Coinbase proposed to introduce regulation of cryptocurrency, but not to touch DeFi
To develop the cryptocurrency market, regulators should target crypto exchange regulations. Brian Armstrong, the founder of U.S.-based cryptocurrency exchange Coinbase and issuer USDC, expressed this opinion in a blog post on the company’s website.
According to Armstrong, the industry needs to get a satisfactory regulation of cryptocurrency as soon as possible and not wait for a comprehensive and perfect regulation to do business. For example, Armstrong suggested that all Stablecoin issuers should not be exclusively required to have a banking license. but acknowledged that existing financial requirements can be applied to issuers.
According to the head of Coinbase, it would be logical to require a banking license for those companies that use risky assets to collateralize a stablecoin. He also believes that any Stablecoin issuer is required to follow the sanctions regime.
To oversee crypto exchanges, Armstrong suggested deploying anti-money laundering, market manipulation, and compiling a minimum set of requirements to protect customer assets.
DeFi is above suspicion
The Coinbase co-founder suggested that the decentralized finance market (DeFi) should be left untouched. This is because any blockchain-based smart contract is, by default, as transparent as possible.
Users can store cryptocurrency in non-depository (non-custodial) wallets, solving the threat of third-party fraud. Armstrong urged not to equate cryptocurrency wallet developers with financial services providers, and he suggested that the creation of DeFi-protocols be subsumed under the protection of free speech.
The aggressive rhetoric of the U.S. Treasury Department can explain armstrong’s call not to touch DeFi. In August 2022, Department-controlled entities imposed sanctions on the Tornado Cash cryptocurrency-mixing smart contract because of more than $7 billion in money-laundering assistance from 2019. According to U.S. authorities, the smart contract helped the Lazarus Group, a North Korean hacking group, launder $455 million in stolen cryptocurrency. Tornado Cash also helped launder more than $96 million in the Harmony cross-chain bridge heist, as well as $7.8 million in the Nomad hack.
Earlier, we reported that bETH to ETH exchange discount reached 5% amid Binance’s troubles.
Cryptotraders lost more than $250,000,000 in liquidations after Fed rate hike
Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.
Cryptotraders lost $132,000,000 in BTC
Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.
Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.
The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.
Regulators continue to hunt the cryptobusiness
Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.
The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.
We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.
Binance was caught circumventing KYC to register Chinese clients
Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.
The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.
The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.
An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.
We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.
Why cryptoanalysts expect bitcoin to fall
The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:
The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.
The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.
However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.
There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.
We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.
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