News Updates December 13 & 14, 2022
1. Bitcoin slips below $18,000 as Federal Reserve raises interest rates by 50 basis points. The U.S. Federal Reserve raised the federal funds rate by 50 basis points, increasing it to a range of 4.25% to 4.5%, the highest since 2007.
Today's interest rate decision was largely expected, with traders pricing in such a rise ahead of time. The price of bitcoin dipped below $18,000 following the news.
The central bank said it remains "highly attentive" to inflation risks. Policymakers projected rates would peak next year at 5.1% before being cut to 4.1% in 2024. That’s higher than previously predicted.
Bitcoin immediately fell on the news. The leading crypto by market cap dipped below $18,000 briefly, from $18,355 before the announcement. The move appears to be a classic example of "buy the rumor, sell the news."
2. PayPal Working With Crypto Wallet MetaMask to Offer Easy Way to Buy Crypto
PayPal will integrate its buy, sell and hold crypto services with MetaMask Wallet as the companies look to broaden users' options to transfer digital assets from their platforms, the companies said Wednesday.
According to a press release, the partnership between the payments firm and MetaMask developer ConsenSys is intended to enable users to select their PayPal accounts as a payment option to buy ether (ETH) from within the MetaMask app. The offering is designed to facilitate seamless purchases and transfers of ether from PayPal to MetaMask.
MetaMask intends the offering to help bring more users into the Web3 ecosystem at a time when the sector is looking for a way forward during the crypto winter.
"This integration with PayPal will allow our U.S. users to not just buy crypto seamlessly through MetaMask, but also to easily explore the Web3 ecosystem," said ConsenSys product manager Lorenzo Santos in the press release.
Select U.S. customers can access the new offering beginning today as PayPal works to roll out the service to the rest of its U.S. customers over the next few weeks.
The launch follows PayPal's push to enable crypto transfers between its own platform and several popular crypto exchanges in June. The fintech company debuted its crypto purchase, sell and hold service in October 2020.
3. Forget CBDCs, Here’s Where the Biden Administration Needs to Focus in 2023
Rather than centralizing the digital dollar, lawmakers should focus on exploring a decentralized identification program and develop financial literacy programs for the general public.
This fall, the Biden administration in the U.S. released a framework outlining a potential way to regulate the emerging digital asset industry. The report also came with a proposal for studying a central bank digital currency (CBDC), which seems like the direction the whole world is heading.
Today, nearly every country with a central bank is studying or developing a CBDC, according to the Bank of International Settlements (BIS). At their best, CBDCs could advance certain national priorities like bolstering financial inclusion and simplifying tax collection.
That’s what the BIS suggests. What the “central bank of central banks” is less likely to say, however, is that there are significant downsides to concentrating even more monetary power in the hands of institutions like the U.S. Federal Reserve.
This fall, the Biden administration in the U.S. released a framework outlining a potential way to regulate the emerging digital asset industry. The report also came with a proposal for studying a central bank digital currency (CBDC), which seems like the direction the whole world is heading.
Today, nearly every country with a central bank is studying or developing a CBDC, according to the Bank of International Settlements (BIS). At their best, CBDCs could advance certain national priorities like bolstering financial inclusion and simplifying tax collection.
That’s what the BIS suggests. What the “central bank of central banks” is less likely to say, however, is that there are significant downsides to concentrating even more monetary power in the hands of institutions like the U.S. Federal Reserve.
A CBDC, which can be but is not necessarily built on a blockchain, would differ drastically from other forms of crypto assets because they are inherently centralized and permissioned by design. If the government is going to get involved in the digital money race, it should do so on the principles of openness and transparency.
The Biden White House’s proposed CBDC would likely be administered by the government and a coterie of banking partners in the old-fashioned, neoliberal tradition of public-private partnerships. Although CBDC boosters pay lip service to the ideal of “financial privacy,” there are still widespread and justified concerns over allowing the government to see the details of everyone’s finances on a minute-by-minute basis.
And, yes, it is true that a U.S. dollar-based CBDC would likely promote the international use of the dollar – thereby strengthening the currency against the Chinese digital yuan, which is being piloted today in no small part to one day bolster the Chinese Communist Party’s international “soft power” – this also comes with concerns.
4. Gambling-related USDT funds grow as 1k new online gambling websites use Tether
In general, these online gambling platforms accept USDT deposits and withdrawals and settle funds via cryptocurrency payments.
Deposits and withdrawals of USDT among gambling websites through crypto payment platforms are on the rise, according to a report from Wu Blockchain, authored by Bitrace.
A study of 20 active online gambling sites revealed that there have been over 5 million USDT new deposits and other related addresses in 2022 with 161 new USDT payment platforms.
The data for these 20 gambling platforms show a total outflow of 4.2 billion USDT between 2021 and 2022. $780 million USDT was deposited into 60,000 exchange addresses, representing 18.57% of all outflows from online gambling.
The remaining funds were distributed across 310,000 individual addresses. The funds were then transferred across the blockchain network via address transfers, on-chain lending, anonymous transactions, and cross-chain transfers, thus contaminating more crypto addresses.
1,031 new online gambling platforms will be using USDT in 2022, according to the report.
Leading the list of contaminated addresses in China
More than 53% of the “contaminated” addresses are Chinese. The Chinese central bank announced that all cryptocurrency transactions, mining, and trading were illegal in 2021. This, therefore, prohibits the provision of any form of online gambling business to its citizens.
However, some online gambling institutions are set up outside of China and allow gamblers to use USDT to avoid law enforcement agencies’ tracking of money movements. In addition, the report stated that the USDT that entered online gambling pools is “contaminated” and spreads through withdrawals, impacting normal users’ addresses.
To curb money laundering through virtual currency transactions and other methods, the National People’s Congress passed the Anti-Telecommunication Network Fraud Law that came into effect on December 1, 2022.
As China steps up its opposition to crypto-related illicit activities, Hunan Province authorities have recently arrested 63 people for allegedly laundering $1.7 billion with cryptocurrency obtained from gambling.
5. U.S. Senator Claims Binance Has Ties to Chinese Government.
During an FTX-focused hearing held by the Senate Banking Committee, Senator Bill Hagerty (R-TN) said that Binance, the world’s largest cryptocurrency exchange, is controlled by the Chinese government. I wanna stay on this concern that I have. Particularly, about Binance. About the Chinese Communist Party’s role and support of that. To be clear, Binance is being proliferated around the world. It's a [Chinese] state-backed network.
Hagerty claims that Binance is doing business in emerging markets in “a very predatory fashion.”
The lawmaker noted that Binance is nearly seven times larger than FTX by trading volume. Furthermore, he predicts that the exchange’s market share will only grow now that its main rival has collapsed. If Binance were to implode like FTX, that would have “catastrophic” consequences, Hagerty says. The senator is concerned by the fact that there is no transparency regarding Binance’s reserves, and the influence that U.S. regulators can have on these exchanges is limited. The senator also voiced his concerns about the dominance of the USD as the world's reserve currency. Binance was founded in China back in 2017, but the exchange was forced to move out of the country due to the government's crackdown on crypto trading. In a blog post published in September, Binance CEO Chanpeng Zhao, who is a Canadian citizen, denied having ties to the Chinese government. Zhao also claims that the world's largest exchange doesn't have any legal entities in China.
6. Binance Proof of Reserves fall by $3.5B in 24 hours
Binance's USD and BTC Proof of Reserves fall by $3.5 billion and 500 million, respectively, according to Glassnode data.
Over the last 24 hours, the Binance USD (BUSD) and Bitcoin (BTC) Proof of Reserves (PoR) have fallen by $3.45 billion, and $472.86 million respectively — according to Glassnode data analyzed by CryptoSlate.
Within that same period. Binance PoR also witnessed approximately $1.86 billion in inflows of both USD Coin (USDC), and Tether (USDT). A margin decline in Ethereum (ETH) was also observed.
Binance’s PoR total USD currently sits below $40 billion, as can be observed below in the Glassnode chart below. This reveals a steep decline since the start of the year and a fall in PoR holdings of approximately $13.2 billion since Sept.
Binance witnessed a sharp fall in late Nov. in both BTC PoR holdings and exchange balance holdings. In late Nov., BTC PoR holdings were 555,261 BTC, while exchange holdings were 656,361 BTC.
