long-term potential of the market.
Coinbase, a leading US cryptocurrency platform, has been sued by the Securities and Exchange Commission (SEC) for allegedly allowing users to trade unregistered securities. The case was brought to a federal court hearing in New York on Tuesday. The SEC had been investigating Coinbase since July, and the company received a warning notice from the regulator about a potential enforcement action on 23 March. The regulator has accused Coinbase of breaking its rules by using a “staking” service, which allows customers to turn over their crypto tokens to facilitate transactions on a blockchain and receive a return. This violates SEC regulations. The case has highlighted the regulatory hurdles that the cryptocurrency industry faces, and the SEC has been ramping up its scrutiny of the sector. The lawsuit against Coinbase is one of the most significant regulatory actions against a cryptocurrency company to date. It is likely to have far-reaching consequences for the industry, which is still grappling with issues such as security, fraud, and money laundering. Shares of cryptocurrency and blockchain-related companies fell in premarket trading on Tuesday after the industry’s biggest exchanges Coinbase Global and Binance found themselves in the crosshairs of the U.S. securities regulator. The U.S. Securities and Exchange Commission sued Coinbase, accusing it of illegally operating without registration with the regulator. The SEC also filed a lawsuit against Binance and its CEO, Changpeng Zhao, on Monday. In a complaint filed in Manhattan federal court on Tuesday, the SEC said Coinbase has since at least 2019 operated as an unregistered broker by handling cryptocurrency transactions, evading the disclosure requirements meant to protect investors.
Key Metrics:
Total Crypto Market Cap : $1.14 T
Bitcoin Market Cap : $513.28 B
Ethereum Market Cap : $220.88 B
ETH/BTC Ratio : 0.07
Ethereum Gas Price : 19 gwei
DeFi TVL $74.49 : B
Fear and Greed Index : 50 (Neutral)
Federal Reserve Balance Sheet : $8.38 T
Article 2: Weekly Review of IC15.
On Monday, The global cryptocurrency market experienced a decline following the increase of the debt ceiling by the House, but investors are keeping an eye on the upcoming FOMC meeting. At 4 pm, the IC15 Index dropped by 392 points to reach 37,355, with only two cryptocurrencies, XRP and Avalanche, experiencing gains of 1.22% and 0.41% respectively. Meanwhile, Litecoin, Uniswap, BNB, and Chainlink recorded losses ranging from 2% to 4%. The Crypto and Digital Assets All Parliamentary Group (APPG) of UK lawmakers issued a report calling for the regulation of the crypto industry in the country and made 53 recommendations to that effect. US House Republicans have also proposed a bill that would allow crypto exchanges to register with the SEC and trade digital assets, stablecoins, and commodities in one place. In Russia, Rosbank is piloting a cross-border settlement solution using cryptocurrencies with private and corporate clients, while the Central Bank of Brazil has granted a payment license to the country’s largest crypto exchange under an electronic money issuer status.
The global cryptocurrency market experienced a significant drop on Tuesday following the US SEC’s action against Binance, the largest crypto exchange, and its CEO, Changpeng Zhao (CZ), for violating regulations. At 4 pm, the IC15 Index fell by 846 points to 36,509, with all coins in the index showing losses, particularly Solana, BNB, Dogecoin, and Polygon, which declined by 6–8%. The US Securities and Exchange Commission accused Binance and CZ of violating federal securities laws. Meanwhile, CFTC chair Rostin Behnam, Coinbase CLO Paul Grewal, and former regulators testified before Congress to discuss regulations for cryptocurrencies. JP Morgan partnered with six Indian banks to develop a blockchain-based platform for interbank dollar transactions in Gujarat International Finance Tec-City (GIFT) City, the newest financial hub in India. El Salvador also announced plans to invest $1 billion in the world’s largest Bitcoin mining farms to promote Bitcoin adoption.
The US House Committee on Financial Services will hold a meeting on June 13th to discuss the future and clarity of the digital asset ecosystem. The meeting will take place as US lawmakers urge the Treasury Department and the IRS to release the planned crypto tax rules for full compliance of the crypto industry. The US government has been working to regulate the crypto industry, with the IRS issuing guidance on how to report cryptocurrency taxes in 2019. However, there is still a lack of clarity on how cryptocurrencies should be taxed, and the industry is calling for more guidance to ensure compliance.
In other news, interbank messaging system SWIFT has partnered with Chainlink to provide financial institutions with a way to seamlessly connect their systems with any blockchain network. The collaboration will enable financial institutions to access a wider range of blockchain networks and services, including smart contracts, without the need for additional infrastructure. This move is part of SWIFT’s efforts to embrace blockchain technology and stay competitive in the rapidly changing financial industry. The IC15 Index was down by 171 points to 36,984 at 4 pm, with only one gainer, Tron, up 0.32%. Meanwhile, Solana fell by 6.35%, followed by BNB, Avalanche, and Cardano, which experienced declines ranging from 3–5%. In the UK, the Financial Conduct Authority (FCA) has introduced stricter rules for crypto advertisements. The FCA has classified cryptocurrencies as “restricted mass market investments”, and has mandated that all ads or promotions related to crypto must include “clear risks warnings”.
Despite the FCA’s move, UK lawmakers remain divided in their opinions about crypto. Some believe that cryptocurrencies should be treated as financial services, while others view them as a form of gambling. Overall, the cryptocurrency market has been volatile in recent months, with many investors uncertain about the future of digital assets. Some experts predict that the market will continue to experience ups and downs in the coming months, as governments and regulators around the world grapple with how to regulate this emerging asset class.
Article 3: Battle of Bulls and Bears
Cryptocurrencies experienced a sharp decline after the US Securities and Exchange Commission (SEC) accused Binance Holdings Ltd. of mishandling funds and deceiving regulators.The lawsuit filed by the SEC alleges that Binance failed to register its digital asset exchange as a securities exchange, which is a violation of federal securities laws. The SEC also claims that Binance did not provide proper disclosures to investors regarding its operations and the risks involved in trading cryptocurrencies.
Binance is one of the largest cryptocurrency exchanges in the world, with a daily trading volume of over $30 billion. The exchange has faced scrutiny from regulators in various countries, including the UK, Japan, and Germany, over its compliance with anti-money laundering and know-your-customer regulations.
The allegations made by the SEC have had a significant impact on the cryptocurrency market, with many tokens experiencing a sharp decline. Solana fell as much as 13%, while Cardano dropped 8%, Polygon slipped 6% and Filecoin slumped 10%. The overall market capitalization of cryptocurrencies also fell by over $100 billion in a matter of hours. Bitcoin accounts for almost 50% of the value of the $1.2 trillion crypto market, according to data from CoinMarketCap, while Binance Coin is the fourth-largest token, with a market value of around $43 billion. Binance handles around 50% of all crypto trading volume.
The drop in prices led to the liquidation of nearly $250 million worth of trading positions, mostly from traders who were betting on higher prices, in just four hours, according to tracker Coinglass. The sharp decline in prices has been attributed to a number of factors, including concerns over regulatory crackdowns and a shift in investor sentiment. One of the main drivers behind the drop in prices is thought to be regulatory concerns. Governments around the world are increasingly looking to regulate the crypto market, with a focus on cracking down on illegal activities such as money laundering and fraud. This has led to a number of high-profile crackdowns in recent months, including the recent arrest of John McAfee, who was charged with running a pump-and-dump scheme using cryptocurrencies.
Changpeng Zhao. In March, the US Commodity Futures Trading Commission accused Binance and Zhao of routinely violating American derivatives rules. Binance has faced scrutiny from regulators around the world, with some countries such as the UK, Japan, and Canada warning that the exchange is not authorized to operate in their jurisdictions. In response to the charges, Binance said it takes its legal obligations “very seriously” and is committed to complying with all applicable regulations and laws.
The exchange has also hired former US Senator Max Baucus and former US Treasury official Jim Messina to advice on its regulatory and government relations. Binance stated in a blog post that the SEC allegations shouldn’t be subject to an enforcement action and that it intended to “defend our platform vigorously. “The SEC going after Binance is no surprise, as they have already gone after a number of other centralized crypto exchanges and it was likely only a matter of time before they took action against the biggest player in the space,” said Jeffrey Blockinger, chief counsel at decentralized exchange Vertex Protocol.
In conclusion, the SEC’s lawsuit against Binance has had a significant impact on the cryptocurrency market, with many tokens experiencing a sharp decline. The lawsuit highlights the regulatory challenges faced by the industry, particularly with regards to the classification of digital assets. The outcome of the case could have far-reaching implications for the cryptocurrency industry, particularly for exchanges that offer tokens that are deemed to be securities.
Article 4: Weekly Spotlight
Cryptocurrency’s tumultuous ride continued this week, with the world’s largest digital currency experiencing significant price fluctuations. While BTC reached a three-week high at one point, it ultimately ended the week on a sour note, with its market capitalization plummeting by more than $5 billion in a single day. This latest bout of volatility has once again highlighted the challenges facing investors and traders in the cryptocurrency space. Despite its growing popularity and mainstream acceptance, bitcoin remains a highly speculative asset that is subject to sudden and unpredictable price swings.
JPMorgan has teamed up with six Indian banks to launch a blockchain-based platform that enables interbank settlement of US dollar transactions. The platform aims to expand the capacity of the existing settlement system, allowing banks to process instant transactions 24/7. Under the current interbank settlement system, transactions could take several hours, and settlement is not available on weekends or public holidays. The blockchain project aims to remove this barrier, according to JPMorgan’s senior country officer Kaustubh Kulkarni. The initiative also aims to help New Delhi position the Gujarat International Finance Tec-City (GIFT City) as an alternative trading centre to Singapore and Dubai.
JPMorgan will run a pilot project for the next few months to analyse the banks’ experience. The pilot project will be launched on Monday, using JPMorgan’s blockchain platform Onyx, after approval from the International Financial Services Center Authority. JPMorgan launched its Onyx blockchain-based platform in 2020 to improve the quality of wholesale payment transactions. The bank reportedly processed nearly $700bn in short-term loan transactions via Onyx as of April 2023.
The Commonwealth Bank of Australia (CBA) has announced that it will temporarily decline certain payments to cryptocurrency exchanges. The move comes as part of newly introduced measures to combat scams in the country. As part of the scam risk measures, the bank will also place a AUD 10,000 ($6,650) limit on payments made to exchanges in the coming months. The CBA will decline or hold crypto payments for 24 hours or more. The bank has said that customers who make payments to cryptocurrency exchanges are currently facing a significantly higher risk of potentially being scammed.
Consumer interest in cryptocurrencies has been increasing, and scammers globally are capitalizing on this trend and masquerading as legitimate investment opportunities or diverting funds into cryptocurrency exchanges. The introduction of 24-hour holds, declines, and limits on payments to crypto exchanges would help reduce both the number of scams and the amount of money lost by customers. The CBA will monitor the impact of the scam measures, and they will be subject to review. James Roberts, CBA General Manager of Group Fraud Management Services, said that the bank is aware of the increasing popularity of cryptocurrencies and that scammers are taking advantage of this trend. He added that the new measures will help reduce the number of scams and the amount of money lost by customers. Roberts said that customers who make payments to cryptocurrency exchanges are currently facing a significantly higher risk of potentially being scammed. The CBA is the largest bank in Australia, and its move to combat cryptocurrency scams is significant. The bank’s decision to limit payments to exchanges and hold crypto payments for 24 hours or more is likely to have a significant impact on the crypto industry in Australia. Cryptocurrency exchanges will need to adapt to the new measures to continue to operate in the country.
The move by the CBA is part of a wider trend of banks and financial institutions globally taking steps to combat cryptocurrency scams. The increasing popularity of cryptocurrencies has led to a rise in scams, and financial institutions are keen to protect their customers from potential losses. The CBA’s measures are in line with those taken by other banks globally.
In conclusion, the CBA’s decision to temporarily decline certain payments to cryptocurrency exchanges and place a limit on payments made to exchanges is a significant move. The bank’s measures are designed to combat cryptocurrency scams and protect its customers from potential losses. The impact of the new measures is likely to be felt across the crypto industry in Australia, and cryptocurrency exchanges will need to adapt to the new environment. The move by the CBA is part of a wider trend of banks and financial institutions globally taking steps to combat cryptocurrency scams.
