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News

Ether ETFs Debut with Over $500 Million in Trades: A Strong Start for Crypto Funds

by mei July 23, 2024

written by mei 4 minutes read

Introduction

The first US ETFs that invest directly in Ether are making a big splash. On their first day, they saw over $500 million in trading volume. While this is not as high as the $4.6 billion traded during the launch of Bitcoin ETFs, it is still a strong start.

High Trading Volume for Ether ETFs

Nine exchange-traded funds (ETFs) traded more than half a billion dollars within a few hours of the market opening. Several of these funds are set to finish among the top 50 highest-traded US ETF debuts of all time.

BlackRock’s iShares Ethereum Trust ETF (ticker ETHA) saw $119 million worth of shares traded by 12:30 p.m. in New York. This makes it the 38th-highest first-day traded value, according to Bloomberg Intelligence. Another product, Bitwise Asset Management’s ETF (ETHW), also saw solid demand with over $64 million in turnover. Grayscale’s Ethereum Trust, which converted into an ETF, traded around $220 million at the same time.

Comparing Ether ETFs to Bitcoin ETFs

“It’s a similar audience for the Ether ETFs and Bitcoin ETFs,” said Drew Walsh, Vice President of Research and Operations at Roundhill Financial. “It’s not a crypto-native audience. It’s people new to the asset class who want exposure to cryptocurrencies.”

Fee War Among Ether ETFs

To attract investors, fund companies are using low fees. However, trading volume alone doesn’t indicate whether investors are buying or selling. Because of how these funds settle trades, net flows into or out of the products may not be known until later in the week.

Launch After Bitcoin ETFs

The Ether ETFs were launched after the first US spot Bitcoin ETFs debuted in January. Those Bitcoin ETFs saw billions of dollars in inflows. Predictions for how much cash Ether funds could bring in vary. Some analysts say one-year flows could range between $4.8 billion to $6.4 billion. But Wintermute analysts project lower demand, estimating flows between $3.2 billion and $4 billion. Bloomberg Intelligence analysts see Ether-ETF flows amounting to roughly 20% of those from Bitcoin funds.

Investor Adoption of Ether ETFs

Christopher Jensen, head of digital assets research at Franklin Templeton, believes investor adoption of Ether ETFs could happen faster. Many investors have already tried Bitcoin funds that launched earlier this year. His team predicts overall flows for spot-Ether ETFs to be about 30% of spot-Bitcoin ETF flows, given that Bitcoin’s market cap is three times larger than Ether’s.

“People have already done some of their homework and many have dipped their toes in. This would be a way to diversify into this new asset class,” Jensen said.

Bitcoin’s First-Mover Advantage

Bitcoin has a first-mover advantage, says Citigroup’s Alex Saunders. It is easier to understand as “digital gold.” Many investors who already hold Bitcoin ETFs may not feel the need to diversify into Ether ETFs. Saunders expects the potential for Ether fund flows to be between $4.7 billion and $5.4 billion.

Conclusion

The debut of Ether ETFs has been strong, with high trading volumes and significant investor interest. While they have not yet matched the debut of Bitcoin ETFs, they are off to a promising start. The fee war among fund companies and investor adoption rates will be key factors to watch in the coming months.

Ethereum

DeFi Giant dYdX v3 Platform Compromised Amid Sale Talks

by mei July 23, 2024

written by mei 6 minutes read

DeFi Giant dYdX Says Its v3 Platform Is Compromised – Just as It’s Reportedly Up for Sale

Introduction

The decentralized crypto-exchange giant dYdX announced on Tuesday that its v3 platform has been compromised. This news came just as Bloomberg reported that dYdX v3 is up for sale. The dYdX team warned users to avoid visiting the dydx.exchange website until further notice.

The Compromise

dYdX revealed that one of its on-chain trading services was attacked. Specifically, the older version of their trading platform, dYdX v3, which handles about $1.5 billion in weekly derivatives trading volume, was targeted. According to a tweet from the company, the website for dYdX v3 has been compromised.

The attackers have not affected the funds that traders already have on dYdX. The issue is limited to the web domain, not the underlying smart contracts. Statements from dYdX’s Discord server indicate that the attacker took over the v3 domain (dydx.exchange) and set up a fake website. When users connect their wallets to this fake site, it asks them to approve a PERMIT2 transaction, which can steal their most valuable tokens.

Impact on Users

The dYdX community team has been active in warning users. They advised everyone to avoid the v3 website until the issue is resolved. Importantly, the newer and larger dYdX v4 platform, which saw $6 billion in trading volume last week, is unaffected by this attack.

Timing of the Compromise

The news of the compromise came just after Bloomberg reported that dYdX v3 is up for sale. Potential buyers include Wintermute, a major market maker. This timing has raised concerns among users and potential buyers.

Sale of dYdX v3 Software

dYdX Trading Inc., the developer of the decentralized finance (DeFi) exchange, is in talks to sell some of its derivatives trading software. The potential buyers include Wintermute Trading Ltd. and Selini Capital. These discussions have not been made public, and representatives from dYdX, Wintermute, and Selini have not commented on the matter.

Background of dYdX

dYdX allows users to trade perpetual futures contracts directly with each other. These contracts cover various cryptocurrencies like Bitcoin, Ether, Solana, and Dogecoin. Launched in 2017 on the Ethereum network, dYdX shifted to another layer over the blockchain with the v3 software to reduce fees and increase transaction speeds. Last year, the platform switched to the current v4 format, launching its own blockchain.

The Compromise Details

dYdX noted on Tuesday that the website for v3 has been compromised. They advised users against clicking any links related to the v3 platform. The v4 platform, which is more secure and faster, is not affected by this issue.

Why v3 Is Still Popular

Despite the compromise, the v3 platform remains popular among traders. It offers higher liquidity for some tokens and less slippage on large transactions. According to Gauntlet, a crypto risk modeling firm, this makes v3 appealing to many traders.

Financial Backing and Revenue

dYdX Trading is backed by venture capital firms like Andreessen Horowitz and Paradigm. The v3 platform generated $137 million in fees in 2022, based on a total trading volume of $466.3 billion from over 33,900 unique traders. According to DeFiLlama, the v3 platform is forecast to generate about $18.67 million in revenue this year. However, US residents are not allowed to trade on the exchange.

Mergers and Acquisitions in DeFi

Mergers and acquisitions are rare in DeFi because most projects use open-source software. This means anyone can use, modify, and redistribute the software. However, the potential sale of dYdX v3 shows that even in DeFi, there are valuable assets that attract buyers.

History of dYdX

dYdX was founded in 2017 by Antonio Juliano, a former software engineer at Coinbase and Uber. He stepped down as CEO in May but continues to serve as president. Ivo Crnkovic-Rubsamen, who succeeded Juliano as CEO, was previously a trader at D.E. Shaw.

Security Measures

The dYdX team is taking the compromise seriously and is working to resolve the issue. They are focusing on ensuring that their platforms remain secure and that user funds are protected. The team has advised users to be cautious and to verify the authenticity of the websites they interact with.

User Reactions

The news of the compromise has led to mixed reactions from the dYdX community. Some users are concerned about the security of their funds, while others are hopeful that the issue will be resolved quickly. The potential sale of the v3 platform adds another layer of complexity to the situation.

Future of dYdX

The future of dYdX looks promising despite the current issues. The platform’s strong financial backing and innovative technology make it a leader in the DeFi space. The team’s commitment to security and user protection is also a positive sign for the platform’s future.

Conclusion

The compromise of the dYdX v3 platform is a significant event in the DeFi world. It highlights the importance of security in decentralized exchanges and the challenges they face. The potential sale of the v3 software to major market makers like Wintermute and Selini Capital shows that there is strong interest in the platform’s technology. As the dYdX team works to resolve the current issues, users are advised to stay cautious and informed.

Bitcoin

Are Cryptocurrencies Real Money? Understanding Digital and Traditional Money Properties

by muhammed July 23, 2024

written by muhammed 8 minutes read

Introduction to Cryptocurrency and Money

Cryptocurrency is a new kind of technology and financial tool. While it shares some features of money, it feels different. Some experts call cryptocurrencies “money,” but is that correct? Can we truly call cryptocurrencies money? Are they different enough from traditional money that we need to change what we think money is?

What is Money?

Before we decide if cryptocurrencies are money, we need to understand what money is. Money has certain properties that make it useful. Here are the main properties of money:

Medium of Exchange
Unit of Account
Portable
Divisible
Durable
Fungible
Store of Value
Relative Scarcity

Medium of Exchange

Money must be easy to exchange for goods and services.

Unit of Account

Money must help us compare the value of different goods and services.

Portable

Money needs to be easy to carry and move.

Divisible

Money should be easy to divide into smaller parts.

Durable

Money must last a long time without getting damaged.

Fungible

One unit of money should be the same as another unit of money.

Store of Value

Money should keep its value over time.

Relative Scarcity

Money should not be too common; there should be a limited supply.

How These Properties Came to Be

These properties were discovered over thousands of years through billions of trades. Merchants realized these properties were necessary for smooth trading. Removing even one property made trade harder. This is why gold and silver have been used as money for so long.

In the past, people used many different forms of currency. Through experience, they learned which properties were best for trading value. Over time, gold and silver became the most common forms of money because they had all these properties. Other metals like copper are used too, but mainly for very small transactions.

Key Takeaway

For something to be money, it must have all these properties. If it lacks even one property, it is not money. This is important to remember when we talk about digital money.

Cryptocurrency and Traditional Money Properties

Now, let’s look at whether these properties apply to digital money, like cryptocurrencies. Here are the properties of money again:

Medium of Exchange
Unit of Account
Portable
Divisible
Durable
Fungible
Store of Value
Relative Scarcity

Applying Traditional Money Properties to Digital Assets

Do these properties apply to digital transactions? The answer is yes. All these properties are important for digital money too.

Portable

A digital asset must be portable to allow for quick and easy transactions.

Divisible

A digital asset must be divisible. Otherwise, it would be like a collectible, not money.

Durable

A digital asset must be durable, meaning it should be secure from hackers and government interference.

Fungible

A digital asset must be fungible. One unit of the digital asset should be the same as another unit.

Unit of Account

A digital asset must serve as a unit of account to assign value to goods and services.

Medium of Exchange

A digital asset must be a good medium of exchange to facilitate transactions of any size.

Relative Scarcity

A digital asset must be relatively scarce to protect its long-term value.

Store of Value

A digital asset must be a good store of value, keeping its value over time and space.

Exploring Digital Monetary Properties

There are over 20,000 cryptocurrencies today. What makes a cryptocurrency? Simply put, a cryptocurrency is a currency used to pay for goods and services. Its defining feature is that it’s digital and not controlled by any single party.

Decentralization

Decentralization means no single party controls the cryptocurrency network. No one controls the issuance of the assets, and no single party can influence the network. This is important for security and trust in digital money. In an adversarial environment, decentralization protects the network from attacks.

Privacy

Privacy is crucial for digital money. Without privacy, digital coins can be tracked and traced, compromising their fungibility. Cryptocurrencies with public ledgers, like Bitcoin, lack privacy, making each coin’s history unique. This means 1 Bitcoin is not the same as another Bitcoin. Privacy ensures that digital coins remain fungible.

Scalability

Scalability refers to the ability of a network to handle increased demand. If a network cannot scale, transaction fees can skyrocket, making it unusable for small transactions. For a digital asset to be a good medium of exchange, it must be scalable. Some cryptocurrencies, like Bitcoin Cash and Monero, have shown they can scale while keeping fees low.

Absolute Scarcity

Absolute scarcity means there is a fixed supply of the cryptocurrency. Bitcoin, for example, has a fixed supply of 21 million coins. While this makes the asset more valuable over time, it may not be practical for everyday transactions. An asset with a fixed supply can experience extreme deflation, making it difficult for merchants to price goods and services.

Programmability

Programmability allows for the creation of smart contracts and decentralized applications on the blockchain. While this is a fascinating feature, it is not necessary for a digital asset to be considered money.

Conclusion

In summary, cryptocurrencies need to have the properties of traditional money to be considered as such. These properties include being a medium of exchange, unit of account, portable, divisible, durable, fungible, store of value, and relatively scarce. Additionally, for digital money, decentralization, privacy, and scalability are crucial.

While many cryptocurrencies exist, only a few, like Monero, have the necessary properties to function as money in the long term. Understanding these properties helps us see how digital assets can fit into the future of finance.

News

Japan’s Early Crypto Regulation: How It’s Paying Off in 2024

by dave July 23, 2024

written by dave 3 minutes read

Introduction to Japan’s Crypto Regulations

Japan has been quick to regulate crypto, unlike many other countries. After the big collapse of Mt.Gox in 2014, a Japan-based company, the government took swift action. They saw the crypto industry as very risky and decided to implement strict rules. These rules were put under the oversight of Japan’s financial regulator.

The Unique Evolution of Web3 in Japan

Ten years later, Web3 in Japan looks different from other countries. Instead of a lot of small startups, big companies are leading the way into Web3. They are doing this through strategic mergers and acquisitions (M&A) and investments.

One of the most active players is Softbank. In 2022, Softbank acquired a controlling stake in BITPoint, a crypto trading platform. They also invested heavily in a Web3 venture fund started by Deutsche Bank. In 2023, Sony also joined the trend by launching a rebranded crypto exchange called S.BLOX. This was after they acquired a local platform, Whalefin.

Highlights from Japan Blockchain Week Summit

During the Japan Blockchain Week Summit in early July, it was clear that big corporations are moving into Web3. Many speakers from large corporations attended, which made the event stand out. This trend is unique to Japan. In the United States, companies like Coinbase and Base Chain are big contributors to Web3. We can expect similar synergies to happen in Japan too.

Japan’s National Web3 Strategy

Japan’s move into Web3 is part of a national policy started in late 2022 by Prime Minister Kishida Fumio. This policy includes tax reforms, rules for stablecoins and NFTs, and allowing investment funds to hold digital assets. These changes are expected to lead to significant developments soon.

Challenges for Small Operators in Japan

However, Japan’s strict rules make it hard for small operators to start from scratch. Daiki Moriyama, Director at the gaming-focused blockchain Oasys, says this is why M&A is popular. Starting a new crypto exchange and getting the necessary licenses is expensive and time-consuming. So, buying existing exchanges is a smart strategy.

For smaller companies, the high compliance costs can make it hard to be profitable. Teaming up with larger companies is a better way to stay in business and reach global audiences.

Impact of Big Players Like Sony

The entry of big players like Sony is also good for the crypto industry’s reputation. It can help change the way people see the industry, which was once viewed with skepticism.

Japan is showing that even strict regulation can provide the certainty needed by big companies. This approach is proving to be effective. It lays the groundwork for a strategic path into Web3 through acquisitions and investments. This can help bring crypto to new audiences and industries.

Bitcoin

Bitcoin Surges to $68,000: Uncover the Factors Behind the 17% Weekly Gain

by Tatjana July 22, 2024

written by Tatjana 6 minutes read

Bitcoin gains: What Has Driven the 17% Weekly Surge?

Bitcoin has seen a significant increase, gaining around 17% in just one week. This rise translates to about $9,000 more in value over the past seven days. Last weekend, Bitcoin was trading below $60,000. However, by July 22, it surged to a six-week high, exceeding $68,000. Let’s explore what has been driving this market momentum and whether it will continue.

Bitcoin Is Back

On July 22, industry research firm 10x Research provided several reasons for Bitcoin’s big price pump. Firstly, there has been a shift in market sentiment. When Bitcoin broke above a key level at $61,133, it changed the narrative from bearish to bullish. This shift encouraged more investors to buy Bitcoin, pushing its price higher.

Retail trading has also played a significant role. Many retail investors bought Bitcoin over the weekend, driving the price up. This weekend alone, Bitcoin gained more than 6%. By Monday morning in Asia, it had reached a multi-week high of $68,480.

Another factor contributing to Bitcoin’s surge is the change in market liquidity. After four weeks of net liquidity outflows totaling $8 billion, the crypto markets saw $3.3 billion in inflows last week. This influx, mainly from futures, stablecoins, and spot Bitcoin ETFs, marked a positive trend change. Last week, spot Bitcoin ETFs had about $1.24 billion in inflows over five trading days.

Influence of Spot Ethereum ETF

The hype around spot Ethereum ETFs has also contributed to market gains. These ETFs are set to begin trading on July 23. Although Ethereum’s price has only managed to gain 4.5% over the past week, it still adds to the overall positive sentiment in the crypto market.

Global Market Influences

There have been rumors that China might adopt a more favorable stance on cryptocurrencies. Hong Kong’s new crypto regulations are seen as a test for this potential shift. Additionally, South Korea has proposed postponing crypto taxation until 2028, which has spurred speculative trading and boosted the market.

Impact of Inflation Data

Lower-than-expected Consumer Price Index (CPI) inflation data last week set a floor for Bitcoin prices. This data followed a 20% peak-to-trough decline, helping stabilize Bitcoin’s price. This week, the release of Personal Consumption Expenditures (PCE) inflation reports could provide further bullish momentum.

U.S. Politics and Crypto Market

U.S. politics have also influenced the crypto market. A failed assassination attempt on Donald Trump and President Joe Biden stepping down from the election race have further bolstered crypto market sentiment. Rumors are circulating that the Securities and Exchange Commission (SEC) may settle a major case soon. Additionally, former President Trump is set to deliver a highly anticipated speech in Nashville, where he might announce Bitcoin as a strategic reserve asset. This announcement could trigger a parabolic rise in Bitcoin’s price.

Bullish Week Ahead?

Markus Thielen, head of research at 10x Research, stated that this week could see more momentum. He pointed out that rumors are rife about the SEC settling a significant case. Moreover, former President Trump’s upcoming speech might contain major news for Bitcoin, potentially driving its price even higher.

Retail Trading Impact

Retail investors have been crucial in driving Bitcoin’s recent price surge. Their weekend trading activities have led to significant gains that carry into the following week. This pattern was evident this weekend when Bitcoin gained over 6% from Friday to Monday.

Market Liquidity Inflows

The inflow of liquidity into the crypto market is another key factor. After several weeks of outflows, last week saw a positive change with $3.3 billion in inflows. These inflows came primarily from futures, stablecoins, and spot Bitcoin ETFs, marking a shift in market trends.

Spot Bitcoin ETFs

Spot Bitcoin ETFs have had a substantial impact on the market. Last week alone, these ETFs saw $1.24 billion in inflows. This influx of funds into Bitcoin ETFs indicates strong investor confidence and contributes to the overall price surge.

Spot Ethereum ETF Hype

The anticipation around spot Ethereum ETFs has also played a role in boosting the crypto market. Although Ethereum’s gains have lagged behind Bitcoin, the positive sentiment surrounding the ETF launch has had a beneficial effect on the market.

China’s Potential Crypto Adoption

There are rumors that China might adopt a more favorable stance towards cryptocurrencies. This speculation has been fueled by Hong Kong’s new crypto regulations, which are seen as a potential test for broader adoption in China.

South Korea’s Crypto Tax Postponement

In South Korea, a proposed postponement of crypto taxation until 2028 has spurred speculative trading. This news has positively impacted the market, contributing to Bitcoin’s price surge.

Influence of Inflation Data

Lower-than-expected CPI inflation data last week helped stabilize Bitcoin prices. This week, the release of PCE inflation reports could provide further bullish momentum, potentially driving Bitcoin prices higher.

U.S. Politics

U.S. political events have also influenced the crypto market. A failed assassination attempt on Donald Trump and President Joe Biden stepping down from the election race have added to the positive sentiment. Additionally, rumors about the SEC settling a major case and Trump’s upcoming speech in Nashville could further boost Bitcoin’s price.

Conclusion

Bitcoin’s recent price surge to over $68,000 has been driven by a combination of factors, including market sentiment shifts, retail trading, liquidity inflows, and global market influences. The anticipation around spot Bitcoin and Ethereum ETFs, along with potential changes in crypto regulations in China and South Korea, have also played significant roles. Additionally, U.S. political events and inflation data have impacted the market. As these factors continue to evolve, the crypto market could see further momentum in the coming weeks.

Bitcoin

Bitcoin National Reserve Proposal: Bold $1 Million Predictions Ignite Debate

by muhammed July 22, 2024

written by muhammed 5 minutes read

Bitcoin National Reserve Proposal Sparks Bold $1 Million Predictions

There has been a surge of interest and discussion surrounding Bitcoin lately. A notable figure in the cryptocurrency world, Andrew Kang, has proposed that Bitcoin could potentially be recognized as a national asset. This idea has ignited conversations within the crypto community, with enthusiasts debating its global implications and setting ambitious price targets for Bitcoin.

From Speculation to Advocacy

Andrew Kang’s recent analysis has stirred significant debate. In a widely circulated post, Kang revealed that discussions are taking place among leaders about the possibility of incorporating Bitcoin into national treasury reserves. Although these discussions remain speculative, they highlight the significant potential Bitcoin holds, which could lead to major benefits for some, albeit not for everyone.

Kang believes these discussions point to Bitcoin’s untapped potential, even if they don’t lead to immediate action. Should Bitcoin become a national treasury asset, Kang predicts its value could skyrocket to $1 million. He notes that Bitcoin’s current market capitalization is significantly undervalued, even considering a modest probability of 5-10%. This undervaluation is especially noteworthy given the recent increase in Bitcoin interest from less than 1%.

A Global Ripple Effect

The concept of the US adopting Bitcoin as a reserve currency is groundbreaking. Kang asserts that if the US were to embrace Bitcoin in this way, it would likely prompt other nations to follow. This would not only validate Bitcoin as a reliable store of value but also expedite its adoption in international financial markets.

Adding to the optimism are rumors that a major Asian company may soon take on roles akin to those of Coinbase and MicroStrategy. Such a development would enhance Bitcoin’s image and encourage more businesses to invest in the cryptocurrency market.

Kang points to the rapid succession of these positive developments, suggesting that the next few months will be pivotal for Bitcoin and its proponents. With potential government endorsement, broader adoption, and increasing corporate interest, Bitcoin could be on the verge of a new era.

Navigating Benefits and Risks

While the potential benefits of Bitcoin as a national asset are significant, the implementation poses substantial challenges. If the US government were to recognize Bitcoin, it could bolster its position as a global financial leader, particularly against rivals like China and Russia. This move could drive innovation, attract blockchain technology experts, and lead to the establishment of a robust regulatory framework that enhances the security of cryptocurrency transactions and promotes wider adoption.

However, the risks are considerable. Bitcoin’s notorious volatility presents a significant threat to economic stability. A sudden drop in Bitcoin’s value could disrupt the economy and complicate monetary policy management.

Policymakers would need to carefully balance the drive for innovation with the need for a secure and stable financial system. Incorporating Bitcoin as a strategic reserve asset could greatly enhance its credibility in the financial sector, but this must be carefully weighed against potential economic risks and consumer protection concerns.

The Path Forward

The ongoing discussions about Bitcoin potentially becoming a national asset highlight its increasing recognition and transformative potential in global finance. With ambitious price targets and the possibility of setting a global precedent, Bitcoin stands on the brink of a significant shift.

However, the journey ahead will be complex and requires careful strategizing. The coming months will be critical in determining whether Bitcoin will solidify its role in national financial systems or remain a speculative asset with untapped potential.

In summary, Andrew Kang’s proposal that Bitcoin could be recognized as a national asset has sparked bold predictions and lively discussions within the cryptocurrency community. With the potential for Bitcoin to become a national treasury asset, its value could skyrocket to $1 million. The idea of the US adopting Bitcoin as a reserve currency could have a global ripple effect, prompting other nations to follow and validating Bitcoin as a reliable store of value.

However, while the benefits of Bitcoin as a national asset are significant, the risks are considerable. Policymakers must carefully balance the drive for innovation with the need for a secure and stable financial system. The journey ahead will be complex and requires careful strategizing. The next few months will be critical in determining whether Bitcoin will solidify its role in national financial systems or remain a speculative asset with untapped potential.

With potential government endorsement, broader adoption, and increasing corporate interest, Bitcoin could be on the verge of a new era. The ongoing discussions about Bitcoin potentially becoming a national asset highlight its increasing recognition and transformative potential in global finance. The future of Bitcoin as a national asset is still uncertain, but the possibilities are exciting.

Andrew Kang’s proposal has stirred significant debate, highlighting the significant potential Bitcoin holds. The concept of the US adopting Bitcoin as a reserve currency is groundbreaking and could have a global ripple effect. The potential benefits of Bitcoin as a national asset are significant, but the risks are considerable. Policymakers must carefully balance the drive for innovation with the need for a secure and stable financial system.

In conclusion, the journey ahead for Bitcoin as a national asset will be complex and requires careful strategizing. The next few months will be critical in determining whether Bitcoin will solidify its role in national financial systems or remain a speculative asset with untapped potential. The future of Bitcoin as a national asset is still uncertain, but the possibilities are exciting.

News

South Korea’s New Crypto Regulations: Enhanced User Protection and Market Stability

by mei July 21, 2024

written by mei 7 minutes read

South Korea Implements New Crypto Regulations

Overview of the New Crypto Regulations

South Korea has recently introduced new regulations to enhance user protection in the cryptocurrency industry. These rules, enacted on July 18, 2023, by South Korea’s Financial Services Commission (FSC), aim to ensure that users are safer when dealing with Virtual Asset Service Providers (VASPs). This move is expected to keep South Korea as one of the world’s leading cryptocurrency markets.

Key Provisions of the New Regulations

User Protection Measures

The new regulations require VASPs to keep at least 80% of user crypto deposits in cold storage. Cold storage means keeping the crypto assets offline, which makes them less vulnerable to hacking and cyber-attacks. This measure is a significant step towards ensuring that users’ funds are safe.

Additionally, VASPs must obtain insurance against hacking and other malicious attacks. This insurance provides an extra layer of security for users’ assets.

Separating User and Exchange Funds

The regulations mandate that VASPs must keep customer deposits separate from their own funds. This separation ensures that users’ assets are not affected if the exchange faces financial difficulties. Customer deposits must be securely stored in banks, which adds another level of protection.

Monitoring and Reporting Suspicious Activities

To prevent unfair trading activities, such as price manipulation, VASPs are required to monitor transactions regularly. If they notice any suspicious or abnormal trading activities, they must report these to the financial authorities immediately. The Financial Supervisory Service (FSS) will prepare guidelines to help VASPs identify and report these activities.

Specific Requirements and Enforcement

Definition of Virtual Assets

The new regulations define virtual assets as electronic tokens with economic value that can be traded or transferred electronically. However, certain electronic tokens, like game money, electronic stocks, and central bank digital currency (CBDC), are excluded from this definition.

Formation of an Advisory Committee

The FSC will organize an advisory committee to consult on policies and regulations related to virtual assets. This committee will include representatives from relevant government ministries and experts from the private sector, chaired by the Vice Chair of the FSC.

Managing User Deposits

VASPs must keep customers’ deposits at credible financial institutions, specifically banks. Banks will manage these deposits and invest them in risk-free assets, such as government bonds, to ensure the safety and return of deposits even if a VASP goes bankrupt.

Cold Wallet Storage

More than 80% of users’ virtual assets must be stored in cold wallets. The FSC will regulate the specific storage requirements to ensure maximum security. If there are concerns about hacking or other risks, the FSC may impose stricter cold wallet ratios on particular VASPs.

Penalties for Unfair Trading

The regulations include strict penalties for unfair trading activities. If a VASP is found guilty of using nonpublic information, manipulating prices, or other dishonest transactions, they could face severe punishments. These include prison sentences and hefty fines based on the amount of unfairly gained profits.

Blocking Deposits and Withdrawals

Under certain circumstances, VASPs can block users from making deposits or withdrawals. These include network errors, system maintenance, or orders from administrative authorities. The suspension can last for up to six months if necessary.

Impact on the South Korean Crypto Market

Enhanced Security for Users

The new regulations are designed to provide robust security for crypto users in South Korea. By requiring VASPs to store a significant portion of crypto assets in cold storage and obtain insurance, users can feel more secure about their investments. The separation of user and exchange funds further adds to this security, ensuring that users’ assets are protected even if an exchange faces financial issues.

Prevention of Unfair Trading Activities

By monitoring and reporting suspicious activities, the regulations aim to create a fairer trading environment. This will help prevent price manipulation and other unfair practices, making the market more stable and trustworthy for all participants.

Legal Framework for the Crypto Industry

The Virtual Asset User Protection Act provides a clear legal framework for the cryptocurrency industry in South Korea. This framework includes definitions of virtual assets, guidelines for managing user deposits, and penalties for unfair trading. Having clear regulations in place helps build trust and credibility in the market, encouraging more people to participate in crypto trading and investment.

Challenges and Future Developments

Need for Comprehensive Regulation

While the new regulations focus on the distribution of virtual assets, there is still a need for laws regulating their issuance. Kim Hyoung-joong, president of the Korea Fintech Society, emphasized that for the local crypto industry to grow, there needs to be regulation of both issuance and distribution, along with measures to promote industry growth.

Ongoing Adjustments

The new regulations come with a one-year grace period for refining the regulatory details. During this time, the authorities will continue to work on user protections and promote a sound market order. This flexibility allows for adjustments based on feedback and evolving market conditions, ensuring that the regulations remain effective and relevant.

Strengthening the Leading Crypto Market

South Korea is one of the world’s largest cryptocurrency markets, and these new regulations are crucial for maintaining its leading position. By enhancing user protection and creating a fair trading environment, South Korea aims to attract more investors and foster growth in the crypto industry.

Conclusion

South Korea’s new cryptocurrency regulations represent a significant step forward in protecting users and ensuring a fair trading environment. With measures like cold storage requirements, insurance against hacking, and strict penalties for unfair trading, these regulations aim to create a safer and more trustworthy market for everyone involved. As the country continues to refine and implement these regulations, it sets a strong example for other nations looking to regulate their own crypto markets effectively.

Ethereum

Ethereum Mixer Tornado Cash Surpasses $2 Billion in 2024 Amid Sanctions

by muhammed July 21, 2024

written by muhammed 5 minutes read

Slowdown in July

Ethereum mixer Tornado Cash has received nearly $2 billion in 2024 despite sanctions. However, things have slowed down in July, with the protocol attracting only $65.1 million worth of deposits, according to data from Flipside.

First Half of 2024: Significant Deposits

In the first six months of 2024, over $1.9 billion was deposited into Tornado Cash. Although things have slowed down in July, the protocol still managed to attract a significant amount of deposits. According to crypto analytics service Flipside, the total value locked (TVL) metric is not as reliable for Tornado Cash. This is because users typically deposit funds and then withdraw anonymized funds, rather than keeping them in the protocol for a long time like with most decentralized finance (DeFi) services.

Tornado Cash’s TVL Growth

Despite the limitations of the TVL metric, data from DeFiLlama shows significant growth for Tornado Cash. At the start of the year, the protocol had under 160,000 ETH. Now, it has nearly 168,600 ETH. In U.S. dollars, this represents growth from $374.4 million to $572.82 million, considering the increase in asset value.

Privacy and Anonymity

Tornado Cash is a coin mixer designed to preserve the privacy of crypto users. It uses zero-knowledge proof cryptography to anonymize user deposits, allowing them to withdraw funds to a new address that cannot be traced back to the original deposit. This makes it a popular tool for those seeking privacy in their crypto transactions.

Inflows from Major Hacks

Tornado Cash has seen inflows from wallets associated with major hacks. For instance, the hacker behind the Poloniex hack sent $3.3 million worth of Ethereum (ETH) to the mixer in early May. Transactions linked to hacks, including some allegedly connected to North Korea, led the U.S. Treasury Department to sanction Tornado Cash in August 2022.

Legal Prosecution and Community Reaction

Following the sanctions, Tornado Cash developers faced lengthy legal prosecution. The crypto community viewed this as an overreach. This prosecution is ongoing, with a recent ruling delaying the money laundering trial of Tornado Cash co-founder Roman Storm, despite objections from the prosecution.

Coinbase’s Legal Challenge

Coinbase’s chief legal officer, Paul Grewal, criticized the U.S. Treasury’s actions. He argued that the Treasury is “bending old laws past their breaking point” by blaming developers and TORN holders for Tornado Cash’s misuse. Grewal pointed out that immutable, open-source software code is not property. Therefore, the Treasury can only regulate property in which a foreign national has an interest.

Support from Vitalik Buterin

Ethereum co-founder Vitalik Buterin expressed support for privacy-centric crypto tools. He called the 64-month prison sentence for Tornado Cash developer Alexey Pertsev “really unfortunate.” Buterin encouraged people to develop next-gen solutions for privacy. He believes building software is a legitimate way to fight for privacy.

Tornado Cash’s Role in Crypto Privacy

Tornado Cash plays a crucial role in maintaining privacy in the crypto world. It allows users to make transactions without revealing their identities. Despite the legal and regulatory challenges, the protocol continues to attract significant deposits.

Sanctions Impact

The sanctions have impacted Tornado Cash, but the protocol still sees substantial inflows. The U.S. Treasury’s actions have sparked debate within the crypto community about the regulation of privacy tools. Many believe that sanctioning a tool used for privacy sets a dangerous precedent.

Future of Privacy-Centric Crypto Tools

The future of privacy-centric crypto tools like Tornado Cash remains uncertain. Legal challenges and regulatory scrutiny will likely continue. However, the demand for privacy in crypto transactions suggests that tools like Tornado Cash will remain relevant.

Tornado Cash’s Activity in 2024

Analyzing Tornado Cash’s activity in 2024 reveals that the protocol remains active despite the challenges. Significant deposits indicate that users continue to trust the protocol for their privacy needs. This activity highlights the ongoing demand for privacy-centric solutions in the crypto space.

Conclusion

Ethereum mixer Tornado Cash has attracted nearly $2 billion in 2024 despite facing sanctions and legal challenges. The protocol’s ability to maintain significant inflows, even with regulatory scrutiny, underscores the importance of privacy in the crypto world. As the debate over privacy and regulation continues, tools like Tornado Cash will play a pivotal role in shaping the future of crypto transactions.

Bitcoin

BTCTurk CEO Resigns Amid Major Global Expansion Plans

by dave July 20, 2024

written by dave 6 minutes read

Ozgur Guneri Steps Down After Seven Years

Ozgur Guneri, the CEO of Turkey’s largest cryptocurrency exchange BtcTurk, is stepping down after seven years. This announcement marks a significant change for the company, as BtcTurk looks to expand its reach beyond Turkey. Despite stepping down as CEO, Guneri will remain a board member, continuing to influence the company’s strategic direction.

Kerem Tibuk Takes Over as Acting CEO

BtcTurk’s founder, Kerem Tibuk, will take over as the acting CEO. Tibuk has big plans for BtcTurk, including launching a global exchange. He aims to tap into markets in Latin America, Africa, and the Asia-Pacific region. According to Tibuk, the current bull market in Bitcoin will lead to higher prices, making this an opportune time for expansion.

Turkey’s Growing Interest in Cryptocurrency

Turkey has become one of the top markets for cryptocurrencies. The country’s high inflation and collapsing local currency have driven many people to invest in digital assets. This surge in interest has also led to a growing number of former central bank officials joining cryptocurrency exchanges. President Recep Tayyip Erdogan even appointed an academic focused on blockchain technology to the monetary authority’s rate-setting committee last year.

Global Exchange Plans

BtcTurk’s global expansion plans are a significant part of its strategy. The company plans to launch a global exchange, targeting new markets in Latin America, Africa, and the Asia-Pacific region. Tibuk believes that Bitcoin, the world’s biggest cryptocurrency, is in a bull market, and he expects prices to be higher than they are today. This optimistic outlook is a key driver behind the expansion efforts.

Ozgur Guneri’s New Focus

Although stepping down as CEO, Ozgur Guneri is not leaving the cryptocurrency scene. He plans to focus on international cooperation and global matters. Guneri anticipates a lively final quarter and an exciting 2025 for cryptocurrencies worldwide. His experience and insight will continue to benefit BtcTurk as the company navigates the complexities of the global market.

BtcTurk’s User Base and New Developments

Established in 2013, BtcTurk has grown to have about 6 million users in Turkey. The company, managed by Elliptik Software and Trade Inc., is also working on an equity trading platform. This new platform is expected to launch at the end of the year, adding another dimension to BtcTurk’s offerings.

Cyberattack and Security Measures

BtcTurk faced a significant challenge in June when it was hit by a cyberattack. Several of its hot wallets were accessed, and cryptocurrency was stolen from some of them. However, the company has assured its users that their assets are safe. The exchange’s financial strength is well above the amounts taken, and user assets will not be affected by the losses. BtcTurk is carrying out detailed research on the attack and has contacted official authorities to address the issue.

Impact of the Cyberattack

Only some of the balances in the hot wallets of ten cryptocurrencies were affected by the cyberattack. BtcTurk’s cold wallets, where most of the assets are kept, were not impacted. The exchange’s response to the attack highlights its commitment to security and user protection. By compensating users for their losses, BtcTurk aims to maintain trust and confidence in its platform.

BtcTurk’s Financial Resilience

Despite the cyberattack, BtcTurk remains financially strong. The exchange’s financial resources far exceed the amount stolen, ensuring that user assets are not at risk. This resilience is crucial as BtcTurk prepares for its global expansion and the launch of its equity trading platform. The company’s ability to recover from setbacks and continue growing is a testament to its strong foundation and strategic planning.

Cryptocurrency Regulations in Turkey

The rise of cryptocurrency in Turkey has also brought attention to regulatory issues. The government has been working on creating a framework for cryptocurrency regulations. These regulations are expected to provide clarity and stability for the market, making it safer for investors. As one of the leading exchanges in Turkey, BtcTurk is closely monitoring these developments to ensure compliance and adapt to any changes.

Blockchain Technology in Turkey’s Financial Sector

Blockchain technology is becoming increasingly important in Turkey’s financial sector. President Erdogan’s appointment of a blockchain-focused academic to the monetary authority’s rate-setting committee is a significant step. This move reflects the government’s recognition of blockchain’s potential to revolutionize financial systems. BtcTurk, with its focus on blockchain and cryptocurrency, is well-positioned to benefit from these advancements.

Future of Cryptocurrency in Turkey

The future of cryptocurrency in Turkey looks promising. With high inflation and a weak local currency, more people are turning to digital assets as a hedge against economic instability. BtcTurk, as the largest cryptocurrency exchange in the country, is at the forefront of this trend. The company’s expansion plans and new initiatives, such as the equity trading platform, are set to further solidify its position in the market.

Conclusion

BtcTurk is undergoing significant changes with Ozgur Guneri stepping down as CEO and Kerem Tibuk taking over as acting CEO. The company’s plans for global expansion and the launch of an equity trading platform mark an exciting new chapter. Despite the challenges posed by the recent cyberattack, BtcTurk remains financially strong and committed to its users. As Turkey continues to embrace cryptocurrency amid high inflation and economic uncertainty, BtcTurk is poised to lead the market with its innovative approach and strategic vision.

Ethereum

Ethereum ETFs Start Trading on Cboe July 23: SEC Approvals Confirmed

by muhammed July 20, 2024

written by muhammed 8 minutes read

Ethereum ETFs Set to Begin Trading on July 23, Cboe Confirms

The Chicago Board Options Exchange (Cboe) has announced that five spot Ethereum exchange-traded funds (ETFs) will start trading on Tuesday, July 23. This news has been confirmed through notices posted on Cboe’s website.

Ethereum ETFs to Begin Trading

The spot Ethereum ETFs that will begin trading on July 23 include the following:

21Shares Core Ethereum ETF (CETH)
Fidelity Ethereum Fund (FETH)
Franklin Ethereum ETF (EZET)
Invesco Galaxy Ethereum ETF (QETH)
VanEck Ethereum ETF (ETHV)

Each listing notice from Cboe reads, “We are pleased to announce that One (1) Exchange Traded Product (‘ETP’) will be listed on Cboe and will begin trading as a new issue on July 23, 2024, pending regulatory effectiveness.”

Regulatory Approval from the SEC

The date of July 23 had been expected for some time. Earlier this week, sources close to the situation mentioned that they expected the U.S. Securities and Exchange Commission (SEC) to give final approvals for these Ethereum ETFs. The SEC had been working on final drafts of filings from various firms.

In May, Ethereum ETFs received initial approvals from the SEC. This was surprising to many, as the SEC had been scrutinizing Ethereum-centric firms and had previously treated Ethereum differently from Bitcoin. Just four months after spot Bitcoin ETFs started trading in the U.S., the SEC decided to approve the Ethereum ETFs.

Now, Cboe is confident that the ETF operators will get their final approvals ahead of the trading date on July 23.

Understanding Ethereum ETFs

An ETF, or exchange-traded fund, is a popular investment vehicle. It allows investors to buy shares that track the price of an underlying asset, such as gold, foreign currencies, or cryptocurrencies like Ethereum. These funds trade on stock exchanges, making it easier for investors to get exposure to various assets.

The SEC surprised the traditional and crypto markets when it approved 11 spot Bitcoin ETFs in January. This approval led to a significant influx of capital into the Bitcoin space. Industry experts had expected the SEC to take longer to approve Ethereum ETFs due to its cautious approach. However, the SEC quickly approved the Ethereum ETFs, and the final paperwork is now being filed. If everything goes smoothly, investors will soon be able to invest in the second-largest digital asset by market cap.

List of Ethereum ETFs and Their Managers

Several major investment firms have received the green light from the SEC to list spot Ethereum ETFs in the U.S. Here is a list of the fund managers and their respective ETFs:

BlackRock

iShares Ethereum Trust
BlackRock, the world’s largest asset manager, got approval for its iShares Ethereum Trust. The firm first filed an S-1 form for this product in November. BlackRock’s CEO, Larry Fink, is enthusiastic about cryptocurrency and has mentioned the value of having an Ethereum ETF. He also discussed the inevitability of “tokenization.”

Grayscale

Grayscale Ethereum Trust to Spot Ethereum ETF
Grayscale received SEC approval after filing a proposal in October to convert its Grayscale Ethereum Trust into a spot Ethereum ETF. The current trust operates like a closed-end fund. When it transitions to an ETF, investors will be able to redeem shares more easily. Grayscale’s Bitcoin Trust had previously converted into an ETF, setting a precedent for this change. Additionally, Grayscale’s mini ETH ETF also received approval this week. This mini trust will have lower fees for investors and be seeded with assets from the main, larger ETF.

ARK Invest/21Shares

ARK Invest Ethereum ETF
ARK Invest, led by Cathie Wood, filed a proposal for an Ethereum ETF in September. This ETF is in partnership with crypto ETF issuer 21Shares, with Coinbase acting as its custodian.

ProShares

ProShares Ether Strategy ETF
ProShares recently received approval for its ProShares Ether Strategy ETF. Initially, ProShares had applied for futures products but later quietly applied for a spot fund.

Fidelity

Fidelity Ethereum Fund
Fidelity has shown interest in launching an Ethereum ETF since November. Cboe filed a 19b-4 on behalf of Fidelity, and in March, Fidelity filed its S-1 with the SEC.

VanEck

VanEck Ethereum ETF
VanEck was the first to file a proposal for an Ethereum ETF in 2021. Although it withdrew the proposal later that year, it has since refiled. VanEck’s Bitcoin ETF has been successful, and the firm even waived its fees to compete better in the market.

Hashdex

Hashdex Nasdaq Ethereum ETF
Brazilian fund manager Hashdex filed a proposal for its Hashdex Nasdaq Ethereum ETF in September. Hashdex already has several crypto ETFs trading in Brazil. In the U.S., its Hashdex Bitcoin ETF was approved in January and began trading in March.

Franklin Templeton

Franklin Ethereum ETF
Franklin Templeton entered the race in February when it filed a proposal with the SEC. The firm’s Franklin Bitcoin ETF launched earlier this year under the EZBC ticker.

Invesco/Galaxy Digital

Invesco Galaxy Ethereum ETF
Invesco, in collaboration with Galaxy Digital, submitted a proposal for an Ethereum ETF in September. Invesco is the sponsor of the product, while Galaxy Digital acts as its execution agent, handling the selling of ETH to cover the ETF’s expenses.

Bitwise

Bitwise Ethereum ETF
Bitwise filed its S-1 form in March to offer a spot Ethereum ETF. Matt Hougan, Chief Investment Officer at Bitwise, previously predicted that ETH ETFs would launch in December and be more successful if approved later in the year.

Impact on the Crypto Market

The approval and trading of these Ethereum ETFs are expected to have a significant impact on the crypto market. With major investment firms like BlackRock, Grayscale, ARK Invest, and others entering the space, there will likely be increased institutional investment in Ethereum. This could lead to greater market stability and growth in Ethereum’s value.

The approval of Ethereum ETFs also marks a significant shift in the SEC’s approach to cryptocurrency regulation. Initially hesitant, the SEC’s recent approvals indicate a more open stance towards digital assets. This could pave the way for future approvals of other cryptocurrency-based ETFs, further legitimizing the crypto market.

Investors are eagerly awaiting the start of trading on July 23. The launch of these Ethereum ETFs represents a major milestone for the cryptocurrency industry and provides a new avenue for investors to gain exposure to Ethereum. As these ETFs begin trading, it will be interesting to observe how the market responds and how the value of Ethereum is affected.

Conclusion

In summary, the Cboe’s announcement that five spot Ethereum ETFs will begin trading on July 23 is a significant development for the cryptocurrency market. With approvals from the SEC and participation from major investment firms, these ETFs are set to attract substantial interest from investors. This move is expected to enhance the legitimacy and stability of Ethereum and the broader crypto market. As the trading date approaches, all eyes will be on how these new financial products perform and their impact on the market.

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