The White House has prepared the first framework regarding U.S. authorities’ plans to regulate the cryptocurrency market. How would the US regulate cryptocurrency? This was reported by CNBC, citing U.S. President Joe Biden’sadministration.
The document reports that the U.S. president will consider the need to call on the U.S. Congress to make amendments to the Bank Secrecy Act. The edits are expected to affect not only cryptocurrency providers, but also NFT marketplaces.
Also, the authorities will consider the issue of tougher penalties for businesses for illegal financial services. The media assume that with such toughening, the U.S. Department of Justice may have more powers to punish activity on the crypto market.
Is cryptocurrency legal in the United States?
Is cryptocurrency legal in the United States? Currently, they are not regulated in any way. The U.S. Treasury Department intends to complete a risk assessment of illicit activity through decentralized finance (DeFi) as well as the NFT market by the end of 2023. The Biden administration has also urged the Fed to investigate the development of a digital government currency, but details are not yet available.
The White House also took a stab at stablecoins. According to U.S. authorities, the stablecoin market could provoke “devastating consequences” if it does not fall under existing standards for regulating financial services. To “safeguard” stablecoins from potential risks, the U.S. Treasury Department will increase its interaction with financial institutions to “identify, monitor and analyze strategic risks associated with cryptocurrency markets.”
Recall that Biden issued an executive order directing various agencies within the federal government to prepare reports on cryptocurrencies in March 2022. According to the executive order, the agencies will study the possibility of creating a digital version of the dollar, and the DOJ must decide if new legislation needs to be drafted.
We previously reported that Vietnam is leading the way in the adoption of cryptocurrencies.
Tesla no longer believes in Bitcoin long term projections due to $200 million loss
Ilon Musk’s Tesla no longer believes in Bitcoin long term projections as an investment and an analog to traditional money. Twitter user @1mantruthsquad, who studied the financial statements of the company, reached this conclusion.
It turned out that Tesla made adjustments to some wording in its annual financial report to the U.S. Securities and Exchange Commission (SEC). For example, the U.S. company no longer states that it “believes in the long-term potential of cryptocurrencies.”
Is Bitcoin a long term investment?
It remains unclear what could have influenced the change in position, but Tesla also noted that at the end of 2022, losses from investments in bitcoin (BTC) amounted to $204 million. For comparison, the company lost $101 million in 2021. Moreover, profits from cryptocurrency investments decreased: while in 2021 Tesla earned only $128 million from bitcoin sales; in 2022 the company earned only $64 million from “certain conversions” to fiat.
As a reminder, in July 2022, Tesla reported selling 75% of its bitcoin investments. During a conference call with investors, Elon Musk assured that the company had gotten rid of cryptocurrency because of the uncertainty surrounding the coronavirus pandemic. According to him, it was important for the company to increase its corporate cash balance.
However, Tesla has dumped bitcoin before. For example, in April 2021, another Tesla report revealed that Tesla had sold 10% of its bitcoins at the end of March of that year. At the time, Musk insisted that with the sale, the company allegedly wanted to test the liquidity of the cryptocurrency. As of February 2023, Tesla holds less than $185 million in bitcoin on its corporate balance sheet.
To recap, Tesla first announced an investment in bitcoin in February 2021. At that time, the company invested about $1.5 billion in the largest cryptocurrency by market capitalization. At the time, bitcoin prices in the BTC/USD pair jumped from ~$39,000 to ~$45,000 in minutes amid the news. At the time of writing, BTC is trading at $23,000.
Earlier, we reported that crypto-investors gave a bitcoin forecast for today ahead of the Fed meeting.
Solana price targets: Solana founders reveal their plans for 2023
Solana price targets: according to Solana founders Anatoly Yakovenko and Raj Gokal, the ecosystem is showing signs of active recovery, even in a volatile market.
According to a recent report from Electric Capital, the number of developers on Solana has grown 83% over the past year to more than 2,000. Only Ethereum has more.
Plans for Solana – the project managed to survive the crypto winter
Yakovenko and Gokal believe that the mass adoption of blockchain technology is rapidly disrupting traditional financial models. In their view, the only way to bring this moment closer is an uncompromising commitment to decentralization. So even despite the reputational damage inflicted on the crypto industry in 2022, the project team remains faithful to its basic tenets and works to improve Solana.
The number of validators in the network has increased – now the blockchain runs on more than 2,000 nodes. The developers have also planned performance improvements to make Solana more stable and efficient.
The project’s founders argue that the cryptocurrency community can be seen as an example of anti-fragility, a concept that suggests that attacks on the system can have an unexpected effect, making it stronger. According to them, the prolonged bear market has had just such an effect on Solana, greatly strengthening its position.
Working on the bugs
In 2022, Solana experienced several failures that caused downtime and disrupted the network’s ability to process transactions. A variety of factors, including technical problems and security breaches caused these. The repeated downtime negatively affected Solana’s reputation as a reliable and trustworthy platform, causing some investors to question its stability.
Yakovenko and Gokal confirmed that the client-validator developed by Firedancer would significantly reduce Solana’s risk of outages Thanks to its ability to handle 0.6 million transactions per second.
The future of Solana and related projects is still in question
The ecosystem was hit hard by the collapse of FTX. To explain the financial ties between Solana and the Bankman-Frieda empire, the team published an entire blog post: it highlighted that FTX and Alameda bought over 50.5 million SOL tokens worth $500 million, which will remain blocked until 2028. It also became known that as of Nov. 6, 2022, about $1 million of the project’s funds were on the exchange. The fate of those assets is currently unclear.
SOL has now recovered from its November decline and is trading at $24. Nevertheless, the constant disruptions raise questions about the stability of blockchain and the future of projects built on it – such as Serum. So even though Yakovenko and Gokal are confident, it remains to be seen whether the project will meet the challenges it faces.
We previously reported that OKX will remove the Gemini stable token from its listing.
Traders were offered different options for insurance against the collapse of exchanges
U.S. bankruptcy firm Cherokee Acquisitions began offering different options for insurance to protect investors against the potential bankruptcy of cryptocurrency exchanges like Coinbase, Binance and Kraken. As conceived by the investment firm, the options will allow recovery of up to 100% of the assets that could fall under the freeze in the event of a collapse of the exchanges.
A put option is a futures contract that allows the holder to sell assets at a predetermined price. It is used as an investment hedge.
Trade specialist Brian Ferrara says that institutional investors and hedge funds will sell put options for insurance. The monthly fee for options will be between 0.25% and 0.35% for assets held on Coinbase. In the case of Kraken, the rate rises from 0.35% to 0.45%. Binance charges the most fees on assets on its balance sheet, ranging from 0.45% to 0.55%. The contract term for a put option is six months.
Investor interest in asset insurance may be more relevant than ever given the high-profile scandal surrounding cryptocurrency exchange FTX, as well as other scandalous companies like Celsius Network, BlockFi and others. At the same time, the actions of the surviving exchanges hint that the crisis in the cryptocurrency market is not over yet.
For example, at the end of 2022, Binance founder Changpeng Zhao warned in a letter to exchange employees of future problems due to the collapse of FTX. He also said that the bankruptcy of the Sam Bankman-Fried exchange triggered “a lot of additional scrutiny and complicated questions” about Binance.
U.S. cryptocurrency exchange Coinbase made its third round of layoffs in January 2023, laying off 20 percent of its employees. According to Coinbase CEO Brian Armstrong, the exchange took this step in view of “information received. Exactly what kind of insider information is being referred to is not clear, but Coinbase has also curtailed the development of projects whose profitability is projected to be low.
We previously reported that the founder of TRON expects China to recognize bitcoin soon.
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