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Don’t Get Your Hopes Up: SVB's Demise Won't Bring Interest Rates Down
Crypto markets have experienced a surprising surge over the past few days, with bitcoin and ether rising by around 20% since late Sunday. Stock markets are down sharply Wednesday morning as banking’s woes expand to Europe, but the Dow Jones Industrial Average was actually up a little over 1% between Monday’s open and Tuesday’s close.
Those breezes of bullishness came despite a wave of bank failures within the last week that would seem to suggest a rocky road ahead for the economy. That reflects the current “bad news is good news” environment, in which anything that makes a Federal Reserve interest rate hike less likely – including negative news about the real economy – is bullish for asset markets.
This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
But markets may still be overlooking a specific provision of the Fed’s recent bank bailouts that could undermine that conventional wisdom. The Fed has created a program called the Bank Term Funding Program (BTFP) that is, on its face, about backstopping banks.
But the BTFP will also make it easier for the Fed to further raise interest rates.
The new and improved Fed ‘put’
At the most obvious level, of course, the crypto surge and early-week steadiness in equity markets were reasonable first-order reactions to the Fed’s decision to designate Silicon Valley Bank (SVB) and Signature Bank as “systemically important.” That emergency declaration suspended the normal rules of the Federal Deposit Insurance Corporation (FDIC) and allowed all deposits to be made entirely whole.
While West Coast venture capitalists have been rightly excoriated for their irresponsible panic-mongering about the consequences of a normal unwind for their precious SVB, it’s certainly true that some amount of short-term turmoil has been avoided. The rescue of Signature in particular seems like good news for crypto, as Signature banked some operators in the sector.
See also: Silicon Valley Bank and Signature Bank Reignite 'Too Big to Big to Fail' Debate
But positive sentiment may also have come, perversely, from the fact that the banks collapsed in the first place. The collapses could be taken as a sign that the Fed’s aggressive interest rate hikes over the past year are having their desired effect of slowing the economy. In turn, that might mean rate hikes would slow or even reverse, which would be good for everyone still in the game.
This is the essence of the “bad news is good news” logic of a market hanging on the Fed’s every twitch. But the specifics of the SVB and Signature insolvencies made the logic even more compelling. The banks were quite directly undermined by the Fed’s interest rate hikes, which undercut the value of existing Treasury bonds, leading to big losses when the banks had to sell those underwater bonds to cover withdrawals.
While SVB and Signature faced industry-specific withdrawal pressures, this erosion of the market value of pre-2022 bonds is an issue for a large number of banks across America. Continuing rate hikes would likely make it worse and could cause more bank failures. At the same time, as we found out Tuesday, inflation is still very much alive and well in America, now running at 6%.
So the Fed needs to keep raising rates to curb inflation, but such a hike could put more banks at risk. That looked like a bit of a trap for the Fed, and maybe a barrier to continued aggressive rate hikes. An appealing source of hopium, if nothing else.
Keep it rolling
But the Federal Reserve has printed itself a get-out-of-jail-free card on the underwater-Treasurys dilemma. The change could also constitute a large and somewhat stealthy federal subsidy of the entire U.S. banking industry.
As excavated in detail by Bloomberg’s Matt Levine, the new Bank Term Funding Program, announced alongside the SVB and Signature bailouts, will offer loans of up to one year against U.S. bonds issued before March 12, 2023. This includes bonds issued before interest rate hikes began in 2022, bonds whose market value has been driven down on the order of 10%-15% by the issuance of higher-yield bonds since then. That’s what forced both SVB and crypto bank Silvergate before it to take huge losses on bond sales when customer withdrawals accelerated.
The key feature of the BTFP is that it will offer loans against those underwater bonds at their face value, rather than at their current market value. The intention seems to be to offer banks a bridge between the shaky, old, low-yield bonds and safer ground.
The duration of the loans is notably just one year, which is not exactly generous, so there’s at least some restraint on display here by the Fed. But it still means the Fed could wind up shouldering a lot of risk for banks: three have just blown up in rapid succession. Some level of default on these BTFP loans seems very plausible.
That would leave the Fed holding Treasury bonds that might not regain their market value for years, or even decades. The Fed doesn’t face the same duration risk as private banks, so it can afford to hold, even all the way to the bonds’ 10-, 20- or 30-year maturities, when their face value can be redeemed from the U.S. Treasury Department.
It will take further analysis to figure out exactly what costs and risks this effectively transfers from private banks to the Fed, and ultimately to the U.S. dollar and American public. For instance, defaults on BTFP loans could amount to some kind of stealth money-printing. But the BTFP certainly smells like a sector-wide banking backstop, or even bailout, if nothing else, trading on faith in the Federal Reserve.
See also: Should I Keep My Money in Bitcoin or a Bank? | Opinion
The important takeaway for markets, meanwhile, is that interest rate hikes are still entirely on the table, since the new BTFP will prevent further harm to banks. That seems particularly worth the attention of crypto market participants. The factors driving the current BTC and ETH rallies are still a bit opaque, but another rate hike would add substantial downward pressure.
The next meeting of the Fed’s rate-setting Open Market Committee is scheduled for March 22-23, just over a week from now. The Fed knows it has headroom to raise rates, but if traders have missed that fact, the current crypto surge could turn out to be a dangerous bear trap.
#cryp101
Those breezes of bullishness came despite a wave of bank failures within the last week that would seem to suggest a rocky road ahead for the economy. That reflects the current “bad news is good news” environment, in which anything that makes a Federal Reserve interest rate hike less likely – including negative news about the real economy – is bullish for asset markets.
This article is excerpted from The Node, CoinDesk's daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.
But markets may still be overlooking a specific provision of the Fed’s recent bank bailouts that could undermine that conventional wisdom. The Fed has created a program called the Bank Term Funding Program (BTFP) that is, on its face, about backstopping banks.
But the BTFP will also make it easier for the Fed to further raise interest rates.
The new and improved Fed ‘put’
At the most obvious level, of course, the crypto surge and early-week steadiness in equity markets were reasonable first-order reactions to the Fed’s decision to designate Silicon Valley Bank (SVB) and Signature Bank as “systemically important.” That emergency declaration suspended the normal rules of the Federal Deposit Insurance Corporation (FDIC) and allowed all deposits to be made entirely whole.
While West Coast venture capitalists have been rightly excoriated for their irresponsible panic-mongering about the consequences of a normal unwind for their precious SVB, it’s certainly true that some amount of short-term turmoil has been avoided. The rescue of Signature in particular seems like good news for crypto, as Signature banked some operators in the sector.
See also: Silicon Valley Bank and Signature Bank Reignite 'Too Big to Big to Fail' Debate
But positive sentiment may also have come, perversely, from the fact that the banks collapsed in the first place. The collapses could be taken as a sign that the Fed’s aggressive interest rate hikes over the past year are having their desired effect of slowing the economy. In turn, that might mean rate hikes would slow or even reverse, which would be good for everyone still in the game.
This is the essence of the “bad news is good news” logic of a market hanging on the Fed’s every twitch. But the specifics of the SVB and Signature insolvencies made the logic even more compelling. The banks were quite directly undermined by the Fed’s interest rate hikes, which undercut the value of existing Treasury bonds, leading to big losses when the banks had to sell those underwater bonds to cover withdrawals.
While SVB and Signature faced industry-specific withdrawal pressures, this erosion of the market value of pre-2022 bonds is an issue for a large number of banks across America. Continuing rate hikes would likely make it worse and could cause more bank failures. At the same time, as we found out Tuesday, inflation is still very much alive and well in America, now running at 6%.
So the Fed needs to keep raising rates to curb inflation, but such a hike could put more banks at risk. That looked like a bit of a trap for the Fed, and maybe a barrier to continued aggressive rate hikes. An appealing source of hopium, if nothing else.
Keep it rolling
But the Federal Reserve has printed itself a get-out-of-jail-free card on the underwater-Treasurys dilemma. The change could also constitute a large and somewhat stealthy federal subsidy of the entire U.S. banking industry.
As excavated in detail by Bloomberg’s Matt Levine, the new Bank Term Funding Program, announced alongside the SVB and Signature bailouts, will offer loans of up to one year against U.S. bonds issued before March 12, 2023. This includes bonds issued before interest rate hikes began in 2022, bonds whose market value has been driven down on the order of 10%-15% by the issuance of higher-yield bonds since then. That’s what forced both SVB and crypto bank Silvergate before it to take huge losses on bond sales when customer withdrawals accelerated.
The key feature of the BTFP is that it will offer loans against those underwater bonds at their face value, rather than at their current market value. The intention seems to be to offer banks a bridge between the shaky, old, low-yield bonds and safer ground.
The duration of the loans is notably just one year, which is not exactly generous, so there’s at least some restraint on display here by the Fed. But it still means the Fed could wind up shouldering a lot of risk for banks: three have just blown up in rapid succession. Some level of default on these BTFP loans seems very plausible.
That would leave the Fed holding Treasury bonds that might not regain their market value for years, or even decades. The Fed doesn’t face the same duration risk as private banks, so it can afford to hold, even all the way to the bonds’ 10-, 20- or 30-year maturities, when their face value can be redeemed from the U.S. Treasury Department.
It will take further analysis to figure out exactly what costs and risks this effectively transfers from private banks to the Fed, and ultimately to the U.S. dollar and American public. For instance, defaults on BTFP loans could amount to some kind of stealth money-printing. But the BTFP certainly smells like a sector-wide banking backstop, or even bailout, if nothing else, trading on faith in the Federal Reserve.
See also: Should I Keep My Money in Bitcoin or a Bank? | Opinion
The important takeaway for markets, meanwhile, is that interest rate hikes are still entirely on the table, since the new BTFP will prevent further harm to banks. That seems particularly worth the attention of crypto market participants. The factors driving the current BTC and ETH rallies are still a bit opaque, but another rate hike would add substantial downward pressure.
The next meeting of the Fed’s rate-setting Open Market Committee is scheduled for March 22-23, just over a week from now. The Fed knows it has headroom to raise rates, but if traders have missed that fact, the current crypto surge could turn out to be a dangerous bear trap.
#cryp101
SEC to vote on cybersecurity, consumer privacy rule proposals
The Securities and Exchange Commission will vote on new rules and changes to bolster requirements for cybersecurity, privacy and tech infrastructure that officials said could encompass cryptocurrencies.
The five-member commission will vote Wednesday morning on issues relating to cybersecurity, the privacy of consumer financial information and technology infrastructure, such as cloud services.
The SEC will vote on whether to propose changes to require brokers-dealers, investment companies, registered investment advisers and transfer agents to tell people when they have been affected by data breaches. A current rule requires “covered firms” to let customers know about how they use their financial information, but there is no requirement now to let them know about breaches, SEC Chair Gary Gensler said.
“Critically, firms would need to help customers understand how to protect themselves from harm that might result from the breach,” Gensler said.
The SEC also will vote on whether to propose a new rule requiring broker-dealers, clearinghouses and other entities to have written policies to address their cybersecurity risks. It would require market entities, excluding smaller broker-dealers to disclose to the public a description summarizing cybersecurity risks that could “materially affect the entity” and also “significant cybersecurity incidents in the current or previous calendar year,” Gensler said.
“I believe such disclosure would help investors make informed decisions when deciding to which firms they might entrust their finances, data, and personal information,” Gensler said.
Market entities and capital markets rely on “complex and ever-evolving information systems,” Gensler said, adding that they are systems owned or used by the entity.
Those two proposals wouldn’t include a special carve-in or carve-out for crypto, according to an SEC official. To the extent that information systems interact with crypto, that would be covered by the cybersecurity changes, the official said.
The last proposal would broaden Reg SCI to include the largest broker dealers, swap data repositories and certain exempt clearinghouses while bulking up policies.
Regulation SCI was adopted in 2014 to strengthen the tech infrastructure of U.S. securities markets. The rule currently applies to national securities exchanges, among others.
An SEC official said if a national securities exchange is trading crypto securities, then the rule would apply.
The meeting starts at 10 a.m. EDT on Wednesday.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#Web3 #antiscam #cryp101
The five-member commission will vote Wednesday morning on issues relating to cybersecurity, the privacy of consumer financial information and technology infrastructure, such as cloud services.
The SEC will vote on whether to propose changes to require brokers-dealers, investment companies, registered investment advisers and transfer agents to tell people when they have been affected by data breaches. A current rule requires “covered firms” to let customers know about how they use their financial information, but there is no requirement now to let them know about breaches, SEC Chair Gary Gensler said.
“Critically, firms would need to help customers understand how to protect themselves from harm that might result from the breach,” Gensler said.
The SEC also will vote on whether to propose a new rule requiring broker-dealers, clearinghouses and other entities to have written policies to address their cybersecurity risks. It would require market entities, excluding smaller broker-dealers to disclose to the public a description summarizing cybersecurity risks that could “materially affect the entity” and also “significant cybersecurity incidents in the current or previous calendar year,” Gensler said.
“I believe such disclosure would help investors make informed decisions when deciding to which firms they might entrust their finances, data, and personal information,” Gensler said.
Market entities and capital markets rely on “complex and ever-evolving information systems,” Gensler said, adding that they are systems owned or used by the entity.
Those two proposals wouldn’t include a special carve-in or carve-out for crypto, according to an SEC official. To the extent that information systems interact with crypto, that would be covered by the cybersecurity changes, the official said.
The last proposal would broaden Reg SCI to include the largest broker dealers, swap data repositories and certain exempt clearinghouses while bulking up policies.
Regulation SCI was adopted in 2014 to strengthen the tech infrastructure of U.S. securities markets. The rule currently applies to national securities exchanges, among others.
An SEC official said if a national securities exchange is trading crypto securities, then the rule would apply.
The meeting starts at 10 a.m. EDT on Wednesday.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#Web3 #antiscam #cryp101
White House blasts digital assets in new report, sees little value in crypto
A new report from the White House blasts digital assets as failing to live up to their purported initial promise and raising risks for both consumers and the entire U.S. financial system.
The president’s annual economic report to Congress casts major doubt on the benefits of digital assets, and comes almost exactly a year after President Joe Biden ordered multiple federal agencies to research and issue reports on the matter.
Noting that digital assets have been touted as distribution tools for intellectual property and financial value, a better payment mechanism, an avenue for increased financial inclusion and a way of cutting out financial middlemen, the report argues that “so far, crypto assets have brought none of these benefits.”
“Indeed, crypto assets to date do not appear to offer investments with any fundamental value, nor do they act as an effective alternative to fiat money, improve financial inclusion, or make payments more efficient; instead, their innovation has been mostly about creating artificial scarcity in order to support crypto assets’ prices — and many of them have no fundamental value,” the report issued by the Biden administration says. “This raises the question of the role of regulation in protecting consumers, investors, and the rest of the financial system from panics, crashes, and fraud related to crypto assets.”
Shift in tone
The critiques in the report to Congress may signal a shift in approach from agnostic to openly adversarial towards digital assets.
The White House suggests that the Fed’s soon-to-be debuted faster payments network may eliminate much of the argument for digital assets, saying that “continued investments in the nation’s financial infrastructure have the potential to offer significant benefits to consumers and businesses.” The report casts doubt on — but does not rule out — the possibility of a U.S. central bank digital currency, saying that CBDCs could hurt credit availability and raise the risk of bank runs.
The annual economic report notes that some of the benefits of distributed ledger technology may be achieved in the future. It specifically cites the New York Federal Reserve’s pilot program for a wholesale central bank digital currency aimed at making payments between banks, including cross-border transactions, virtually instantaneous.
The White House document also argues that digital assets are neither an effective store of value, nor an effective means of payment.
“There is also tension in an asset being promoted as both money and an investment vehicle,” the report reads. “As money, the instrument should have a stable value, suggesting limited price volatility. But as a risky asset, it should experience price volatility, for which an investor would be compensated with a high expected return. Holding everything else constant, the riskier an asset is, the less likely it can effectively serve as money.”
That includes the prospect of stablecoins becoming a widely adopted payment tool, the report says.
“Stablecoin holders that lack redemption rights may be unable to find willing counterparties to exit their stablecoin positions,” reads the document, which echoes a Financial Stability Oversight Council report that singled out Tether and Circle’s USDC. The White House adds that stablecoins are “too risky” to serve a broad payments purpose yet.
But what about the underlying technology?
The White House appears to have a dim view of distributed ledger technology as a whole, citing arguments that previously existing technology could perform similar functions better, and poking holes in several specific use cases. It also notes the frequent noncompliance in securities and other financial regulatory law, large numbers of scams, and unusual concentration of activities by crypto trading platforms that would be prohibited at an existing exchange.
The White House also blasts proof-of-work mining, arguing that it "has few, if any, attendant benefits,” for the communities where miners set up while increasing local energy costs and heightening the risk of power crises.
DeFi doesn’t escape the White House’s criticism either.
“Though DeFi applications claim to help broaden access to credit by decreasing intermediation fees, they create serious risks to investors and cause at least two risks for the broader financial system: the use of significant leverage, and the performance of regulated functions without compliance with appropriate regulations.”
In the conclusion of its chapter on digital assets, the White House urges that regulators “must apply the lessons that civilization has learned, and thus rely on economic principles, in regulating crypto assets.”
The Council of Economic Advisers, one of the two main economic policy units within the White House, drafts the annual report, which the president signs off on. Biden in February nominated Jared Bernstein, a current member of that panel and former Obama and Clinton administration official, to become its chair.
Whether the criticisms presented in the report reflect a majority opinion in the administration remains to be seen. Lael Brainard, the former Federal Reserve vice chair and new head of the National Economic Council, the other major White House economic policy group, played an active role in the Fed’s CBDC research.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#cryp101 #dyor
The president’s annual economic report to Congress casts major doubt on the benefits of digital assets, and comes almost exactly a year after President Joe Biden ordered multiple federal agencies to research and issue reports on the matter.
Noting that digital assets have been touted as distribution tools for intellectual property and financial value, a better payment mechanism, an avenue for increased financial inclusion and a way of cutting out financial middlemen, the report argues that “so far, crypto assets have brought none of these benefits.”
“Indeed, crypto assets to date do not appear to offer investments with any fundamental value, nor do they act as an effective alternative to fiat money, improve financial inclusion, or make payments more efficient; instead, their innovation has been mostly about creating artificial scarcity in order to support crypto assets’ prices — and many of them have no fundamental value,” the report issued by the Biden administration says. “This raises the question of the role of regulation in protecting consumers, investors, and the rest of the financial system from panics, crashes, and fraud related to crypto assets.”
Shift in tone
The critiques in the report to Congress may signal a shift in approach from agnostic to openly adversarial towards digital assets.
The White House suggests that the Fed’s soon-to-be debuted faster payments network may eliminate much of the argument for digital assets, saying that “continued investments in the nation’s financial infrastructure have the potential to offer significant benefits to consumers and businesses.” The report casts doubt on — but does not rule out — the possibility of a U.S. central bank digital currency, saying that CBDCs could hurt credit availability and raise the risk of bank runs.
The annual economic report notes that some of the benefits of distributed ledger technology may be achieved in the future. It specifically cites the New York Federal Reserve’s pilot program for a wholesale central bank digital currency aimed at making payments between banks, including cross-border transactions, virtually instantaneous.
The White House document also argues that digital assets are neither an effective store of value, nor an effective means of payment.
“There is also tension in an asset being promoted as both money and an investment vehicle,” the report reads. “As money, the instrument should have a stable value, suggesting limited price volatility. But as a risky asset, it should experience price volatility, for which an investor would be compensated with a high expected return. Holding everything else constant, the riskier an asset is, the less likely it can effectively serve as money.”
That includes the prospect of stablecoins becoming a widely adopted payment tool, the report says.
“Stablecoin holders that lack redemption rights may be unable to find willing counterparties to exit their stablecoin positions,” reads the document, which echoes a Financial Stability Oversight Council report that singled out Tether and Circle’s USDC. The White House adds that stablecoins are “too risky” to serve a broad payments purpose yet.
But what about the underlying technology?
The White House appears to have a dim view of distributed ledger technology as a whole, citing arguments that previously existing technology could perform similar functions better, and poking holes in several specific use cases. It also notes the frequent noncompliance in securities and other financial regulatory law, large numbers of scams, and unusual concentration of activities by crypto trading platforms that would be prohibited at an existing exchange.
The White House also blasts proof-of-work mining, arguing that it "has few, if any, attendant benefits,” for the communities where miners set up while increasing local energy costs and heightening the risk of power crises.
DeFi doesn’t escape the White House’s criticism either.
“Though DeFi applications claim to help broaden access to credit by decreasing intermediation fees, they create serious risks to investors and cause at least two risks for the broader financial system: the use of significant leverage, and the performance of regulated functions without compliance with appropriate regulations.”
In the conclusion of its chapter on digital assets, the White House urges that regulators “must apply the lessons that civilization has learned, and thus rely on economic principles, in regulating crypto assets.”
The Council of Economic Advisers, one of the two main economic policy units within the White House, drafts the annual report, which the president signs off on. Biden in February nominated Jared Bernstein, a current member of that panel and former Obama and Clinton administration official, to become its chair.
Whether the criticisms presented in the report reflect a majority opinion in the administration remains to be seen. Lael Brainard, the former Federal Reserve vice chair and new head of the National Economic Council, the other major White House economic policy group, played an active role in the Fed’s CBDC research.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#cryp101 #dyor
Banking Crisis Won’t Kill Crypto-Banking Despite Short-Term Pain
The crypto ecosystem was built on the belief that no one entity, meaning a bank, should be in charge of one individual’s finances, but until that becomes a reality, traditional banking will likely have to serve as a bridge between centralized finance and decentralized finance.
Thus, the shutdown of Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank will certainly cause headaches for the industry in the short-term as many crypto companies search for new banking partners, uncertain if larger entities will even want to touch crypto companies anytime soon.
“For now, it's not clear what new financial institutions will partner with these crypto companies in the wake of Silvergate, SVB and now Signature,” said Ilya Volkov, CEO of and co-founder of YouHodler, a Swiss-based international fintech platform providing a variety of Web3 crypto and fiat service.
“The industry is currently running out of options and that needs to be addressed soon to prevent further problems,” Volkov added, noting that it will cause some fear-based reactions from the investors.
In the long-run, however, this contagion shouldn’t hurt the crypto industry as there will likely be other smaller banks that will likely to bridge the gap. “Crypto liquidity is likely to take a hit in the short-term but this is an opportunity for new innovative challenger banks to step up and take the place of SVB, Silvergate and Signature,” said Andrei Grachev, managing partner at digital asset market maker DWF Labs.
Read more: The Banking Crisis Is Not Crypto’s Fault
Circle and USDC are surviving (so far)
Perhaps Circle’s ability to quickly secure an automated settlement partner serves as one such prime example. The stablecoin issuer found itself in the middle of the chaos as its USDC de-pegged from theoretical $1 value, after revealing that about $3.3 billion of USDC’s cash reserves were stuck in SVB and that it could no longer mint or redeem USDC through Signature’s Signet product.
However, by late Sunday, Circle was able to find itself a new automated settlement banking partner with Cross River Bank, keeping it open for business on Monday.
“It would be shortsighted to assume that the events of the last few days will lead to a total divorcing of crypto and traditional banking,” said Joshua Frank, co-founder and CEO of provider of information services for digital assets, The Tie. He expects a rapid emergence of alternative banking partners and noted that there are still a few banking options available to U.S. crypto companies such as Cross River Bank, BankProv etc.
Other potential banks that could come to help the crypto industry include Western Alliance Bank, according to Boris Revsin, managing partner at Tribe Capital. “There are other innovative banks, like Western Alliance Bank, that will continue to offer banking rails like what Silvergate and Signature offered and many more that will be looking at this technology as an opportunity for growth,” said Revsin.
Perhaps a potential solution would be for the crypto companies to look outside of the U.S. for potential banking partnerships and use strategies involving stablecoins,
“Crypto companies need to look globally for offerings, and they should consider a diversified stablecoin strategy for payroll, contractors and vendors to become more antifragile for the foreseeable future,” Revsin noted.
On-chain banking and other adaptations
Another novel idea, that only crypto can help provide a solution to, is on-chain banking, according to Brent Xu, CEO and founder of cross-chain decentralized finance (DeFi) protocol Umee.
“Future banking should become on-chain. That means that banks are going to start to more resemble blockchains as opposed to purely centralized entities,” Xu said. Such technology will allow the banks to have “on-chain metrics related to their exposure to AFS (available for sale) securities like treasuries and to allow better on-chain metrics for their cash management activities, he added.
Regardless of the final outcome, every bear cycle in crypto has experienced such conundrums, and came out stronger, Xu said. “Having been in this industry for as long as I have, this news doesn’t surprise me to the point where we have become numb to the effects. It is to be expected,” he said, adding that this won’t mean the end of crypto banking; rather, institutions that don’t adapt to new technology will be left behind.
“The crypto industry has gone through banking shifts like this every cycle. We won’t see a shortfall of banks. More so, we will see a shortfall of legacy banks that support this tech,” Xu added.
Read more: Silicon Valley Bank and Signature Bank Reignite ‘Moral Hazard’ Dilemma Bitcoin Was Designed to End
Brandy Betz and Aoyon Ashraf assisted in reporting of the story
#bicasso #cryp101
Thus, the shutdown of Silvergate Bank, Silicon Valley Bank (SVB), and Signature Bank will certainly cause headaches for the industry in the short-term as many crypto companies search for new banking partners, uncertain if larger entities will even want to touch crypto companies anytime soon.
“For now, it's not clear what new financial institutions will partner with these crypto companies in the wake of Silvergate, SVB and now Signature,” said Ilya Volkov, CEO of and co-founder of YouHodler, a Swiss-based international fintech platform providing a variety of Web3 crypto and fiat service.
“The industry is currently running out of options and that needs to be addressed soon to prevent further problems,” Volkov added, noting that it will cause some fear-based reactions from the investors.
In the long-run, however, this contagion shouldn’t hurt the crypto industry as there will likely be other smaller banks that will likely to bridge the gap. “Crypto liquidity is likely to take a hit in the short-term but this is an opportunity for new innovative challenger banks to step up and take the place of SVB, Silvergate and Signature,” said Andrei Grachev, managing partner at digital asset market maker DWF Labs.
Read more: The Banking Crisis Is Not Crypto’s Fault
Circle and USDC are surviving (so far)
Perhaps Circle’s ability to quickly secure an automated settlement partner serves as one such prime example. The stablecoin issuer found itself in the middle of the chaos as its USDC de-pegged from theoretical $1 value, after revealing that about $3.3 billion of USDC’s cash reserves were stuck in SVB and that it could no longer mint or redeem USDC through Signature’s Signet product.
However, by late Sunday, Circle was able to find itself a new automated settlement banking partner with Cross River Bank, keeping it open for business on Monday.
“It would be shortsighted to assume that the events of the last few days will lead to a total divorcing of crypto and traditional banking,” said Joshua Frank, co-founder and CEO of provider of information services for digital assets, The Tie. He expects a rapid emergence of alternative banking partners and noted that there are still a few banking options available to U.S. crypto companies such as Cross River Bank, BankProv etc.
Other potential banks that could come to help the crypto industry include Western Alliance Bank, according to Boris Revsin, managing partner at Tribe Capital. “There are other innovative banks, like Western Alliance Bank, that will continue to offer banking rails like what Silvergate and Signature offered and many more that will be looking at this technology as an opportunity for growth,” said Revsin.
Perhaps a potential solution would be for the crypto companies to look outside of the U.S. for potential banking partnerships and use strategies involving stablecoins,
“Crypto companies need to look globally for offerings, and they should consider a diversified stablecoin strategy for payroll, contractors and vendors to become more antifragile for the foreseeable future,” Revsin noted.
On-chain banking and other adaptations
Another novel idea, that only crypto can help provide a solution to, is on-chain banking, according to Brent Xu, CEO and founder of cross-chain decentralized finance (DeFi) protocol Umee.
“Future banking should become on-chain. That means that banks are going to start to more resemble blockchains as opposed to purely centralized entities,” Xu said. Such technology will allow the banks to have “on-chain metrics related to their exposure to AFS (available for sale) securities like treasuries and to allow better on-chain metrics for their cash management activities, he added.
Regardless of the final outcome, every bear cycle in crypto has experienced such conundrums, and came out stronger, Xu said. “Having been in this industry for as long as I have, this news doesn’t surprise me to the point where we have become numb to the effects. It is to be expected,” he said, adding that this won’t mean the end of crypto banking; rather, institutions that don’t adapt to new technology will be left behind.
“The crypto industry has gone through banking shifts like this every cycle. We won’t see a shortfall of banks. More so, we will see a shortfall of legacy banks that support this tech,” Xu added.
Read more: Silicon Valley Bank and Signature Bank Reignite ‘Moral Hazard’ Dilemma Bitcoin Was Designed to End
Brandy Betz and Aoyon Ashraf assisted in reporting of the story
#bicasso #cryp101
FTX sues for control of Bahamas assets, calls FTX Digital Markets 'a front’ to defraud customers
Bankrupt crypto exchange FTX is suing the liquidators of its Bahamas entity, saying FTX Digital Markets wrongly claims to own the exchange and was actually “a front to facilitate a conspiracy” to defraud customers.
FTX's new management wants a declaratory judgment from the U.S. Bankruptcy Court for the District of Delaware that says FTX Digital Markets “has no ownership” in any of the FTX debtors’ property.
The FTX debtors have often been at odds with the team of lawyers, known as joint provisional liquidators under Bahamian law, tasked with winding down its Bahamian entity since the crypto behemoth filed for bankruptcy protection in November. The Bahamian entity still controls at least hundreds of millions of dollars-worth of assets.
“If the FTX debtors succeed in this adversary proceeding, there will be no property of FTX DM for local proceedings in The Bahamas to resolve,” the filing says.
A lawyer for the joint provisional liquidators did not immediately respond to a request for comment.
'Corporate shell'
The plaintiffs in the adversary proceeding include FTX.US, the exchange’s sibling trading firm Alameda Research and West Realm Shires, Inc., a holding company formed by former FTX head Sam Bankman-Fried. They name FTX Digital Markets and its joint provisional liquidators Brian Simms, Kevin Cambridge and Peter Greaves, as defendants.
According to the lawsuit, FTX Digital Markets claims to be “the constructive owner of FTX.com’s property” and says the ownership dispute should be settled in The Bahamas. The FTX debtors handling the bankruptcy in the United States disagree, saying that the liquidators inherited a “corporate shell” that they are using to continue a jurisdictional bankruptcy battle. The “baseless” ownership claims will harm FTX customers and creditors, lawyers say.
“The JPLs’ claim to ownership of FTX.com’s property is based largely on constructive, equitable, and other non-documentary arguments that depend upon the false premise that FTX DM was the center of the FTX Group. Nothing could be further from the truth,” the filing says. “The peculiar history of FTX DM is a classic example of abuse of the corporate form. It was created as a front to facilitate a conspiracy to defraud the debtors’ customers—a conspiracy to which three individuals have already pled guilty.”
Former Alameda Research CEO Caroline Ellison and FTX co-founders Gary Wang and Nishad Singh have all pleaded guilty to criminal charges related to their time at the bankrupt company. Former CEO Sam Bankman-Fried pleaded not guilty to a litany of criminal charges and awaits an October trial.
FTX Digital Markets was an “offshore haven for a continuous fraudulent scheme, as well as a conduit through which the fruits of that fraudulent scheme could be channeled to insiders and third parties outside of the reach of any independent and effective regulatory authority,” according to lawyers for the FTX debtors.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#Web3 #cryp101
FTX's new management wants a declaratory judgment from the U.S. Bankruptcy Court for the District of Delaware that says FTX Digital Markets “has no ownership” in any of the FTX debtors’ property.
The FTX debtors have often been at odds with the team of lawyers, known as joint provisional liquidators under Bahamian law, tasked with winding down its Bahamian entity since the crypto behemoth filed for bankruptcy protection in November. The Bahamian entity still controls at least hundreds of millions of dollars-worth of assets.
“If the FTX debtors succeed in this adversary proceeding, there will be no property of FTX DM for local proceedings in The Bahamas to resolve,” the filing says.
A lawyer for the joint provisional liquidators did not immediately respond to a request for comment.
'Corporate shell'
The plaintiffs in the adversary proceeding include FTX.US, the exchange’s sibling trading firm Alameda Research and West Realm Shires, Inc., a holding company formed by former FTX head Sam Bankman-Fried. They name FTX Digital Markets and its joint provisional liquidators Brian Simms, Kevin Cambridge and Peter Greaves, as defendants.
According to the lawsuit, FTX Digital Markets claims to be “the constructive owner of FTX.com’s property” and says the ownership dispute should be settled in The Bahamas. The FTX debtors handling the bankruptcy in the United States disagree, saying that the liquidators inherited a “corporate shell” that they are using to continue a jurisdictional bankruptcy battle. The “baseless” ownership claims will harm FTX customers and creditors, lawyers say.
“The JPLs’ claim to ownership of FTX.com’s property is based largely on constructive, equitable, and other non-documentary arguments that depend upon the false premise that FTX DM was the center of the FTX Group. Nothing could be further from the truth,” the filing says. “The peculiar history of FTX DM is a classic example of abuse of the corporate form. It was created as a front to facilitate a conspiracy to defraud the debtors’ customers—a conspiracy to which three individuals have already pled guilty.”
Former Alameda Research CEO Caroline Ellison and FTX co-founders Gary Wang and Nishad Singh have all pleaded guilty to criminal charges related to their time at the bankrupt company. Former CEO Sam Bankman-Fried pleaded not guilty to a litany of criminal charges and awaits an October trial.
FTX Digital Markets was an “offshore haven for a continuous fraudulent scheme, as well as a conduit through which the fruits of that fraudulent scheme could be channeled to insiders and third parties outside of the reach of any independent and effective regulatory authority,” according to lawyers for the FTX debtors.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#Web3 #cryp101
Yat Siu Says 'Pro-Capitalist’ Asian Countries Are More Ready to Embrace Web3
LOS ANGELES — Yat Siu, co-founder and chairman of Web3 game developer and investment firm Animoca Brands, said Tuesday that Asian companies are more willing to adopt and invest in Web3 technologies than their North American counterparts.
During a fireside chat at the Outer Edge conference in Los Angeles Siu said that among major international game publishers and their 400 portfolio companies, those located in Japan, Korea, Hong Kong and across Southeast Asia are far more active in discussing, building and embracing technologies such as non-fungible tokens (NFT) and the metaverse than those located in the U.S.
Siu explained that due to the harsh crypto winter that hit many U.S.-based companies last year, its impact on NFTs has steered many U.S. firms away from investing in Web3. However, enthusiasm to invest in blockchain is still alive in Asia.
“The adoption, readiness and willingness actually sits in Asia. Like, you go and want to sell something to people in Japan or Korea or Southeast Asia, you'll find a much more ready market versus over here.”
He also claimed that intellectual property (IP) development is more advanced across Asia and the “pro-capitalist” sentiments among investors in the region have prompted their investments in Web3 technologies.
"A large swath of people in the U.S. kind of start to veer somewhat outside of capitalism. Capitalism doesn't work for them," he said. "Whereas in Asia, a lot of people are very pro-capitalist because of their own experiences with what capitalism has brought to them in their lifetime."
"We joke about this, but it's kind of true – the ‘American Dream’ is much more alive and well in Asia than it is in the U.S. for all the things [Web3] that we just discussed," he added.
Recently, countries in Asia have been making moves to embrace Web3 at a national level. In October, Japan’s Prime Minister Fumio Kishida said in a policy speech that the country would be investing in NFTs and the metaverse in its digital transformation efforts. In November, Japan’s Digital Ministry said it would create a decentralized autonomous organization to further explore its use of Web3 technologies.
In January, South Korean government said it would create a metaverse replica of its capital city, Seoul, to help the country improve its public services in a virtual setting.
Read more: South Korea’s Crypto Firms Will Have to Self-Regulate Under New Guidance
#antiscam #bicasso #cryp101
During a fireside chat at the Outer Edge conference in Los Angeles Siu said that among major international game publishers and their 400 portfolio companies, those located in Japan, Korea, Hong Kong and across Southeast Asia are far more active in discussing, building and embracing technologies such as non-fungible tokens (NFT) and the metaverse than those located in the U.S.
Siu explained that due to the harsh crypto winter that hit many U.S.-based companies last year, its impact on NFTs has steered many U.S. firms away from investing in Web3. However, enthusiasm to invest in blockchain is still alive in Asia.
“The adoption, readiness and willingness actually sits in Asia. Like, you go and want to sell something to people in Japan or Korea or Southeast Asia, you'll find a much more ready market versus over here.”
He also claimed that intellectual property (IP) development is more advanced across Asia and the “pro-capitalist” sentiments among investors in the region have prompted their investments in Web3 technologies.
"A large swath of people in the U.S. kind of start to veer somewhat outside of capitalism. Capitalism doesn't work for them," he said. "Whereas in Asia, a lot of people are very pro-capitalist because of their own experiences with what capitalism has brought to them in their lifetime."
"We joke about this, but it's kind of true – the ‘American Dream’ is much more alive and well in Asia than it is in the U.S. for all the things [Web3] that we just discussed," he added.
Recently, countries in Asia have been making moves to embrace Web3 at a national level. In October, Japan’s Prime Minister Fumio Kishida said in a policy speech that the country would be investing in NFTs and the metaverse in its digital transformation efforts. In November, Japan’s Digital Ministry said it would create a decentralized autonomous organization to further explore its use of Web3 technologies.
In January, South Korean government said it would create a metaverse replica of its capital city, Seoul, to help the country improve its public services in a virtual setting.
Read more: South Korea’s Crypto Firms Will Have to Self-Regulate Under New Guidance
#antiscam #bicasso #cryp101
Crypto Exchange BitMEX's Acting CEO: We Have Gone Through the 'Valley of Death’
Crypto exchange BitMEX was built to weather the current market turmoil caused, in part, by the failure of three U.S. crypto-friendly banks within a week, said Stephan Lutz, acting CEO and group chief financial officer.
"The current market situation is actually what BitMEX originally was built for by our founders," he told CoinDesk TV's "First Mover" on Tuesday.
"Since the end of last year, we think we have been through the valley of death," he added. "We see positive signs in the market and we are able to reap those benefits. We are very grateful that the ecosystem and the community trusts us as a real crypto exchange that is focused on crypto."
Lutz said that if a crypto exchange is focused on derivatives, is safe, segregates client assets and has limited to no connection to the fiat world, it is likely thriving. BitMEX, which outlines its 2023 predictions in a new report, is seeing a rise in its volumes and market share.
Three scenarios
In the report the exchange details three scenarios it sees playing out this year for the crypto industry. In the first, risk appetite for quality crypto assets recovers as the pace of Federal Reserve interest rate hikes slows.
In that scenario, Lutz said, “we go back to quantitative easing [and] more money supply which drives inflation” and, in turn, “drives crypto prices to the extent that you use your crypto, bitcoin in particular, as an inflation hedge.” He said that’s what has occurred over the past two weeks.
In the second scenario investors remain cautious. According to Lutz, that means people are waiting “before going back significantly into crypto.” If they do invest, the report advises looking for projects with legitimate use cases.
The third scenario depends on whether regulators are embracing crypto and the “likelihood that some jurisdictions will figure out how they deal with crypto regulation and therefore provide certainty for investors [on] how to deal with it,” Lutz said. That would then lead to increased transparency and trust in crypto players, he said.
The proposed nakaDollar
Earlier this month, BitMEX co-founder Arthur Hayes proposed a stablecoin called the nakaDollar (NUSD).
Hayes said the bitcoin and bitcoin derivatives-backed token would be considered extremely liquid and appealing to traders. It would rely on member crypto firms to maintain a peg to the U.S. dollar.
Lutz said the token would be a “stable unit of account that is bound to the U.S. dollar in terms of exposure, but without the risks of the current stablecoin system.”
Hayes’ nakaDollar idea is a “natural one, if you think about it,” Lutz said.
"We believe if it's followed – and there will be people who will take up the idea because it needs to be a decentralized idea in a way to make it to make it credible – that [nakaDollar] will really be or can be a game changer in the whole crypto industry."
Read more: Arthur Hayes Proposes Bitcoin-Backed Stablecoin Called NakaDollar
#cryp101 #bicasso
"The current market situation is actually what BitMEX originally was built for by our founders," he told CoinDesk TV's "First Mover" on Tuesday.
"Since the end of last year, we think we have been through the valley of death," he added. "We see positive signs in the market and we are able to reap those benefits. We are very grateful that the ecosystem and the community trusts us as a real crypto exchange that is focused on crypto."
Lutz said that if a crypto exchange is focused on derivatives, is safe, segregates client assets and has limited to no connection to the fiat world, it is likely thriving. BitMEX, which outlines its 2023 predictions in a new report, is seeing a rise in its volumes and market share.
Three scenarios
In the report the exchange details three scenarios it sees playing out this year for the crypto industry. In the first, risk appetite for quality crypto assets recovers as the pace of Federal Reserve interest rate hikes slows.
In that scenario, Lutz said, “we go back to quantitative easing [and] more money supply which drives inflation” and, in turn, “drives crypto prices to the extent that you use your crypto, bitcoin in particular, as an inflation hedge.” He said that’s what has occurred over the past two weeks.
In the second scenario investors remain cautious. According to Lutz, that means people are waiting “before going back significantly into crypto.” If they do invest, the report advises looking for projects with legitimate use cases.
The third scenario depends on whether regulators are embracing crypto and the “likelihood that some jurisdictions will figure out how they deal with crypto regulation and therefore provide certainty for investors [on] how to deal with it,” Lutz said. That would then lead to increased transparency and trust in crypto players, he said.
The proposed nakaDollar
Earlier this month, BitMEX co-founder Arthur Hayes proposed a stablecoin called the nakaDollar (NUSD).
Hayes said the bitcoin and bitcoin derivatives-backed token would be considered extremely liquid and appealing to traders. It would rely on member crypto firms to maintain a peg to the U.S. dollar.
Lutz said the token would be a “stable unit of account that is bound to the U.S. dollar in terms of exposure, but without the risks of the current stablecoin system.”
Hayes’ nakaDollar idea is a “natural one, if you think about it,” Lutz said.
"We believe if it's followed – and there will be people who will take up the idea because it needs to be a decentralized idea in a way to make it to make it credible – that [nakaDollar] will really be or can be a game changer in the whole crypto industry."
Read more: Arthur Hayes Proposes Bitcoin-Backed Stablecoin Called NakaDollar
#cryp101 #bicasso
Animoca Brands Co-Founder: Royalties Make It Possible for NFT Projects to Flourish
Royalties have helped fuel the growth of the non-fungible token (NFT) economy, said Yat Siu, co-founder of computer gaming firm Animoca Brands.
“All of these innovations happen because of the fact that royalties were possible,” Siu told CoinDesk TV’s “First Mover” on Friday.
The Hong Kong-based firm has taken a firm stance in support of digital creators via its NFT licenses, which Siu said were issued as a way for creators to have a “legal way of protecting their royalty rights.” Siu recently emphasized the company’s position during the annual NFT Paris conference, underscoring the importance of creator rights and royalties within Web3.
Despite a bear market sweeping much of 2022, the NFT industry amassed more than $24 billion worth of sales.
“That means that billions of dollars went to creators but, more importantly, an even larger number went to owners of the assets of these entities that fueled an industry that made it possible to create companies like Blur, OpenSea or Magic Eden,” he said.
Siu said that without royalties there wouldn't be enough money in the ecosystem to support project innovations.
“If you remove that, then you actually end up sending the industry, from our perspective, backwards,” he said.
Saudi Arabia deal
Now, the firm is looking to build the next OpenSea in the MENA (Middle East-North Africa) region.
The firm recently invested in Nuqtah, Saudi Arabia's first licensed non-fungible token (NFT) marketplace, he said.
“We view it [the investment] a little bit like when we made our investment in OpenSea back in 2019,” Siu told CDTV. ”One of the reasons we made that investment was because we wanted to sort of help build the rails of that NFT economy, which back then was nonexistent, and today has become fairly meaningful.”
According to Siu, major market players such as Japan have regional NFT participants. The MENA region, however, has yet to establish one significant player, he said.
Animoca Brands wants to kick-start NFT infrastructure development in Saudi Arabia, which Siu said the firm is doing by backing Nuqtah.
Siu did not disclose the amount of the private investment but said that no government money was involved.
Read more: How Web3 Animation Project 'The Gimmicks' Survives a Crypto Winter / CULTURE Week
#Web3 #cryp101
“All of these innovations happen because of the fact that royalties were possible,” Siu told CoinDesk TV’s “First Mover” on Friday.
The Hong Kong-based firm has taken a firm stance in support of digital creators via its NFT licenses, which Siu said were issued as a way for creators to have a “legal way of protecting their royalty rights.” Siu recently emphasized the company’s position during the annual NFT Paris conference, underscoring the importance of creator rights and royalties within Web3.
Despite a bear market sweeping much of 2022, the NFT industry amassed more than $24 billion worth of sales.
“That means that billions of dollars went to creators but, more importantly, an even larger number went to owners of the assets of these entities that fueled an industry that made it possible to create companies like Blur, OpenSea or Magic Eden,” he said.
Siu said that without royalties there wouldn't be enough money in the ecosystem to support project innovations.
“If you remove that, then you actually end up sending the industry, from our perspective, backwards,” he said.
Saudi Arabia deal
Now, the firm is looking to build the next OpenSea in the MENA (Middle East-North Africa) region.
The firm recently invested in Nuqtah, Saudi Arabia's first licensed non-fungible token (NFT) marketplace, he said.
“We view it [the investment] a little bit like when we made our investment in OpenSea back in 2019,” Siu told CDTV. ”One of the reasons we made that investment was because we wanted to sort of help build the rails of that NFT economy, which back then was nonexistent, and today has become fairly meaningful.”
According to Siu, major market players such as Japan have regional NFT participants. The MENA region, however, has yet to establish one significant player, he said.
Animoca Brands wants to kick-start NFT infrastructure development in Saudi Arabia, which Siu said the firm is doing by backing Nuqtah.
Siu did not disclose the amount of the private investment but said that no government money was involved.
Read more: How Web3 Animation Project 'The Gimmicks' Survives a Crypto Winter / CULTURE Week
#Web3 #cryp101
Bitcoin Miner Marathon Says It Still Has Access to $142M at Signature Bank
Bitcoin mining firm Marathon Digital Holdings (MARA) said it still has access to $142 million in cash deposits at Signature Bank, which was shut down by New York regulators on Sunday.
Signature was the third bank with ties to the crypto industry to collapse in one week, after Silvergate Bank's voluntary liquidation and Silicon Valley Bank's shutdown by U.S. regulators.
Marathon "has access to its funds for treasury management purposes and is paying all invoices in the normal course of business," it said in a Monday statement. It also holds more than 11,000 bitcoins, giving it "financial optionality that extends beyond the traditional banking system."
The miner had been winding down its debt obligations to Silvergate since January, and terminated a credit facility last week, reducing its debt by $50 million.
MARA, one of the largest bitcoin miners in the world, was up aabout 9% on early morning trading on the Nasdaq, as bitcoin edged closer to $23,000.
#Web3 #cryp101
Signature was the third bank with ties to the crypto industry to collapse in one week, after Silvergate Bank's voluntary liquidation and Silicon Valley Bank's shutdown by U.S. regulators.
Marathon "has access to its funds for treasury management purposes and is paying all invoices in the normal course of business," it said in a Monday statement. It also holds more than 11,000 bitcoins, giving it "financial optionality that extends beyond the traditional banking system."
The miner had been winding down its debt obligations to Silvergate since January, and terminated a credit facility last week, reducing its debt by $50 million.
MARA, one of the largest bitcoin miners in the world, was up aabout 9% on early morning trading on the Nasdaq, as bitcoin edged closer to $23,000.
#Web3 #cryp101
USDC Stablecoin Regains Dollar Peg After Silicon Valley Bank-Induced Chaos
The USDC stablecoin regained its peg to the U.S. dollar, according to CoinGecko, after falling below the $1 value it was supposed to hold as the federal banking and finance regulators said on Sunday that all depositors in Silicon Valley Bank will be made whole and have access to their funds on Monday.
The Circle-issued stablecoin fell in value late Friday as holders rushed to redeem their tokens upon learning that Circle kept some portion of the funds backing USDC in Silicon Valley Bank, which state and federal regulators took over on Friday morning.
Circle later acknowledged that about $3.3 billion – or about 8% of the overall funds backing USDC – were held in Silicon Valley Bank. The Federal Deposit Insurance Corporation announced on Friday that insured SVB depositors would regain access to their funds by Monday, but said uninsured depositors would only get an advance sometime this upcoming week. As the FDIC sells off SVB’s assets, these uninsured depositors would receive a dividend. More than 90% of the funds held in SVB were uninsured.
Read more: Scrutiny Falls on $43B USDC Stablecoin’s Cash Reserves at Failed Silicon Valley Bank
USDC fell to as low as $0.86 at some points, a staggering collapse for the world’s second-largest stablecoin, but began recovering somewhat by midday Saturday.
USDC's price action on March 11, 2023 at 11:00 p.m. ET (04:00 UTC) (CoinDesk)
Circle assured investors it would “cover any shortfall” in USDC reserves using corporate funds should it not recover the full $3.3 billion, which helped it rebound to $0.97.
The announcement came after a number of major crypto exchanges suspended or paused USDC-related transactions. Coinbase (COIN), the largest exchange in the U.S., paused conversions from USDC to U.S. dollars late Friday. On the other hand, the world’s largest exchange, Binance, announced Saturday it would resume trading certain USDC trading pairs it had previously suspended.
Circle said Friday it was waiting for further information from the FDIC on what it would actually do about SVB’s deposits. It’s a key question that lawmakers and regulators are grappling with.
U.S. Rep. Maxine Waters, the ranking member on the House Financial Services Committee, met with officials from the FDIC, Federal Reserve and U.S. Treasury Department on Friday to discuss the situation.
Read more: Circle Scrambles to Right USDC After Signature Bank Failure
#cryp101 #antiscam #dyor
The Circle-issued stablecoin fell in value late Friday as holders rushed to redeem their tokens upon learning that Circle kept some portion of the funds backing USDC in Silicon Valley Bank, which state and federal regulators took over on Friday morning.
Circle later acknowledged that about $3.3 billion – or about 8% of the overall funds backing USDC – were held in Silicon Valley Bank. The Federal Deposit Insurance Corporation announced on Friday that insured SVB depositors would regain access to their funds by Monday, but said uninsured depositors would only get an advance sometime this upcoming week. As the FDIC sells off SVB’s assets, these uninsured depositors would receive a dividend. More than 90% of the funds held in SVB were uninsured.
Read more: Scrutiny Falls on $43B USDC Stablecoin’s Cash Reserves at Failed Silicon Valley Bank
USDC fell to as low as $0.86 at some points, a staggering collapse for the world’s second-largest stablecoin, but began recovering somewhat by midday Saturday.
USDC's price action on March 11, 2023 at 11:00 p.m. ET (04:00 UTC) (CoinDesk)
Circle assured investors it would “cover any shortfall” in USDC reserves using corporate funds should it not recover the full $3.3 billion, which helped it rebound to $0.97.
The announcement came after a number of major crypto exchanges suspended or paused USDC-related transactions. Coinbase (COIN), the largest exchange in the U.S., paused conversions from USDC to U.S. dollars late Friday. On the other hand, the world’s largest exchange, Binance, announced Saturday it would resume trading certain USDC trading pairs it had previously suspended.
Circle said Friday it was waiting for further information from the FDIC on what it would actually do about SVB’s deposits. It’s a key question that lawmakers and regulators are grappling with.
U.S. Rep. Maxine Waters, the ranking member on the House Financial Services Committee, met with officials from the FDIC, Federal Reserve and U.S. Treasury Department on Friday to discuss the situation.
Read more: Circle Scrambles to Right USDC After Signature Bank Failure
#cryp101 #antiscam #dyor
Credit Suisse’s Buyout Shows Banks Still Have a Banking Problem
Time to add Credit Suisse (CS) to the list of bank failures we’ve seen so far in 2023.
Over the weekend UBS agreed to buy Credit Suisse for what equates to about $3.25 billion of UBS stock complete with the Swiss government helping absorb some of the coming writedowns of CS’s loan book. UBS had to step in to save CS after last Wednesday's 50 billion Swiss franc liquidity injection from the Swiss National Bank proved insufficient to buoy the bank’s operations once the Saudi National Bank (CS’s largest shareholder) said it wouldn’t provide any more assistance.
We’ve come full circle: During the last financial crisis in 2008 it was UBS that was saved by the long arm of the Swiss government. This time the government needed UBS to lend a helping hand.
There are many financial system and banking system takes to be had here, but here’s a crypto-focused one.
Despite its lofty side quest to disrupt finance, it wasn’t crypto that upended these banks and it certainly didn’t upend Credit Suisse. Bankers were so busy laughing at crypto's unraveling they didn't realize their banks were also unraveling.
Instead of failing because Bitcoin made banking services obsolete, Credit Suisse failed because it wasn’t good at being a bank. Remember in 2021 when Credit Suisse took $5.5 billion of losses on loans in connection to Archegos? And remember how it was embroiled in enough fraud in 2014 that it had to pay $2.6 billion to the United States Department of Justice?
Some other stuff happened and then Credit Suisse was forced to sell itself to a competitor at a steep discount.
All the while, bitcoin’s price is trending up as banks fail simply because they are being banks. This is really the first time the narrative of bitcoin as a way to opt out of unadvisable banking practices is playing out as we would have expected.
Banks are failing because they are bad at being banks and the Bitcoin blockchain is completely separate from those failures. Bitcoin is on the outside looking in on the mess and offers itself as a genuine means to opt out.
Banks don’t have a crypto problem, banks have a banking problem.
#bitcoindifficulty #cryp101
Over the weekend UBS agreed to buy Credit Suisse for what equates to about $3.25 billion of UBS stock complete with the Swiss government helping absorb some of the coming writedowns of CS’s loan book. UBS had to step in to save CS after last Wednesday's 50 billion Swiss franc liquidity injection from the Swiss National Bank proved insufficient to buoy the bank’s operations once the Saudi National Bank (CS’s largest shareholder) said it wouldn’t provide any more assistance.
We’ve come full circle: During the last financial crisis in 2008 it was UBS that was saved by the long arm of the Swiss government. This time the government needed UBS to lend a helping hand.
There are many financial system and banking system takes to be had here, but here’s a crypto-focused one.
Despite its lofty side quest to disrupt finance, it wasn’t crypto that upended these banks and it certainly didn’t upend Credit Suisse. Bankers were so busy laughing at crypto's unraveling they didn't realize their banks were also unraveling.
Instead of failing because Bitcoin made banking services obsolete, Credit Suisse failed because it wasn’t good at being a bank. Remember in 2021 when Credit Suisse took $5.5 billion of losses on loans in connection to Archegos? And remember how it was embroiled in enough fraud in 2014 that it had to pay $2.6 billion to the United States Department of Justice?
Some other stuff happened and then Credit Suisse was forced to sell itself to a competitor at a steep discount.
All the while, bitcoin’s price is trending up as banks fail simply because they are being banks. This is really the first time the narrative of bitcoin as a way to opt out of unadvisable banking practices is playing out as we would have expected.
Banks are failing because they are bad at being banks and the Bitcoin blockchain is completely separate from those failures. Bitcoin is on the outside looking in on the mess and offers itself as a genuine means to opt out.
Banks don’t have a crypto problem, banks have a banking problem.
#bitcoindifficulty #cryp101
Bitcoin rally is 'pure gravy' for miners finally seeing a light at the end of the tunnel
Bitcoin miners are finally getting some good news thanks to the rally in cryptocurrencies this year.
The first three months of this year are "shaping up to be a better quarter" than the previous one, investment firm Stifel said in an analyst note on Monday.
Hashprice, which measures how much miners earn based on a number of factors, is up 36% compared to March 12, at $0.08 per terahash.
"This for us is pure gravy," CleanSpark Executive Chairman Matthew Schultz told The Block. "When you look at the price appreciation in bitcoin, it's essentially another $200,000 a day in free cash flow if you're mining 20 bitcoin a day, which is about where we are."
Bitcoin price appreciation is happening at the same miners are finally seeing a slump in power prices — essentially reversing trends that squeezed their margins last year and drove some to bankruptcy. It may be a chance for a turnaround for even the hardest-hit companies.
"The market has helped us a lot," a spokesperson with Core Scientific, which filed for bankruptcy in December, said last week. "Power prices have come down dramatically. And when you're a bitcoin miner power pricing is your primary cost input ... We're spending a lot of money on professional fees, but operationally things are going great."
More competition
Mining is a balancing act between many factors and as overall economic conditions improve, analysts have warned that the better environment will be partially offset by an increase in mining difficulty as competition heats up.
CleanSpark's Schultz said he's seen an influx of machines coming online, but nothing that surpasses what had already been planned and announced by miners.
"So we haven't seen a direct impact yet, but we certainly expect that it could have an impact not only on difficulty and mining economics from that perspective but also it's likely to have an impact on the price of mining equipment going forward," Schultz said.
Difficulty is expected to jump between 5% and 6% this week according to different estimates. It will be the third increase in a row, following a 9.95 % and 1.16% jump.
"We expect continued growth to the overall network hash rate in the near term as newer gen machine deliveries are installed and brought online," said the note from Stifel.
Because rackspace for machines is scarce at the moment, "if the price of BTC goes up a lot in 2023, there will be a lag between before the difficulty goes up to an extent," the Core Scientific spokesperson said.
Machines and investments
The market for ASIC machines started trending higher in late January for the first time since December 2021. Prices for those in the top efficiency tier have jumped 9% in the last two months, according to data from Luxor, which runs an ASIC trading desk.
Mid-generation machines are typically more sensitive to changes in mining economics than the absolute newest generation models, and "we are seeing that play out right now," said Luxor COO Ethan Vera.
"With Bitcoin heading towards $30k it's becoming easier for companies to raise equity capital, allowing them to deleverage their balance sheet. This deleveraging is resulting in less distressed assets coming to market and a reduction of ASIC supply," Vera said. "Miners will look to hedge revenue and costs, take on less leverage then before. But ASIC markets will trend up with bitcoin price."
Prices could move "pretty quickly" unless machine supply available in the markets remains "too high," he said.
Miners have been in survival mode for the past several months — striving to deleverage themselves and clean up their balance sheets. Amid the excitement from the last bull market in 2021 and the race to deploy as fast as possible, some took on large amounts of debt to buy as many machines as possible when prices were comparatively very high.
Not so fast
In June of last year, bitcoin liquidations from miners spiked, data from TheMinerMag shows, and many companies have continued to sell a large portion of their mined bitcoin. Even miners like Marathon and Hut 8 — which historically have held on to their production — started selling off a portion of their holdings in the last couple of months.
"The debt markets are starting to show signs of life," Schultz said. "But by and large, unless you have a rock-solid balance sheet, they're still mostly closed. So the access to capital is pretty much restricted to either equity or the sale of Bitcoin."
CleanSpark said during its last earnings presentation in February that it would propose to increase the number of shares authorized for issuance from 100 million to 300 million, keeping that as an option as the company builds towards its growth target this year.
In September, Hive Blockchain struck a deal to sell up to $100 million in shares, while Iris Energy agreed to sell up to the same amount in shares to B. Riley. Terawulf said in January that it raised $32 million in equity, while also restructuring its existing debt.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#cryp101
The first three months of this year are "shaping up to be a better quarter" than the previous one, investment firm Stifel said in an analyst note on Monday.
Hashprice, which measures how much miners earn based on a number of factors, is up 36% compared to March 12, at $0.08 per terahash.
"This for us is pure gravy," CleanSpark Executive Chairman Matthew Schultz told The Block. "When you look at the price appreciation in bitcoin, it's essentially another $200,000 a day in free cash flow if you're mining 20 bitcoin a day, which is about where we are."
Bitcoin price appreciation is happening at the same miners are finally seeing a slump in power prices — essentially reversing trends that squeezed their margins last year and drove some to bankruptcy. It may be a chance for a turnaround for even the hardest-hit companies.
"The market has helped us a lot," a spokesperson with Core Scientific, which filed for bankruptcy in December, said last week. "Power prices have come down dramatically. And when you're a bitcoin miner power pricing is your primary cost input ... We're spending a lot of money on professional fees, but operationally things are going great."
More competition
Mining is a balancing act between many factors and as overall economic conditions improve, analysts have warned that the better environment will be partially offset by an increase in mining difficulty as competition heats up.
CleanSpark's Schultz said he's seen an influx of machines coming online, but nothing that surpasses what had already been planned and announced by miners.
"So we haven't seen a direct impact yet, but we certainly expect that it could have an impact not only on difficulty and mining economics from that perspective but also it's likely to have an impact on the price of mining equipment going forward," Schultz said.
Difficulty is expected to jump between 5% and 6% this week according to different estimates. It will be the third increase in a row, following a 9.95 % and 1.16% jump.
"We expect continued growth to the overall network hash rate in the near term as newer gen machine deliveries are installed and brought online," said the note from Stifel.
Because rackspace for machines is scarce at the moment, "if the price of BTC goes up a lot in 2023, there will be a lag between before the difficulty goes up to an extent," the Core Scientific spokesperson said.
Machines and investments
The market for ASIC machines started trending higher in late January for the first time since December 2021. Prices for those in the top efficiency tier have jumped 9% in the last two months, according to data from Luxor, which runs an ASIC trading desk.
Mid-generation machines are typically more sensitive to changes in mining economics than the absolute newest generation models, and "we are seeing that play out right now," said Luxor COO Ethan Vera.
"With Bitcoin heading towards $30k it's becoming easier for companies to raise equity capital, allowing them to deleverage their balance sheet. This deleveraging is resulting in less distressed assets coming to market and a reduction of ASIC supply," Vera said. "Miners will look to hedge revenue and costs, take on less leverage then before. But ASIC markets will trend up with bitcoin price."
Prices could move "pretty quickly" unless machine supply available in the markets remains "too high," he said.
Miners have been in survival mode for the past several months — striving to deleverage themselves and clean up their balance sheets. Amid the excitement from the last bull market in 2021 and the race to deploy as fast as possible, some took on large amounts of debt to buy as many machines as possible when prices were comparatively very high.
Not so fast
In June of last year, bitcoin liquidations from miners spiked, data from TheMinerMag shows, and many companies have continued to sell a large portion of their mined bitcoin. Even miners like Marathon and Hut 8 — which historically have held on to their production — started selling off a portion of their holdings in the last couple of months.
"The debt markets are starting to show signs of life," Schultz said. "But by and large, unless you have a rock-solid balance sheet, they're still mostly closed. So the access to capital is pretty much restricted to either equity or the sale of Bitcoin."
CleanSpark said during its last earnings presentation in February that it would propose to increase the number of shares authorized for issuance from 100 million to 300 million, keeping that as an option as the company builds towards its growth target this year.
In September, Hive Blockchain struck a deal to sell up to $100 million in shares, while Iris Energy agreed to sell up to the same amount in shares to B. Riley. Terawulf said in January that it raised $32 million in equity, while also restructuring its existing debt.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#cryp101
Prices, Volume Spike on Mix of Regulators' Backstops and Lower Rate Expectations
Crypto assets reversed course on Monday from their recent down trend as Federal Reserve comments appeared to allay investor fears about the impact of Silicon Valley Bank’s collapse on the banking sector and economy.
Bitcoin, ether and other major cryptos all spiked on Monday, the former two assets by well into the double digits, as conditions late Sunday and early Monday improved. The turnaround followed just a couple of days after markets tail-spinned.
The collapse of SVB, once holding close to $200 billion in investor deposits, had sent markets roiling on Friday, as the bank’s depositor base extends through much of the technology and crypto ecosystem. BTC’s price fell below $20,000 on Friday (UTC) on heavy volume, as fears of contagion rippled through on-risk, asset markets.
The announcement by the U.S. Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) that depositors would have full access to their deposits by Monday morning, renewed markets’ confidence, and boosted BTC and ETH prices by as much as 15% and 10%, respectively.
Bradley Duke, co-CEO at ETC Group, commented that the announcement had reassured “both traditional and crypto markets.”
The intraday price move would have represented the largest one-day moves for BTC and ETH since February 2021 and November 2022, respectively.
The Federal Reserve also announced plans to make additional funding available to all eligible depository institutions, and is “prepared to address any liquidity issues that may arise”.
The Fed statement is a crucial one, as it implies that the pain incurred by the collapse of SVB will be ring-fenced to SVB only. Holders of deposits in excess of the traditional $250,000 limit were essentially ensured that they will be made whole.
USDC, which reportedly held funds at SVB, regained its peg with the U.S. dollar, after falling to as low as 94 cents on Friday.
BTC and ETH volume exploded on the day as both traded more that two times their average 20-day trading volume. The same 2x spikes occurred in XRP, MATIC, ADA, DOT, and SOL as well.
Meanwhile, in macroeconomic news, bond yields plunged as the fallout from the SVB collapse led investors to believe that the Fed will slow or even pause rate hikes in response.
One day ago, markets were assigning a 40% chance that the U.S. central bank would boost interest rates by 50 basis points, but following the near banking sector meltdown, they are assigning a 35% chance that the FOMC will leave rates unchanged. The shift underscores concerns that the Fed had spurred the crisis by overstepping in its efforts to tame inflation by limiting money supply.
Just in time to make macroeconomic conditions even more interesting will be Tuesday’s inflation report, which is likely to have an outsized impact on Tuesday trading. A favorable inflation figure will likely increase the chorus of calls for no rate hikes.
A less than optimal inflation figure will likely take markets on a ride, especially following today’s move higher.
#cryp101
Bitcoin, ether and other major cryptos all spiked on Monday, the former two assets by well into the double digits, as conditions late Sunday and early Monday improved. The turnaround followed just a couple of days after markets tail-spinned.
The collapse of SVB, once holding close to $200 billion in investor deposits, had sent markets roiling on Friday, as the bank’s depositor base extends through much of the technology and crypto ecosystem. BTC’s price fell below $20,000 on Friday (UTC) on heavy volume, as fears of contagion rippled through on-risk, asset markets.
The announcement by the U.S. Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) that depositors would have full access to their deposits by Monday morning, renewed markets’ confidence, and boosted BTC and ETH prices by as much as 15% and 10%, respectively.
Bradley Duke, co-CEO at ETC Group, commented that the announcement had reassured “both traditional and crypto markets.”
The intraday price move would have represented the largest one-day moves for BTC and ETH since February 2021 and November 2022, respectively.
The Federal Reserve also announced plans to make additional funding available to all eligible depository institutions, and is “prepared to address any liquidity issues that may arise”.
The Fed statement is a crucial one, as it implies that the pain incurred by the collapse of SVB will be ring-fenced to SVB only. Holders of deposits in excess of the traditional $250,000 limit were essentially ensured that they will be made whole.
USDC, which reportedly held funds at SVB, regained its peg with the U.S. dollar, after falling to as low as 94 cents on Friday.
BTC and ETH volume exploded on the day as both traded more that two times their average 20-day trading volume. The same 2x spikes occurred in XRP, MATIC, ADA, DOT, and SOL as well.
Meanwhile, in macroeconomic news, bond yields plunged as the fallout from the SVB collapse led investors to believe that the Fed will slow or even pause rate hikes in response.
One day ago, markets were assigning a 40% chance that the U.S. central bank would boost interest rates by 50 basis points, but following the near banking sector meltdown, they are assigning a 35% chance that the FOMC will leave rates unchanged. The shift underscores concerns that the Fed had spurred the crisis by overstepping in its efforts to tame inflation by limiting money supply.
Just in time to make macroeconomic conditions even more interesting will be Tuesday’s inflation report, which is likely to have an outsized impact on Tuesday trading. A favorable inflation figure will likely increase the chorus of calls for no rate hikes.
A less than optimal inflation figure will likely take markets on a ride, especially following today’s move higher.
#cryp101
IoTeX Blockchain's DAO Votes 97% in Favor of Adding Ether Liquid Staking Derivatives
The IoTeX blockchain's governance community voted to support ether liquid staking derivatives with 97% of token holders in favor of the move.
Some 141 million IOTX were staked in favor of the network’s 13th improvement proposal (IIP-13), which increases the IOTX staking ratio to enhance network security by expanding the number of validators, or entities that process transactions and maintain the blockchain.
The proposal also suggests natively adding support to represent staking buckets as non-fungible tokens (NFTs) so liquid staking protocols can manage their stakes through smart contracts. That would allow developers to quickly launch liquid staking decentralized applications (dapps) and potentially increase the staking ratio – improving the network’s use case among developers and contributing to the value proposition of IOTX tokens.
“Increasing the IOTX staking ratio and, therefore, the security of its blockchain has always been the goal for IoTeX,” co-founder Raullen Chai said in a message to CoinDesk. “The primary motivation behind IIP-13 is improved security and further decentralization of the IoTeX blockchain.”
With this feature implemented and deployed on testnet and mainnet, builders can quickly launch their liquid staking dapps, such as Lido and Rocketpool, on the IoTex network.
Liquid staking refers to the exchange of staked ether for tokenized versions of the second-largest cryptocurrency that can be used in decentralized finance (DeFi) applications. Uses range from using these tokens as collateral for loans or margin trading to earning yield.
Such tokens have been among the higher gainers this year so far, with Lido’s LDO and Rocketpool’s RPL each gaining over 200% in the past three months, CoinGecko data shows.
Staking on the IoTeX blockchain is currently done directly on the network without connecting to smart contracts for support.
IOTX is trading at 2 cents on Tuesday and has a market capitalization of $290 million, CoinGecko data shows.
#bicasso #antiscam #Web3 #cryp101
Some 141 million IOTX were staked in favor of the network’s 13th improvement proposal (IIP-13), which increases the IOTX staking ratio to enhance network security by expanding the number of validators, or entities that process transactions and maintain the blockchain.
The proposal also suggests natively adding support to represent staking buckets as non-fungible tokens (NFTs) so liquid staking protocols can manage their stakes through smart contracts. That would allow developers to quickly launch liquid staking decentralized applications (dapps) and potentially increase the staking ratio – improving the network’s use case among developers and contributing to the value proposition of IOTX tokens.
“Increasing the IOTX staking ratio and, therefore, the security of its blockchain has always been the goal for IoTeX,” co-founder Raullen Chai said in a message to CoinDesk. “The primary motivation behind IIP-13 is improved security and further decentralization of the IoTeX blockchain.”
With this feature implemented and deployed on testnet and mainnet, builders can quickly launch their liquid staking dapps, such as Lido and Rocketpool, on the IoTex network.
Liquid staking refers to the exchange of staked ether for tokenized versions of the second-largest cryptocurrency that can be used in decentralized finance (DeFi) applications. Uses range from using these tokens as collateral for loans or margin trading to earning yield.
Such tokens have been among the higher gainers this year so far, with Lido’s LDO and Rocketpool’s RPL each gaining over 200% in the past three months, CoinGecko data shows.
Staking on the IoTeX blockchain is currently done directly on the network without connecting to smart contracts for support.
IOTX is trading at 2 cents on Tuesday and has a market capitalization of $290 million, CoinGecko data shows.
#bicasso #antiscam #Web3 #cryp101
Starknet governance to begin with vote for new protocol upgrade
Starknet DAO is set to begin its decentralized governance with the community’s inaugural vote to green light the launch of its latest protocol upgrade, called Starknet Alpha v0.11.0.
This first phase of Starknet’s governance will focus on protocol upgrades. Community members will be able to vote on every protocol upgrade released by the Ethereum scaling solution. Every successful vote will lead to the launch of a new protocol version on the Starknet mainnet.
The Starknet Foundation says it will be playing a pivotal role in kickstarting the DAO’s governance. Established in October 2022, the Starknet Foundation is in charge of leading grants and funding for the Ethereum scaling protocol. The foundation plans to share some of its voting power with several independent delegates. This move is to ensure a diverse governance environment for the project. Other participants in this early governance period will include investors, core contributors, and other delegates.
The DAO has chosen March 21 as the start of the voting period for its next upgrade. The vote, which will happen via Snapshot, is expected to take six days to complete.
Starknet’s planned protocol upgrade will be launched on the Goerli testnet while the vote is ongoing. This will then be followed by a mainnet launch if the vote passes.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#bitcoindifficulty #BNB #nftcommunity #cryp101
This first phase of Starknet’s governance will focus on protocol upgrades. Community members will be able to vote on every protocol upgrade released by the Ethereum scaling solution. Every successful vote will lead to the launch of a new protocol version on the Starknet mainnet.
The Starknet Foundation says it will be playing a pivotal role in kickstarting the DAO’s governance. Established in October 2022, the Starknet Foundation is in charge of leading grants and funding for the Ethereum scaling protocol. The foundation plans to share some of its voting power with several independent delegates. This move is to ensure a diverse governance environment for the project. Other participants in this early governance period will include investors, core contributors, and other delegates.
The DAO has chosen March 21 as the start of the voting period for its next upgrade. The vote, which will happen via Snapshot, is expected to take six days to complete.
Starknet’s planned protocol upgrade will be launched on the Goerli testnet while the vote is ongoing. This will then be followed by a mainnet launch if the vote passes.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#bitcoindifficulty #BNB #nftcommunity #cryp101
Bitcoin begins to claw back Fed-related losses, back above $27,500
Bitcoin, ether and other coins inched higher, clawing back some of the losses after crypto assets sank during Federal Reserve Chairman Jerome Powell's press conference yesterday.
Bitcoin was trading around $27,504 by 9:15 a.m. EDT, up 1% in the past few hours, according to TradingView data. It had flirted with $29,000 yesterday ahead of the Fed's decision to raise interest rates, before briefly plunging below $27,000 following Powell's press conference.
BTCUSD chart by TradingView
Inflation is still high, and the Fed had to act, Galaxy Digital's Head of Research, Alex Thorn, told The Block.
"Despite issues we've seen in the banking sector, Jerome Powell isn't stopping the tanker just yet," Thorn said.
Bitcoin retraced a bit, Thorn said, but it continues to hold up well, he added.
"If the banking crisis plays out further, there's no reason why the bitcoin safe-haven narrative can't also continue, pushing prices higher," Thorn said.
Between a banking crisis and an inflation headache
Powell said yesterday that the past few weeks of banking woes and potential credit tightening could impact inflation in its own way, which might lead the central bank to assess its increases. Powell wouldn't say whether this meant rates would pause.
UBS analysts see the light at the end of the tunnel based on a tweak to the committee's statement, which removed reference to "ongoing increases," instead noting that "some additional firming may be appropriate."
Powell elaborated on the tweak in his press conference, saying the line referred to additional interest rate hikes, though he emphasized the "may" in the sentence from the FOMC statement.
Nomura analysts expect significant headwinds due to the limited supply of bank credit. As such, they maintain the view that the "Fed has already reached the terminal rate policy rate of the current hiking cycle and will hold that federal fund's rate at 4.75-5.00% until March 2024."
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#cryp101 #antiscam
Bitcoin was trading around $27,504 by 9:15 a.m. EDT, up 1% in the past few hours, according to TradingView data. It had flirted with $29,000 yesterday ahead of the Fed's decision to raise interest rates, before briefly plunging below $27,000 following Powell's press conference.
BTCUSD chart by TradingView
Inflation is still high, and the Fed had to act, Galaxy Digital's Head of Research, Alex Thorn, told The Block.
"Despite issues we've seen in the banking sector, Jerome Powell isn't stopping the tanker just yet," Thorn said.
Bitcoin retraced a bit, Thorn said, but it continues to hold up well, he added.
"If the banking crisis plays out further, there's no reason why the bitcoin safe-haven narrative can't also continue, pushing prices higher," Thorn said.
Between a banking crisis and an inflation headache
Powell said yesterday that the past few weeks of banking woes and potential credit tightening could impact inflation in its own way, which might lead the central bank to assess its increases. Powell wouldn't say whether this meant rates would pause.
UBS analysts see the light at the end of the tunnel based on a tweak to the committee's statement, which removed reference to "ongoing increases," instead noting that "some additional firming may be appropriate."
Powell elaborated on the tweak in his press conference, saying the line referred to additional interest rate hikes, though he emphasized the "may" in the sentence from the FOMC statement.
Nomura analysts expect significant headwinds due to the limited supply of bank credit. As such, they maintain the view that the "Fed has already reached the terminal rate policy rate of the current hiking cycle and will hold that federal fund's rate at 4.75-5.00% until March 2024."
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#cryp101 #antiscam
Tether Stability Made It the Safest Stablecoin Bet Amid U.S. Banking Crisis, Analysts Say
The often-controversial tether (USDT) stablecoins emerged as the best bet for traders looking for a stable haven earlier this month following a series of banking troubles in the U.S.
The USD coin (USDC) fell under 90 cents on March 11 after the collapse of Silicon Valley Bank (SVB) revealed some of the industry’s major players had exposure to the bank.
These players included U.S.-based stablecoin issuer Circle, which held a part of its USDC stablecoin’s cash reserves at Silicon Valley Bank as of Jan. 17, according to the firm's latest attestation.
Decentralized stablecoins took a hit too, with frax and dai – both backed by a basket of tokens – falling by cents on their intended dollar pegs.
Who is boss?
Tether held its fort, however, even trading at a premium in the following days. This came despite a long-held notion among some market participants about the token’s opaque asset backing and concerns about parent company Tether Global.
Data further shows at least $5 billion of inflows into Tether in the past weeks, bringing its market capitalization to over $77 billion as of Wednesday.
Part of that could likely be due to its supposedly low exposure to the U.S. banking system, some say.
“Tether has no exposure to SVB as its popularity lies more in the Asian region, meaning USDT doesn't rely on dollars being held in American banks, making it one of the safest stablecoins to pivot to currently,” said François Cluzeau, head of trading at Flowdesk, in a message to CoinDesk.
“We have seen a lot of USDC and DAI being traded for USDT, which has kept USDT liquid,” Cluzeau wrote.
The systematic risks of USDC affected dai stablecoins, which further strengthens tether’s thesis of holding a variety of assets to back its stablecoins, said Mitya Argunov, chief product officer at P2P.org.
"Tether’s performance during the crisis is largely due to its lack of direct exposure to SVB – it just didn’t have deposits there. Other major stablecoins like DAI were also indirectly exposed and de-pegged because they are actually largely collateralised by USDC,” Argunov said.
“However, the flight to Tether as a safe haven should also be seen as confidence in Tether’s portfolio risk management strategy – which minimizes duration risk, i.e. how SVB should have operated,” Argunov added.
Still a Need for Caution
Meanwhile, some developers continue to remain cautious for the long term.
“Looking at Tether's history, it has experienced FUD and redemption issues in the past and has been stable amidst current market turmoil,” said Danny Chong, co-founder of Tranchess, in a note to CoinDesk.
“Tether's ability to maintain stability amidst recent challenges suggests that it may have a chance at long-term success,” Chong said, adding that further stress tests would show if it remained “resilient in the long run.”
USDC also demonstrated the effectiveness and resilience of its hedging strategy through collaboration with its banking partners as it recovered its peg swiftly the following week, Chong said.
Demand for stablecoins is undented, however.
“The swiftness of Circle’s USDC recovering its peg after their announcement of a recovery plan is further confirmation of how the market values the potential for stablecoin businesses,” Chong noted.
#cryp101 #cryptotrading
The USD coin (USDC) fell under 90 cents on March 11 after the collapse of Silicon Valley Bank (SVB) revealed some of the industry’s major players had exposure to the bank.
These players included U.S.-based stablecoin issuer Circle, which held a part of its USDC stablecoin’s cash reserves at Silicon Valley Bank as of Jan. 17, according to the firm's latest attestation.
Decentralized stablecoins took a hit too, with frax and dai – both backed by a basket of tokens – falling by cents on their intended dollar pegs.
Who is boss?
Tether held its fort, however, even trading at a premium in the following days. This came despite a long-held notion among some market participants about the token’s opaque asset backing and concerns about parent company Tether Global.
Data further shows at least $5 billion of inflows into Tether in the past weeks, bringing its market capitalization to over $77 billion as of Wednesday.
Part of that could likely be due to its supposedly low exposure to the U.S. banking system, some say.
“Tether has no exposure to SVB as its popularity lies more in the Asian region, meaning USDT doesn't rely on dollars being held in American banks, making it one of the safest stablecoins to pivot to currently,” said François Cluzeau, head of trading at Flowdesk, in a message to CoinDesk.
“We have seen a lot of USDC and DAI being traded for USDT, which has kept USDT liquid,” Cluzeau wrote.
The systematic risks of USDC affected dai stablecoins, which further strengthens tether’s thesis of holding a variety of assets to back its stablecoins, said Mitya Argunov, chief product officer at P2P.org.
"Tether’s performance during the crisis is largely due to its lack of direct exposure to SVB – it just didn’t have deposits there. Other major stablecoins like DAI were also indirectly exposed and de-pegged because they are actually largely collateralised by USDC,” Argunov said.
“However, the flight to Tether as a safe haven should also be seen as confidence in Tether’s portfolio risk management strategy – which minimizes duration risk, i.e. how SVB should have operated,” Argunov added.
Still a Need for Caution
Meanwhile, some developers continue to remain cautious for the long term.
“Looking at Tether's history, it has experienced FUD and redemption issues in the past and has been stable amidst current market turmoil,” said Danny Chong, co-founder of Tranchess, in a note to CoinDesk.
“Tether's ability to maintain stability amidst recent challenges suggests that it may have a chance at long-term success,” Chong said, adding that further stress tests would show if it remained “resilient in the long run.”
USDC also demonstrated the effectiveness and resilience of its hedging strategy through collaboration with its banking partners as it recovered its peg swiftly the following week, Chong said.
Demand for stablecoins is undented, however.
“The swiftness of Circle’s USDC recovering its peg after their announcement of a recovery plan is further confirmation of how the market values the potential for stablecoin businesses,” Chong noted.
#cryp101 #cryptotrading
Circle applies for French crypto license as stablecoin issuer expands in Europe
Stablecoin issuer Circle has applied for a French crypto asset license as part of a wider growth strategy for Europe.
The Boston-based firm filed separate applications to be a registered digital asset service provider and a licensed electronic money institution, Circle said in a statement. A successful registration will mean Circle can offer its products to customers in France, and "onshore" its euro-backed stablecoin EUROC, the statement said.
“We are excited to kick our European growth strategy into high-gear with this application,'' said Jeremy Allaire, co-founder and CEO of Circle.
France recently tightened its crypto licensing rules ahead of the introduction next year of a European Union-wide digital assets framework called Markets in Crypto-Assets. Circle already holds licenses from various U.S. states and in Singapore and is best known for its dollar-backed USDC stablecoin.
Circle's model was tested recently after USDC de-pegged from the dollar due to some of the stablecoin's reserves being parked at Silicon Valley Bank as it headed for collapse. Had the government not backstopped all deposits at the struggling lender there was a risk that Circle and other account holders would have taken a haircut.
Circle senior policy specialist Tarleton Watkins recently told a conference at the Warwick Business School that one solution would be for stablecoin reserves to be parked at central banks using a central bank digital currency as the backing instrument.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#Binance #cryp101 #bicasso
The Boston-based firm filed separate applications to be a registered digital asset service provider and a licensed electronic money institution, Circle said in a statement. A successful registration will mean Circle can offer its products to customers in France, and "onshore" its euro-backed stablecoin EUROC, the statement said.
“We are excited to kick our European growth strategy into high-gear with this application,'' said Jeremy Allaire, co-founder and CEO of Circle.
France recently tightened its crypto licensing rules ahead of the introduction next year of a European Union-wide digital assets framework called Markets in Crypto-Assets. Circle already holds licenses from various U.S. states and in Singapore and is best known for its dollar-backed USDC stablecoin.
Circle's model was tested recently after USDC de-pegged from the dollar due to some of the stablecoin's reserves being parked at Silicon Valley Bank as it headed for collapse. Had the government not backstopped all deposits at the struggling lender there was a risk that Circle and other account holders would have taken a haircut.
Circle senior policy specialist Tarleton Watkins recently told a conference at the Warwick Business School that one solution would be for stablecoin reserves to be parked at central banks using a central bank digital currency as the backing instrument.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
#Binance #cryp101 #bicasso
Tron Network’s TRX Drops 13% Following SEC Charges Against Justin Sun
The Tron network’s native TRX token dropped 13%, per CoinDesk data, from 6.7 cents to 5.8 cents after the Securities and Exchange Commission (SEC) announced charges against Justin Sun and three of his companies including Tron Foundation and BitTorrent.
TRX dropped roughly 13% after SEC charged Justin Sun. (Highcharts.com and CoinDesk)
With a total supply of 91.15 billion, Tron’s market capitalization currently stands at $5.47 billion, and in the past 24 hours, trading volume for TRX sits at roughly $421 million as of presstime.
The SEC is charging the Tron network founder with the offer and sale of unregistered crypto asset securities, as well as fraudulently manipulating TRX’s secondary market through extensive wash trading.
Other Sun-related assets also took a dive as both Sun Token (SUN) and JUST (JST) slid more than 8% after the announcement. Huobi (HT), the token of the crypto exchange that Sun leads, fell 10%.
Read more: Tron Founder Justin Sun Sued by U.S. SEC on Securities, Market Manipulation Charges
#cryp101 #antiscam
TRX dropped roughly 13% after SEC charged Justin Sun. (Highcharts.com and CoinDesk)
With a total supply of 91.15 billion, Tron’s market capitalization currently stands at $5.47 billion, and in the past 24 hours, trading volume for TRX sits at roughly $421 million as of presstime.
The SEC is charging the Tron network founder with the offer and sale of unregistered crypto asset securities, as well as fraudulently manipulating TRX’s secondary market through extensive wash trading.
Other Sun-related assets also took a dive as both Sun Token (SUN) and JUST (JST) slid more than 8% after the announcement. Huobi (HT), the token of the crypto exchange that Sun leads, fell 10%.
Read more: Tron Founder Justin Sun Sued by U.S. SEC on Securities, Market Manipulation Charges
#cryp101 #antiscam
Immutable and Polygon Labs Team Up to Expand the Web3 Gaming Ecosystem
Web3 gaming developer platform Immutable is forming a strategic partnership with blockchain protocol Polygon Labs to accelerate the development of Web3 gaming.
According to a press release, Immutable will power its platform products using Polygon's zero-knowledge technology to simplify the process of onboarding game studios and developers in Web3. The alliance aims to provide an option for businesses "that accelerates time-to-market and gives them access to an ecosystem that will be one of the largest and most liquid for end users," according to the press release.
Interested in keeping up with Web3 news and trends? Subscribe to The Airdrop here.
"By combining the number one Web3 gaming platform – currently serving hundreds of game studios and millions of players – with Polygon’s best-in-class zkEVM technology, we are building an Ethereum-centric gaming ecosystem that is poised to take Web3 mainstream and bring digital ownership to millions of people around the world,” said Robbie Ferguson, Immutable president and co-founder. “Billions of dollars of skins are sold each year with no rights for players – we’re changing that so players are in control, and ownership is the expectation.”
Immutable X (IMX), the company's native token, dropped roughly 15% to $1.29, a 24-hour low. Prior to the Web3 gaming studio’s announcement, the token was trading at $1.51.
Both Immutable and Ethereum and have focused on expanding the burgeoning Web3 gaming industry with new tools and mainstream partnerships. In June, Immutable launched a $500 million venture fund for Web3 games, while Polygon launched a business unit devoted to advancing Web3 gaming in July.
Immutable also launched an all-in-one passport system in January to make the sign-in and management process easier for Web3 gamers, while gaming engine Unity expanded support for Immutable X in its developer toolkit last month.
Polygon has scored an impressive list of partnerships, including Nike, Reddit and Starbucks, and recently partnered with Square Enix, the company behind the Final Fantasy video games, to develop a non-fungible token (NFT) project. Meanwhile, Immutable has partnered with companies including GameStop, DC Comics and Marvel to build out over 140 new titles building on the existing platform.
See Also: Polygon Partners With Salesforce for NFT-Based Loyalty Program
#bicasso #cryp101 #cryptotrading
According to a press release, Immutable will power its platform products using Polygon's zero-knowledge technology to simplify the process of onboarding game studios and developers in Web3. The alliance aims to provide an option for businesses "that accelerates time-to-market and gives them access to an ecosystem that will be one of the largest and most liquid for end users," according to the press release.
Interested in keeping up with Web3 news and trends? Subscribe to The Airdrop here.
"By combining the number one Web3 gaming platform – currently serving hundreds of game studios and millions of players – with Polygon’s best-in-class zkEVM technology, we are building an Ethereum-centric gaming ecosystem that is poised to take Web3 mainstream and bring digital ownership to millions of people around the world,” said Robbie Ferguson, Immutable president and co-founder. “Billions of dollars of skins are sold each year with no rights for players – we’re changing that so players are in control, and ownership is the expectation.”
Immutable X (IMX), the company's native token, dropped roughly 15% to $1.29, a 24-hour low. Prior to the Web3 gaming studio’s announcement, the token was trading at $1.51.
Both Immutable and Ethereum and have focused on expanding the burgeoning Web3 gaming industry with new tools and mainstream partnerships. In June, Immutable launched a $500 million venture fund for Web3 games, while Polygon launched a business unit devoted to advancing Web3 gaming in July.
Immutable also launched an all-in-one passport system in January to make the sign-in and management process easier for Web3 gamers, while gaming engine Unity expanded support for Immutable X in its developer toolkit last month.
Polygon has scored an impressive list of partnerships, including Nike, Reddit and Starbucks, and recently partnered with Square Enix, the company behind the Final Fantasy video games, to develop a non-fungible token (NFT) project. Meanwhile, Immutable has partnered with companies including GameStop, DC Comics and Marvel to build out over 140 new titles building on the existing platform.
See Also: Polygon Partners With Salesforce for NFT-Based Loyalty Program
#bicasso #cryp101 #cryptotrading
