PBOC to Maintain High Regulatory Pressure on Crypto Trading for the Rest of 2021

PBOC to Maintain High Regulatory Pressure on Crypto Trading for the Rest of 2021

China’s central bank held a meeting to discuss work priorities for the second half of the year. It vowed to continue to put high regulatory pressure on virtual currency trading in the second half of the year.

Severe cracking down on illegal activities in virtual currency was reportedly listed as one of its work results in the first half of the year. Local publication Wu Blockchain noted,

“The meeting emphasized that the crackdown on crypto in the second half of the year is to “maintain” rather than strengthen, which may imply that there will be no big new policies, but the continuation of current policies.”

In H1 2021, the People’s Bank of China cracked down on trading and mining cryptocurrencies over heightened concerns over fraud, money laundering, and excessive energy usage. Now, the central bank will continue to maintain these regulatory measures against them in the future.

However, as we reported, these measures were not limited to the crypto industry and imposed on other sectors such as the Internet. The central bank set a series of regulatory actions targeting the tech sector’s monopoly, such as Ant Group Co., Tencent, and others over the past year as well.

Besides cracking down on the illegal capacity of virtual currency, the PBOC also decided at the meeting that it will firmly implement the decisions and arrangements made by the Central Committee and the State Council on anti-monopoly.

While preventing the disorderly expansion of capital, the central bank also proposed promoting financial business standards. It will also supervise these financial platform companies to ensure they fully implement the relevant requirements under regulations, as per the statement.

The apex bank further said that it would accelerate its work to create a financial stability law, which Deputy Governor Liu Guiping proposed in March.

The PBOC reiterated that its prudent monetary policy would be reasonable, appropriate, and flexible. While vowing to implement a good “cross-cyclical” policy design, which means policy support will be provided for a long time, the central bank said it would avoid overstimulating the economy.

“Now that final reg fud is out.. time to send it to the mooon,” commented Molly of eGirl Capital.

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Author: AnTy

$45 Billion Asset Manager, GoldenTree, Is Investing in Bitcoin

$45 Billion Asset Manager, GoldenTree, Is Investing in Bitcoin

GoldenTree Asset Management, a $45 billion asset manager run by founder and chief investment officer Steven Tananbaum, is the latest financial institution to get into crypto by purchasing an undisclosed amount of Bitcoin.

While it is not yet known just how much GoldenTree is actively buying Bitcoin, the fund has reportedly restricted its crypto exposure to only Bitcoin at this level.

Back in April, the asset manager had updated its SEC filing to allow the acquisition and buying and selling of a broad range of cryptos and blockchain-based companies.

Citing sources with knowledge of the matter, TheStreet reported that adding Bitcoin to its balance sheet will work as a diversifier for its broad mixture of debt-focused strategies.

Lately, they have also been having conversations about adding to its headcount with experience on the funding and operational sides of crypto investing, one of the sources said.

CIO Tananbaum and his companions at the firm Joseph Naggar Deeb Salem have already made VC-style investments in blockchain firms. In early July, they backed the funding for Borderless Capital, which focuses on the Algorand ecosystem.

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Author: AnTy

Wells Fargo Is Offering Crypto Exposure to its High-Net-Worth Clients

Wells Fargo has also joined in on crypto-mania. The financial services giant has started offering cryptocurrency exposure to its high-net-worth clients (HNWI), reported Insider, saying a company spokesperson has confirmed this.

In 2021, banks, hedge funds, mutual funds, pension funds, insurance companies, asset managers, and financial institutions, everyone from the traditional market has started warming up to cryptocurrencies.

In May, when it first became public, the investment-research division of Wells Fargo Wealth and Investment Management, Wells Fargo Investment Institute, was planning to evaluate and onboard an actively managed crypto strategy on its platform for its qualified investors.

This search for “a professionally managed solution” has been going on for months, said the research unit’s president Darrell Cronk at the time adding, the strategy was likely to be ready in June.

Wells Fargo’s wealth and investment management arm oversee about $2 trillion in assets.

Competitors JPMorgan and Morgan Stanley have also started offering their wealthy clients exposure to cryptocurrency recently.

“We think the cryptocurrency space has just kind of hit an evolution and maturation of its development that allows it now to be a viable investable asset,” Cronk told Insider in May but added that instead of a “strategic allocation,” he sees it as an “alternative investment.”

The financial institution also understands the importance of having a limited supply, with Bitcoin only going to have 21 million in supply ever, as Cronk noted that anytime supply is reduced, even if an asset’s demand holds constant, “it should increase the price.” Cronk said of cryptocurrencies,

“Over time, as people become more familiar with these and as they become more mainstream, I think it will naturally go up.”

“We’ve seen that happen quite consistently over the last decade, but we’ve seen it accelerate during the pandemic because there’s been more digitalization of platforms.”

With risks still present there, the bank will also focus on consumer protections and regulations. “So we’re not without risk, it’s just that we think there can be a viable investable option for those clients who show an interest,” Cronk said.

Wells Fargo has seen “quite a bit of interest” from clients.

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Author: AnTy

It’s Not About Taxes, Congress is Coming After the Entire US Crypto Industry

The unreleased infrastructure bill is the talk of the crypto town, and for a good reason, as it aims to generate $28 billion in tax revenue from the current $1.67 trillion cryptocurrency industry to help fund the nearly $1 trillion bill.

The bipartisan Senate proposal aims to amp up IRS surveillance over cryptocurrency transactions. The bill broadens the Tax Code’s definition of “broker” to cover nearly everyone in crypto, including non-custodial actors like miners, forcing them all to KYC users, explained Jake Chervinksy, General Counsel at Compound Finance. Adam Cochran of Cinneamhain Ventures commented,

“Politicians need to stop taking the paternalistic approach of trying to ban all risks and invest in the underlying problems that make people disproportionately abuse those risks.”

The definition of a “broker” is expanded in the bill to include “any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.”

Earlier drafts even covered non-custodians, including PoW miners & PoS validators. They explicitly included DEX & P2P markets covering DEX LPs, liquidators, protocol governors, and maybe even node operators or wallet developers.

The tax code requires brokers to comply with IRS reporting requirements, as per which they have to give Form 1099s to their customers & file them with the agency. To fill the form, brokers have to collect customer data, including name, address, phone number, and other information.

“As those who understand crypto already know, users are pseudonymous & access is permissionless,” said Chervinksy.

Non-custodial actors like miners have no way to get the information they need to fill the form, which in practice “could mean a de facto ban on mining in the USA,” he added.

“This sounds insane, but it really might happen. Most crypto legislation goes nowhere, so it’s easy to ignore. Not this time. This provision is part of the bipartisan & otherwise popular infrastructure bill, which is moving quickly through Congress & is highly likely to pass,” Chervinksy wrote.

He further explains that the bill can raise revenue by adding new taxes or making people pay taxes they owe, and Congress thinks crypto is all tax evaders.

“This is no way to handle major new regulations,” said Chervinsky, noting that it would either kill the crypto industry, and the policy may end up a substantial foreign policy failure as China did by cracking down on crypto mining and ended up forcing the miners out of the country.

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“The crypto provisions in the new US infrastructure bill are a disaster,” said Avichal Garg of Electric Capital. According to him, this bill would result in the departure of crypto companies from the US en masse. Garg added,

“You can’t KYC autonomous code that lives in the cloud that happens to custody crypto. The right strategy is to KYC at the fiat off ramps.”

So, what could a crypto user do here? With the provision not final yet, US citizens can reach out to their Members of Congress.

Crypto supporter Representative Warren Davidson (R-OH) also came against this bill, saying it is a departure from America’s role as someone that spearheads innovation.

“America led in the Industrial Revolution, the advent of the automobile, and the development of the internet,” Davidson said in an interview, “and now America is about to forfeit that leadership with this new technology.”

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A petition to “Stop the Senate from sneaking through total surveillance of the crypto-economy” has already been started. Chervinksy said,

“Things are moving fast, which can feel scary. But as it was with FinCEN’s proposed rule, it’s been amazing to see the entire industry come together this week to fight against this. We really do have some of the best & brightest on our side.”

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Author: AnTy

USD Longs Climb to Highest Level Since March 2020, Greenback’s Downturn Coincides with BTC Rally

USD Longs Climb to Highest Level Since March 2020, Greenback’s Downturn Coincides with BTC Rally

The net long dollar position has grown to $2.99 billion this week, up from just $399.69 million in the previous week. Meanwhile, bitcoin net shorts are rising as the BTC price surges to $42,500, last seen in May.

The USD Index has been going down for the past ten days, sliding from nearly 93.2 to 91.79 on Friday — a level last seen over a month back.

This downturn comes after the greenback enjoyed an uptrend for about three months between late May and July. In 2021, the first quarter for USD was an uptrend which followed a downtrend for just under two months.

This is unlike 2020 when the USD Index rallied strongly past 103 in March while every other asset got annihilated. And just as Bitcoin, crypto, stocks, gold, and oil started recovering, USD went down hard to a multi-year low of 89.2 in the first week of January this year.

Interestingly, after 16 long months of net shorts, US dollar positioning finally flipped to net long last week.

Now US dollar net longs have reached their highest level since early March last year, according to CFTC data. The net long dollar position has risen to $2.99 billion this week, from a mere $399.69 million in the previous week.

In contrast, in the cryptocurrency market, bitcoin net shorts rose to 1,572 contracts from net shorts of 1,192 the previous week. This could be because CME traders are hedging their longs.

USD’s downturn coincides with Bitcoin’s uptrend to the point when it bottomed out on July 20, and the day USD had its local top.

Late on Friday or early Saturday, the Bitcoin price surged as high as $42,500, a level that was last seen in May after registering ten green candles in a row.

Since May, the dollar has been poised for its worst weekly performance as the US Federal Reserve made dovish remarks combined with underwhelming economic data.

The downtrend in greenback began as Fed Chair Jerome Powell said after a policy meeting that rate increases were “a ways away” and the job market still had “some ground to cover.”

“While the Fed continued to say it was moving towards winding back its money-printing program, the Fed’s move towards this shift looks likely to be slower than previously anticipated,” said Steven Dooley, currency strategist at Western Union Business Solutions.

US gross domestic product number (GDP) provided little support as the economy of America expanded at a 6.5% annualized rate in the second quarter boosted by massive government aid. Still, even this growth was just slightly better than Q1 and fell short of the expected 8.5% acceleration.

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Author: AnTy

5th State Issues a Warning Against BlockFi as the Crypto Lender Engages with Regulators

5th State Issues a Warning Against BlockFi as the Crypto Lender Engages with Regulators

Crypto lender BlockFi has received another warning, and this time it’s from Kentucky.

The cryptocurrency trading and financial services provider received an order from the Division of Securities of the Kentucky Department of Financial Institutions (KDFI) on Friday regarding the state’s BlockFi Interest Account (BIA) operations.

According to the order, BlockFi is prohibited from soliciting or offering any securities in the state.

BlockFi meanwhile maintains that BIA is lawful and appropriate for crypto market participants.

However, effective immediately, the firm will stop accepting new BIA clients residing in KY. This does not affect its existing clients, who will continue to access the products, services, and assets on the BlockFi platform. BlockFi said in a statement,

“BlockFi has been actively engaging with multiple regulators. We remain steadfast in our commitment to protect consumers’ rights to earn interest on their crypto assets.”

This month, BlockFi also received the same prohibitive orders from New Jersey, Texas, Vermont, and Alabama, where they have stopped accepting new customers and continue to be in active dialogue with regulators regarding its Interest Account.

This week, meanwhile, the New Jersey Bureau of Securities (NJ BOS) postponed the effective date of its order to Sept. 2, 2021, following their discussion. Texas securities regulators have also allowed the company to provide evidence to support its claims and have a hearing scheduled for early October.

Despite all the regulatory pushback, the company is reportedly still pursuing a $500 million Series E funding round, that too ahead of a possible public offering.

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Author: AnTy

MSTR Stocks Are A “Leverage Long” Bet on Bitcoin, says MicroStrategy CEO Michael Saylor

MSTR Stocks Are A “Leverage Long” Bet on Bitcoin, says MicroStrategy CEO Michael Saylor

“We’ve been very intelligent about the way we put together the leverage,” said Michael Saylor, who is not interested in diversifying into other cryptos because he believes “holding Bitcoin for the long term is the highest upside lowest risk strategy” he can pursue.

Publicly-listed business intelligence company MicroStrategy is sitting on massive paper gains, about $1.5 billion if it sold its 105,085 BTC stash at current prices.

According to Bloomberg data, these gains are more than double the cumulative earnings posted by the company in the last 25 years. The nominal gain is also over 3x the revenue generated by the company since it first added Bitcoin to its treasury last August.

These gains are despite MicroStrategy having to write off millions in accounting charges related to Bitcoin.

According to the company’s second-quarter financial results, as of June 30, 2021, MicroStrategy had $3.653 billion in digital assets based on non-GAAP (generally accepted accounting principles) calculation with a non-GAAP cost basis of $2.741 billion.

Talking about racking up these accounting charges for the Bitcoin it is holding, MicroStrategy Chief Executive Officer Michael Saylor said they’re “leveraged long bitcoin” with a decade-long view. He said in an interview,

“Our view is that Bitcoin is an open digital property network and one day billions of people are going to hold digital property all our bitcoin on their mobile phones. And so we just want to get there before the billions of users get there and we’re patient.”

As for why people should invest in MSTR stocks rather than directly in BTC, Saylor explained that MicroStrategy is an operating company that sweeps its operating income into the leading cryptocurrency on which they are leveraged long.

“We borrowed $2.2 billion at a blended interest rate of about 1.5% interest. So if you like bitcoin, then you definitely would like the idea of owning” this leveraged position, he added.

“So I think we’ve been very intelligent about the way we put together the leverage and we’re unique in that regard. There is no publicly-traded company that’s got our bitcoin position with the ability to raise debt and buy bitcoin with debt.”

In the 2Q21 report, the company said it would continue to “deploy additional capital” in its digital asset strategy, which involves acquiring and holding BTC. Before that, the company had filed to sell a billion dollars in new stock to raise more funds to buy the crypto asset.

“I think in time, we will buy Bitcoin. It’ll just be a question of when we buy it with cash flows or with debt or with equity. And that’s all just a function of market conditions. And we try to do whatever is going to be created for our shareholders,” said Saylor regarding his future Bitcoin plans.

Overall, Saylor remains “very, very bullish on Bitcoin long term,” and what they “want to hold is a form of the non-sovereign store of value forever.”

As for looking past Bitcoin, to maybe even the second-largest cryptocurrency, Ethereum, which is the platform on which DeFi and NFT sector is flourishing and is increasingly gaining the attention of institutional investors, for MicroStrategy, “holding Bitcoin for the long term is the highest upside lowest risk strategy we can pursue.” ETH 2.81% Ethereum / USD ETHUSD $ 2,536.21
$71.272.81%
Volume 18 b Change $71.27 Open $2,536.21 Circulating 116.92 m Market Cap 296.53 b
10 h MSTR Stocks Are A “Leverage Long” Bet on Bitcoin, says MicroStrategy CEO Michael Saylor 10 h Bitcoin and Ether Print Green Candles for 10 Consecutive Days, OI on FTX & CME Rises Sharply & Faster than Binance 1 d Avalanche Launches New Cross-Chain Bridge To Connect Users With Ethereum

The company has no plans to diversify in crypto as “by holding bitcoin we’re diversified because we can see Bitcoin sitting on the balance sheets of cities, state, governments, companies, small investors, big investors, and ultimately think Bitcoin is going to be the core to big tech innovation at Apple, Amazon, and Facebook. So we just want to be holding Bitcoin,” he said.

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Author: AnTy

Bitcoin and Ether Print Green Candles for 10 Consecutive Days, OI on FTX & CME Rises Sharply

The crypto market is enjoying the greens this week as both Bitcoin and Ether print 10 daily green candles in a row.

Ever since bottoming out on July 20, these crypto assets have been surging, with Bitcoin hitting $42,500, which was last seen on May 20, and Ether climbed to the June 16 level of about $2,484.

The total crypto market has now rallied to $1.68 trillion but is still down from $2.55 trillion in mid-May.

In the derivatives market, the open interest on Bitcoin futures is also going up, now at $14.25 billion, up from $11.27 from June 27 low. In terms of BTC, total OI is now at 341.57k, down from 375.74k BTC on July 17.

Interestingly, in the past 24 hours, FTX had the biggest increase of 15.29% in OI, now at 57.53k, followed by CME‘s 10.21% jump to 36.68k BTC. Leading crypto exchange Binance had one of the lowest increases of 4.71% to 80.91k BTC.

Less than a fortnight back, FTX had 42.5k BTC in OI compared to Binance’s 93.89k. This shows the shift in the market as FTX continues to get more popular and bigger while Binance faces regulatory scrutiny worldwide.

Also, during the recent short squeeze, more Binance traders got liquidated than FTX, much like always in spite of the former only pushing 1 liquidation per second and significantly underreporting the figures.

As for Ether, OI has recovered to $6.41 billion from $4.43 billion on June 26. In ETH terms, it is currently at 2.6 million ETH, while less than a fortnight back, it was 2.77 million. The latest increase in OI across the exchanges has been between 8% to 12%, except for CME, which only had a 2.36% rise in the past 24 hours, followed by Bybit’s 4.8%.

But FTX is clearly leading with its OI on Ether futures now at 3726k, while on July 17, it was 379.5k compared to Binance’s 626.92k, which is a long way to reach 730.97k about two weeks back.

The Macro

While the market is clearly recovering sharply, crypto market participants aren’t really sure if the bull run is continuing from the first half of the year after having a 50% to 75% drawdown in crypto prices. However, the confidence for the same is increasing.

But not only is the micro in favor, but the macro-environment also is not as dim with the US Federal Reserve discussing tapering.

The thing is, tapering might not happen soon, with GDP figures coming in at 6.5%, only slightly better than Q1 and well below the economists’ expectation of 8.5%. Unemployment also increased month over month at 5.9%.

For the first time, volume at Fed’s reverse repurchase facility also topped $1 trillion as investors and financial institutions continued to pour cash into the overnight window. Demand for the reverse repo facility surged as the US debt ceiling looms, the Treasury department cuts down on its bill issuance, and financial firms struggle to find places to invest their excess cash.

Meanwhile, in the current unchartered territory, household savings rates are plummeting. “In the early days of covid, a major point of inconsistent economic data in increasing stimulus + QE/OMO was the massive savings everyone had. Now they’re back to lows,” noted Split Capital.

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Author: AnTy

Colombian Bank to Allow Deposits & Withdrawals with Crypto Exchanges in Government-Sponsored Pilot

Colombian Bank to Allow Deposits & Withdrawals with Crypto Exchanges in Government-Sponsored Pilot

Banco de Bogotá is the first commercial bank of Colombia that plans to test deposits and withdrawals with cryptocurrency exchanges.

This initiative is part of a year-long government-sponsored pilot that will test banking services for crypto platforms.

Colombia’s financial watchdog, the Financial Superintendency of Colombia (SFC), had announced earlier this year that nine crypto firms were chosen to test banking services for crypto platforms.

Crypto exchanges Binance and Gemini were chosen by the SFC, which will operate with Colombian banks Davivienda and Bancolombia, respectively.

Before this pilot, banks were restricted from transferring money to exchanges due to financial regulations.

Starting in August, Banco de Bogotá will allow its customers to send and withdraw money from Chilean crypto exchange Buda.com. Both the parties involved, however, are still working on the terms and definition of the contract.

This agreement between Banco de Bogotá and Buda.com is the second such to be launched as crypto exchanges Panda and Bitpoint started working with Colombian fintech Movii this month.

Banco de Bogotá will also operate with Mexican exchange Bitso, but that partnership is yet to be started.

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Author: AnTy

Large VC Firms and Pension Funds Are Coming in Crypto and Inflating the Valuations: PwC

Large VC Firms and Pension Funds Are Coming in Crypto and Inflating the Valuations: PwC

Cryptocurrency companies are enjoying a rapid rise in valuations thanks to the entry of large investors, according to professional services firm PwC.

Big venture capital firms, private equity players, and even pension funds are replacing family offices and boutique firms in these fundraising campaigns of crypto companies, PwC Crypto Leader Henri Arslanian told Bloomberg in an interview.

Arslanian said these big names are putting a bid in for a higher valuation, making smaller venture capital firms unhappy. He added,

“This is happening a lot with very early-stage companies, say, $5 million to $20 million — the prices are being inflated.”

Back in 2020, crypto M&A was about $3 billion, but in 2021 this amount was raised in just the last two to three months alone. Crypto deals have heated up in recent months after crypto asset prices went skywards.

According to Arslanian, besides the regulatory risk, the challenge involves assessing the valuation of businesses that are a few months or years old. Another issue, he said, is a lack of suitable assets to invest in as there aren’t many companies that are “investable, looking for capital and could absorb $100 million.”

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Author: AnTy