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Cryptocurrency

Key regulatory measures to reduce cryptocurrency risks should come from developed countries

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Between September 2019 and June 2021, the crypto ecosystem expanded by 2,300%, especially in developing countries, the United Nations reported in a paper titled “Not All That Glitters Gold.” According to some estimates of digital currency ownership, 15 of the top 20 economies in the field in 2021 were emerging and developing countries.

Using cryptocurrencies has become attractive regarding the price and speed of sending a transfer. Cryptocurrencies are mostly owned by middle-income people in developing countries. In countries facing currency depreciation and rising inflation, cryptocurrencies were perceived to protect household savings.

Regardless of the reasons for using cryptocurrencies, exchanges play a crucial role in enabling their wider use. There are now more than 450 crypto-exchanges, which reached a joint peak daily trading volume of $500 billion in May 2021.

Risks. The UN cautions that using cryptocurrencies could lead to risks of financial instability. If prices fall, monetary authorities may need to intervene to restore financial stability. It is important to note that in developing countries.

Crypto use also undermines the effectiveness of capital controls, a critical tool in developing countries that can help contain the build-up of macroeconomic and financial vulnerabilities, as well as expand policy space.

Finally, if left unchecked, cryptocurrencies could become a widespread means of payment and even informally replace national currencies (a process called cryptocization), which could threaten countries’ monetary sovereignty.

Regulation. All of these risks have forced politicians around the world to start regulating. The proliferation of cryptocurrency has served as a wake-up call for central banks, some of which have begun to discuss creating public alternatives to private digital currencies. Developing countries have also begun to take steps to regulate. 

As of November 2021, 41 countries, up from 15 in 2018, had banned banks and other financial institutions from conducting cryptocurrency transactions or prohibited exchanges from offering services to individuals and businesses. Nine developing countries, namely Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia, have completely banned cryptocurrencies. Some other countries have imposed income taxes on capital gains derived from trading. Finally, crypto exchanges are subject to national anti-money laundering and terrorist financing laws in jurisdictions such as Australia, the Bahamas, Greece, Romania, the Philippines and Uzbekistan.

Despite the recent regulatory response, cryptocurrencies remain in a legal gray area in most developing countries. The ecosystem is global in nature, and many of its components are outside the jurisdiction of states, making regulation of cryptocurrencies a challenge. Accordingly, the main regulatory measures to mitigate the global risks associated with cryptocurrencies should come from developed countries, where most of these providers are headquartered.

Developing countries may have less room to maneuver, but regulation is possible. The UN has highlighted measures that could curb the further spread of risks:

  • Require mandatory registration of crypto exchanges and digital wallets and make using cryptocurrencies less attractive;
  • Prohibit regulated financial institutions from holding stablecoins and cryptocurrencies or offering related products to customers;
  • Regulate decentralized finance;
  • Restrict or prohibit advertising of exchanges and digital wallets in public places and on social media;
  • Create a public payment system, such as a central bank digital currency. 

There is no universal policy response to the growing use of cryptocurrencies in developing countries, the UN summarized. Countries need to adapt to recommended policies, considering the specifics of their national financial systems, regulatory infrastructure and enforcement capacity. Also, regarding financial regulation, policymakers should consider that the crypto ecosystem is constantly evolving.

Cryptocurrency

BNB Chain Unveils Its Q1 Report: 55.8% Decrease in Value Loss; opBNB Crosses 20 Million Users; BSC TVL Jumps 70.8%

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[PRESS RELEASE – Dubai, UAE, May 2nd, 2024]

NB Chain, the community-driven blockchain ecosystem that includes the world’s largest smart contract blockchain, today shared its report on the performance of BNB Chain in Q1 2024. It highlights the key growth metrics and updates for BNB Chain’s Layer 1 (L1) BNB Smart Chain (BSC), its L2 opBNB, the decentralized storage solution BNB Greenfield, and security measures.

In Q1 2024, the average Daily Active Users (DAU) on BSC increased by 27.3% Quarter-on-Quarter (QoQ) to 1.4 million. In the same period, the Total Value Locked (TVL) on BSC increased by 70.8% from $3.49 billion in January to $5.96 billion at the end of Q1. During Q1 2024, the price of the BNB token increased by 93.5% — doubling the increment in Q4 2023 (42.9%). In the same period, market capitalization also grew by 93.5% to $43.7 billion. Between January and March 2024, the total unique addresses on BSC increased by 5.3% to 435 million addresses, leading among EVM-compatible blockchains in daily new unique addresses.

During Q1 2024 and as part of the “One BNB” strategy, opBNB continues to exhibit growth and is now the leading blockchain in the industry by Daily Active Users (DAU). The milestone was achieved concurrently with the total distinct addresses on opBNB crossing 20 million in this quarter.

This quarter also witnessed the introduction of critical technology updates, focusing on scalability and optimization. The opBNB team launched its 2024 roadmap, targeted to achieve 10,000 TPS and be 10 times more cost-effective. The integration of the Path-Based Storage System (PBSS) solution, designed to optimize blockchain storage for opBNB, is also underway and is forecasted to roll out in Q2 2024. Further, new opBNB projects such as Bitget Wallet and Binance Web3 Wallet began utilizing opBNB Bridge, and a customized gas token for opBNB is currently in development.

BNB GreenField, the decentralized storage platform, made strides with network storage data size surpassing 415 GB. The peak daily stored data size hit a new high at 33.84 GB on February 22, 2024.

Notably, BNB GreenField saw the implementation of three major forks named Hulunbeier, Ural, and Pawnee. Each fork aimed to bring unique enhancements, significantly improving user experience and backend operations.

Overall, a reduction of 55.8% in value loss from the same period last year emphasizes the network’s constant improvements and reiterates BNB Chain’s dedicated efforts towards security and safeguarding users’ interests through AvengerDAO.  

Read the BNB Chain Q1 report in full here. 

About BNB Chain

BNB Chain is a community-driven blockchain ecosystem that is removing barriers to Web3 adoption. It is composed of:

  • BNB Smart Chain (BSC): A secure DeFi hub with the lowest gas fees of any EVM-compatible L1; serves as the ecosystem’s governance chain.
  • opBNB: A scalability L2 that delivers the lowest gas fees of any L2 and rapid processing speeds.
  • BNB Greenfield: Meets decentralized storage needs for the ecosystem and lets users establish their own data marketplaces.

Setting a high bar for security, the AvengerDAO community protects BNB Chain users while Red Alarm provides a real-time risk-scanner for Dapps. The ecosystem also offers a range of monetary and ecosystem rewards as part of its Builder Support Program.

For more, users can follow BNB Chain on X or start exploring via BNB’s Dapp library.

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Cryptocurrency

BlackRock’s Spot Bitcoin ETF Sees First Outflows Amid BTC Price Slump

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The spot Bitcoin exchange-traded funds (ETFs) in the United States have recently observed a noteworthy trend, marked by a consecutive six-day period of outflows. Notably, BlackRock’s IBIT ETF encountered its first instance of outflows just yesterday.

This development coincides with bitcoin navigating through its most challenging month since the aftermath of the 2022 FTX collapse, registering a notable decline of 11% over this week.

Record Breaking Outflows and Market Downturn

According to data from Farside Investors, BlackRock’s Bitcoin fund saw its first $36.9 million outflow on May 1st, with the nine other ETFs collectively recording a $526.8 million outflow on the same day.

The largest outflow for the day was observed in the Fidelity Wise Origin Bitcoin Fund (FBTC), which saw $191.1 million in net outflows. Grayscale Bitcoin Trust (GBTC) followed closely with an outflow of $167.4 million.

ARK 21Shares and Franklin Bitcoin ETFs saw respective outflows of $98.1 million and $13.4 million, contributing to the largest single outflow day for U.S. spot Bitcoin ETFs.

In the broader market context, bitcoin’s price is down by more than 10% this week, as CoinGecko data indicates. Following Tuesday’s decline, BTC and the broader cryptocurrency market are set to break their seven-month streak of gains, marking their most significant monthly decline since November 2022, when the crypto exchange FTX collapsed.

Bitcoin had plummeted by over 16% by the end of April, while Ethereum saw an 18% decrease in value. Smaller cryptocurrencies faced even higher declines, with popular altcoins like SOL, Dogecoin (DOGE), and Avalanche (AVAX) experiencing drops ranging from 35% to 40% throughout April.

Overall, the total market capitalization of the cryptocurrency market has shrunk by nearly 18%, marking its biggest decline since June 2022. At the time of writing, bitcoin is trading at $57,600 while most alts have performed better.

Analysts Weigh In

Despite these challenges, Bloomberg ETF analyst James Seyffart maintains that spot Bitcoin ETFs are “operating smoothly across the board,” emphasizing that inflows and outflows are part of the ETF lifecycle.

Echoing this sentiment, ETF Store president Nate Geraci emphasized that such fluctuations are normal for ETFs.

He compared it with the outflows experienced by traditional assets like gold ETFs, pointing out that the metal’s prices have surged by 16% year-to-date despite significant outflows. This year, the iShares Gold ETF and SPDR Gold ETFs have seen outflows of $1 billion and $3 billion, respectively.

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Cryptocurrency

Binance Founder CZ’s First Words After Receiving 4-Month Prison Sentence

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Binance founder and former CEO – Changpeng Zhao a.k.a CZ – received a four-month prison sentence after pleading guilty to violating US anti-money laundering laws at the world’s largest cryptocurrency exchange.

In the first tweet following the sentencing, CZ revealed his intention to remain a passive investor and holder in the crypto industry while simultaneously highlighting the importance of compliance in the industry.

CZ Reacts

In his final tweet before beginning his four-month prison sentence, CZ expressed gratitude to his supporters, acknowledging the letters, messages, and various forms of encouragement he received.

He even went on to emphasize the importance of their support in keeping him resilient during this period.

“I will do my time, conclude this phase, and focus on the next chapter of my life (education). I will remain a passive investor (and holder) in crypto. Our industry has entered a new phase. Compliance is super important. A silver lining of this whole process is that Binance has been under the microscope. And funds are SAFU. Protect users!”

CZ resigned as Binance’s chief executive officer last November after admitting that he and the exchange he founded in 2017 had failed to comply with anti-money laundering regulations outlined in the Bank Secrecy Act.

The Sentencing

Once regarded as one of the most influential figures in the industry, CZ became the second prominent crypto leader after FTX’s Sam Bankman-Fried (SBF) to face imprisonment.

The sentence was significantly lower than the three years sought by prosecutors and marked the first instance of a CEO being imprisoned for violating the Bank Secrecy Act, a charge frequently used in recent crypto prosecutions.

Prior to his sentencing, CZ expressed his remorse to US District Judge Richard Jones, acknowledging his failure to implement an effective anti-money laundering program. He stated,

“I believe the first step of taking responsibility is to fully recognize the mistakes. Here I failed to implement an adequate anti-money laundering program. I realize now the seriousness of that mistake.”

CZ chose to surrender voluntarily to serve his sentence, which will likely be at a detention center near Seattle-Tacoma International Airport. Additionally, Binance agreed to a $4.32 billion penalty, while CZ paid a $50 million criminal fine and an additional $50 million to the US Commodity Futures Trading Commission (CFTC).

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