5 Things to Know in Crypto Today – SEC v Ripple Ruling to Test the SEC

Key Insights:

  • XRP revisited $0.50 on Thursday following the latest SEC v Ripple Court ruling that went Ripple’s way.
  • Metaverse activity continues, with Blackrock (BLK) launching a metaverse-related ETF.
  • Fed fear could reignite later today, with US inflation numbers due alongside a string of FOMC member speeches.

The Securities and Futures Exchange Loses Key Battle Against Ripple

On Thursday, the ongoing SEC v Ripple case took an unexpected turn in favor of Ripple and XRP.

This week, Investors were awaiting a swift end to the case following the Motions for Summary Judgment filings. The filings suggested a possible settlement, with the Defendants filing the Motion for Summary Judgment without a Court ruling on an SEC objection.

However, Judge Torres overruled an SEC objection on Thursday. The decision could have a material bearing on the case. Judge Torres overruled the SEC’s objection to the Court denying the SEC motion to protect the William Hinman speech-related documents under the attorney-client privilege.

The latest ruling is a big blow for the SEC and its chances of overseeing the digital asset space. The SEC had battled to shield the Hinman documents under the attorney-client privilege, with more than seven motions contesting previous Court decisions.

However, Judge Torres has ordered the SEC to turn over all the Hinman speech-related documents.

XRP rallied by 8.49% on Thursday as investors responded to the news. The broader crypto market reaction to the ruling was also positive. The total crypto market cap reversed losses to the end day at $911.4 billion, a $7.4 billion rise on the day.

XRP gets an SEC v Ripple court ruling boost.
XRPUSD 300922 Daily Chart

Big Names Bridge Virtual and Real Worlds to Keep Web3 in the Limelight

The United Arab Emirates continued its drive into the virtual space this week. On Wednesday, the Dubai Ministry of Economy unveiled its headquarters in the metaverse. Dubai and Abu Dhabi are not newcomers to the metaverse, with both setting up shop in the virtual space earlier in the year.

While the UAE continues migrating to the metaverse, other big names have also hit the news this week.

On Thursday, Warner Music Group (WMG) announced a partnership with OpenSea to provide artists with more Web3 opportunities. In the announcement, WMG said the collaboration would,

“Provide a platform for select WMG artists to build and extend their fan communities in Web3.”

Blackrock (BLK) is not wanting to be left behind as more mainstream players go virtual. Bloomberg reported that the asset manager is launching a new exchange-traded fund (ETF) targeting metaverse-related companies.

ETHW Breaks Out on News of Binance Ethereum PoW Mining Pool Launch

On Thursday, Ethereum (Proof-of-Work) (ETHW) rallied by 11.83% to end the day at $12.004. News of Binance launching an ETHW Mining Pool drove ETHW demand in a choppy session.

According to the announcement,

“All users of the ETHW Pool will enjoy zero pool fees for ETHW mining.”

However, Binance added,

“In order to protect Binance users, ETHW will go through the same strict listing review process as Binance does for any other coin/token. Supporting ETHW on Binance Pool does not guarantee the listing of ETHW. Binance does not guarantee any listings as per our internal policy.”

ETHW breakout on pool mining news.
ETHWUSD 300922 Hourly Chart

Fed Fear Remains a Clear and Present Danger for the Crypto Market

This morning, the crypto market cap is down $3.33 billion to $908.07 billion. After a bullish Thursday session, caution has hit the broader crypto market.

Later today, US economic indicators and Fed chatter will test investor resilience. US inflation, personal spending, and consumer sentiment will be in the spotlight.

While revisions to consumer sentiment figures and personal spending will draw interest, the Core PCE Price Index will be the market focal point. Fed fear stemming from the current inflation environment could reignite should inflationary pressures build further.

Economists forecast the Core PCE Price Index to rise by 4.7% year-over-year, up from 4.6% in July.

Crypto market sees modest loss ahead of key US stats and Fed chatter.
Crypto Market Cap 300922 Daily Chart

Bitcoin and Its Carbon Footprint Was Under Scrutiny Once More

A research paper from the University of New Mexico compared Bitcoin’s (BTC) carbon footprint to that of digital crude and not gold.

The paper also noted that,

“Extreme changes would be required to make BTC sustainable (eg., on the renewable mix). POW-based cryptocurrencies are on an unsustainable path. If the industry doesn’t shift its production path away from POW or move towards POS, then this class of digitally scarce goods may need to be regulated and delay will likely lead to increasing global climate damages.”

BTC had a muted reaction to the latest anti-POW paper. This morning, BTC was down 0.55% to $19,482.

BTC showed muted reaction to climate talk.
BTCUSD 300922 Daily Chart

 

The GBP/USD Is Back in the Red After the BoE Fueled Wednesday Rally

On Wednesday, the Bank of England stepped in to calm the markets and restore confidence in the Pound.

Tagged the ‘Gilt Market Operations,’ the BoE released details of the Bank’s purchases of longer-dated UK government bonds.

According to the announcement,

“The Bank will carry out purchases of long-dated gilts in a temporary and targeted way. The purpose of these purchases is to restore orderly market conditions.”

The Bank added,

“Given current market conditions, the Bank stands ready to purchase conventional gilts with a residual maturity of more than 20 years in the secondary market, initially at a rate of up to £5 billion per auction. These parameters will be kept under review in light of prevailing market conditions.”

The first auction took place on Wednesday, and subsequent auctions will happen daily until October 14, 2022.

Market Reaction to the BoE Intervention Was Ultimately Bullish

On Wednesday, the GBP/USD pair rallied by 1.45% to end the session at $1.08879. The Pound had tumbled to a low of $1.05381 before surging to a day high of $1.09160. However, this morning, the GBP/USD pair was on the back foot early in the Asian session, falling by 0.33% to $1.08520.

GBP/USD under pressure after Wednesday relief rally.
290922 GBPUSD Daily Chart

While the purchase of longer-dated gilts delivered order, market concerns over the UK Government’s mini-budget and the implications to inflation and monetary policy remain. On Tuesday, BoE Chief Economist Huw Pill said that the BoE would wait until the November MPC meeting to deliver a policy response to the mini-budget.

However, market disorder forced the Bank into action.

Beyond the Pound, market reaction to the Bank of England intervention was evident across the asset classes.

On Wednesday, the NASDAQ 100 rallied by 2.05%, with the Dow and the S&P500 ending the day with gains of 1.88% and 1.97%, respectively. The US futures had been in negative territory through the European session before the market response to the BoE move.

The European markets also bounced back from heavy losses, with the DAX30 rising by 0.36% and the FTSE100 ending the day up 0.30%. However, the gains were modest, with recession jitters and hawkish Fed chatter pegging the majors back on the day.

Elsewhere, the crypto market recoupled with the US equity markets. The crypto market had briefly decoupled in response to the Fed’s rate hike and FOMC projections.

Crypto - NASDAQ correlation
Total Market Cap – NASDAQ – 290922 5 Minute Chart

Recovering from an early morning slide to a Wednesday low of $865.4 billion, the crypto market cap is currently up $14.1 billion to $910.0 billion.

Early in the Wednesday session, news of Apple Inc. (AAPL) pulling plans to ramp up production of the new iPhone 14 product suite had sent riskier assets into the deep red.

Looking at the Asian markets this morning, the risk-on sentiment from the US session has failed to provide support. At the time of writing, the ASX200 was down 0.53%, with the NASDAQ 100 Mini down 16 points.

The Bank of England will need to do more to restore confidence in the Pound. Hawkish central bank chatter will also remain a headwind for riskier assets. Warnings from the likes of Apple Inc of weakening demand will continue to add to the market angst.

Apple Inc. Joins Growing List Responding to Economic Conditions

Overnight, US tech giant and multinational Apple Inc. (AAPL) announced that it would drop plans to increase the production of its new iPhone 14 product suite.

Bloomberg reported that an expected surge in demand failed to materialize, forcing the company to notify suppliers to curtail efforts to increase assembly line output. Apple planned to increase production of the new iPhone 14 product suite by as much as 6 million units in the second half of this year.

Today’s news followed reports of Apple Inc. shifting some iPhone 14 production from China to India. According to Reuters, the shift from China was in response to rising geopolitical tensions and COVID-19 lockdown measures in China that continue to impact output.

The market reaction to the news was bearish. Ahead of the Bloomberg report, the NASDAQ 100 Mini was in positive territory. However, at the time of writing, the NASDAQ 100 Mini was down 142.25 points, with the Dow Jones Mini down 190 points. For the S&P 500, another bearish session would extend the losing streak to seven sessions.

Pre-market, Apple Inc was down 3.70%.

The European markets also responded adversely to the news. Early in the European session, the DAX30 was down 1.60%, with the CAC40 and the EuroStoxx600 down 1.24% and 1.43%, respectively.

Beyond the global equity markets, the crypto market reacted negatively to the news. This morning the crypto market cap was down $17 billion to $878.4 billion. Before the Apple news hit the wires, the crypto market cap had struck an early high of $902.2 billion.

Crypto market reacts to Apple Inc news.
Crypto Market Cap 280922 Daily Chart

Apple Joins Growing List of Multinationals to Sound the Alarm Bells

This morning’s news was one of several as US multinational companies respond to a marked shift in the economic environment. Economic indicators continue to flash red as central banks attempt to tame inflation.

Rising interest rates and persistent inflation amidst a weakening economic outlook have weighed on demand expectations.

In July, Walmart (WMT) spooked the global financial markets with a grim outlook for the quarter and the fullyear. However, shortly after the WMT warning, Apple Inc. and Amazon.com (AMZN) released earnings results and delivered positive outlooks, which were in stark contrast to that of Walmart.

Conditions have deteriorated rapidly since July, with Gap Inc. (GPS) pulling its full-year outlook in August, citing macroeconomic uncertainty as the company searched for a new CEO.

Earlier this month, FedEx (FDX) withdrew its earnings forecasts, citing deteriorating market conditions. FedEx shares tumbled by 21.44% in response to the announcement.

As the list grows longer, market angst will likely build as investors prepare for the earnings season, which kicks off next month.

5 Things to Know in Crypto Today: DOGE Enjoys Another Breakout Session

Key Insights:

  • The crypto market decoupled from the NASDAQ 100 for a second session on Friday, though recession fears and monetary policy remain crypto headwinds.
  • Investor sentiment towards a favorable outcome to the SEC v Ripple case continues to drive XRP towards $1.00.
  • Regulatory activity picked up late in the third quarter, with US regulators back in focus

The Crypto Market Decoupled from the NASDAQ 100 for a Second Session

On Friday, the total crypto market cap rose by a modest $1.16 billion to $905.6 billion. While modest, the crypto market brushed aside a bearish NASDAQ session, which fell by 1.80% to end the week down 8.38%.

The NASDAQ loss followed a 1.37% decline from Thursday, as the global financial markets responded further to Wednesday’s Fed policy move and FOMC projections.

On Thursday, the crypto market had surged by $42 billion as investors rotated out of stocks. Major FX pairings including, the GBP/USD and the EUR/USD, also took a hit.

On Friday, the GBP/USD tumbled by a whopping 3.57% to $1.08504, with the EUR/USD sliding by 1.50% to $0.96868. Dollar dominance could give investors a greater incentive to move into the crypto market. Investor sentiment towards the global economic outlook suggests no immediate recovery from decade lows.

Monday through Friday, the crypto market cap rose by 1.24%, supported by XRP and others that enjoyed particularly bullish weeks. A mixed Saturday morning session has reduced the gain, with profit taking likely contributing to the modest pullback to $901 billion.

Crypto market in positive territory.
Crypto Market Cap 240922 Weekly Chart

Investor Sentiment Toward the SEC v Ripple Case Drives XRP to $0.55

On Friday, XRP hit a day high of $0.5587. It was the first visit to $0.55 since May. Hopes of a favorable outcome to the SEC v Ripple case supported a bullish Monday to Friday. XRP surged by 41.8% to lead the top 100 and move into the number 6 spot by market cap.

Last weekend’s Motion for Summary Judgment filings and a shift in focus from William Hinman’s speech-related documents fueled the XRP resurgence.

The defendants filed their Motion for Summary Judgment before a Court decision on the SEC objection to the Court denying its motion to shield William Hinman’s speech-related documents under the attorney-client privilege.

The Motion for Summary judgment filing suggests an out-of-court agreement. The market consensus had been that the SEC would do whatever it could to prevent the documents from becoming public records, including a settlement.

While down through the Saturday morning session, the XRP bulls will target a return to $0.60 to bring $1.00 into view. Updates from the SEC v Ripple case need monitoring in the coming weeks.

XRP leads the way.
XRPUSD 240922 Weekly Chart

The Commodity Futures Trading Commission (CFTC) Makes Its Move

With the SEC under the watchful eye of lawmakers and embroiled in an ongoing battle with Ripple Lab, the CFTC came into the spotlight.

This week, the CFTC filed its first claim against a DAO. In addition, the CFTC fined bZeroX $250,000 for operating illegally and issued a cease-and-desist order.

More claims will likely follow as the CFTC shows its teeth in a bid to win the right to regulate the digital asset space. According to the CFTC press release, the CFTC also charged Ooki DAO for offering illegal off-exchange digital-asset trading, registration violations, and failing to comply with the bank secrecy act.

Dogecoin (DOGE) Leads the Crypto Top Ten on Saturday

This morning, dogecoin was up 3.71% to $0.06571. Heading for a third consecutive bullish session, DOGE Whale numbers suggest a bearish trend reversal and a DOGE return to $0.070. However, DOGE will need the support of the broader crypto market to avoid a reversal of the breakout from sub-$0.0560.

Numbers from intotheblock revealed increased Whale holdings, supporting the bullish week. While trailing XRP, DOGE is up 14% for the week, solidifying its #10 ranking.

Chalk and Cheese: Cardano Hard Fork Delivers ADA Price Support

For the current week, ADA is up 2.68% to $0.460. While down from a week high of $0.482, investors responded differently to the ADA hard fork than to the Ethereum Merge.

Chart, waterfall chart Description automatically generated

One likely reason is that the Vasil hard fork delivers network upgrades that should drive project migration to the Cardano ecosystem.

On Friday, Charles Hoskinson took to Twitter, saying,

“I’ve seen hundreds of tweets like this one. Lots of projects are excited to deploy now.”

The Cardano founder was referring to a tweet from NewM, which said,

“We’ve been waiting for the #Vasil to deploy our smart contracts. This upgrade makes them more efficient and cost-effective on #Cardano. The future of #music is happening now! More on this soon.”

By contrast, ethereum (ETH) is down 0.55% to $1,328 for the current week. The shift to a Proof-of-Stake (PoS) protocol has yet to demonstrate a reason for an ETH breakout. On August 8, ETH had struck a high of $2,031 before sliding to a post-Merge low of $1,220.

5 Things to Know in Crypto Today: The Fed Hits the Crypto Market

Key Insights:

  • The Federal Reserve sends riskier assets into the deep red, with the crypto market cap down $21.7 billion to $862.5 billion.
  • Today, the Vasil hard fork is due to take place, with ADA seeing a bearish run into Thursday.
  • Ripple holder optimism takes a breather as investors respond to the Fed.

The Federal Reserve Sinks the Crypto Market, Talking of More to Come

Today, the Federal Reserve hiked rates by 75 basis points, which was in line with market expectations. Despite the Fed holding back from a percentage point hike, the market reaction was bearish.

In response to the policy decision, rate statement, economic projections, and Fed Chair Powell’s press conference, the market cap rose to a high of $919.4 billion before tumbling to a low of $859.2 billion.

Crypto market cap sinks
Crypto Market Cap 210922 Hourly Chart

Growth projections affirmed the market’s fear, with the FOMC projecting growth of 0.2% in 2022 and 1.2% in 2023. In June, the FOMC projected growth of 1.7% in both 2022 and 2023. Things were not much better for inflation. The FOMC revised the PCE inflation target for 2022 from 5.2% to 5.4% and from 2.6% to 2.8% for 2023.

As a result of persistent inflation, the FOMC projected the Federal Funds Rate (FFR) to hit 4.4% this year, an upward revision from June’s 3.4%. For 2023, the FOMC projects the FFR to reach 4.6%, an upward revision from June’s 3.8%.

FOMC projections bearish.
FOMC Projections Sept 2022

Fed Chair Powell’s press conference provided little market comfort, reiterating the Fed’s commitment to bring inflation to target. Powell also stood by the Fed’s mantra of curbing inflation at any cost, saying,

“Will keep pat it until the job is done.”

The crypto market was not alone in responding adversely to the policy decision, projections, and press conference.

On Wednesday, the NASDAQ 100 fell by 1.79%, while the Dollar Spot Index (DXY) ended the day up 1.02% to 111.344. The crypto correlation with the NASDAQ was evident throughout the US session.

NASDAQ correlation.
NASDAQ – Crypto Market Cap 210922 5-Minute Chart

The Vasil Hard Fork Countdown Begins

Today, the markets expect Cardano (ADA) to get a price boost as the market focus shifts away from the Fed to the Vasil hard fork.

However, ADA has been under intense selling pressure alongside the broader crypto market. Heading for the third loss from four sessions, ADA sits some way off from a September high of $0.524.

ADA losses come despite positive progress reports in the run-up to today’s hard fork.

We expect volatility to persist ahead of the hard fork, with the market reaction to the Ethereum (ETH) Merge likely to test buyer appetite. ETH tumbled post-Merge, catching investors off guard as the market bought the rumor and sold the news.

As of September 21, updates on the ADA Hard Fork Mass Indicators are as follows:

  • Thirty-nine exchanges are hard fork ready, rising by eight from September 20.
  • Nine are in progress, with Coinbase and Kraken still reporting upgrades in progress.
  • Twenty-one have yet to start the upgrade process.

From the top 12 exchanges by liquidity:

  • Eleven exchanges are hard fork ready.
  • Coinbase has yet to complete the upgrade.

Today, ADA is down 2.26% to $0.432, a modest loss relative to Sunday’s 7.82% sell-off.

ADA on the defensive.
ADAUSD 210922 Daily Chart

XRP Succumbs to Market Forces Despite Investor Optimism

Investor optimism towards the SEC v Ripple case supported an XRP rally to a Wednesday and September high of $0.4342.

XRP holders expect an early conclusion to the case after the parties filed Motions for Summary Judgments ahead of schedule. One area of interest has been the end of a long SEC battle to shield William Hinman’s speech-related documents under the attorney-client privilege.

A sudden shift in focus from the William Hinman speech-related documents to the sealing of court documents suggests an out-of-court agreement. The defendants filed the Motion for Summary Judgment without a Court ruling on the Hinman speech-related docs.

Until late July, the SEC had battled to shield the Hinman documents under the attorney-client privilege. A favorable conclusion should see XRP make its way back to $1.00, last visited in December 2021.

XRP in the hands of the SEC v Ripple case.
XRPUSD 210922 Daily Chart

New York Court Orders USDT to Show Financials

This week, the New York Courts ordered Tether (USDT) to provide balance, sheets, income statements, cash-flow statements, general ledgers, and P&L statements, among other documents, to the Court. While stablecoin scrutiny continues in the wake of the Terra collapse, the New York Court ruling came in response to a lawsuit dating back to October 2019.

Voyager Is in the Spotlight as Major Exchanges Target Voyager Assets

This week, news hit the wires of Sam Bankman-Fried run Alameda planning to repay a $200 million loan. In exchange, Voyager Digital would return $160 million in collateral. Voyager filed the request to unwind the loan and return the collateral to the Court on Monday. FTX , owned by Sam Bankman-Fried, is among the top firms looking to acquire Voyager’s assets.

According to the Wall Street Journal, Binance and FTX are in the hunt, with bids in the $50 million range.

5 Things to Know in Crypto Today: Fed & Recession Fears Grip

Key Insights:

  • Ethereum (ETH) and bitcoin (BTC) sink on renewed Fed and recessionary fears.
  • Regulators continued to turn the screw, with FTX in the spotlight.
  • Helium (HNT) bucked a bearish market trend on news of a Binance accounting error.

Fed and Recession Fears Jolt the Crypto Market

This morning, the total crypto market cap tumbled by $27.8 billion to $867.6 billion. Fed and recession fear sent the crypto market tumbling on Sunday, and bearish sentiment has continued through this morning’s session.

Cryptos turn bearish.
Crypto Market Cap 190922 Daily Chart

Last Tuesday’s US CPI report caught the markets off guard, and while economic indicators raise red flags, central banks remain committed to front-loading rate hikes to bring inflation to target.

According to the CME FedWatch Tool, the probability of a percentage point rate hike on November 2 sits at 13.3%, up from 0.0% a week ago. While the chances of a 75-basis point rate hike held steady, the probability of a 50-basis point rate fell from 30.7% to 27.0% over the last seven days.

Fed rate outlook hawkish.
CME Probability Fed 190922

While the numbers in isolation may be of little concern, fears of a global economic recession and a hawkish Fed are negative for cryptos.

On Thursday, the World Bank issued a press release titled ‘Risk of Global Recession in 2023 Rises Amid Simultaneous Rate Hikes.’

The World Bank highlighted the risks of a ‘string of financial crisis in emerging market and developing economies that would do them lasting harm.’

The report preceded a FedEx (FDX) warning of deteriorating economic conditions on Friday. FedEx was not the first to raise concerns. In July, Walmart (WMT) hit the crypto market with a warning of its own.

Helium (HNT) Leads a Choppy Market

This morning, HNT surged by 17.5% to $4.67.

The bounce back from sub-$4.00 came on news of a Binance accounting error leading to the mass selling of erroneously allocated HNT tokens. The Binance error was an accounting error, classifying HNT and the network’s second token, Mobile, as one token.

Binance credited users who deposited Mobile tokens with the higher valued HNT tokens. Holders quickly sold the HNT tokens, leading to the price slide.

HNT in recovery mode.
HNTUSD 190922 Daily Chart

South Korean Authorities Request Interpol Red Letter to Nab Do Kwon

Last week, South Korean authorities issued an arrest warrant for Terra Labs founder Do Kwon. Since then, the situation has become direr. The hunt for Do Kwon has intensified, culminating in authorities calling on Interpol to issue a red letter.

Over the weekend, the Singapore government stated that Do Kwon was not living in Singapore. Even Do Kwon stated that he was not on the run, saying,

“I’m not “on the run” or anything similar – for any government agency that has shown interest to communicate, we are in full cooperation and we don’t have anything to hide.”

However, investors showed little concern. At the time of writing, LUNA was up 12.2% to $0.000309.

LUNA on the move despite Do Kwon woes.
LUNAUSD 190922 Daily Chart

The Financial Conduct Authority Raises FTX Red Flag

FTX has had plenty of news coverage in recent days. Over the weekend, FTX CEO talked of a $1 billion crypto chest to acquire or aid ailing crypt-related firms.

However, the news has not all been FTX-positive. Last week, the FTC warned that FTX is an unauthorized FTC entity. In the announcement, the FTC stated,

“The firm is not authorized by us and is targeting people in the UK. You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”

The Ripple Team Share Their Views on the SEC

Following the weekend filings, Ripple CEO Brad Garlinghouse stated,

“Today’s filings make it clear the SEC isn’t interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress.”

Ripple Defense counsel Stuart Alderoty said,

“My hot take – after two years of litigation, the SEC is unable to identify any contract for investment (that’s what the statute requires); and cannot satisfy a single prong of the Supreme Court’s Howey test. Everything else is just noise.”

Fed and recession fears overshadowed investor optimism for a favorable outcome to the SEC v Ripple case on Sunday and this morning. On Sunday, XRP came within reach of $0.40 before succumbing to market forces.

XRP on the back foot.
XRPUSD 190922 Daily Chart

 

5 Things to Know in Crypto Today: US Regulatory Activity Spikes

Key Insights:

  • Ethereum (ETH) struggles at sub-$1,500 in the wake of the Thursday Merge.
  • Regulatory chatter spikes as the White House releases its first-ever crypto regulatory framework.
  • Sports keeps the metaverse and Web3 in the limelight, with Spain’s LaLiga going metaverse.

Post-Ethereum Merge Review

On Thursday, the heavily anticipated Ethereum (ETH) Merge took place, and the crypto market responded in kind. As seen with previous network events, ETH took a bearish turn. Buy the rumor and sell the news proved true once more.

For the current week, ETH is down 18.8% to $1,435. While the US CPI report has contributed to the losses, ETH slid by 12.5% Thursday through Friday as investors responded to the Merge.

ETH on the slide.
ETHUSD 170922 Daily Chart

By contrast, the crypto market cap fell by 3.96%, Thursday through Friday, to $925.3 billion.

Ethereum was not the only victim of the Merge. Since Thursday, ravencoin (RVN) is down 31.6%, with ethereum classic (ETC) sliding by 13.5%.

For ETH holders, while the Merge may have eliminated the carbon footprint issue, the move to a Proof-of-Stake (PoS) protocol puts ETH in the crosshairs of the SEC.

On Thursday, the SEC chair reportedly spoke about staked cryptos, stating that PoS coins may fall under the SEC’s purview.

However, Dogecoin (DOGE) appears to be a beneficiary of the Merge in becoming the second largest Proof-of-Work protocol in the Post Merge era, behind bitcoin (BTC).

Celsius (CEL) Is on the Move in Hopes of a Business Revival

This morning, CEL is up 16.9% to $1.8899. While the US CPI report and the Merge have impacted crypto appetite, CEL is up 20.5% for the current week.

Hopes of a business revival and repayment of client funds frozen prior to the Celsius bankruptcy have driven demand. Going into the weekend, Celsius reportedly filed for permission to sell stablecoin holdings to fund operations. According to Reuters, Celsius will discuss the proposed sale at an October 6 hearing.

CEL on the move.
CELUSD 170922 Daily Chart

The Biden Administration Releases New Crypto Framework

On Friday, the White House released the first-ever comprehensive framework for the Responsible Development of Digital assets.

The first-ever comprehensive Framework for Responsible Development of Digital Assets looks to provide a framework to protect consumers, investors, and businesses and provide financial stability while addressing national security and environmental concerns.

One section of the White House fact sheet that drew market interest stated,

“The reports encourage regulators like the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) consistent with their mandates, to aggressively pursue investigations and enforcement actions against unlawful practices in the digital assets space.”

Market reaction to the Friday report was mixed. The broader crypto market recovered from session losses to end the day in positive territory.

Crypto market steadies after the Merge.
Total Market Cap 170922 Daily Chart

While Fed Fear Subsides, Recession Fear Resurfaces

Late in the week, Fed fear subsided. Currently, the split between a 75-basis point and percentage point rate hike is 82% to 18% in favor of a 75-basis point hike. Ahead of Thursday’s retail sales and Philly Fed numbers, the split had stood at 75% to 25% in favor of a 75% basis point hike.

Markets bet on a 75-basis point rate hike.
FED Rate Hike Bets 170922

However, while Fed fear subsided, recession fears resurfaced in the wake of Thursday’s weak US economic indicators and the current inflation environment.

On Friday, the NASDAQ 100 fell by 0.90%, ending the week down 5.77%. News of FedEx (FDX) withdrawing its earnings forecasts, citing deteriorating market conditions, added to the market angst.

The Sporting World Drives a Pickup in Web3 Activity

On the brighter side, Web3 continues to evolve, largely thanks to the world of sport and large US conglomerates.

This week, Spain’s LaLiga soccer league announced plans to develop land in the Vegas City district of Decentraland (MANA) in a bid to more closely engage with Gen Z fans. LaLiga reportedly formed a new strategic partnership with StadioPlus to send the league virtual.

LaLiga joins footballing giants Manchester City, among others, which went metaverse earlier this year.

5 Things to Know in Crypto Today: ETH Merge Sinks the Market

Key Insights:

  • The heavily anticipated Ethereum (ETH) Merge took place today, with no reports of any immediate hiccups
  • Despite the crypto event of the year, investors are bearish, with the crypto market cap down by $41.8 billion to $922 billion.
  • However, Celsius (CEL) was in breakout mode on news of restructuring plans before succumbing to crypto market forces.

The Ethereum (ETH) Merge Took Place Seamlessly

On Thursday, the Ethereum (ETH) Merge took place, with Ethereum seamlessly moving to a Proof-of-Stake (PoS) protocol.

Market anticipation of the crypto event of the year saw ETH return to $2,000 in August before settling at a pre-Merge $1,650.

However, investors jumped ship post-Merge, with ETH down 9.5% to $1,484.

ETH slides post-Merge
ETHUSD 150922 Daily Chart

Other Merge-linked coins were also deep in negative territory. Ravencoin (RVN) was down 21.8%, with ethereum classic (ETC) down 8.31%. Things were not much better for Lido DAO (LDO), which was down 7.20% with 60 minutes of the Thursday session remaining.

The post-Merge sell-off left the total crypto market cap down $41.8 billion to $922.13 billion.

Crypto market resumes bearish trend.
Crypto Market Cap Daily Chart 150922

Celsius Plans a Business Resuscitation

After freezing withdrawals and filing for bankruptcy in July, Celsius has been in restructuring mode. Since the filing, Celsius received Court permission to generate revenue via crypto mining facilities to support withdrawal demands.

The latest news is a plan to shift from lender to crypto custodian. Celsius plans to introduce a fee structure to drive revenue streams from different types of transactions.

Market reaction to the news was bullish, with Celsius (CEL) rallying 35.8% to a Thursday and September high of $2.50 before falling into the red.

CEL sees bullish response to restructuring news.
CELUSD 150922 Daily Chart

South Korea Issue Terra Labs Founder Arrest Warrant

This week, news hit the wires of South Korea issuing a warrant for the arrest of Terra Labs founder Do Kwon. Investors’ reaction to the news was brutal, with LUNA (LUNA) and Terra Classic (LUNC) paying the price. In addition to the arrest warrant, there was news of the authorities applying to invalidate Do Kwon’s passport.

In recent weeks, LUNA and LUNC had found strong support before a retrace from September highs.

Late in the Thursday session, LUNA and LUNC were down 15% and 12%, respectively.

LUNC and LUNA sink on Do Kwon news.
LUNC 150922 Daily Chart

Fed Fear Subsides Following US Wholesale Inflation Figures for August

Following Tuesday’s US CPI report, market angst over a percentage point Fed rate hike eased ahead of the Friday session.

Softer US wholesale inflation figures and disappointing Philly Fed Manufacturing PMI and retail sales figures appear to have shut the door on a more hawkish move.

The shift in sentiment provided pre-Merge crypto market support.

Currently, the split between a 75-basis point and percentage point rate hike is 80% to 20% in favor of a 75-basis point hike. Ahead of Thursday’s retail sales and Philly Fed numbers, the split had stood at 75% to 25% in favor of a 75% basis point hike.

Markets price out percentage point Fed rate hike.
FED Rate Hike Bets 150922

China and Vietnam Show Asia’s Crypto Adoption Footprint

This week, Chainalysis released its latest crypto adoption rankings, and China appeared in the top ten, despite the government crackdown on cryptos.

Vietnam ranked first, the US fifth, and China tenth.

Chainalysis crypto adoption rankings
Chainalysis rankings 160922

According to the September report, global adoption plateaued in the last year after steadily rising since 2019.

Crypto adoption hit by crypto winter.
Global Index Score Quarterly

The movements in the Global Index score reflected the impact of the crypto winter on adoption rates. Adoption rates may become another headwind for the crypto market.

 

5 Things to Know in Crypto Today: BTC Returns to $22,000

Key Insights:

  • Bitcoin (BTC) and the crypto market are on target to extend the winning streak to six sessions.
  • Fed fear continues to subside, supporting riskier assets, with a pickup in crypto activity evident in the news wires.
  • NFT news delivered a solana (SOL) breakout, with Web3 and Starbucks (SBUX) supporting a polygon (MATIC) rally.

Fed Fear Subsides as Markets Look Beyond the September Fed Move

This week, the FOMC blackout period prevents FOMC members from talking until after September 22. With a 75-basis point rate hike baked in, US economic indicators will dictate the appetite for riskier assets in the runup to the September policy decision.

Following last week’s Bank of Canada and ECB rate hikes, the global financial markets appear to have accepted the need for front-loading to bring inflation to target.

The NASDAQ continues to trend upwards, supporting the crypto market, with bitcoin (BTC) returning to $22,000.

However, today’s US CPI report could test investor sentiment. Another spike in US inflation may bring some uncertainty. Before the blackout period, Fed Chair Powell and FOMC members had delivered hawkish chatter and commitment to bring inflation to target at any cost.

NASDAQ correlation.
Total Market Cap – NASDAQ – 130922 Daily Chart

Solana (SOL) Leads the Top Ten

On Monday, SOL is up 6.38% to $37.2300. A bullish session saw SOL rally to a day high of $38.4050 before easing back. A return to $40.00 for the first time since August 18 would support a run at the August high of $48.42. However, SOL sits well below the January/2022 high of $179.4975.

Leading the top ten cryptos by market cap, NFT news delivered the SOL breakout session.

Solana-based NFT activity is on the rise. According to Solana News, the most-traded NFT collections over the last 24 hours include, Yoots- Mint Toobs ($426,170), Solana Name Service ($425,491), and Psyker ($273,773).

‘Hello Moon’ also shared some Solana-based NFT numbers overnight, which were SOL price positive.

SOL enjoys a bullish session.
SOLUSD 130922 Daily Chart

Web3 Activity Picks Up as Mainstream Players Form New Partnerships

Ford Motors (F) and Starbucks (SBUX) became the latest US companies to show interest in Web3.

However, Starbucks had more impact on the crypto market, partnering with Polygon (MATIC) to launch an NFT rewards program. On Monday, Starbucks announced a new Web3 experience for its rewards members.

According to the announcement,

“As one of the first companies to integrate NFTs with an industry-leading loyalty program at scale, Starbucks will create an accessible Web3 community that will enable new ways to engage with members and partners (employees).”

In response to the new partnership, MATIC is up 4.10% to $0.9302.

MATIC responds to Starbucks announcement.
MATICUSD 130922 Daily Chart

Input Output HK Vasil Hard Fork Updates Show Progress

With the Vasil hard fork date of September 22 rapidly approaching, investor interest in the Input Output HK updates has grown.

As of September 12, updates on the ADA Hard Fork Mass Indicators are as follows:

  • Sixteen exchanges are hard fork ready, up from 15 as of September 9.
  • Twenty-eight exchanges are in progress, up by one from September 9, with Coinbase and Kraken still reporting upgrades in progress.
  • Twenty-seven exchanges have yet to start the upgrade process.

From the top 12 exchanges by liquidity:

  • Six exchanges are hard fork ready: AAX, Binance, Bittrue, BKEX, MEXC, and WhiteBit, with four in progress, including Coinbase, HitBTC, Upbit, and XT.com.
  • However, two exchanges have yet to start the upgrade process: ChangellyPro and ZB.com.

Investors will be looking for Coinbase and Kraken to complete the upgrade process to deliver ADA price support.

ADA is down 1.6% to $0.501, with ten minutes of the Monday session remaining.

ADA struggles.
ADAUSD 130922 Daily Chart

Fidelity Goes Retail with Bitcoin (BTC) Trading Platform

The Wall Street Journal reported that Fidelity Investments plans to offer BTC trading to its retail clients. Fidelity could become another headache for the likes of Coinbase, which have struggled through the crypto winter.

 

5 Things to Know in Crypto Today: Crypto Resurgence Sends BTC to $21,000

Key Insights:

  • Economic indicators and hawkish Fed chatter failed to influence BTC and the broader crypto market.
  • Thursday’s ECB monetary policy decision contributed to a rotation out of safe haven assets into riskier assets.
  • The shift in market sentiment saw more than $50 billion pour into the crypto market, with the market cap returning to $1,000 billion.

US Economic Indicators and Fed Chatter Take a Back Seat

On Thursday, Fed Chair Powell stood by the Fed mantra of bringing inflation to target at all costs. US economic data favored a more hawkish Fed. However, there were two revelations. Firstly, the Fed is unlikely to move beyond 75-basis point rate hikes. Secondly, the Fed is not alone in its desire to bring inflation under control.

Investor sentiment was evident across the global equity markets and the crypto market.

NASDAQ correlation.
NASDAQ – Crypto 5 Min Chart 090922

Bitcoin (BTC) Leads the Top Ten Crypto Rebound

On Friday, BTC is up 10.04% to $21,263. While a return to $21,000 may seem insignificant, several significant factors need consideration.

  • Bitcoin fell through the August and July lows to a new September low of $18,549 on Tuesday.
  • Technical indicators and the Bitcoin Fear & Greed Index painted a gloomy picture throughout the week.
  • Fed fear was the primary crypto headwind before the great Dollar-unwind.

While the Bank of Canada failed to shift investor sentiment on Wednesday, the ECB had a material impact on the global financial markets. There was a broad-based market realization that the need to bring inflation to target, at any cost, extends beyond the Fed.

A BTC bearish trend reversal will likely form if FOMC members avoid talking up one percentage point rate hikes. We will, however, want to see BTC and the broader crypto market consolidate today’s gains over the weekend.

BTC returns to $21,000.
BTCUSD 090922 Daily Chart

Legal Battles Continue to Plague the Digital Asset Space

Elon Musk faces the wrath of crypto investors. A crusade to sue Elon Musk, Tesla, and SpaceX has evolved into a full-blown legal assault, with more crypto victims joining the battle to take on the world’s richest man. This week news hit the wires of new plaintiffs joining the $258 billion lawsuit alleging that Musk is running a DOGE pyramid scheme.

Another high-profile lawsuit is the SEC v Ripple case. A famous William Hinman speech has become the focal point of the case.

By way of background, the former SEC Director of the Division of Corporation Finance, William Hinman, is a central figure in the SEC v Ripple case. In a famous 2018 speech, Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities.

However, with the lack of progress towards a conclusion, XRP has struggled.

Singapore Bank DBS Partners with Sandbox to Enter the Metaverse

On Friday, DBS announced a partnership with The Sandbox (SAND) to,

“Create DBS BetterWorld, an interactive metaverse experience showcasing the importance of building a better, more sustainable world, and inviting others to come along.”

Quentin Tarantino Settles Miramax NFT Lawsuit

On Thursday, September 8, Quentin Tarantino and Miramax settled a lawsuit over the distribution of Pulp Fiction NFTs.

In 2021, Tarantino announced the planned auction of seven NFTs on the Secret (SCRT) blockchain. The launch coincided with news of the Miramax lawsuit. Tarantino went on to sell one of the seven NFTs for $1.1 million before suspending the auction, citing market volatility.

5 Things to Know in Crypto Today: Weak US Stats Deliver BTC Support

Key Insights:

  • The total crypto market cap found support from weak US economic indicators reflecting greater fear of the Fed than a recession.
  • With investor focus on the Jackson Hole Symposium and Fed Chair Powell, the crypto market is unlikely to break out from current ranges.
  • Any crypto market optimism could freeze over on Friday, with Fed Chair Powell on the docket to deliver a keynote speech.

US Macro and Fed Monetary Policy Remains the Key Market Focus

On Monday, panic selling led the total crypto market cap to a day low of $969.2 billion before a post-US closing bell revival. A lack of US economic indicators and FOMC member chatter allowed dip buyers to jump in ahead of a busy week for the global financial markets.

Today, US private sector PMIs set the tone, with the market focus on the Services PMI. A sharper contraction in the services sector delivered crypto support, with the numbers suggesting the need for a possible pause on rate hikes.

Over the week, core durable goods orders, jobless claims, Q2 GDP, personal spending, and inflation figures are also on the docket.

However, uncertainty will shroud the numbers. Investors will need to consider what gives the Fed more wriggle room and what could shallow the planned aggressive interest rate path beyond normalization.

The two market forces remain the economic outlook and the Fed interest rate path trajectory. A less hawkish stance on interest rates but an optimistic view of the US economy would be the ideal crypto combination. However, with US inflation running hot, the two are unlikely to materialize in unison.

Beyond the US, China, the Eurozone, and the UK are other economies faltering.

Early in the US session, bitcoin (BTC) was up 0.21%, with Ethereum (ETH) rising by 0.53%. XRP led the way down, however, falling by 1.16%.

XRP Falters as Investors Await Key Court Ruling in the SEC v Ripple Case

Investor uncertainty towards the SEC v Ripple case remains an XRP headwind. Court rulings on the matter of the Hinman speech-related documents have been on the slower side. The SEC filed its most recent objection to the July court ruling, denying the SEC motion to shield the Hinman docs under the attorney-client privilege in late July.

Four weeks have passed since the SEC objection. Other than an SEC reply brief, there have been no other updates on the matter of the Hinman speech-related documents.

For investors, one concern will be that the Court has entertained more than six motions to contest an original ruling in favor of Ripple. These preceded the July ruling that resulted in the SEC objection.

Crypto Winter Thaws Early in Singapore

Today, Bloomberg reported surging bitcoin (BTC) trading volumes at DBS crypto exchange DBS Digital.

While other platforms lay off staff and declare bankruptcy, DBS appears to have found the appropriate customer base. Not only are volumes up but also BTC purchases, suggesting whale presence in the Republic.

DBS launched DBS Digital Exchange in December 2020, which coincided with the SEC lawsuit against Ripple Labs.

Nike Brings the NFT Market Back to Life

NIKE reportedly became the highest NFT earnings brand. While NFT trading volumes have fallen off a cliff edge, NIKE had NFT revenue of $185.32 million from 67,490 transactions. According to Dune Analytics, Dolce & Gabbana came in second, with $25.65 million in total NFT revenue, followed by Tiffany ($12.62m).

While Tiffany ranked third, the $12.62 million in revenue came from just 74 transactions.

Web3 and NFT trailblazer Gucci had total NFT revenue of $11.56 million.

PayPal (PYPL) Partners with Coinbase (COIN) to Assist with Banking Compliance

Today, Coinbase announced the addition of PayPal (PYPL) to the Travel Rule Universal Solution Technology (TRUST) network.

According to the announcement,

“TRUST is a global, industry-driven solution designed to increase compliance with a requirement known as the Travel Rule while prioritizing the security and privacy of customers.

Other TRUST members include Robinhood, Binance.US, and Gemini.

Disappointing US Economic Indicators Deliver Cryptos a Temporary Reprieve

Key Insights:

  • Going into the Tuesday session, the crypto market was under pressure, with a post-US closing bell rebound limiting Monday’s losses.
  • Today, US prelim private sector PMIs for August and new home sales for July were the key stats of the US session.
  • Increased crypto market sensitivity to macro and monetary policy places the US economic calendar in the crypto market headlights.

Recent US economic indicators delivered a marked shift in sentiment towards the US economy and Fed monetary policy.

The crypto market response has been evident, with bitcoin (BTC) retreating from $25,000 and the total crypto market cap sliding back to sub-$1,000 billion.

Investor sensitivity to economic indicators placed greater emphasis on today’s private sector PMIs, and especially the services sector PMI. Historically, the housing sector has proven to be an effective barometer of the US economy. For this reason, we also consider housing sector numbers.

US Private Sector PMIs Deliver Temporary Crypto Market Reprieve

In August, the US manufacturing PMI declined from 52.2 to 51.3 versus a forecasted fall to 52.0. Materially, the services PMI slid from 47.3 to 44.1. Economists forecast an increase to 49.2.

As a result, the composite PMI fell from 47.7 to 45.0 versus a forecasted increase to 49.0.

According to the August prelim survey, weaker client demand weighed on private sector output.

  • Service sector activity fell at the fastest pace since May 2000.
  • Interest rate hikes and inflation weighed on spending due to declining disposable incomes.
  • New orders contracted at the fastest pace for over two years, with new overseas business falling at the second fastest rate since December 2020.
  • The services sector recorded a slower pace of hiring, while outstanding business slid at the quickest pace since May 2020.
  • Input costs continued to rise though at the slowest pace in seven months.
  • Output prices rose at the softest pace in 17 months due to greater competition.
  • Despite the headline PMI and new orders slide, optimism rose to the highest level in three months.

The crypto market reaction to the private sector PMIs was positive, suggesting greater fear of the Fed than a recession. From a monetary policy perspective, the PMI numbers may force the Fed to take the foot off the gas.

Following the PMIs, new home sales were also disappointing. In July, new home sales tumbled by 12.6%, following a 7.1% slide in June. Rising mortgage rates beyond 5% coupled with inflation have hit buyer demand.

Affordability issues had been prevalent before the Fed’s rate hikes and the surge in consumer prices. Inventories and strong demand have pushed home prices northwards in recent years.

Crypto Market Reaction to the Weak Numbers Sends a Clear Message

In response to the weaker PMI numbers and a deeper contraction in the services sector, the total crypto market cap increased from $1,010 billion to a high of $1,018 billion.

Crypto reaction to weak PMIs
Crypto Market Cap – Minute Chart – 230822 a

Market reaction to the weak new home sales figures was also positive. The crypto market cap struck a post-stat high of $1,021 billion.

The message seems clear. Weak numbers should force the Fed to reconsider its September policy move. Investors will likely worry about a US recession after this week’s Jackson Hole Symposium.

Crypto reaction to PMIs and Housing Sector Numbers
Crypto Market Cap – Minute Chart – 230822

Across the crypto top ten, there was a clear shift in sentiment, with the top ten moving into positive territory.

Solana (SOL) and Ethereum (ETH) lead the way, with gains of 1.57% and 1.54%, respectively. Bitcoin (BTC) is up 1.08%.

Former OpenSea Executive Asks US Court to Dismiss Insider Trading Charges

Key Insights:

  • The DOJ indicted Nathaniel Chastain on charges of participating in wire fraud and money laundering.
  • Chastain has been accused of secretly buying 45 NFTs based on confidential information.
  • His legal team filed a motion to dismiss the indictment against him on grounds that the NFTs were not legally considered the platform’s property.

In a highly publicised case, the Department of Justice (DOJ) indicted OpenSea’s former Head of Product Nathaniel Chastain in June this year on charges of participating in wire fraud and money laundering.

In what was considered to be the first U.S. case to allege insider trading in digital assets, prosecutors in Manhattan accused Chastain of secretly buying non-fungible tokens (NFT) based on confidential information. Now the ex-executive is asking a U.S. court to dismiss insider trading charges involving the sale of NFTs.

DOJ Case

According to a motion filed in the United States District Court for the Southern District of New York, lawyers representing Chastain argue that NFTs cannot be classified as securities or commodities, which is a requirement for wire fraud charges. They added that U.S. authorities only filed charges in an attempt to set a legal precedent that NFTs are securities.

The DOJ alleges that Chastain secretly bought NFTs that were scheduled to be presented on OpenSea’s homepage and then sold them later at a profit once they had been featured. More specifically, he purchased 45 NFTs on 11 separate occasions based on confidential information.

After choosing to feature them on the website, Chastain sold the NFTs for two to five times what he initially paid and then hid his fraud by making these purchases using anonymous hot wallets and anonymous OpenSea user accounts. He has pleaded not guilty to the two charges which each carry a maximum sentence of 20 years in prison.

However, his attorneys claim that the NFT transactions in question were processed on the Ethereum (ETH) blockchain and given its open source nature and public viewing availability, the lawyers argue that the transactions could not have been used for money laundering.

Motion to Dismiss

Chastain’s claims are centred on the view that while the law prohibits insider trading to protect the financial markets, it does not obligate companies to keep information private. His legal team have thus filed a motion to dismiss the indictment against him on grounds that the NFTs were not legally considered the platform’s property.

Indeed, the case raises complex legal questions about whether insider trading in items other than securities or commodities constitutes a crime.

Overall, the wire fraud statute outlaws schemes to obtain property but according to Chastain, the U.S. Supreme Court has limited what falls into that category. He is adamant that the decision to highlight a specific NFT as property is simply not feasible from a legal perspective.

Chastain left OpenSea, which is the largest online marketplace for the purchase and sale of NFTs, in September 2021 and has since begun working on a new NFT platform known as Oval.

This month, OpenSea announced that it will change the way it handles NFT assets that are reported as stolen. While the company would previously block stolen assets from being bought, sold or transferred on its platform as it investigated each case, it now requires a police report to be submitted within seven days of flagging an NFT as stolen.

Australia’s New Government Outlines Approach to Crypto Regulation

Key Insights:

  • The token mapping exercise formed one of the 12 recommendations in a Senate inquiry report last year.
  • The Australian Securities and Investments Commission (ASIC) has found that 44% of citizens own cryptocurrency.
  • The goal of the token mapping exercise is to identify how crypto assets and related services should be regulated.

Australia is taking steps to regulate crypto assets in the country three months after the Australian Labor party has been elected into power.

Earlier this year, Anthony Albanese’s Labor Party defeated Prime Minister Scott Morrison’s Liberal-National coalition in the country’s federal election. Following this, there were calls for the government to overhaul the regulatory framework of the largely unregulated crypto sector, with an emphasis on consumer protection.

Token Mapping Exercise

Treasurer Jim Chalmers has announced a token mapping exercise, which formed one of the 12 recommendations in a Senate inquiry report last year.

The token mapping exercise, which is expected to be conducted before the end of this year, will help identify how crypto assets such as Bitcoin (BTC) and related services should be regulated in order to inform future regulatory developments. It will examine the type of crypto asset, their underlying code and any other defining technological features.

Treasurer Chalmers, along with Assistant Treasurer and Minister for Financial Services Stephen Jones and Assistant Minister for Competition, Charities and Treasury, Dr. Andrew Leigh have all expressed how the Albanese-led government wants to produce regulation that will adapt with the “largely unregulated” crypto sector.

Their joint statement also acknowledged that more than one million Australian taxpayers have interacted with the crypto ecosystem since 2018 and yet, “regulation is struggling to keep pace with the crypto asset sector”. The officials attributed this to the previous Liberal-led government.

Overall, the token mapping exercise is aimed at helping regulators and policy makers understand in depth the activities they are looking to regulate while supporting innovation in Australia and protecting consumers.

Regulatory Landscape

This move comes at a time when many in the industry have been calling for regulation of the Australian crypto sector in order to aid companies in developing their own blockchain-based innovations and provide guidance to crypto exchanges.

The Labor government hopes that the token mapping exercise will be an important step to bridge the significant education gap between regulators and policymakers by seeking to uncover the characteristics of all digital asset tokens available in Australia. Other goals include developing a licensing framework, reviewing innovative organisational structures, looking at custody obligations for third-party custodians of crypto assets and providing additional consumer safeguards.

In addition, the Australian Securities and Investments Commission (ASIC) has found that 44% of citizens own cryptocurrency, making it the second most popular investment after shares. Their survey, which gathered data from 1,053 retail investors, also showed how a quarter of investors who hold cryptocurrency say it is their only investment.

ASIC Chairman Joe Longo voiced the Commission’s concerns about the large number of participants in the survey having reported investing in what he described as “volatile crypto asset products”. His views echo the government’s repeated rhetoric of a need for stronger consumer protection when it comes to the crypto investment landscape.

Rally Organised for Tornado Cash Developer Arrested by Dutch Authorities

Key Insights:

  • Alexey Pertsev is suspected to be involved in money laundering through Tornado Cash.
  • The Dutch Fiscal Information and Investigation Service began its criminal investigation in June this year.
  • Decentralised finance aggregator 1inch has organised a rally in Amsterdam to show support for Pertsev.

Last week, the Dutch Fiscal Information and Investigation Service (FIOD) arrested a 29-year-old man suspected to be involved in money laundering through the crypto mixing service Tornado Cash.

The service was sanctioned by the U.S. government earlier this month following allegations that Tornado Cash was helping to conceal billions in capital flows, including for North Korean hackers.

FIOD Investigation

According to a statement from the Fiscal Information and Investigation Service, which began its criminal investigation in June this year, Dutch prosecutors are investigating the matter on suspicions of fraud, environmental crime and asset confiscation.

There was speculation online that the arrested developer was Alexey Pertsev and this was subsequently confirmed by his wife Ksenia Malik.

Malik, who has been prohibited from speaking with her husband as he was put behind bars, has confirmed that Pertsev remains in the hands of Dutch authorities. The Fiscal Information and Investigation Service is an agency responsible for investigating financial crimes in the Netherlands.

In response to the arrest, decentralised finance (DeFi) aggregator 1inch has organised a rally in Amsterdam to show support for Pertsev and to stand for developers’ rights to create open source software. The rally will be held on August 20, 2022.

Large-scale Criminal Money Flows

According to FIOD’s Financial Advanced Cyber Team (FACT), Tornado Cash has allegedly been used to conceal large-scale criminal money flows, including crypto hacks and scams.

The news of Pertsev’s arrest came shortly after the United States Treasury Department placed numerous Tornado Cash addresses on the sanctions list of the Office of Foreign Asset Control (OFAC). This is despite the company recently announcing that it had fully open-sourced its user interface code and added a compliance tool that allowed users to show the source of any transaction.

More specifically, 44 cryptocurrency addresses allegedly connected to the controversial mixer were added to the Specially Designated Nationals and Blocked Persons (SDN) and all U.S. persons and entities have been banned from using the tool or any of the Ethereum (ETH) wallet addresses tied to the protocol. Penalties for violating this range from fines of $50,000 to $10,000,000 and 10 to 30 years imprisonment.

The U.S. Treasury Department alleges that individuals and groups have used the mixer to launder more than $7 billion worth of crypto since 2019. The decentralised crypto mixing service has even been utilised by Lazarus Group, a North Korean hacking collective linked to the $625 million hack of Axie Infinity’s Ronin Network. It is suspected that tens of millions of dollars’ worth of crypto stolen from Ronin flowed through Tornado Cash.

After the U.S. Treasury Department’s announcement, Circle, the issuer of the USD Coin (USDC) stablecoin, froze over 75,000 USDC worth of funds linked to the 44 Tornado Cash addresses.

OFAC, a watchdog agency tasked with enforcing economic and trade sanctions based on U.S. foreign policy and national security, previously sanctioned Blender.io for allegedly laundering proceeds from ransomware attacks, as well as about $20.5 million in crypto stolen from Ronin.

CME Group to Launch Options on Ethereum Futures Ahead of the Merge

Key Insights:

  • CME Group plans to launch futures options sized at 50 ETH per contract. 
  • The contracts act as legal agreements to buy or sell ETH at a future date.
  • The company’s average daily trading volume for ETH futures increased by 7% from June to July this year. 

Chicago-based derivatives exchange CME Group is planning to launch options trading for its Ethereum (ETH) futures products next month.

The company confirmed that subject to regulatory review, it plans to launch the options, sized at 50 ETH per contract, just days before the long-awaited Merge upgrade to the Ethereum network takes place.

ETH Futures Contracts

The futures options are expected to start trading on September 12 this year following regulatory approval. More specifically, the Ethereum options contracts will allow investors to place a bet on the price of ETH since they act as legal agreements to buy or sell ETH at a future date.

Overall, Ethereum futures derive their value from ETH, the world’s second-largest cryptocurrency and are often used to hedge against its price changes. Investors will also get a chance to speculate on the asset’s underlying trend and purchase if they expect prices to rise, or take a short position when prices fall. The new contracts will track the CME CF Ether Dollar Reference Rate.

As well as plans to offer options on Ethereum futures, CME Group, which consists of the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange and the Commodity Exchange, already offers Bitcoin (BTC) options trading products and micro-sized options contracts. The micro Bitcoin and Ethereum options are sized at 10% of a BTC or ETH token, while Bitcoin futures are sized at 5 BTC per contract.

CME Group offers futures and options on futures trading through the CME Globex platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform.

Trading Volume Growth

CME Group, which enables clients to trade futures, options and cash, noted that its standard and micro-sized Ether futures contracts have experienced huge growth recently. In particular, the average daily trading volume of ETH futures from June to July this year increased 7%, while micro ETH futures rose by 41%.

What’s more, the firm claims to offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange and agricultural products, in addition to operating one of the world’s leading central counterparty clearing providers, CME Clearing.

The company’s Global Head of Equity and FX Products, Tim McCourt confirmed that CME Group has traded more than 1.8 million contracts to date. McCourt added that the firm expects to see significant interest in the new options contracts owing to the upcoming Ethereum Merge.

McCourt also cited the Ethereum blockchain’s upcoming transition to a proof-of-stake (PoS) consensus mechanism as a potential reason for the increase in trading volume.

Australian Football League Sells Out Limited Edition NFT Drop in Under 12 Hours

Key Insights:

  • The 3,600 packs reserved for the drop came with a retail price of 34.39 USDC each. 
  • The Ripper Skipper drop is estimated to have generated over $130,000 in USDC.
  • The AFL announced a five-year partnership deal with Animoca Brands earlier this year. 

The Australian Football League (AFL), which partnered with Animoca Brands earlier this year to launch a non-fungible token (NFT) marketplace, has seen a huge uptake of its limited edition NFT drop.

The Ripper Skipper drop, which required people to join an ‘allowlist’ in order to purchase one of 3,800 packs, sold out in less than 12 hours.

Ripper Skipper

The 3,600 packs reserved for the drop came with a retail price of 34.39 USDC each, with the project estimated to have generated over $130,000 in USDC.

The project boasts 78 significant moments and highlights from the 2021 season and each pack varies in rarity. The three rarity tiers are based upon unique moments from the season and are categorised as common, deluxe and ovation.

Notably, those who participated in the first drop have a 10% chance of receiving a limited edition AFL Mint Genesis Ball NFT. The wider public will also have access to another drop scheduled to launch later this month.

NFTs are unique tokenised representations of digital files whose ownership can be demonstrated and verified using distributed ledger technology (DLT). Exchanged on public blockchains, NFTs are gaining traction due to businesses tokenising music albums, artwork, internet memes, gaming and esports, which has unlocked new opportunities for digital commerce and engagement.

Overall, NFTs both enable the efficient commercialisation of unique assets and represent the creation of entirely new digital product lines and revenue streams.

Metaverse Plans

Earlier this year, the Australian Football League announced a five-year partnership deal with Animoca Brands to release limited edition NFTs through an AFL Mint marketplace. By partnering with Animoca Brands, AFL plans to tap into its extensive Web3 ecosystem in order to provide fans with future Metaverse experiences in areas such as virtual reality and gaming.

AFL Mint products deliver rewards and real-world experiences via exclusive events, rewarding fans for game days, including ticket upgrades, hospitality, experiential zones and exclusive merchandise. The company has confirmed that fans could someday meet players in the Metaverse as part of its plans to create unique sporting experiences.

The AFL Mint marketplace is set to launch in 2023 and will facilitate the selling and trading of NFT moments between fans and collectors.

The Australian Football League joins several high-profile sporting organisations that have forayed into the world of Web3. For example, the National Basketball Association (NBA) partnered with Dapper Labs in 2020 to launch an NFT marketplace where sports fans can buy, sell and trade basketball video clips.

In addition, the UFC, a world-renowned mixed martial arts organisation, partnered with Dapper Labs at the start of this year to launch an NFT marketplace known as UFC Strike. The NFTs feature iconic moments from fights and are designed to capture and and celebrate a specific instance of UFC history.

European Central Bank Lays Foundation for Crypto Licensing Requirements

Key Insights:

  • The central bank believes that national frameworks governing crypto assets diverge extensively. 
  • The ECB will apply criteria from the Capital Requirements Directive when assessing licensing requests. 
  • The EU recently agreed on landmark legislation to regulate crypto assets and service providers throughout the bloc’s 27 member nations.

The European Central Bank (ECB), which is tasked with implementing monetary policy and maintaining price stability, has issued a new statement on the necessary steps that need to be taken when harmonising crypto licensing requirements in Europe.

More specifically, the central bank has laid the foundation for the criteria it would consider when regulating digital assets in the wake of pan-EU licensing rules that are set to come into effect by 2023.

Harmonising Licensing Requirements

In a statement that specifically addresses guidance on the licensing of digital assets, the European Central Bank has confirmed that it will consider crypto firms’ business models, as well as their internal governance and assessments.

The ECB is taking such measures given that national frameworks governing crypto assets “diverge quite extensively” following the passage of the Markets in Crypto-Assets (MiCA) legislation and the Basel Committee on Banking Supervision issuing guidelines for banks’ exposure to crypto.

In order to achieve harmonisation, the ECB has said that it will apply criteria from the Capital Requirements Directive, which has been in effect since 2013, in order to assess licensing requests for crypto-related activities and services.

In addition, the European Central Bank will rely on national anti-money laundering (AML) authorities and Financial Intelligence Units to provide the data necessary to assess potential risks.

Comprehensive Regulatory Framework

The ECB’s new statement comes at a time when global regulators are seeking to standardise guidelines for crypto service providers within the European Union.

In fact, representatives from the European Parliament and EU recently agreed on landmark legislation to regulate crypto assets and service providers throughout the bloc’s 27 member nations. MiCA represents the first major regulatory framework for the cryptocurrency industry and it aims to protect consumers by requiring crypto issuers to keep bank-style reserves for stablecoins.

MiCA legislation, which will come into effect by the end of 2023, mandates stablecoin issuers to build up a sufficiently liquid reserve with a 1/1 ratio in order to provide an adequate minimum liquidity.

The law includes a legislative package that sets up requirements for crypto issuers to publish a white paper in order to register with authorities, as well as a cap on stablecoins that can’t exceed 200 million euros of transactions per day. Stablecoins will also be supervised by the European Banking Authority (EBA).

Overall, MiCA, which was originally put forward by the European Commission in September 2020, is expected to harmonise the regulatory approach across the EU, while preserving financial stability and addressing environmental concerns by mandating companies to disclose their energy consumption.

Binance’s BNB Chain to Launch a Web3 Course in Latin America

Key Insights:

  • BNB Chain is preparing to launch a Web3 development course in collaboration with Platzi. 
  • The program aims to be accessible to 30,000 students. 
  • El Salvador has introduced a new grassroots diploma program called Mi Primer Bitcoin.

As a region where 51% of consumers have made at least one transaction with cryptocurrency according to data from Mastercard, Latin America is considered to be a hub for adoption and crypto-related activity.

As such, Binance’s BNB Chain is preparing to launch a Web3 development course for students in the region in collaboration with Latin America-focused education platform Platzi.

Web3 Initiative

The course, which aims to be accessible to 30,000 students, will act as a major educational resource available in Spanish for Web2 developers to build on Web3 with BNB Chain.

The goal of the initiative is to further adoption of blockchain technology and Web3 education in the region as accessibility and education remain crucial barriers to entry in Latin America.

Notably, the Binance Smart Chain and the Binance Chain merged to form BNB Chain, which is an abbreviation for ‘Build ’N Build’ according to the company’s CEO Changpeng Zhao. The BNB Chain comprises the BNB Beacon Chain for governance and the BNB Smart Chain, which remains Ethereum Virtual Machine (EVM) compatible.

Overall, BNB Chain’s investment director Gwendolyn Regina has stated that Binance hopes to increase accessibility to resources so that users can build Web3 tools on BNB Chain, as well as supporting the development of blockchain adoption in Latin American.

Latin American Adoption

According to a new survey conducted by Mastercard, more than a third of Latin Americans said they have made an everyday purchase with a stablecoin, while 11% of respondents reported having made a purchase using a digital asset.
In fact, according to Chainalysis research, Latin America has consistently captured between 8% and 10% of global cryptocurrency activity, while decentralised finance (DeFi) applications continue to gain traction in the region as inflation and macroeconomic instability soars.

El Salvador, which made the headlines last year when it became the first country to adopt Bitcoin (BTC) as legal tender, has also introduced a new grassroots diploma program called Mi Primer Bitcoin, or ‘My First Bitcoin’ which aims to increase crypto literacy among teenagers. The program, which has been endorsed by the Salvadoran government, includes a 10-week long course that is split into four parts.

In addition, Binance and Mastercard released prepaid crypto cards this month in Argentina. Argentine cardholders can use Bitcoin, BNB and other cryptocurrencies to make purchases as well as ATM withdrawals in fiat wherever Mastercard is accepted. Moreover, they can earn up to 8% back in cryptocurrency from certain purchases.

SEC Sues Dragonchain for Unregistered Initial Coin Offering

Key Insights:

  • The SEC claims that three entities failed to register more than $16 million in crypto asset securities offerings.
  • The regulator alleges that the Securities Act of 1933 was violated.
  • Dragonchain maintains that DRGN is not a financial security.

The U.S. Securities and Exchange Commission has filed a complaint against Dragonchain’s founder for allegedly raising millions in unregistered crypto asset securities offerings.

More specifically, the SEC is suing John Joseph Roets and the three entities he controls, Dragonchain, the Dragonchain Foundation and The Dragon Company, for failing to register more than $16 million in crypto asset securities offerings over the course of five years.

Unregistered Crypto Asset Securities Offerings

According to a filing in the U.S. District Court for the Western District of Washington, Roets, Dragonchain and the Foundation conducted an unregistered offering of Dragon tokens (DRGN) through a discounted presale to members of a crypto investment club.

In addition, the SEC alleges that Roets, along with the three Dragonchain entities, violated the Securities Act by raising millions of dollars from the sale of Dragon tokens in an initial coin offering (ICO) predominantly marketed to crypto investors in 2017.

The SEC claims that Seattle-based Dragonchain, which is an enterprise blockchain start-up that was originally developed at Disney’s tech-focused Seattle office in 2014, funnelled the money into its marketing and development campaigns.

Overall, the SEC alleges that between 2019 and 2022, Dragonchain, the Dragonchain Foundation and The Dragon Company offered and sold $2.5 million worth of DRGNs to cover business expenditures and to market Dragonchain.

Initial Coin Offering

A crucial element of the filing is that the SEC claims both the 2017 presale and the initial coin offering of Dragon tokens were unregistered crypto asset securities offerings that allegedly raised approximately $14 million from over 5,000 investors.

During the Bitcoin (BTC) market boom at the end of 2017, a number of crypto start-ups delved into ICOs as a means of raising money for their tokens. In fact, at their peak in 2017, initial coin offerings overtook venture capital as the main fundraising method for blockchain start-ups.

An ICO is a method of fundraising capital for early-stage cryptocurrency projects whereby a blockchain-based start-up will mint a certain quantity of its own native digital token in order to offer them to early investors, normally in exchange for other cryptocurrencies such as Bitcoin or Ethereum (ETH).

However, the SEC contends that token sale securities should be subject to federal securities law and information disclosure. A 2021 court filing by the State of Washington also called the DRGN token a security and due to Dragonchain not being registered to sell its securities, the company was fined $50,000 and issued a cease and desist order.

However, the company maintains that DRGN is not a financial security. The SEC, which says it seeks permanent injunctions, has now demanded disgorgement of the proceeds with prejudgment interest and a civil monetary penalty.