News updates June 07, 2022
- First Mover Americas: Bitcoin Dumps Below $30K as Morgan Stanley Calls Out Liquidity Pressures
The latest moves in crypto markets in context for June 7, 2022. Bitcoin (BTC) was dumping on Tuesday, just a day after a price push past $31,500 kindled hopes that recently slumping cryptocurrency prices might have hit a bottom.
"The market dynamics this Tuesday morning are a reminder that the market cannot now rally again as it did in 2020," Alex Kuptsikevich, senior market analyst at FxPro, wrote in an email. "In our view, the bitcoin bear market is not over yet." As of press time, the largest cryptocurrency was changing hands around $29,400, down 6% in the past 24 hours.
More than $200 million worth of positions on derivative exchanges were liquidated in the past 24 hours, according to Coinglass, CoinDesk's Oliver Knight reported.
Katie Stockton, managing partner of the technical-analysis firm Fairlead Strategies, wrote in a report that "long-term momentum remains to the downside," with support seen at $27,200.
2. Why Crypto Bill Is A Boon For Bitcoin and Doom For Altcoins?
The bipartisan bill on crypto regulation released on Tuesday already raises many a doubt in investors’ mind. At the centre of the bill’s recommendations is the plan to regulate various cryptocurrencies in separate categories.
It proposes to bring crypto under the purview of the Commodity Futures Trading Commission (CFTC), instead of the Securities and Exchange Commission (SEC). The bill also plans to introduce strict registration and disclosure requirements on crypto companies. This could prove to be a huge roadblock for the existing altcoins.
Meanwhile, senators Cynthia Lummis and Kirsten Gillibrand are positive about the passing of the bill through all stages of jurisdiction.
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Speaking on Fidelity’s announcement last month on allowing users to put their retirement funds in Bitcoin, Lummis said it was a wonderful idea. Bitcoin could play the role of a long term part of retirement funds, which helps in diversified asset allocation, she added.
“Investors need some assets as just a store of value and that is where Bitcoin shines. For that reason it belongs as a slice of the diversified asset allocation for retirement funds.”
3. SEC Investigating Binance's BNB.
The U.S. Securities and Exchange Commission has reportedly launched an investigation into Binance's BNB, Bloomberg reports.
The regulatory watchdog wants to determine whether or not the most popular exchange token is an unregistered security.
Binance held its initial coin offering (ICO) back in July 2017. The exchange raised a total of $15 million.
The probe is yet to reach any conclusion, according to the report. The regulator may not end up taking legal action against the exchange.
BNB, which experienced immense growth in 2021, remains the fifth-biggest cryptocurrency by market capitalization. The coin is currently trading at $293 after slipping 4.66% on the news.
In December 2020, the SEC took Ripple to court over allegedly illegal XRP sales. The resolution of the high-stakes case is expected to have significant ramifications for the entire industry.
4. Loopholes In Draft US Crypto Bill To Kill Most Altcoins? Here’s Why?
In what could be a landmark moment in the history of cryptocurrencies, a draft crypto bill will come up on Tuesday. Democrat senator Kirsten Gillibrand and Republican senator Cynthia Lummis have penned the bill.
A Bitcoin bull herself, Lummis’ presence at the core of the bill is expected to heavily favor the Bitcoin ecosystem. However, all is not well for the future of altcoins.
Chico Crypto, a YouTuber, said the draft of the much anticipated crypto bill will ‘be very interesting’. The bill broadens the definitions of crypto tokens and regulatory scope of the SEC, he said. This could mean that a broad range of altcoins could essentially come under the SEC’s scanner. Also, in a bad sign for the altcoin market, if they are could be considered as securities, he added.
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Crypto Bill Could Empower SEC Regulation On Altcoins
Explaining the scope of cryptocurrencies under the SEC, he said,
“The bracket includes tokens that derive profit from others’ managerial efforts or those that provide financial interest in the token’s issuing effort. The decentralized autonomous organizations (DAOs) might not come under this definition. But many people who have interest in the company receive a batch of tokens.”
5. Law Decoded, May 30–June 6: Terra’s aftermath in China, Japan and South Korea
The “long waves” of TerraUSD’s May 7 collapse, which we noted two newsletters ago, are extending even further. Last week brought some notable reactions to the stablecoin’s depegging in the East Asia region.
A Chinese state-owned media outlet, the Economic Daily has signaled that the Chinese government may introduce even tighter regulations on cryptocurrencies and stablecoins due to the collapse of the Terra ecosystem. It might even mean a complete ban on stablecoins to prohibit ownership, transfer, purchase and sale of the assets, some experts believe. What China plans, Japan does — as a new law will limit the issuance of stablecoins to licensed banks, registered money transfer agents and trust companies.
It comes as no surprise that South Korea, the birthplace of Terra’s creator, is also among the first nations to react. Amid signs that Terraform Labs co-founder Do Kwon was facing legal trouble in South Korea, the country’s ruling party announced the launch of the Digital Asset Committee, whose task would be to oversee crypto until a permanent government entity is established. This is at the same time when the nation’s Financial Supervisory Service is demanding reports from 157 payment gateways about any service related to crypto, its plans for the future and disclosure of digital assets.
*An open letter from crypto critics*
From 2018 to 2021, the budget spent on crypto lobbying grew from $2.2 million to at least $9 million, and that didn’t go unnoticed. A group of academics, software developers and technology experts decided to pen an open letter to lawmakers in Washington, urging them to resist the lobbyist pressure and attempts to create a “regulatory safe haven” for crypto. The crypto community did not stay silent and expressed its disagreements with the letter and its contents — sadly, in some cases recursing to calling the co-signers “trolls” and “attention seekers.”
*401(k) will fight for crypto in court*
The United States Department of Labor’s March warning to 401(k) providers to stay away from crypto in their portfolios provoked some serious pushback across the spectrum of industry supporters, from congresspeople to trade associations. But ForUsAll, a 401(k) retirement provider with crypto already accessible to its clients, went even further and sued the Department. The company is seeking the withdrawal of a DOL compliance assistance release, which explained that the Department’s Employee Benefits Security Administration may “conduct an investigative program” to target 401(k) plans that contain cryptocurrency.
*One step closer to mining moratorium in New York*
Two months after it passed the lower chamber, the proof-of-work mining ban bill was approved by the New York State Senate. It means “no” to any new mining operations in the state for the next two years, but anyone using 100% of renewable energy is spared from the prohibition. Will other states follow New York and outlaw PoW mining to save the environment? That is surely not impossible. Though the European Parliament had to remove a similar plan after facing pushback.
6. US Department of Justice calls for more international cooperation, coordination on crypto law enforcement.
A new report from the Department of Justice proposes more international cooperation among law enforcement agencies on the crypto and blockchain front.
Information sharing and the harmonization of anti-money laundering and know-your-customer rules were also proposed in the DOJ report, which was developed in conjunction with other US agencies in the wake of the Biden White House's executive order on crypto. That EO was released in March.
The report itself was drafted in response to that executive order. In the introduction, US Attorney General Merrick Garland wrote that "the growing use of digital assets in the global financial system has profound implications for investors, consumers, and businesses and increases the risk of crimes such as money laundering, ransomware, terrorist financing, fraud and theft, and sanctions evasion."
7. Terraform Labs employee under investigation for embezzling firm’s Bitcoin.
The legal troubles around Terraform Labs, the company behind the collapsed Terra (LUNA) ecosystem, are deepening after South Korean authorities launched investigations into one of the firm’s employees over alleged Bitcoin embezzlement.
Seoul police indicate that the employee embezzled the Bitcoin personally from the company in May last year, South Korean news outlet Chosun Biz reported on June 7.
According to officials, no link has been established between the embezzlement suspect and Terra founder Do Kwon, nor has the amount of Bitcoin in question yet been revealed.
The investigation was launched after authorities received intelligence reports regarding the suspect’s alleged fraud. Consequently, the Seoul police asked exchanges used in transacting the crypto assets to freeze the employee’s accounts.
8. Here's Who Constantly Dumps Bitcoin on Crypto Market
An eternity of selling volume in April only occurred during the trading hours of a certain group of traders and investors. Those trading hours are U.S. trading sessions, which indicate that the main selling pressure on the market is coming from U.S. market participants, while a group of Asian investors mostly pumps the digital gold.
As the data of Aracane Research analysts suggests, the cumulative year-to-date return of BTC during U.S. trading hours dropped massively from 4.22% on April 1st to -32.55% in May.
9. Alibaba's Ant Group Floats New Digital Bank ANEXT in Singapore
Ant Group, a majority-owned fintech firm of Alibaba Group Holdings has launched ANEXT, a digital bank following a nod from the Monetary Authority of Singapore (MAS) earlier this month.
ANEXT will be focused on Small and Medium Enterprises (SMEs), particularly those focused on local and regional trades. The startup has inked a 2-year partnership with Proxtera, an entity supported by MAS, the Infocomm Media Development Authority (IMDA), and the private sector entities to create an open framework for financial institutions.
10. BNB Stretches Losses as Binance Fights New Regulatory and Media Battles
Binance coin (BNB), the native token of the world's largest crypto exchange Binance, has extended losses as new regulatory scrutiny and media investigation have once again put the exchange in the spotlight - albeit not in a positive manner.
At 7:10 UTC on Tuesday morning, BNB is changing hands at USD 282.7, down by 9.1% over the past 24 hours. The coin is down by 12.2% over the past week and by nearly 60% from its all-time high of USD 686 recorded in May 2021, according to CoinGecko.
11. Binance CEO Refutes Money Laundering Report
Binance CEO “CZ” on Tuesday refuted a Reuters report that the exchange facilitated about of $2.35 billion worth of illegal transactions.
CZ released over 50 pages of email records between Binance’s cybersecurity team and Reuters, which he believes refutes the Reuters report.
