Hiring Amid Firing: Crypto Winter Doesn’t Affect These Exchanges

Key Insights:

  • Some crypto firms are expanding and recruiting fresh talents amid industry-wide layoffs.
  • LBank, Ripple, Binance, Polygon, and OKX, among others, have opened over 100 positions for various departments.
  • Despite the crypto market’s downward trend, few crypto businesses believe that the industry could rise back.

As crypto endures a bear market, payrolls are slashed, and employees who once boasted of being a part of world-class crypto exchanges and companies are in a dire situation. Brutal economic conditions and sudden plunge in crypto prices have led to massive layoffs within the cryptocurrency space.

One after the other, blockchain companies announced trimming their workforce, citing “turbulent market conditions.” For instance, On June 14, Coinbase (COINwent public announcing its decision to reduce the size of its team by 18% – about 1,100 full-time roles.

CEO Brian Armstrong said the firm had over-hired, especially since the beginning of 2021, when crypto prices were soaring. He cited,

“We saw the opportunities, but we needed to massively scale our team to be positioned to compete in a broad array of bets. While we tried our best to get this just right, in this case, it is now clear to me that we over-hired.”

Close to the Coinbase announcement, BlockFi declared that it would reduce its “headcount by roughly 20%” to around 600. The company blamed the negative impact of market conditions, leading to this decision.

Crypto.com, too, laid off 5% of its talent pool (260 employees roughly) to ensure “continued and sustainable growth for the long term.”

Few crypto firms are on a hiring-spree

Amid the hiring hangover experienced by various leading crypto firms, many are using this opportunity to hire talents that their rivals have shed.

LBank Exchange, one of the top 20 exchanges with deep liquidity (according to CoinMarketCap data), is on a hiring spree. The exchange has posted various job openings on LinkedIn, seeking blockchain experts and interns across its global offices.

According to a press release, LBank has remained ‘unhacked’ and secured amid a slew of security breaches and hack attacks. Allen Wei, co-founder, and CEO of the firm stated,

“We believe in weathering the storm ahead of the sunny day. For us, this is a great time to bring in more talents out there who may have unfortunately lost their source of livelihood.”

Additionally, blockchain solutions provider Ripple (XRP) has shared how Ripple’s teams of engineers work to forge “new paths in the crypto industry.”

The company’s career page has opened more than 100 positions for various departments. The company posted primarily engineering roles across its branches in London, New York, and San Francisco.

Last week, Brad Garlinghouse, the CEO of Ripple, shared that the company is looking for both hybrid and remote roles.

Dubbed “The Ripple Effect x Toronto Engineering,” the company will start recruiting in Toronto on Thursday (June 23). The hiring drive seeks to recruit experts from cloud operations engineers to technical writers.

Another crypto trading platform OKX remarked that it would “continue to hire top talent”. The company will hire 1,500 new employees globally within 2023.

Other crypto platforms such as Binance, Kraken, and FTX had also announced their mass recruitment plans despite the market weakness. Binance (BNB), for instance, said that it has over 2,000 open positions. A Binance CEO Changpeng Zhao said in a comment shared with CoinDesk,

“We will continue to grow our team as planned and see this moment in time as an opportunity to gain access to some of the industry’s best talent.”

Rival exchange Kraken (KRAK) has also extended its arms to hire more than 500 staff. A Kraken blog post notes,

“We have not adjusted our hiring plan, and we do not intend to make any layoffs. We have over 500 roles to fill during the remainder of the year and believe bear markets are fantastic at weeding out the applicants chasing hype from the true believers in our mission.”

Ontario Watchdog Ousts KuCoin, Penalizes Bybit Over Non-Compliance

Key Insights:

  • Ontario Securities Commission has taken enforcement actions against KuCoin and Bybit.
  • Bybit has agreed to pay C$2.5M, while KuCoin is expected to pay the fine of C$2M and an additional C$100K.
  • Ontario has booted several crypto exchanges from the province, including Binance and Poloniex, over non-compliance.

The Ontario Securities Commission (OSC) has accused several crypto exchanges of not being compliant with securities regulations in the Canadian province. 

For instance, the regulator accused Binance (BNB), the world’s largest crypto exchange, of failing to comply with Ontario’s Securities Act. Following this, the OSC clearly stated that Ontario users are restricted from opening new accounts and are banned from trading.

OSC said it is “unacceptable” as the exchange issued notice to Ontario residents without notifying the regulators.

The regulator has come down on other crypto exchange businesses, including Poloniex, for trading securities without registration that was “contrary” to the public interest.

OSC’s eyes now fell on KuCoin and Bybit

OSC announced Wednesday that it has scored two courtroom wins against KuCoin (KCS) and Bybit exchanges. 

The regulator has barred KuCoin from market participation in the province and has settled with Bybit, both accused of operating unregistered crypto trading platforms.

Per the official release, both the exchanges have allowed Ontario users to trade securities without a prospectus. Jeff Kehoe, Director of Enforcement at the OSC, noted that there would be no compromise on non-compliance. He added,

“Foreign crypto-asset trading platforms that want to operate in Ontario must play by the rules or face enforcement action. The outcomes announced today should serve as a clear indication that we refuse to tolerate non-compliance with Ontario securities law.”

The regulator had previously warned both the exchanges on March 29, setting a deadline of April 19 to start their registration discussions. Despite OSC’s warnings, neither Bybit nor KuCoin approached the regulator by the stipulated deadline and continued their unregistered operations, the release noted.

Hefty penalty imposed

The Capital Markets Tribunal panel has ordered monetary sanctions and a market participation ban on two companies that own KuCoin – Mek Global and PhoenixFin.

According to the order, OSC has ordered KuCoin to pay an administrative penalty of a C$2 million ($1.5 million) fine and a further C$96,550.35 (nearly $77,000) towards the costs of the OSC’s investigation.

While KuCoin has been barred from participating in Ontario’s capital markets, Bybit has cooperated with the OSC’s investigation and has reached a settlement agreement. The exchange, which recently confirmed laying off employees up to 30%, had paid nearly C$2.5 million ($1.9 million) and a further C$10,000 ($7,700) for covering investigation costs.

“Unlike KuCoin, Bybit responded to the OSC’s enforcement action, maintained an open dialogue, provided requested information, and committed to engaging in registration discussions.”

Bybit has also confirmed that it will not accept any new registrations from Ontarians nor offer new products to existing investors from the province. If the exchange fails to comply with the discussions, Bybit confirmed that it would withdraw its operations in Ontario.

End of GPU Mining? Crypto Crash Forces Miners To Sell Graphic Cards

Key Insights:

  • As BTC and ETH are rapidly losing value, swaths of miners are forced to sell hoarded GPUs for auction.
  • Some industry experts say that mining a single BTC now would cost up to $25,000.
  • Ethereum would switch to a Proof of Stake model, meaning miners would no longer use GPUs.

For many years, bitcoin (BTC) mining has been an astonishingly lucrative activity, with gross margins as high as 90%. 

For mining profitability, three key factors are responsible – the price of BTC, high power costs, and computing hardware. Currently, all three factors contribute to major distress among miners.

For instance, BTC and Ethereum (ETH) are rapidly losing value. The largest cryptocurrency by market cap once traded above $67,000 before falling prey to the overall market crash. BTC is now trading at as low as $20,430 at press time. 

On the other hand, ETH is the worst-hit crypto, losing its price by 70% in one month and now trading at $1087.

These mining centers, akin to data centers, are power-hungry and consume enormous electricity. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes around 110 Terawatt Hours per year, roughly equivalent to the annual energy consumed by countries like Malaysia or Sweden.

According to Daniel Jogg, CEO of Enerhash, a company running blockchain data centers, the energy rates have soared up in some parts of Europe that mining one BTC would cost up to $25,000.

Given these factors, miners have given up on graphics processing unit (GPU) mining. They are forced to auction graphic cards on online marketplaces at less than half the cost of the GPUs.

Mass sale of graphic cards for auction

Crypto miners and internet cafe owners, who were involved in buying mass graphic cards for mining, are left with nothing but to dump their GPUs or sell them for as low as $300-$350.

On Tuesday, pictures of mining grids flooded online on various Chinese internet services companies like Baidu that was up for sale.

Source: Baidu

Graphic cards from AMD and NVIDIA were sold for over half their actual costs. For instance, the popular NVIDIA GeForce RTX 3060 Ti graphic card is now auctioned for $300, when the actual price was over $700-$800 a few months ago.

Users took to Twitter and other forums advising buyers not to buy these GPUs as they were “abusively used for mining.”

One user on the Geeks 3D forum noted,

“With the crash of the crypto market (Bitcoin, Ethereum as well as other cryptocurrencies), a lot of graphics cards are now on sale by some of the most important of crypto miners (Chinese GPU miners, scalpers, and Internet cafes) at low prices, below MSRP! Keep in mind that these graphics cards were abusively used for mining during months, and it’s not recommended to buy one of them.”

However, enthusiastic gamers would still find these overly used graphic cards useful and buy them at a great deal. According to a Bloomberg report, Ethereum miners have spent roughly $15 billion on GPUs during the previous mining craze since 2021.

GPUs are no longer useful for mining

As Ethereum is shifting from its proof-of-work to proof-of-stake mechanism, many miners aren’t happy, forcing them to find an alternative.

As reported by FX Empire, ETH announced that it would shift to POS between the third and fourth quarters of this year. It is a significant step as it reduces energy consumption by more than 99%, good news for environmentalists and crypto critics.

However, ETH has pushed this merge several times, disappointing expectant. Tim Beiko, a computer scientist who coordinates Ethereum developers, noted that the odds of it not happening this year are “very low.” He added,

“The thing I want to avoid is someone buying a mining GPU today, and the Merge happens this summer, making it almost worthless.”

Part One: It Is Time for CBDCs To Consider the Environment

Key Insights:

  • CBDCs should primarily focus on environment-friendly factors while choosing platforms, software, and hardware designs.
  • The IMF notes that the annual energy consumption of the global payment system is 47.3 TWh.
  • Energy consumption of POW-based cryptos like Bitcoin remains high, while POS consumes less energy.

The environment has constantly been questioned when the topic of cryptocurrencies such as bitcoin (BTC) and ether (ETH) pops up. Some crypto networks use significant amounts of electricity to maintain the blockchain, generating substantial greenhouse gas emissions. This applies to central bank digital currencies (CBDC) too.

These have raised concerns among regulators and global banks that have stepped in, proposing best practices to address the issue. 

For instance, the International Monetary Fund (IMF) released a report at the start of June, recommending countries looking to develop CBDC consider energy consumption while laying their design work.

The international organization, which has been studying digital assets and their impact on global financial stability, has now turned its focus to sustainable digital assets. The report read,

“Major cloud service providers are shifting toward renewable sources of energy such as geothermal and hydropower, as well as toward locations with colder climates, to reduce the carbon footprint in generating power. Adding the environmental footprint as a selection criterion of a cloud partner can benefit not only the CBDC project but also any future digitization project of a central bank.”

Most central banks across the globe have already agreed to work toward fighting climate change while designing their payment system.

How alarming are significant energy costs?

The IMF estimates that the annual energy consumption of the global payment system is around 47.3 TWh [terawatt-hours]. This comes close to the overall yearly energy consumption of countries like Portugal and Bangladesh.

In particular, the evaluations noted that bitcoin consumes about 144 TWh per year.

Per the Crypto Carbon Ratings Institute (CCRI), which tracks the carbon emissions of various crypto networks, BTC and ETH’s energy consumption is enormously higher than other networks.

Source: CCRI

These estimates seem more alarming as several nations are making strides toward launching their own digital version of national currency.

How can CBDCs adhere to sustainability?

IMF study suggested national banks and crypto firms to move away from energy-intensive proof-of-work (POW) protocols. Per the report, blockchain networks that use the POW mechanism consume large amounts of energy.

By definition, POW is a common consensus algorithm that is used by popular crypto networks like bitcoin and litecoin (LTC). Critics of bitcoin miners have argued that the POW mechanism is “overly energy-intensive” and takes longer processing time.

Alternatively, IMF said that energy-conscious crypto networks could rely on non-POW models such as proof-of-stake (POS) protocols. These mechanisms likely consume relatively little energy.

“The potential of non-PoW permissioned crypto assets to reduce energy consumption relative to the existing payment system comes about from energy savings on both core processing architectures and user payment means.”

IMF noted that depending upon the specific configuration details, CBDCs, and certain digital assets could be more energy-efficient. The report compared energy consumption of the current payment landscapes, including credit and debit cards.

According to a blog post on Thursday, IMF noted that replacing POW with other consensus mechanisms is the “first green leap for crypto,” and using permissioned systems is the second. It further said,

“Together, these advances put crypto’s energy consumption well below that of credit cards.”

Energy Consumption of POS Blockchain networks

According to new research by the CCRI, Avalanche (AVAX) blockchain is one of the most energy-efficient among other extensive blockchain networks.

The report said that Avalanche used just 0.0005 percent of the energy used by the Bitcoin blockchain and 0.0028 percent of the energy used by the Ethereum blockchain.

On the other hand, DeFiLlama data showed that the “total value locked (TVL)” for Avalanche was the highest per unit of electricity. TVL is the value of all financial applications on the blockchain.

The TVL of Avalanche per kWh is recorded as $18,454, more than four times compared $4,395 per kWh on Solana (SOL) blockchain. Tezos (XTZ) recorded $943 per kWh, while the TVL is $161 on Algorand (ALGO), $120 per kWh on Cardano (ADA), and $19.18 per kWh for Polkadot (DOT).

These six POS networks selected do not employ identical algorithms. They have different prerequisites in terms of hardware, network size, transaction throughput, and other properties, according to the CCRI.

Another user noted that SafeCoin (SAFE), which offers a new algorithm, Proof of Resource, consumes only ~0.0000027kW per transaction.

When it comes to the design of CBDCs, Richard Dennis, founder of the Dragon IT Security, emphasized that,

“The key criteria for central banks are speed, scalability, the need for it to be very efficient and for the cost to be low.”

Is There a Good Time To Invest in Cryptocurrencies Amid Current Turmoil?

Key Insights:

  • Investing in crypto and holding it for a long time might help escape the current meltdown.
  • Crypto experts seem to be optimistic about the market recovery.
  • Crypto assets diversifying could help in minimizing risks and mass loss.

As most crypto investors are having a nail-biting moment about whether their assets will return to them amid the unexpected market turmoil, many newcomers and existing users are looking to buy the dip.

A recent GOBankingRates survey noted that one-quarter of people invest in crypto assets, be it bitcoin (BTC) or ether (ETH). The majority of investors and traders are relative newbies to the crypto world, many of whom got into investing during the pandemic.

But that did not save them from being hardly hit by Monday’s brutal selloff, which pulled down bitcoin to below $24,000. Garcia, a 24-year full-time trader from Miami, lost $7K on Monday from her initial investment of $10,000 on digital assets. She noted that the losses weren’t unexpected but shocking. The trader told Bloomberg,

“It’s scary for sure. If you’re a professional trader, you know not to risk anything you can’t afford to lose. I think I’m just going to be a lot more diligent.”

Many investors are clinging to the nascent asset class, given the potential of the promising technology that is changing the world. Users believe that the current rout could rebound back shortly.

Is “Buy the Dip” mantra applicable now?

Usually, the “buy the dip” principle pops up when price drops are temporary and recover themselves over time. Dip buyers buy at a relative discount and reap the rewards when prices go up.

As the crypto market, on the whole, is very unpredictable, investing any time, including buying the dip, could be risky. While there are chances that the prices would bounce back, so are the probability that it could plunge further.

Oleg Giberstein, the co-founder of Coinrule, told Forbes publication that it is not just that crypto is down, but the overall economic outlook is bad. 

Regarding buying the dip, he advised that investors must decide on the amount they are comfortable investing to buy cryptos like BTC or ETH and not worry too much about their prices for the next two years.

When is the best time to buy crypto assets?

With crypto, everything is constantly changing. Timing a cryptocurrency buy can be difficult, if not treacherous, as all kinds of elements determine a coin’s price action.

This is so true that some people have made significant gains on the right buy at the right time, mostly not from timing the market but often by luck.

As cryptos trade all day long, even during the wee morning hours, timing crypto trades would be fraught with peril. However, experts suggest that analyzing a few months of data could generate a general trading pattern, which can be considered when buying digital assets. 

Cryptos, like any other investment asset, the best bet would be to hold in for a longer-term. According to Bob Mason, a financial consultant and subject matter expert at FX Empire, 

“Buying now for a long-term hold may make sense, though buying on the rise would be a more sound investment decision than during this current downtrend.”           

Experts are “optimistic”

A recent bitcoin report by Block, formerly known as Square, revealed that the more people believe their knowledge to be about cryptos, the stronger optimistic they are about bitcoin’s future.

On Monday, founder and CEO of SkyBridge Capital wealth management fund Anthony Scaramucci told during the CNBC’s Squawk Box show that despite the current bear market, he remains optimistic and that his fund has purchased more BTC and ETH.

Scaramucci said that bitcoin still contributes over 50% of the overall crypto market, and thus, “there is a flight to quality here.” He urged crypto investors to stay “disciplined” and not panic about the heavy drop.

One of dogecoin’s (DOGE) founders has opined on how long the current bear market would last.

According to Bob Mason, previous selloffs and regulatory uncertainty have been key factors that make investing in crypto more precarious in the current cycle. But on the positive front, he added,

“Mainstay cryptos such as bitcoin aren’t going anywhere and will rebound. It does, therefore, depend on the investment time horizon.”

Possible mistakes to avoid

One of the primary mistakes that investors commit is not diversifying their investments. The primary purpose is to limit risks, especially in highly volatile asset classes.

The mantra is simple – to maximize returns while minimizing the risks. According to the Winklevoss twins’ Gemini crypto exchange, a well-diversified portfolio usually has a mixture of stocks, fixed income, and commodities such as gold (XAU) and oil. Or it might include one or more crypto assets too.

Anjali Jariwala, the founder of FIT Advisors, notes that investors have to diversify their asset allocations within cryptos further. One way to diversify crypto holdings is by investing in them with different use cases or purposes.

For instance, an investor could hold bitcoin, ethereum, cardano (ADA), and litecoin (LTC), each of which might perform differently under different circumstances. If an investor has deep knowledge about cryptos, there could be various other coins to hold as well. Jariwala added,

“If one cryptocurrency fails and your investment goes all the way to zero, other crypto investments may still do well.”

She said that in cases like the current extreme market meltdown, the whole crypto portfolio won’t be wiped off because of the plunge in one or two coins.

SEC Writes to Crypto Exchanges About “Insider Trading Safeguards”

Key Insights:

  • Several US crypto exchanges received an inquiry from SEC regarding protection against insider trading.
  • The move signals that the SEC is concerned about regulatory violations amid the crypto market meltdown.
  • Last month, an Argus report noted that many prime suspects for insider trading came to light.

How cryptocurrency exchanges prevent the leaking of market-sensitive information has become a growing topic of concern. Regulators across the globe have been raising questions about market integrity for retail consumers.

Just weeks ago, Nathaniel Chastain, a former product manager of Ozone Network, otherwise known as OpenSea, was charged with insider trading in non-fungible tokens (NFTs). The investigation involved the FBI and the National Cryptocurrency Enforcement Team.

SEC wants to double-check on insider trading safeguards

Now, the US Securities and Exchange Commission (SEC) has involved itself in ensuring that crypto exchanges comply with anti-insider trading rules and have enough protection.

According to Fox Business, an unnamed source familiar with SEC’s moves in this regard said that the watchdog has sent letters to crypto exchanges inquiring whether they have proper safeguards to curb insider trading incidents.

Put simply, insider trading means when someone uses non-public insider information of a company to buy or sell financial assets that aren’t listed yet. 

For instance, in April, an Ethereum (ETH) wallet allegedly bought roughly $400,000 worth of tokens that were not yet listed on Coinbase (COIN) at the time.

In this case, the purchases took place three minutes before Coinbase’s official announcement, raising the question among speculators whether this was luck. However, the exchange did not list the tokens, raising suspicion among the community. 

Such incidents have called regulators to scrutinize acts of insider trading in crypto exchanges.

Per the source, the letter has supposedly been sent to multiple exchanges. However, the SEC did not mention which exchanges were involved. Fox Business had contacted top crypto exchanges – Binance, Coinbase, FTX, and Crypto.com – all declined to comment. 

The SEC too, failed to confirm the probe when asked. Although the news comes unofficially through a source, the probe aligns with SEC chair Gary Gensler’s comments in May. In an interview, he noted, 

“Crypto’s got a lot of those challenges – of platforms trading ahead of their customers. In fact, they’re trading against their customers often because they’re market-marking against their customers.”

It is also unknown which division of the SEC is involved in the probe, the Fox news report noted.

The act comes at a time when the crypto market is facing increased pressure. Bitcoin (BTC), the largest cryptocurrency by market cap, plunged to below $23K, bringing down the value of the entire crypto market to lower than $1 Trillion.

What do exchanges say?

An analysis performed by Argus Inc., suspected several anonymous crypto investors of insider trading. They allegedly got to know when tokens would be listed on exchanges.

A recent Wall Street Journal report found 46 wallets that purchased a combined $17.3 million worth of tokens listed shortly after on Coinbase, Binance (BNB), and FTX (FTT).

Coinbase noted that they had a compliance policy prohibiting employees from trading on privileged information. Additionally, it also conducts regular analyses to ensure fairness in trading.

Coinbase CEO Brian Armstrong recently wrote in a blog post,

“There is always the possibility that someone inside Coinbase could, wittingly or unwittingly, leak information to outsiders engaging in illegal activity. We have zero-tolerance for this and monitor for it, conducting investigations where appropriate with outside law firms.”

A Binance spokeswoman told WSJ that employees have 90 days to hold on to investments, which security leaders monitor. She noted,

“There is a longstanding process in place, including internal systems, that our security team follows to investigate and hold those accountable that have engaged in this type of behavior, immediate termination being minimal repercussion.”

FTX, too acts immediately over such violations and has explicitly banned its employees from trading on upcoming tokens listings. The company CEO Sam Bankman-Fried noted in a mail that FTX has relevant policies in place to prevent such acts.

BoE Director Stands Firm in His Anti-Crypto Stance Amid Market Chaos

Key Insights:

  • The head of the Bank of England said that cryptos have “no intrinsic value.”
  • He warned users that those who invest in these digital assets would “lose all their money.”
  • The crypto market had one of its worst days yesterday, falling below $1 trillion.

The crypto market witnessed a brutal blow on Monday, alarming global authorities and raising pressure on central banks. Crypto investors and users voiced out their cries about the ongoing market downturn. One crypto investor and a YouTuber went to the extent of announcing that many people would quit crypto.

This has even instigated fear in the minds of central bank authorities, who have shown their ‘pro-crypto’ stance. For instance, U.S. Treasury secretary Janet Yellen publicly acknowledged the potential of digital currencies and blockchain technology. In a recent CBDC interview, she said crypto has “grown by leaps and bounds.”

However, the unexpected market crash driven by the collapse of the Terra network and massive selloff amid heightened inflation fears has made Yellen shift sides. Last week during an event organized by the New York Times, she warned that cryptos like bitcoin (BTC) and ether (ETH) are “very risky investments.”

Days after her warnings, the chief of the central bank of England, Andrew Bailey, said Monday that unbanked digital assets have “no intrinsic value.”

“People may still want to buy them because they have extrinsic value … people value things for personal reasons. But they don’t have intrinsic value. This morning we have seen another blow-up in a crypto exchange.”

Be prepared to lose all money

Again, the central banker emphasized that crypto assets are highly risky and speculative. In particular, people need to be alert to the risks or be prepared to lose their entire investments. 

Speaking to MPs during a Parliament session, Bailey noted,

“If you want to invest in these assets, okay, but be prepared to lose all your money.”

This isn’t the first time Bailey has voiced his anti-crypto stance. Last month, the Bank of England (BoE) Governor said that cryptos are not suitable as a practical means of payment.

Bailey has never been a fan of bitcoin or crypto. He said in April during a “Stop Scams” conference that crypto creates an “opportunity for the downright criminal.” Known for his reluctant stance on decentralized money, he has been highly skeptical since last year. He tagged cryptos as “dangerous” before expressing that these assets wouldn’t last long. 

Was he right? What exactly happened to the crypto industry?

On Monday, major trading platforms such as Celsius halted crypto withdrawals, citing “extreme market conditions.” Binance (BNB) quickly followed, pausing bitcoin withdrawals due to “stuck on-chain transaction,” but resumed it hours later.

The Celsius native token CEL dropped drastically from over $7 to about 33 cents last year. The token was down further by 50% in the previous week. The news of Celsius looked similar to what happened in May when the algorithmic stablecoin pegged to USD – TerraUSD (UST) – lost $60 billion in value.

Additionally, Peter Thiel-backed crypto lending start-up BlockFi and Crypto.com announced Monday that they would cut more than 400 jobs. They joined the growing list of digital asset firms such as Gemini and Rain Financial that are looking to layoff.

Following these, panicked investors dumped their crypto holdings, causing the market cap of overall crypto to slump below $1 trillion, which is down from $3 trillion in November 2021.

The crash dragged BTC to trade below $23,000, tumbling 15% in the last 24 hours. The largest cryptocurrency is trading at $22,419 at press time. Ethereum, too fell by 17% and now trading at $1,187.

Adding more to the Monday swirl, shares of the crypto trading behemoth Coinbase (COIN) fell 11%, which marks the lowest since the company’s public debut in April 2021.

Bailey’s repeated warning comes in response to a question during Parliament about the duty of regulators to protect investors amid the government’s wish to promote financial innovation.

DeFi Lender Celsius Halts Withdrawals, Sends 104,000 ETH to FTX

Key Insights:

  • Due to “extreme market conditions,” crypto lender Celsius paused all withdrawals, swaps, and transfers.
  • Celsius did not mention when it would call off the withdrawal freeze.
  • Celsius has transferred around 104,000 ETH to FTX in the past three days.

Crypto lending platform Celsius Network has been under pressure from all sides, including US state regulators. The embattled startup has drawn the ire of securities commissions from the states of Kentucky, Alabama, New Jersey, and Texas. The regulators believe the company violated security laws through its crypto “Earn Rewards” program.

Adding to it, Celsius’s native token CEL slumped after being affected by the broader crypto crash last month. The major sell-off was driven by the collapse of TerraUSD (UST) and its sister token Luna.

Now, Celsius users are facing another blow after the company paused withdrawals, swaps, and transfers, but there are conflicting reports about what actually happened.

Celsius halts withdrawals, leaving investors in shock

The crypto staking network Celsius experienced a chaotic weekend after announcing the hold on withdrawals, citing “extreme market conditions.” In the elaborate blog post, the firm said,

“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”

Immediately following the announcement, the price of CEL fell sharply by 45% to $0.19 at press time. This triggered market stress in the sector bringing down the price of ether (ETH) to $1,237 as of press time.

The company noted that the act would “stabilize liquidity and operations” while taking steps to protect assets and benefit the Celsius community.

“We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible.”

The company did not specify an exact timeframe when it would resume withdrawal services.

What does it mean for users?

The news follows increased tension among Celsius users who vented on social media. One user spread the rumor that there is a possibility for locked Celsius accounts, “similar to Luna.”

The CEO of Celsius, Alex Mashinsky, hit back at the user denying such allegations and terming such rumors as FUD.

A sudden announcement of the temporary suspension of withdrawals has put users in a fix. Celsius community will not be able to withdraw until the company resumes its withdrawal services. However, Celsius promises customers that their accounts would meanwhile accrue interests.

Celsius Network platform, which has 1.7 million customers, offers an interest-bearing savings account, borrowing, and payments with digital assets and fiat money. This regulated lender lets users receive interest on deposited cryptocurrencies or take out crypto collateralized loans.

The mass exodus of assets

The digital assets lender has supposedly transferred around 104,000 ETH in total for the past three days to the FTX exchange today for unspecified reasons.

Moving massive amounts of ETH, wrapped bitcoin (WBTC), and freezing withdrawal services has stirred speculators. The crypto firm sent about 9,500 WBTC worth around $247 million.

One user noted that the possible reason could be to earn yields, while there are risks that it would create delta exposure. However, the exact reason for the mass exodus of assets between Celsius and FTX and the sudden suspension of withdrawals remains unknown.

The liquidity problem

Put simply, when a business does not have the liquid assets necessary to meet its short-term obligations, such as repaying loans, it faces a liquidity problem.

In this case, Celsius has been facing a liquidity crisis since last month, when CEL’s price dropped to $1 after customers complained about being unable to withdraw funds.

The firm would be trying to stabilize liquidity by replacing several volatile digital assets like WBTC and ETH, which the company withdrew from Aave.

Per the Cointelegraph report, since Sunday, Celsius has staked 204 million USD Coin (USDC) stablecoins on Aave. Additionally, the lender has deposited 10 million USDC and around 8.2 million Dai (DAI) stablecoins to Compound. 

The stablecoins re-staked by Celsius (222 million in total) is close to the value of removed WBTC assets.

Additionally, Mashinsky has been highly vocal in the recent past, blaming short-sellers on Wall Street as responsible for the overall crypto crash, including the fall of CEL and Terra network. He also recently told Kito News that the crypto markets would recover, and inflation is not a long-term concern.

SEC Is Reportedly Probing the Firm Behind Stablecoin TerraUSD

Key Insights:

  • SEC is investigating whether Terra’s tokens are illegal securities.
  • Terra founder Do Kwon and Terraform Labs are already facing scrutiny from SEC over offering the Mirror Protocol.
  • However, Terraform is not aware of any SEC probes into UST.

The Securities and Exchange Commission (SEC), which is already investigating Terra (LUNA) tokens following its collapse, is now probing whether Terraform Labs, the company behind UST, violated federal investor protection laws.

The investor protection regulation details regulatory priorities and issues surrounding new financial products, fee structures, and trading strategies.

Did Terraform violate US laws?

Discussing the confidential probe, an unnamed source told Bloomberg that members of the SEC’s Division of Enforcement are examining whether Terraform’s token marketing violated the investor protection rules.

This is a separate probe from the ongoing investigation on the firm and its founder Do Kwon in connection with offering another cryptocurrency project dubbed Mirror Protocol.

The Mirror Protocol trading platform allows users to trade mirrored assets representing synthetic stocks.

Meanwhile, the Singapore-based Terraform noted that it is unaware of any such investigation by the US watchdog. Kwon said in a statement,

“We are not aware of any SEC probes into TerraUSD at this time – we’ve received no such communication from the SEC and are aware of no new investigation outside of that involving Mirror Protocol.”

Terra’s trauma – A brief recall

Unlike other stablecoins such as tether (USDT) or USD Coin (USDC), backed by real-world assets such as fiat currencies and government bonds, UST relies on an algorithm, which is not a central issuer.

Terraform Labs, the company behind the token, developed a forex reserve for UST following the criticism faced by algorithmic stablecoins. A separate entity called the Luna Foundation Guard (LFG) stepped in to provide backing.

In February, the LFG created a bitcoin (BTC) denominated reserve for UST and announced plans to hold $10 billion in BTC reserves for the stablecoin. Since then, LFG has been actively purchasing BTC, announcing a sizeable purchase totaling $1.5 billion in May.

LFG would use its BTCs to buy back UST from the market in case the stablecoin price drops below $1. This strategy failed when BTC experienced a sharp downfall on May 7, following Fed’s rise in interest rates by half-point.

Terra investors woke up on May 9, only to fall victim to an unexpected implosion. Bloomberg calls this as one of the biggest crypto busts in history, wiping out billions of dollars in value.

Following this, Terraform relaunched its blockchain and renamed the Luna coin that was struggling close to zero. However, this new version of the blockchain did not include UST.

New York Regulator Issues Guidance for USD-Backed Stablecoins

Key Insights:

  • New York State DFS has set clear criteria for stablecoins.
  • Stablecoins should be fully backed by a reserve of assets.
  • The reserves must be subject to monthly independent audits.

The New York State Department of Financial Services (NYDFS) released new guidelines on Wednesday, listing a series of rules that any stablecoin issuer in the state must abide by.

Last month, Sen. Toomey, the ranking member of the Senate Banking Committee, introduced the Stablecoin TRUST Act, which forces issuers to adhere to specific rules. The act promised financial privacy by regulating dollar-pegged stablecoins such as tether (USDT) and USD Coin (USDC).

The new DFS regulatory guidance on stablecoins is in line with the act, setting “foundational criteria” for USD-backed stablecoins issued by licensed entities.

Backed by a reserve of assets

The New York DFS first approved stablecoins pegged to the dollar in 2018. DFS authorized Paxos to offer its first asset-backed token – Paxos Standard – backed by the national currency.

Since then, DFS-regulated entities have been required to meet “conservative reserve requirements” and provide attestations to protect consumers by ensuring the stability of these digital assets, said Adrienne A. Harris, superintendent of the NYDFS. She noted,

“Leveraging our years of expertise in the space, our Regulatory Guidance today creates clear criteria for virtual currency companies looking to issue USD-backed stablecoins in New York.”

The key idea behind setting the guidance is to formalize both consumer protection and institutional soundness, Harris told CoinDesk in an interview.

Per the DFS rules, stablecoins must be backed by a reserve of assets whose market value is “at least equal to” that of outstanding stablecoins at the end of each day.

Rules such as the reserves should be “segregated from the proprietary assets of the issuing entity,” were also laid out.

The reserves must consist of dollars stored in four types of treasuries:

  • US Treasury bills with no more than three months to maturity
  • Reverse repurchase agreements collateralized by US Treasury bills
  • US Treasury notes or US Treasury bonds
  • Deposit accounts at US state

Additionally, stablecoin issuers must adopt “clear, conspicuous redemption policies” that are approved by the DFS in advance by writing. This approval allows lawful holders the right to redeem units of the stablecoin from the Issuer “in a timely fashion.”

The assets reserves are also subject to monthly audits by an independent certified public accountant.

The new regulatory guidance by the NYDFS is the first of its kind to be released by a US financial watchdog that sets a baseline regulatory prospect for USD-pegged stablecoins.

Solana Invests $100M in South Korean web3 Startups, Focus on Gaming

Key Insights:

  • Solana Ventures and the Solana Foundation have committed $100M to support South Korean crypto startups.
  • The seed investment will focus on gaming studios, GameFi, NFTs, and DeFi.
  • Solana is currently trading flat, down by 0.30 % over the last 24 hours.

The recent collapse of the Terra network has triggered South Korean authorities to introduce measures to scrutinize crypto exchanges. Reports noted that around 280,000 South Koreans had been victims of the unexpected plunge in UST and LUNA.

However, users are still holding strong, and investors aren’t backing down. The crypto plunge hasn’t left them in dismay, with some clinging to the belief that it is just too big to be allowed to fail.

To add more hope, Solana (SOL) has become the latest to bring funds to the crypto sector.

$100 million fund to support NFT, gaming, and DeFi projects

Solana blockchain’s key players Solana Ventures and Solana Foundation have jointly set up a $100 million fund to support crypto projects in South Korea. The funds will particularly focus on projects in gaming, non-fungible tokens (NFTs), and DeFi.

Johnny B. Lee, general manager of games for the Solana Foundation, told Bloomberg that it would also support platforms based on Terra, which was stranded by the blockchain’s collapse. He noted,

“The developers did nothing really wrong, but they’re left in the lurch.”

According to Austin Federa, head of communications at Solana Labs, the fund is backed by money from the Solana community treasury in addition to the venture arm’s pool of capital.

Lee predicted that there would be more “high-quality and fun games” launching on the Solana blockchain in the second half of 2022. He also noted that the industry would soon adopt web3 games as much as free-to-play games on mobile devices. He told TechCrunch,

“A big portion of Korea’s gaming industry is moving into web3, and we want to be flexible.”

Apart from capital inflows, Solana is also planning to offer developers in South Korea help with product and engineering.

South Korean crypto gaming sector

According to data from Statista, the overall gaming market in South Korea is projected to be valued at $18.3 billion this year.

While this figure accounts for the whole gaming industry and not crypto-related games, the number has increased steadily. Andrew Campbell, a program lead for Esports and content creator programs at Sky Mavis (the company that develops Axie Infinity), told Blockworks,

“There’s such a strong gaming culture in South Korea, and their distribution channels are a lot more centralized there.”

In what is the world’s fiercest gaming market, South Korean tech and gaming leaders like Nexon, Smilegate, and Netmarble have been pinning hopes on blockchain tech to create new business models. For instance, with a market cap of $21.43 billion, Nexon made headlines in 2021 for buying 1,171 bitcoins (BTC).

Solana price analysis

Solana’s price has been bullish after breaking down by 0.30% over the last 24 hours. The altcoin faced resistance at the $44.44 level, and firm support is seen at the $38.44 level. The digital asset is currently trading at $39.56 at press time.

SOL price

On June 1, the Solana network was down for more than six hours, and transactions could not be processed. This has led to a 12% decline in the value of SOL.

This sharp single-day decline came less than a month after the token experienced a 24% drop, driven by the market instability due to the collapse of Terra’s flagship stablecoin UST.

Over Half of Investors in Asia Already Hold Crypto: Accenture Report

Key Insights:

  • 52% of wealthy Asian investors already hold digital assets.
  • A further 21% is expected to invest by the end of 2022.
  • Cryptos represent 7% of surveyed investors’ portfolios and make the fifth-largest asset class in Asia.

Last year, several reports noted that Asian nations are leading the world in crypto investments. For instance, the comparison website Finder.com found that of 27 countries surveyed, the top five countries were all in Asia.

From India’s rise in trading volume by 500% in 2020 to one-third of South Korea’s population owning or getting paid in cryptocurrencies, it became clear that Asian populations are embracing these burgeoning financial instruments.

But it is important to note that, despite the current crypto market downfall, over half of the affluent investors in Asia hold cryptocurrencies such as bitcoin (BTC), ether (ETH), litecoin (LTC), in some sort or the other.

Cryptos – fifth largest asset class in Asia

Professional services giant Accenture released an industry poll on Monday, which found that Asian wealth managers are reluctant to sell digital assets to investors, despite its growing demand among investors.

Dubbed “the Future of Asia Wealth Management,” the analysis noted,

“Currently, 52 percent of affluent investors in Asia hold digital assets. Accenture’s research indicates this could reach 73 percent by the end of 2022.”

The results were drawn from two surveys involving 3,200 investors and over 500 financial advisors from wealth management firms across Asia. The polls were conducted between December 2021 and January 2022.

The business further stated that affluent investors in Asia allocated their portfolios to digital assets, which is more than they allocated to foreign currencies, commodities, and collectibles. The percentage of crypto investors is expected to further grow by this year. The report continued,

“A further 21% expect to invest in them by the end of 2022. Digital assets represent 7% of surveyed investors’ portfolios — making it the fifth-largest asset class in Asia.”

Additionally, digital assets, the $54 billion revenue opportunity, are being ignored by most wealth management firms because they lack the necessary knowledge. Accenture added,

“Among firms’ barriers to action are a lack of belief in (and understanding of) digital assets, a wait-and-see mindset, and – given that launching a digital asset proposition is operationally complex – choosing to prioritize other initiatives.”

Source: Accenture.com

Driving adoption in Asia

Mainstream crypto adoption in the Asian markets is rising, with governments eyeing the industry and trying to compete with other major economies in testing and releasing a central bank-backed cryptocurrency (CBDC).

A Chainalysis report noted that East Asia accounts for the largest crypto market, responsible for 31% of all transactions made in 2020. 

Recently, crypto exchange Gemini found that digital asset adoption skyrocketed in 2021, particularly in countries such as India and Hong Kong.

Crypto Turmoil Doesn’t Affect Bermuda’s Plans To Emerge As Crypto Hub

Key Insights:

  • Bermuda’s minister doesn’t see crypto market volatility as a hindrance to becoming a crypto hub.
  • Jason Hayward said Bermuda wants to attract more cryptocurrency-related projects and firms.
  • Bermuda Monetary Authority has licensed 14 digital-asset companies, including four in 2022.

During the Digital Currency Group Founders’ Summit in 2019, Edward David Burt, the youngest Premier of Bermuda, shared how determined he is to make the country the biggest crypto hub.

Since then, the British island territory has been taking steps to make Bermuda the most crypto-friendly jurisdiction. For instance, the country enacted a regulatory regime governing initial coin offerings (ICO) and awarded its first ICO certification to the fintech company Uulala (UULA).

Now, the country is optimistic that the recent Terra network crash, causing a deep plunge in the price of its stablecoins TerraUSD (UST) and Luna, would have a positive impact in the long run.

Bermuda proposes crypto-friendly laws to attract more businesses

In a move to become a prominent player in the crypto industry, Bermuda has had high hopes that the recent crypto price crash won’t affect their crypto-hub ambitions.

Jason Hayward – Bermuda’s Minister of Economy and Labor – believes that the country’s transparent crypto regulations and comprehensive regulatory framework could attract more crypto companies.

Speaking with the Wall Street Journal, Hayward noted that the recent devaluation in the price of cryptocurrencies such as bitcoin (BTC), which has fallen over 50% from its November record high, “does not threaten the island’s ability to become a crypto hub.” He further said,

“This industry downturn is likely to advance our goal and positively impact our long-term growth and role in this sector.”

According to Bermudan regulators, 27% of Bermuda’s economy accounts for international businesses, including their local trained workforce. Competing with other crypto-friendly countries like Malta and Liechtenstein, Bermuda is enticing crypto companies to get a foothold in the sector.

The move comes at a time when crypto firms blamed regulatory uncertainty as a barrier to the sector’s broader acceptance.

Additionally, crypto experts believe that Bermuda is one such jurisdiction that has enacted a proper regulatory framework for cryptocurrencies. 

David Schwartz, president of the Financial & International Business Association, said Bermuda is leading the way in crypto regulation in establishing an infrastructure for the crypto industry.

Schwartz added that it is unknown how the regulators intend to supervise and examine the crypto firms. He said,

“They’ve got great rules and regulations and laws, but it’s all about the implementation at the end of the day.”

Per the 2018 legislation, all cryptocurrency companies in Bermuda should get a license from the Bermuda Monetary Authority (BMA), which oversees the island’s insurance and reinsurance industry.

So far, the BMA has approved licenses to 14 digital-asset companies, including four crypto companies, in 2022. This includes stablecoin USD Coin (USDC) provider Circle, crypto-lending startup BlockFi, and crypto exchange Bittrex.

Japan Introduces Legal Framework for Stablecoins Linked to Yen

Key Insights:

  • Japan becomes the first country to pass a stablecoins bill for investor protection.
  • The bill defines stablecoins as digital money pegged to the yen and can only be issued by licensed banks.
  • Mitsubishi UFJ Trust and Banking Corp will be releasing their own stablecoin – Progmat Coin.

After a massive crypto crash in the recent past, various governments and industry experts went vocal about streamlining the industry. In fact, the bear crypto market is welcomed by many as they believe it is a chance to get rid of bad actors and focus on better yielding products.

Stablecoins like Tether (USDT) and USD Coin (USDC) were the talk of the town, especially during the World Economic Forum in Davos this year. The debates were sparked by the collapse of the so-called algorithmic stablecoin – terraUSD or UST, which saw its sister token luna drop to $0 in May.

Though regulators, central bankers, and authorities are antagonists to cryptocurrencies, many have become constructive in regulating the sector for investor protection.

Japan is at the forefront of recognizing stablecoins

The ‘land of the rising sun’ has stepped forward to introduce a legal framework for stablecoins on Friday. The new bill would classify stablecoins as digital money.

Japan’s parliament confirmed that stablecoins could only be released by registered banks, trust companies, or money transfer agents. Unlike algorithmic stablecoins like UST that slumped recently, the bill noted that stablecoins must be linked to the national currency yen or any legal tender.

Additionally, the new law stated that the stablecoin must guarantee holders the right to redeem their cryptos at face value, a Bloomberg report said.

However, the bill does not address asset-backed stablecoins in use, such as tether or algorithmic stablecoins.

Japan has been cautious when it comes to cryptos or stablecoins. For instance, in December 2021, the country proposed new restrictions that only allow banks and wire transfer services to issue stablecoins.

The de facto watchdog, Japan’s Financial Services Agency, intended to tighten other rules like overseeing wallet providers that engage in stablecoin transactions.

The release noted that the new stablecoin legal framework would take effect in a year.

Mitsubishi and Banking Corp ready to roll out stablecoin

Japanese banking giant Mitsubishi UFJ and Banking Corp. are already ready to roll out its stablecoin. Dubbed Progmat Coin, the token is fully backed by yen and will guarantee redemption at face value. The Progmat Coin will be released once the legal framework is in place.

Announced in February, the company said in a statement that the stablecoin would be used for clearing and settlements of digital securities related to the bank.

Last September, Yuri Okina, a member of a government panel on digital finance, stressed that Japan must ensure any regulation it adopts on stablecoins does not stifle private-sector tech innovations.

ForUsAll Drags DOL to Court Over ‘Grave Concerns’ With BTC in 401(k)

Key Insights:

  • Retirement plan provider sued the US Department of Labor over recent anti-crypto guidance.
  • One-third of clients spoken with since the guidance are holding back on crypto options.
  • The Labor Department said ‘grave concerns’ citing Fidelity Investment’s plan for bitcoin in retirement.

Crypto enthusiasts wondering if bitcoin (BTC) could enter their retirement savings had a sigh of relief in April when Fidelity Investments brought cryptocurrencies into 401(k) accounts.

However, cryptos are highly volatile, which was recently proved in the Terra (LUNA), and TerraUSD (UST) crashes, leading investors shocked. Additionally, they have little practical use, given their vulnerability in crimes and the lack of real-world cash flows.

This was the very reason the US Department of Labor had “grave concerns” when Fidelity included bitcoin in retirement plans.

Additionally, DOL published a sternly worded guidance in March, revealing heightened skepticism of 401(k) cryptocurrency investments. The department, which regulates 401(k)-type plans, cautioned retirement fiduciaries to take “extreme care” before adding cryptos into their plans.

DOL under the mallet

Quoting the department’s anti-crypto compliance release, a San Francisco-based 401(k) retirement provider, ForUsAll, filed a lawsuit against DOL on Thursday.

The company said that it is seeking the withdrawal of DOL’s cautionary release, citing the Administrative Procedure Act (APA). The filing noted,

“This lawsuit seeks to preserve the rights of American investors to choose how to invest money in their own retirement accounts. Brought under the APA, this lawsuit challenges DOL’s arbitrary and capricious attempt to restrict the use of cryptocurrency in defined contribution retirement plans.”

ForUsAll accused DOL of focusing only on the risks of cryptos without mentioning its potential benefits, including diversification. 

The DOL has taken the “opposite course” by issuing the release, despite the Biden administration directing federal agencies to work on the development and use of cryptos, the firm stated.

“DOL’s issuance of the Release was arbitrary, capricious, and otherwise not in accordance with law and in excess of DOL’s statutory authority, in violation of the APA.”

According to ForUsAll, one-third of the clients that the company spoke with said, despite their interest in inculcating cryptos, “they do not intend to proceed at this time in light of enforcement threats.”

The retirement provider let workers in retirement plans under its administration invest up to 5% of their 401(k) contributions in bitcoin, ether (ETH), litecoin (LTC), ripple (XRP), and other cryptocurrencies.

ForUsAll CEO Jeff Schulte told CoinTelegraph,

“The government is suddenly trying to restrict the type of investments Americans can choose to make because they’ve decided today that they don’t like a certain asset class. They’re clearly trying to effect a ban, and they don’t have the legal authority to do so.”

Implications still remain

Several crypto advocates have offered various justifications saying Americans deserve more choice in their retirement plans. Surveys have also shown that particularly millennials tend to see crypto as a desirable investment. Advocates say that crypto investments can diversify a given portfolio as their price fluctuations aren’t synced with other markets.

On the other hand, investors have had enough hard times navigating the US retirement savings system without adding an option that even professional investors struggle to hold. 

Challenges like crypto’s limited track record, bitcoin’s latest unexpected slide, which is more than 50% from its November 2021 peak, and technical difficulties such as ensuring safe custody in a largely unregulated realm, remain to be addressed.

NY Fed’s Williams Says Digital Currency Might Impact Monetary Policy

Key Insights:

  • NY Fed President John Williams calls it ‘critical’ for central banks to understand crypto’s impact.
  • He noted that digitizing finance could have “implications for markets” and monetary policy.
  • The Fed is considering whether to launch its digital dollar, while the Biden administration is looking into regulation.

Few senior Federal Reserve officials have been highly vocal on cryptocurrencies and their potential to disrupt the monetary policy. Vice-chair Lael Brainard recently noted that a central bank digital currency (CBDC) could coexist alongside stablecoins and provide a measure of safety.

Federal Reserve Board Governor Miki Bowman also stressed the importance of innovation in community banking, referring to the latest Fed discussion paper on cryptocurrencies.

For the US, it is still early when it comes to crypto regulation or a CBDC, as the country is still in its research stage.

NY Fed’s President calls digital transformation is ‘critical’

John Williams, the president of the Federal Reserve Bank of New York, sees digital transformation in payments as a possible way to change Fed’s monetary policy and impact its balance sheet.

In his speech during a research conference on Wednesday at Columbia University, Williams said that technology is changing rapidly while the role of the central bank remains the same. He noted,

“The role of central banks will always be to supply money and liquidity to bring stability to the economy and financial system.”

He told an audience of financial industry leaders, central bank officials, and scholars that CBDCs and stablecoins backed by safe and liquid assets have room for innovation. 

His remarks come amid the wider crypto sell-offs, with cryptos like bitcoin (BTC) struggling to catch up above $30,000. The world’s first crypto by market cap is still trading below $30,000 after a deep dive from its all-time peak of over $67,000 in November 2021. 

Terra’s network crash throwing down terra (LUNA) and TerraUSD (UST) prices to the far bottom, has also driven Fed officials like Williams to consider the safe digitization of currencies.

Per a Reuters report, Williams stressed that digital transformation could have “implications for markets” and for Fed’s interactions with peers, “as well as how we carry out monetary policy.” He further said,

“It’s critical that we understand how these transformations could affect the economy and the financial system, as well as monetary policy implementation.”

Senators contribute to digital dollar push

A digital dollar or a CBDC could come with a slew of benefits; however, it remains far from sight.

The crypto price turbulence has called US lawmakers to introduce a bill allowing the US Treasury to create a CBDC. The bill noted that the digital dollar would virtually eliminate funds transfer waiting periods and cut fees.

In March, the Biden administration issued an executive order calling for more research on developing a digital dollar and highlighted a need for more regulatory oversight of cryptos such as ether (ETH), Litecoin (LTC), etc.

Additionally, crypto supporters say that financial inclusion is crucial for the US to adopt its digital currency.

That said, several senators stand positive about bringing a digital dollar to the payments system. For instance, Rep. Stephen Lynch (D-Mass) said,

“As digital payment and currency technologies continue to expand rapidly and with Russia, China, and over 90 countries worldwide already researching and launching some form of Central Bank Digital Currency, it is absolutely critical for the US to remain a world leader in the development and regulation of digital currency and other digital assets.”

Members of Congress, including Jesús Chuy Garcia (D-Ill.), Ayanna Pressley (D-Mass.), and Rashida Tlaib (D-Mich), have also joined Lynch.

Top Experts From Microsoft, Google Call to Crackdown Crypto Lobbying

Key Insights:

  • Leading scientists and academics sign a letter to US legislators asking to counter the crypto industry’s influence.
  • The letter outrightly rejected claims made by crypto advocates who attempt to regulate the sector.
  • Crypto industry influencers increased from 115 to 320 in the past four years.

Recently, cryptocurrency tycoons are emerging as the new players in American politics. Bitcoin’s (BTC) most ardent supporters are driving an influx of cash into campaigns across the US.

On the other hand, the country and most of its congressmen are also turning “pro-crypto” by considering new regulations to streamline the frothy industry. Crypto advocates in the United States have been putting extra effort into supporting the sector. A recent report said that crypto lobbyists have nearly tripled since 2018.

While politicians such as Rep. Ritchie Torres, a New York Democrat, are encouraging citizens to support the crypto market, a bunch of top technologists and scientists have challenged the growing influence of crypto influencers and lobbyists.

“Counter-lobbying” efforts

Tech experts Miguel de Icaza from Microsoft, Kelsey Hightower, a principal engineer at Google Cloud, and top academics, including Harvard lecturer Bruce Schneier have jointly called for a crackdown on the influence of the rapidly growing crypto industry.

In a letter addressed to US lawmakers, the group has “counter-lobbied” the burgeoning digital assets sector, criticizing crypto investments and the underlying blockchain tech.

The letter, seen by the Financial Times, read,

“We urge you to resist pressure from digital asset industry financiers, lobbyists, and boosters to create a regulatory safe haven for these risky, flawed, and unproven digital financial instruments.”

The letter included the names of Senate Majority and Minority Leaders Charles Schumer and Mitch McConnell, Republican Patrick Toomey, and Democrat Ron Wyden. Patrick and Ron have supported a few crypto developments previously.

The letter intends to lessen the negative impact of crypto lobbying, such as the recent Terra network collapse that overturned the entire crypto community. Many investors have lost a fortune in their Terra (LUNA) and TerraUSD (UST) savings.

Although several individuals have questioned the safety and reliability of cryptos, the joint approach marks the first ‘organized effort’ to counter the attempts of crypto advocates to lure mass focus, the FT report said.

A pro technologist and an academician, Bruce Schneier, once said cryptos are “useless.” He said that the claims made by advocates on cryptocurrencies are not true. He said,

“It’s not secure, it’s not decentralized. Any system where you forget your password and you lose your life savings is not a safe system.”

Another signatory and a London-based software engineer Stephen Diehl called the letter “counter-lobbying,” while de Icaza, a former Microsoft engineer, said that millions of dollars are being wasted in getting crypto equipment. 

The letter noted,

“Crypto-assets have been the vehicle for unsound and highly volatile speculative investment schemes that are being actively promoted to retail investors who may be unable to understand their nature and risk.”

Crypto lobbyists triple since 2018

The reason behind fears and counter-lobbying efforts is that the businesses that influence crypto policy in the US have skyrocketed in the past four years. 

A new study released in March by Public Citizen noted that crypto lobbyists have nearly tripled since 2018. Per the findings, the number of crypto influencers jumped to 320 in 2021 from 115 in 2018.

Apart from this, the spending on crypto lobbying quadrupled from $2.2 million in 2018 to $9 million in 2021. The expenditure was driven by crypto exchange giant Coinbase (COIN), Ripple (XRP) Labs, and Blockchain Association. The study noted that each of these participants spent over $2 million on lobbying between 2018 and 2021.

India Is Finalizing a Crypto Consultation Paper, Says Govt. Official

Key Insights:

  • The Indian government is ready with a consultation paper on cryptocurrencies.
  • Economic Affairs Secretary Ajay Seth said that a global consensus is needed to deal with crypto challenges.
  • Simultaneously, the government calls for global regulation and what India can play.

The crypto industry in India has been struggling to cope with unclear rules, market volatility, and payment processors cutting off exchanges. The industry has been looking forward to a crypto bill in order to get some clarity on how the government seems to treat cryptocurrencies in India.

While the Reserve Bank of India (RBI) has consistently batted for a complete banning of cryptos like bitcoin (BTC) and ether (ETH), the government has maintained that it was keen on regulating the sector instead of an outright ban.

A crypto consultation paper on the way

Speaking at an event organized by the country’s Finance Ministry, the economic affairs secretary Ajay Seth said that a consultation paper on cryptocurrencies is “fairly ready.”

According to local sources, Seth called for a global consensus on crypto regulation. The paper is a result of consultation from various domestic and international players, including the World Bank and the International Monetary Fund. He noted, 

“Digital assets, whatever way we want to deal with those assets, there has to be a broad framework on which all economies have to be together. No country can choose to either of the position. We need a global consensus on crypto regulation.”

He added that India would observe crypto regulations across the globe before deciding how it would regulate. 

“We hope that we will soon be in a position to finalize our consultation paper. Simultaneously we are also beginning our work for some sort of a global regulation (to determine) what role India can play.”

The intention of releasing a crypto consultant paper is to convey that there has to be a “broad framework and participation of all countries,” and cryptos can’t succeed unless there is a global consensus, he noted.

In the virtual 2022 World Economic Forum’s annual Davos conference, India’s Prime Minister Narendra Modi also stressed the same. He said that cryptos are an example of the challenges that we are facing.

“To fight this, every nation, every global agency needs to have collective and synchronized action.” 

Investors Cling to Gold-Backed Cryptos, Following Massive Market Crash

Key Insights:

  • The recent crypto sell-offs have diverted investors to commodity-backed cryptos like gold.
  • Some gold-pegged cryptos to watch for investments include PAXG, XAUt, and DGX.
  • Gold price estimates by experts are bullish in 2022.

On May 7, TerraUSD (UST) stablecoin, which is supposed to maintain a $1 peg, started to wobble, and the price of the then-$18-billion algorithmic crypto crashed to as low as 35 cents on May 9. The Terra (LUNA) network witnessed a catastrophic failure within days.

For Sam, it was a $5000 worth of loss of his savings, and he is still struggling to recover from the nightmare. For now, nobody can predict how deep this plunge could be and whether it might bounce back to its 1:1 dollar peg.

Alternatively, Investors are eyeing alternative “safe-haven” assets such as gold-backed cryptos as a possible ray of hope after the terrible loss.

Its glittering gold, as bitcoin disappoints

With the recent geopolitical tensions and crypto sell-offs, bitcoin (BTC) became extremely fragile, crashing below the $28,000 level and bringing down stock prices. The world’s largest crypto by market cap is struggling to catch up above $30,000.

As a result, investors are fearful about re-entering the crypto market despite its higher returns in the past. Investors rather do not want to take any risks and look into newer variants of stablecoins backed by real-world commodities such as gold.

According to Everett Millman, a chief market analyst at Gainesville Coins,

“One of the main concerns that a lot of people who are new to crypto have is that it’s not backed by anything. It just gets on a screen. So attaching them or linking them to a real-world commodity, it does make some sense.”

Some of the gold-baked projects have promised stability to investors on the crypto front and have kept up to their word. 

For instance, Paxos Gold (PAXG), a digital token backed by physical gold, offers its investors, not just the tokens but also the underlying physical gold, which the parent company stores in vaults.

Tether Gold (XAUt) token also gives investors direct exposure to the physical gold price. It provides accessibility to ETFs and other traditional financial assets too.

Other gold-backed cryptos such as DigixGlobal (DGX), Meld Gold by Algorand (ALGO), and GoldCoin (GLC) have also evolved widely over the years.

Are these tokens a way forward?

It has been proved that gold is a protective hedge against inflation and a better alternative for crypto lovers who wish to invest in a stable and safer option when compared to fiat-pegged stablecoins.

Experts like Timothy Ord, President, and Editor of The Ord Oracle, predicted that gold stocks could see 10X gains in the next three years. Additionally, Wall Street gold estimates are also bullish for 2022.

Analysts at Goldman Sachs have recently hiked their forecasts for gold prices, predicting that the metal would hit around $2,300-$2,400 an ounce, up from $1950 previously.

Daniel Briesemann, an analyst at Commerzbank, told a publication,

“Gold is still in considerable demand as a safe haven, as evidenced by persistently high ETF inflows.”

Gold is a fully fungible asset and a globally recognized store of value, making the precious metal an ideal choice for tokenization.

On the downside

The fact that they are commodity-derived products doesn’t mean they are exempted from risks. For instance, their redemption process isn’t always smooth. Additionally, investors don’t necessarily have direct ownership over the gold that their tokens are pegged to. But this could differ in certain tokens which allow physical redemptions.

Another risk with gold-pegged digital currencies is that these tokens introduce the concern of storing a large supply of physical gold. As a result, investors should be careful to examine where the gold is housed before investing. Because if the value of gold disappears for any reason, the token value loses its value.

It is essential that there is transparency between crypto developers, investors, and third-party holders of gold, to build investor trust and maintain the stability of the digital token.

However, although gold-backed coins are still a small component of the pegged cryptocurrency market, USD-backed stablecoins remain a much larger part of the ecosystem. With the current crypto turmoil and the ongoing geopolitical tensions, gold-backed cryptos might change the order.

Tether Forays Into Latin America, Launches Mexican Peso-Pegged Crypto

Key Insights:

  • Tether launches a new stablecoin pegged to the Mexican peso.
  • The new MXNT tokens will receive support from Ethereum, Polygon, and Tron.
  • The peso-backed stablecoin would provide a store of value and minimize volatility.

After launching the world’s largest US dollar-pegged stablecoin USDT with a market valuation of over $73 billion, the Euro-pegged EURT, and the offshore Chinese Yuan-pegged CNHT, the Tether blockchain platform is now foraying into the Latin American market.

Alternatively, the crypto industry in Latin America is fresh, especially in digital currency transactions and payments. This is mainly because it is fast and offers low transfer rates. 

For instance, Mexico has embraced the ‘crypto culture’ and constantly delights the crypto community with its crypto-curious moves. The country has been preparing to bring bitcoin (BTC) as a legal tender citing El Salvador.

Stablecoin Backed 1:1 to the Mexican Peso

With a rich crypto-friendly culture, Mexico has now received its first stablecoin pegged to its national fiat Peso.

Announced Thursday, Tether has launched a 1:1 Mexican-peso pegged stablecoin, dubbed MXNT, built by the team of developers behind USDT.

Paolo Ardoino, CTO of Tether, quotes the increase in cryptocurrency usage in Latin America over the last year, making it apparent to launch a stablecoin offering.

Per triple-A data, 40% of Mexican companies are looking to adopt blockchain and cryptocurrencies in some form. Ardoino said,

“Introducing a Peso-pegged stablecoin will provide a store of value for those in the emerging markets and, in particular, Mexico. MXN₮ can minimize volatility for those looking to convert their assets and investments from fiat to digital currencies.”

The peso-backed stablecoin will be initially supported in the Ethereum (ETH), Tron (TRX), and Polygon (MATIC) blockchains, the company noted.

The move marks tether’s first foray into the Latin American market with a dedicated digital currency.

After the collapse of TerraUSD (UST), which shook the crypto world and caused investors to rethink and evaluate their stablecoin investments, investors have cashed out around $10 billion worth of tether since May 11.

However, tether assured that it has more than enough assets to cover the value of its entire circulating tokens. In a May 19 statement, the blockchain firm revealed that the commercial paper in the USDT reserves fell by 17% since the end of 2021. A commercial paper is a form of short-term debt issued by companies to finance their payrolls, payables, and inventories, among other short-term debt obligations.