News Updates July 09, 2022

1. Bitcoin 'cheap' at $20K as BTC price to wallet ratio mimics 2013
Fidelity Investments' Jurrien Timmer stays upbeat on Bitcoin network strength, while another commentator flags a "compelling" risk/reward ratio at $20,000. 

Bitcoin (BTC) has not been this good value since it cost $1,130, one analyst argues as BTC offers a “compelling” risk/reward ratio.

In a Twitter thread on July 7, Jurrien Timmer, director of global macro at asset manager Fidelity Investments, simply described $20,000 Bitcoin as “cheap.”

Timmer: "In other words, Bitcoin is cheap"
While fears that crypto markets could suffer further drawdowns this year remain, some believe that current Bitcoin price levels offer the kind of value for money not seen in years.

Analyzing the BTC price versus the number of non-zero addresses — wallets with a positive balance — Timmer concluded that BTC/USD is now back at where it was at the peak of the 2013 bull market.

At the time, BTC/USD managed to hit around $1,130 before spending several years consolidating thanks to the demise of exchange Mt. Gox.

“I use the price per millions of non-zero addresses as an estimate for Bitcoin’s valuation, and the chart below shows that valuation is all the way back to 2013 levels, even though price is only back to 2020 levels,” Timmer explained.

“In other words, Bitcoin is cheap.”
The Bitcoin price/network ratio is not the only encouraging sign when it comes to Bitcoin’s growth despite the current bear market. Timmer added that Bitcoin adoption still reflects the rise of the internet, and that the Bitcoin network “appears to be intact”  

when it comes to its growth cycles.

When it comes to price/network ratio, it is further not just Bitcoin showing signs of solid investment potential.

“If Bitcoin is cheap, then perhaps Ethereum is cheaper,” he wrote.

“If ETH is where BTC was four years ago, then the analog below suggests that Ethereum could be close to a bottom.” when it comes to its growth cycles.

2. How to Stake (Wrapped) Bitcoin: A Beginner’s Guide.

The Bitcoin (BTC) network uses a proof-of-work (PoW) consensus protocol to secure the network, which means network participants can earn mining rewards (if they choose to mine the digital currency), but they can’t earn staking rewards natively. 

Fortunately, for BTC holders who would like to earn staking rewards on their bitcoin investment, you can tokenize your coins into Wrapped Bitcoin to earn staking rewards in the Ethereum (ETH)-based DeFi ecosystem. 

Read on to learn how to stake bitcoin (in tokenized form) and start earning staking rewards on your “digital gold.” 

What is Wrapped BTC & how does it work? 
Wrapped Bitcoin (WBTC) is a tokenized version of BTC on the Ethereum network. WBTC integrates BTC into Ethereum’s decentralized finance ecosystem by conforming to the ERC-20 standard. 

WBTC was launched in 2019 by BitGo, Kyber, and Ren and is currently the largest wrapped token by total market capitalization. 

WBTC allows Ethereum applications to integrate an ERC-20 token backed by real BTC reserves. In simple terms, you can wrap your BTC and lend the WBTC through DeFi lending protocols, use it as collateral for a crypto loan, or deposit it in an automated market maker (AMM) to earn liquidity mining rewards. 

WBTC is collateralized 1:1 with BTC through a transparently verifiable “proof of reserve” system. In other words, WBTC is pegged to the value of BTC in a ratio of 1:1 and, therefore, mirrors BTC’s price movements. 

Wrapped Bitcoin is managed by a decentralized autonomous organization (DAO) comprising several members who hold a multisig contract to add or remove WBTC merchants and custodians.

To deposit BTC and mint WBTC you must go through a process that involves merchants and custodians. Upon receiving a request from a user, the merchant initiates a transaction by sending your BTC to a custodian to mint a corresponding amount of WBTC. The WBTC is sent to the user, and the custodian locks the BTC in a digital vault. 

If you want to redeem your WBTC for BTC, the merchant initiates a burn transaction and authorizes the custodians who release a corresponding amount of BTC to the merchant's address. The WBTC is destroyed by the custodian and you will receive your BTC from the merchant. 

3. US state regulators are increasing scrutiny into Celsius and Voyager: Bloomberg

* Texas and Alabama regulators are reportedly expanding investigations into Celsius and Voyager.

* The authorities are looking at what went wrong and why. 

Securities regulators in Texas and Alabama are expanding their investigations into troubled crypto lending firms Celsius and Voyager, according to a Bloomberg report on Friday.

The two states are said to be examining whether Voyager and Celsius fully disclosed information on their loans and the creditworthiness of borrowers.

Joe Rotunda, director of enforcement at the Texas State Securities Board, told Bloomberg that the regulator is finding a lot of firms may not have adequately disclosed what they were doing with investors' funds, including the amount of risk they were taking and the type of transactions they were conducting.

Amanda Senn, chief deputy director at the Alabama Securities Commission, told the outlet that the regulator was investigating these companies and "trying to figure out what happened and why."

Senn added that the investigations were still in the initial stages, "but we have a responsibility on behalf of our investors in our states."

Last September, both the Texas and Alabama regulators claimed that Celsius's interest-bearing crypto deposit offerings were unregistered securities.

Celsius and Voyager are both struggling financially, as The Block has previously reported:

Celsius halted withdrawals on June 12 and since then clients' funds have remained stuck. The firm has hired legal and financial advisers to explore possible restructuring options.

Voyager filed for Chapter 11 bankruptcy protection earlier this week. Funds of Voyager's clients also remain stuck, since the firm halted withdrawals last week after its counterparty and troubled hedge fund Three Arrows Capital failed to repay a $650 million loan.

4. Russia’s Finance Ministry Supports Circulation of Stablecoins in Country

The Russian Ministry of Finance is ready to back the legalization of transactions with stablecoins in Russia, according to a high-ranking representative. While the ministry recognizes that cryptocurrencies could lay the ground for a new financial system, the department is unsure if it will be better than the current one.

Russia’s Minfin Open to Legalizing Stablecoins if Business Needs It

The Ministry of Finance of the Russian Federation (Minfin) generally supports authorizing the circulation of stablecoins in the country, according to Ivan Chebeskov, director of the ministry’s Financial Policy Department. The top official made the statement during “The Influence of Web3 – New Era of the Internet of Trust?” panel at the Russian Creative Week.

Chebeskov remarked that Minfin looks at the issue from the perspective of Russian entrepreneurs. “If there is a need for businesses, companies or investors to settle, invest in a new way, if they need such a tool, because it reduces costs, works better than previous tools, and if we can limit the risks associated with it, we will always support such initiatives,” he elaborated.

Quoted by RBC Crypto, the government representative also noted that blockchain in general, as well as crypto assets, digitalization and tokenization, can potentially provide an opportunity to establish an entirely new financial system. “But one cannot be completely sure that it will be able to work better than the existing financial systems,” Chebeskov commented.

The Russian finance ministry has been a driving force behind efforts to legalize operations with cryptocurrencies in Russia, and earlier this year submitted a new bill “On Digital Currency,” designed to fill the regulatory gaps left by the law “On Digital Financial Assets.” The latter only partially regulated crypto matters when it went into force in January 2021.

The Central Bank of Russia, on the other hand, has maintained a strong opposition against allowing crypto transactions in the country, while developing a digital ruble and proposing a blanket ban on crypto-related activities. Only recently, it softened its stance a little, with Governor Elvira Nabiullina stating that the regulator could agree to small-scale crypto payments in international settlements amid mounting Western sanctions against Russia.

Chebeskov’s statement comes despite the collapse of terrausd (UST), which caused a major market slump and loss of confidence in stablecoins. The situation in the crypto market was recently cited by the head of the parliamentary Financial Market Committee, Anatoly Aksakov, who warned that the upcoming legislation, which has undergone multiple revisions this year, will be “tough.”

5. Singapore’s low taxes draw Japan’s Web 3.0 companies. A large number of Japanese Web 3.0 companies are moving to or at least setting up new offices in Singapore, executives from Japanese blockchain gaming infrastructure builder Oasys told Forkast on Friday.

Fast facts
Japanese firms operating in the Web3 sector need to pay taxes on unrealized gains if they issue a token and that goes up in value, Ryo Matsubara, representative director of Oasys, told Forkast at the IVS Crypto 2022 event in Okinawa. “We [may] go bankrupt because we need to pay the tax,” he said.
In an interview, Matsubara and Oasys director Daiki Moriyama said a difficult regulatory environment in Japan has led the firm to take a hybrid operational approach by looking to operate out of Singapore.
The number of Japanese startups moving to Singapore will likely reach 100 within 2022, according to Matsubara, as the city-state offers advantages in terms of close physical proximity and time zone.

Japan levies up to a 55% tax on gains made in crypto by investors, while token issuers reportedly are levied at a tax rate of around 35%. 
Oasys on Thursday said their sale of private tokens raised about US$20 million led by blockchain investment platform Republic Capital and Crypto.com, Huobi and KuCoin.
Japan’s traditional video game and IP giants Sega and Bandai Namco are among the primary investors of Oasys, which was founded this year.

6. US diplomats call on Japan's crypto exchanges to cut ties to Russia: Report
The FSA and Japan’s Finance Ministry previously warned crypto firms against processing transactions involving sanctioned individuals or entities, subject to fines or imprisonment.

Officials representing the United States government have reportedly urged Japan’s licensed cryptocurrency exchanges to stop doing business with Russia, seemingly as part of the country’s economic sanctions.

According to a Thursday report from the Financial Times, U.S. diplomats requested several of the 31 crypto exchanges licensed to do business in Japan and certain miners to halt operations in Russia. Japan’s financial watchdog, the Financial Services Agency, or FSA reportedly issued demands to the respective exchanges to sever any remaining ties with Russia.

7. India's Law Enforcement Agency Probes Crypto Exchanges for Forex Violations
The investigation comes amid a slide in the rupee to a record low versus the greenback.

India's Directorate of Enforcement (ED) has issued notices to crypto exchanges seeking more information on supposed foreign exchange violations by those entities, according to the Economic Times.
At issue are possible violations of the Foreign Exchange Management Act 1999 (FEMA), which outlines formalities and procedures for all foreign exchange transactions in India. The law's main objective was to facilitate external trade and payments and ensure orderly development and maintenance of the Indian forex market. The ED is tasked with ensuring compliance with the law and probing violations under the FEMA act and the Prevention of Money Laundering Act 2002 (PLMA).
 
"Transaction history, relationship with foreign exchanges, how much money is going out of India – ED is examining every detail on offshore transactions," an ED official told the Economic Times.