New Updates September 16, 2022
1. Biden’s Executive Order Produces Few Answers in Crypto Reports From US Treasury
Crypto firms have been eagerly awaiting a series of U.S. government reports they hoped would clarify what the Biden administration and regulators intend to do about digital assets. Most of the documents are out now, but the picture remains murky.
The reports from the Treasury Department – three of them released Friday – largely recommend the government continue assessing crypto risks, keep up enforcement actions and push forward with work on a digital dollar (without recommending the U.S. should have one).
The reports clearly identify the real challenges and risks from digital assets used for financial services," Treasury Secretary Janet Yellen told reporters in a briefing. "If these risks are mitigated, digital assets and other emerging technologies could offer significant opportunities."
The reports are a response to President Joe Biden’s executive order on digital assets, signed in March, which directed federal agencies to analyze different aspects and issues around the cryptocurrency ecosystem and provide recommendations for how the U.S. can both be a leader in the digital asset sector worldwide, as well as address any monetary stability or consumer protection risks posed by the burgeoning industry. Agencies will publish a total of 21 reports.
Gensler repeatedly asserts that existing federal securities laws apply to the crypto industry, going so far as to tell a U.S. senator on Thursday that “the asset backed securities market took 10 or 11 years where they did these … exemptive orders or relief to individual issuers,” implying that a similar process may need to occur in crypto first.
2. Bitcoin price threatens $19.6K as Ray Dalio predicts 30% stocks crash
The aftermath of the Ethereum Merge gives no respite to crypto bulls, who face continued market pressure as stocks also trend down.
Bitcoin (BTC) attempted to violate local lows on Sep. 16 as the latest cross-crypto downtrend intensified.
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD approaching $19,600 at the time of writing, with buyer support just avoiding a further drop.
The level had remained in place as an intraday floor as the Ethereum Merge concluded, only to spark a sell-off, which took Ether (ETH)/BTC toward three-week lows.
Amid the gloomy mood, traders and analysts showed little inclination to reassess their market outlooks.
“I feel confident with the scenario of quick pump to 23k on BTC and 1800 on ETH and big dump from there,” Il Capo of Crypto wrote, reiterating a long-held theory.
3. SEC’s Gensler Signals Extra Scrutiny for Proof-of-Stake Cryptocurrencies: Report
Speaking after the Merge (but not specifically about Ethereum), SEC Chair Gary Gensler said proof-of-stake cryptos could be investment contracts that subject them to securities regulations.
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler on Thursday said that staked cryptocurrencies may be subject to federal securities regulations, repeating a pro-oversight stance in the wake of Ethereum’s transition to just such a method.
According to the Wall Street Journal, Gensler said that proof-of-stake (PoS) blockchains, which generate new coins for inventors who pool their holdings, take on investment contract-like attributes that could bring them under his agency’s purview. He said he wasn’t talking about a specific coin, according to the Journal.
Still, the comments, which came hours after Ethereum completed its PoS transition via the Merge, indicate that the milestone tech upgrade may carry greater ramifications for the second-most popular blockchain than simply cutting its energy usage. As a proof-of-work chain, its native ether token was one of only two cryptos – the other being bitcoin – clearly defined as commodities by federal regulators.
4. Russian Central Bank Wants to Hire a Crypto Specialist
Russia’s Central Bank has announced that it wants to hire a “cryptocurrency” expert – a massive turnaround for the bank, which earlier this year proposed a blanket ban on all things crypto-related.
In a post on the Russian job search platform Headhunter (HH), the Central Bank wrote that it was looking for a “blockchain developer” with “cryptocurrency” expertise. The bank wants to hire a developer with between one and three years of experience in the field.
The bank explained that the successful candidate would be charged with the “development of analytical materials” and “consultation reports” – as well as “proposals for legal amendments” to laws pertaining to “digital currencies, distributed ledger technology, decentralized finance, and digital financial assets.”
Russian regulators and politicians have often used the term “digital financial assets” as a euphemism for crypto.
The new hire will also be asked to work on “pilot” projects.
Until relatively recently, the bank’s position on crypto was that it should be banned completely – much as is the case in China – and that a digital ruble should be released as quickly as possible.
But the job posting appears to show a possible departure from this hardline stance: The bank especially wants to hear from individuals with experience with the Bitcoin, Ethereum, and Hyperledger Fabric blockchain protocols.
*Russian Central Bank to Take a Leaf Out of Crypto’s Book?*
The Central Bank’s position on crypto has softened somewhat in recent months – but it still remains at loggerheads with the pro-industry Ministry of Finance.
The ministry wants to regulate crypto and place limits on the amount of money citizens can spend on coins in the space of a year. It also wants to legalize – and tax – crypto mining. But the Central Bank and its long-serving Governor Elvira Nabiullina have remained opposed – creating an impasse that even direct intervention from President Vladimir Putin has failed to resolve.
However, in recent months, the bank has indicated that it is prepared to make some concessions, and may allow certain exporters to sell their goods and services for crypto – providing these coins “do not enter the Russian economic system.” The bank has also indicated it may be prepared to drop its opposition to industrial crypto mining.
But hiring a crypto expert may well prove that the bank is now prepared to go a step further – and possibly incorporate tech developments from the world of crypto in its own operations.
5. Luna: great success for the “Jail Kwon” token
Still stinging badly are the huge losses suffered by Luna investors after the implosion of the Terra ecosystem.
Neither did the news of the issuance of an arrest warrant for founder Do Kwon by authorities in South Korea soothe tempers, because Kwon is not in his home country and therefore authorities cannot arrest him.
Indeed, a full-scale fanfare broke out after the news was published, particularly among those who hope that the authorities will be able to catch and arrest him.
Meanwhile, the price of the cryptocurrency Luna 2 (LUNA) has fallen from $4.3 to $2.9, after touching $7 in previous days. It is now at -85% from the highs of four months ago, which was when it debuted in the markets after the implosion of the previous cryptocurrency bearing the same name.
*Jail Kwon: speculation about the arrest warrant for Do Kwon*
This kind of stadium cheering against Do Kwon materialized in a new token called “Jail Kwon” (JKWON). The token had actually been launched before at the beginning of September, but initially it had not met with much success.
With the latest events, however, its market price has skyrocketed from 0.18 mills to 1.10 mills in the space of a few hours, a gain of more than 500% in less than 24 hours. Even for a very volatile market like cryptocurrency, this remains a more than resounding achievement.
Thereafter, enthusiasm was dampened, so much so that the price in the following two days dropped to 0.6 thousandths of a dollar.
Jail Kwon was created following the implosion of the Terra ecosystem by some investors who lost a lot of money because of that event.
It is worth mentioning, that from the first moment after the implosion rumors began to circulate about hypothetical fraudulent activity on the part of the ecosystem managers, so much so that it did not take long for the Korean authorities to let it be known that they had opened an investigation.
In South Korea in particular, the project is enjoying a fair amount of success, as is also shown quite clearly by the price performance of the token on the crypto markets in recent days.
The fact is that this could go on for a while longer, so this could be one of those tokens on which interest could suddenly mount, even for more than once.
Jail Kwon was launched on BNB Chain and is tradable on PancakeSwap under the ticker JKWON.
This might be the first case of an Educate-to-Earn project, while the whitepaper states that the mission is to combine Web3 with Web2 to provide something unique to the cryptocurrency market by leveraging Do Kwon’s relevance and social media presence and Luna’s crash.
6. Government Officials Migrating to Crypto Firms: What’s Driving Them?
With crucial posts lasting only a few months, former regulators at the center of major financial markets have struggled with new jobs in the rapidly evolving cryptocurrency business for the past ten years. To prepare for a potentially stricter set of regulations for a sector that has so far fought its way through the gaps while raking in billions of dollars from investors and consumers, cryptocurrency firms have been luring officials from every nook of the complex US regulatory network and other key people in the finance world in the past few months.
The British government set aside money in 2018 to educate 250 police officers on developing digital currencies. The cops were trained to look into, seize, and understand the worth of digital money. They were known as crypto tactical advisers. Many are now quitting law enforcement and working in the private sector, where they can do the same duties for higher pay.
The officers meet the demand for developing cryptocurrency businesses bracing themselves against ongoing hacking threats and stringent laws from nations like the United States.
According to estimates from the National Police Chiefs' Council (NPCC), the representative organization that fights for the rights of the U.K. police force, cybercrime officers are leaving law enforcement at a rate that is more than triple that of the rest of the police force, as reported by Bloomberg a while back – at least 15 cops left law enforcement to work for cryptocurrency companies. The NPCC anticipates this number will rise sharply over the next couple of months.
A Chainalysis representative acknowledged to Fortune that the business is aggressively "hiring ex-law enforcement talent (cyber and otherwise)," but she declined to elaborate on their specific position at the company. A Coinbase representative told Bloomberg.
7. Crypto Miners From US, EU Stay Put in Russia Despite War, Sanctions
After Russia started the war in Ukraine in February, the European Union and U.S. expanded sanctions. Western companies fled Russia, leaving behind facilities, goods and local staff.
You would think the Russian cryptocurrency mining market, long popular for cheap Siberian hydropower, would feel the heat, too. In April, one of the largest mining companies in Russia, BitRiver, was hit by U.S. sanctions.
That immediately affected BitRiver’s business: Compass, a U.S. mining company, ceased doing business with BitRiver and reportedly tried to sell the hardware it placed in BitRiver’s facility in Siberia. The machines got stuck in negotiations between the erstwhile partners. Then, Japanese bank SBI said it was out of Russia – meaning, out of BitRiver’s farm, as CoinDesk reported.
However, no other Russian mining firms have been sanctioned so far, and clients from the EU and U.S. aren’t leaving in a panic – on the contrary, old clients have stayed and some new ones have come in, say people in the industry.
“Nothing changed. In crypto, people don’t care about these sanctions. Everyone who has been working here keeps working,” said Artem Eremin, CEO of Chilkoot, a mining hardware reseller.
The reason: Russia is still an attractive place for mining thanks to cheap electricity, even more so now when other previously popular jurisdictions have made life harder for miners. China outlawed mining last year. Kazakhstan cut off all power to mines for several months in early 2021 and increased energy costs for miners with a new tax this year.
8. Long-Term Bitcoin Holders Now Own 13.62 Million BTC
Despite gloomy market conditions, BTC whales have accumulated the crypto asset in the past few months.
On Friday, Bitcoin failed to retain the price level of $20,000.
Long-term Bitcoin (BTC) holders are not ready to sell their digital assets despite the latest crypto market correction. Glassnode’s data indicates that the long-term holders of the world’s most valuable digital currency now own approximately 13.62 million Bitcoin, which is the highest level on record.
Total supply held by Long-Term Holders has reached a new ATH of 13.62M BTC, LTH supply is the volume of Bitcoin which has been dormant for 155-days and is statistically the least likely to be spent during market volatility,” Glassnode noted.
Bitcoin network has remained volatile during the last few days. Earlier this week, the total number of active BTC addresses touched its highest level in three months. During the first week of September 2022, the dormant BTC supply crossed 65.7%.
However, the network witnessed some concerns as the profitable supply has dipped in the past few weeks amid a plunge in Bitcoin’s price. On Friday, the digital currency dropped below $20,000. As a result, the mean transaction volume (7-day moving average) touched $160,275 on Friday, which is the lowest level in one month.
Despite gloomy market conditions, BTC whales have accumulated the crypto asset in the past few months.
On Friday, Bitcoin failed to retain the price level of $20,000.
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Long-term Bitcoin (BTC) holders are not ready to sell their digital assets despite the latest crypto market correction. Glassnode’s data indicates that the long-term holders of the world’s most valuable digital currency now own approximately 13.62 million Bitcoin, which is the highest level on record.
“Total supply held by Long-Term Holders has reached a new ATH of 13.62M BTC, LTH supply is the volume of Bitcoin which has been dormant for 155-days and is statistically the least likely to be spent during market volatility,” Glassnode noted.
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Bitcoin network has remained volatile during the last few days. Earlier this week, the total number of active BTC addresses touched its highest level in three months. During the first week of September 2022, the dormant BTC supply crossed 65.7%.
However, the network witnessed some concerns as the profitable supply has dipped in the past few weeks amid a plunge in Bitcoin’s price. On Friday, the digital currency dropped below $20,000. As a result, the mean transaction volume (7-day moving average) touched $160,275 on Friday, which is the lowest level in one month.
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Bear Market
With a drawdown of more than 70% from its all-time high in November 2021, Bitcoin is currently going through one of the worst phases in its history.
“Bitcoin has now been within a persistent market downtrend for ten months since the ATH in November 2021. This week, Bitcoin spot prices touched the $18,649 level, marking the second-lowest local low at a 72.5% drawdown from the cycle top. Compared to prior bear cyclical bottoms, the 2022 contraction has not been as significant from a percent drawdown perspective. The lows in 2015, 2018 and 2020 reached over 77%+ drawdowns from ATH. However, even with a lower drawdown magnitude, the scale of financial loss in this bear market can be reasonably argued to be the largest in history,” Glassnode mentioned in its report.
9. Crypto Lending Company Celsius Files for Permission to Sell Its Stablecoin Holdings
Celsius currently owns 11 forms of stablecoins totalling approximately $23 million, according to disclosures.
Crypto lending firm Celsius Network, which is currently in Chapter 11 bankruptcy proceedings, has asked the court for authorization to sell its stablecoin holdings in order to generate liquidity to help fund its operations, according to new court filings.
* Celsius filed for bankruptcy in July, and is currently before the U.S. Bankruptcy Court for the Southern District of New York, which is also hearing Three Arrows Capital's bankruptcy case.
* If this motion is approved by presiding Judge Martin Glenn, the Chief U.S. bankruptcy judge, the proceedings of the sale would go to primarily pay for the operations of Celsius Network. While the proceeds generated by the sale of the stablecoins constitute property of the Debtors' estate, paying them back is part of a separate and ongoing process.
* The Debtors, however, continue to own stablecoins that should be monetized to fund their operations in these Chapter 11 cases given their market stability compared to other types of cryptocurrencies," the filing reads.
* Celsius' official committee of unsecured creditors made a deal with the U.S. Trustee's office earlier in September to appoint an independent examiner, provided they took certain steps to limit the amount of time and funding the examiner would take. Celsius agreed to join the examiner, and the judge signed off on the deal on Wednesday.
* A hearing is scheduled for Oct. 6 in New York to discuss the proposed stablecoin sale.
