News Updates August 22, 2022
1. Bitcoin Holders Withdrawing from Exchanges "Like Never Before": Arcane Research.
Bitcoin investors have been moving their stashes off crypto exchanges frantically, as reported by Arcane Research in a recently published tweet. Glassnode has added that the Bitcoin balance on exchanges has reached a four-year low.
*Withdrawing Bitcoin like never before"*
The Arcane Research team spreads the word about negative exchange net flows they have been noticing since the start of the year. The tweet names a likely reason for this: the collapse of large crypto lenders earlier this summer — Celsius, Babel Finance and Vauld — after experiencing issues with liquidity. This is when the biggest withdrawals kicked off compared to those that took place before May.
The tweet says that users have been withdrawing Bitcoin from exchanges "like never before." Besides, Arcane Research mentions that issues with lenders have done serious damage to users and assumed that they might be losing trust in crypto exchanges.
In June, 119,000 BTC was moved off of exchanges. In July, they withdrew 96,000 Bitcoin, and in August, so far 65,000 BTC have been removed. Before the summer, the biggest amount of BTC that was taken away from exchanges totalled 71,000 coins.
2. Crypto market cap slides under $1 trillion as Bitcoin grapples to hold above $21,000
Since Friday, August 19, when a substantial amount of liquidations took place, affecting the larger cryptocurrency market, the price of Bitcoin (BTC) has dropped by more than 10%.
This fall in the price of the flagship digital asset has had a knock-on effect on the total capitalization of the global cryptocurrency market, currently $985 billion, falling back below the $1 trillion mark for the first time since briefly falling below the threshold on August 20, according to data obtained from CoinMarketCap.
*Bitcoin price analysis*
Meanwhile, the flagship digital asset is currently trading at $21,165, down 1.19% on the day and 12.47% over the past week, with a total market worth of $404 billion. Despite the falling price, Bitcoin’s long position interest continues to hover at its highest levels in the last 12 months.
The second largest asset by market cap, Ethereum (ETH), is currently down 2.97% on the day and a further 17.27% in the last week with a total market cap of $192 billion, despite the upcoming Merge upgrade on the horizon.
Elsewhere, all other notable cryptocurrencies in the top 20 coins by market cap are down on the day by as much as 1%, including Cardano (ADA), Solana (SOL), Shiba Inu (SHIB), and Dogecoin (DOGE).
3. Australia’s new government finally signals its crypto regulation stance
Australian Treasurer Jim Chalmers said that his government will improve the way Australia’s system manages crypto assets and provide greater protections for consumers.
Three months after being elected into power, the Australian Labor Party (ALP) has finally broken its silence on how it’s planning to approach crypto regulation.
Treasurer Jim Chalmers announced a “token mapping” exercise, which was one of the 12 recommendations in a senate inquiry report last year on “Australia as a Technology and Financial Center.” The report was warmly welcomed by the industry which has been anxiously waiting to see if the ALP government would embrace it.
Aimed at being conducted before the end of the year, the token mapping exercise is expected to help “identify how crypto assets and related services should be regulated” and inform future regulatory decisions.
Cointelegraph understands that Treasury will also undertake work on some of the other recommendations in the near future, including a licensing framework for crypto asset service providers dealing in non-financial product crypto assets, appropriate requirements to safeguard the consumer crypto asset custody, and a review of the decentralized autonomous organization (DAO) company-style structure.
In a statement from Treasurer Jim Chalmers, along with Assistant Treasurer and Minister for Financial Services Stephen Jones and Assistant Minister for Competition, Charities and Treasury Andrew Leigh, the government led by Prime Minister Anthony Albanese says it wants to reign in on a “largely unregulated” crypto sector:
The statement noted that more than one million taxpayers have interacted with the crypto ecosystem since 2018, and yet, “regulation is struggling to keep pace and adapt with the crypto asset sector.”
The politicians claimed that the previous Liberal-led government had previously “dabbled” in crypto asset regulation through crypto secondary service providers “without first understanding what was being regulated:”
*Caroline Bowler, CEO of BTC Markets said the*
move mirrors calls from many in the industry for “proportional, appropriate regulation” of the sector.
“The additional benefits of token mapping are many. It will provide greater clarity to crypto investors; aid companies in developing their own blockchain-based innovations; provide guidance to digital currency exchanges; as well as assist regulators in shaping an appropriate regulatory regime,” she said.
However, Aaron Lane, a senior lecturer at the RMIT Blockchain Innovation Hub, believes the token mapping exercise is something of a delaying tactic by the Labor government:
4. South Koreans Will Have to Pay A Heavy Gift Tax on Crypto Airdrops
As per the latest reports, the Ministry of Strategy and Finance is looking to introduce a new gift tax on airdrops for crypto assets. Earlier today, August 22, the ministry was responding to a tax law interpretation for freely transferable cryptocurrencies, and whether they can implement the gift tax for the same.
A spokesperson of the Ministry of Finance said: “The free transfer of assets is a ‘gift’ under the Inheritance and Gift Tax Act. In this case, a gift tax will be levied on the third party to whom the virtual asset is transferred free of charge”.
Airdrops are quite popular in the crypto space wherein a platform rewards the holders of its native digital assets. Airdrops specifically happen at the time of hardforking the existing blockchain to a new one or while depositing virtual assets to a blockchain network. Another form of crypto rewards is crypto staking which may also be subject to a gift tax.
Crypto Gift Taxes to be Between 10-50%
5. Former Comptroller of the Currency Says Ripple and SEC Will Settle to Enable Investors To Continue Trading & Holding XRP
The lawsuit between Ripple and the Securities and Exchange Commission (SEC) has been a major topic of discussion in the cryptocurrency industry.
Cryptocurrency enthusiasts, including popular figures in the industry, have weighed into the debate as to whether Ripple offered unregistered securities in the United States.
With the lawsuit expected to end by March 2023, some experts have begun to make their predictions on a possible outcome.
Brian Brooks, the former Binance U.S. CEO and previous Acting Comptroller of the Currency, is the latest to speculate on the possible outcome of the Ripple vs. SEC lawsuit.
In a recent interview, Brooks noted that the court would decide whether Ripple’s 2013 Initial Coin Offering (ICO) is a breach of U.S. securities law.
However, he expects both parties to settle the line to enable investors to continue trading XRP in the United States. According to Brooks, the settlement that may likely happen will border around the distribution of XRP in 2013.
Here, the most important issue about the XRP is that there is a difference between the way the asset is distributed and the nature of the asset at a given moment and time. And I think the issue is that whatever happened at the original distribution of the XRP tokens ten years ago, whether that was or was not a security, that is what the courts will decide. The question is whether XRP today is security?; the answer is that the SEC itself has said that assets can change their nature with time as they achieve utility and decentralization.
I will just make a quick prediction that there is a settlement that will be done somewhere. The settlement has to do with the distribution of the tokens so that existing token holders can continue to trade them and find value in them in ways that they do,” Brooks quoted.
6. Brazilian Local Gov’t Chief & ‘Bitcoin Pharaoh’ Suspected of Crypto-powered Money Laundering
Brazilian law enforcement agencies have swooped on the home of a local government chief they suspect of heading a crime ring that laundered money using cryptoassets – along with a controversial figure named “the Bitcoin Pharaoh.”
The raid took place at the home of the Armação de Búzios councilman Lorram Gomes da Silveira, Globo reported, and saw officers confiscate over USD 9,250 in cash.
Multiple agencies were involved in the raid, including Rio de Janeiro’s state ministry-run Specialized Action Group for the Combat of Organized Crime. The agencies, as well as public prosecutors, believe that the councilman headed a “criminal organization” that oversaw large-scale “corruption,” making use of “false documents.”
Lorram is in his third term as councilor of Armação de Búzios, a position he was first elected to in 2009. From November 2018 to May 2019, he served as chief of staff to the city’s mayor. And it was in this period, the ministry says, that the crimes were committed.
Two other men were also investigated in conjunction with the same alleged crimes: Glaidson Acácio dos Santos, known as “the Bitcoin Pharaoh,” and Carlos Alexandre da Silva.
Officers appear to believe that Lorram accepted cash payments in exchange for granting Armação de Búzios-based individuals licenses and other favors – and allegedly had the Pharaoh and da Silva convert the cash into crypto in a bid to “hide” the funds.
The ministry began its investigations into suspected money laundering violations in April last year, and suspects that other City Hall employees may have participated in the criminal “organization.”
The judiciary, meanwhile, has determined that around USD 271,000 worth of Loram’s assets are “unaccounted for” – and may be hidden away in crypto wallets they have not yet gained access to.
The “Pharaoh” was jailed last year and is awaiting trial on charges of orchestrating a USD 7 billion crypto-themed Ponzi scheme that allegedly promised investors 10% returns on their stakes.
Earlier this month, FDR reported, the “Pharaoh” declared his intention to run for election – from prison – as a candidate for the Christian Democratic Party in October’s general election.
7. First Mover Asia: Crypto Sell-Off Due to Fed Hawkishness, Possible Jump Dump of ETH, Says QCP Capital; Cryptos Decline Slightly in Monday Trading
Crypto asset trading firm QCP Capital will be eyeing remarks later this week by U.S. central bank Chair Jerome Powell for their potential effect on digital asset markets.
Bitcoin and ether fall slightly as investors fret over monetary policy and macroeconomic uncertainty.
Insights: Crypto asset trading firm QCP Capital blamed the recent crypto sell-off on Federal Reserve hawkishness and Jump Capital's possible jettisoning of ETH.
Catch the latest episodes of CoinDesk TV for insightful interviews with crypto industry leaders and analysis. And sign up for First Mover, our daily newsletter putting the latest moves in crypto markets in context.
8. LATAM’s New Crypto Mining ‘Promised Land’: Pluses & Minuses for Paraguay.
Paraguay has become a “new Latin American Mecca for cryptocurrency mining,” a new report has claimed – but not everyone seems to be happy about the fact that more miners than ever are choosing to set up shop in the nation.
As previously reported, the Paraguayan Senate last month signed off on a bill that will regulate crypto mining and trading in the nation. The bill, which has been in the pipelines since September 2021, seeks to legalize mining and ensure that miners pay taxes and declare their activities.
Many Paraguayan politicians have argued that the mining sector could be a major money-spinner for the government and power companies. The nation is home to a number of large hydroelectric power stations that periodically produce surplus power.
As this surplus power often cannot be used by Paraguayans, many advocates have called for international miners to be encouraged to set up shop near dams and power plants. While other industries have little use for irregular power supply, this is not the case for miners, whose rigs can take advantage of power when it is available and sit idle when this is not the case. Miners from as far afield as Canada and China have already been courted, with talks still ongoing with some of the parties fleeing China’s crypto crackdown of September 2021.
El Pais reported that an abundance of “very cheap electricity” has turned the nation into a “promised land for profitable Bitcoin mining,” and remarked that former “jungles” in Ciudad del Este, San Pedro, and Paraguarí have already become major mining centers.
9. Former CFTC Chair: Here's How SEC and CFTC Can Work Together to Regulate Crypto
Forming a self-regulatory governing committee “might be a way to develop standards for this market,” Timothy Massad said on CoinDesk TV’s “First Mover.”
Former Commodity Futures Trading Commission (CFTC) Chairman Timothy Massad said current gaps in crypto regulation can be filled if the Securities and Exchange Commission (SEC) and the CFTC come together to form a self-regulatory organization (SRO).
Massad, now a research fellow at Harvard University’s School of Government, told CoinDesk TV on Monday that as it stands now, “neither agency has the power” to regulate cryptocurrency.
"There is the gap. There's a gap with respect to regulation of what I would call the cash market for crypto assets, which are not securities," he said.
The SEC oversees the securities markets including stocks and bonds while the CFTC’s purview is in commodities futures such as agriculture and metals. The CFTC has taken a role in crypto because exchanges such as the CME have active futures markets in bitcoin (BTC) and ether (ETH). Meanwhile, the SEC has taken action against crypto firms because it deems some tokens as securities based on the way they are marketed.
