Main topic: An investment firm is attempting to turn equities into crypto tokens that comply with securities laws, with the backing of a well-known trading firm.
Key points:
1. Susquehanna International Group is supporting a project called Dinari, which aims to tokenize stocks in a compliant manner.
2. Dinari has acquired a broker-dealer and registered with the Securities and Exchange Commission, allowing it to distribute dividends and maintain records of securities ownership.
3. The company's flagship product, dShares, enables investors outside the US to use cryptocurrencies to purchase shares of major US companies and exchange-traded funds.
China's historical dominance in the crypto industry persists despite periodic crackdowns, with many crypto companies still earning a significant portion of their revenue from the country and maintaining unofficial channels of liquidity; China's economic uncertainty, including concerns about future crackdowns and a collapsing real estate market, can impact global crypto markets.
A new study by the Bank for International Settlements (BIS) suggests that cryptocurrencies like Bitcoin have not reduced financial risks but rather amplified them in emerging market economies, leading to potential policy options ranging from bans to regulation.
Prominent crypto commentators criticize the new crypto tax reporting rules proposed by President Joe Biden, fearing that they will push the crypto industry further away from the US and stifle innovation.
Court rulings in the United States are beginning to challenge the Securities and Exchange Commission's stance on digital assets, leading to hopes of a resurgence in the crypto industry in the country.
Bitcoin and crypto could experience significant growth in the next few months, with September expected to be a particularly eventful period, including the potential impact of U.S. bitcoin ETF filings and China declaring crypto as "legal property and protected by law."
A recent survey by ConsenSys revealed that Americans perceive the financial system as functioning well, but they believe there is room for improvement and that the country has the necessary technology to transform the system; 98% of respondents have heard of cryptocurrencies, with Bitcoin, Ethereum, and Dogecoin being the top three crypto assets held by Americans.
The rejection of a new bill on cryptocurrency regulation by the Australian Senate reflects the country's cautious approach and leaves the industry without legal guidelines as crypto innovation continues.
The lack of a fully regulated financial market in the US contradicts global economic interdependence, and as a result, the crypto industry is moving offshore rapidly; however, the US government is likely to eventually establish a clear regulatory framework and invest in blockchain R&D, thus strengthening the industry.
Only 22 out of the nearly half a billion people invested in cryptocurrency have become billionaires through their investments, with Bitcoin being the most common asset held by crypto billionaires, according to a report by Henley & Partners. The report also revealed that the US ranked third in terms of public adoption of cryptocurrencies, behind the UAE and Singapore.
Crypto exchange Coinbase plans to focus on non-U.S. markets, including the European Union, the United Kingdom, Canada, Brazil, Singapore, and Australia, due to their clearer crypto laws, as it seeks to expand its operations and establish partnerships with global and local banks and payment providers while ensuring compliance with governance systems. The company also aims to intensify its lobbying and visibility efforts ahead of the EU elections and engage with the G20 to create global crypto standards.
The lack of clear crypto regulations in the US has caused significant issues for the industry, leading to collapses and a weakening of America's position as a financial hub, according to Coinbase CEO Brian Armstrong. He emphasizes the need for clear rules that recognize the innovation potential of the technology while protecting consumers. Armstrong also highlights the potential benefits of Bitcoin exchange-traded funds (ETFs) and Coinbase's role as custodian in many ETF applications.
Coinbase CEO Brian Armstrong predicts that cryptocurrencies will be a prominent topic in the 2024 US elections as the gap between current crypto policies and the needs of Americans becomes more apparent.
U.S. Securities and Exchange Commission Chair Gary Gensler continues to emphasize the importance of crypto companies complying with securities laws, despite recent setbacks in court cases against the industry. Gensler will discuss recent enforcement actions and proposals related to cryptocurrency firms but will avoid discussing ongoing litigation, including high-profile cases against Coinbase and Binance.
Ethereum co-founder Joseph Lubin believes that the U.S. Securities and Exchange Commission's dispute with crypto firms over whether crypto tokens are considered securities will be resolved in favor of the industry, stating that "clear heads will prevail." He also expressed confidence that decentralized protocols, blockchain, and cryptocurrency align with the philosophies of the U.S. and that other countries will follow suit.
Crypto strategist predicts a significant expansion in the digital assets market similar to 2019, with the possibility of a short squeeze after a Bitcoin market correction.
The Blockchain Association reflects on the past five years of the crypto industry's challenges in Washington D.C. and highlights potential future areas of focus, including anti-money laundering efforts, passing crypto-related legislation, and the possibility of regulatory personnel changes.
CoinShares chief strategy officer, Meltem Demirors, warns of uncertainty in the crypto industry, with outflows and decreased trading volume, emphasizing the need for regulatory certainty in the United States.
Crypto is poised to create a new investable asset class globally and will revolutionize the internet, requiring new business models, metrics, and research structures, as well as a framework to analyze value flows within the tech stack, particularly in relation to Ethereum's layer 2 solutions.
Ark Invest's recent report highlights the recovery of Bitcoin's realized capitalization, the decline in liquidity and trading volumes, the recent increase in volatility, and the optimistic long-term outlook for the cryptocurrency.
Cryptocurrency is seen as a solution to the lack of sustainability and investor confidence in the African fintech space, according to experts interviewed on the Hashing It Out podcast.
Crypto asset manager CoinShares plans to establish a hedge fund unit for qualified US investors in order to provide institutional investors with actively managed exposure to digital assets outside of Europe due to the changing macro environment marked by interest rates and inflation.
Coinbase, the U.S. cryptocurrency exchange operator, may invest more elsewhere if the U.S. cannot get crypto regulation right, raising questions about whether the U.S. is still the primary hub for crypto innovation and development.
Cryptocurrency faces regulatory challenges that could shape its future, but despite these challenges, the industry holds promise with developments such as increased institutional adoption, central bank digital currencies (CBDCs), DeFi innovation, interoperability, and expected regulatory clarity.
The departure of Binance.US CEO Brian Shroder, along with layoffs and a significant outflow of funds, highlights the ongoing issues of influence and trust in the cryptocurrency industry. Trust and regulation are key factors that crypto platforms need to address to gain the same level of trust as traditional banks.
Europe is seen as a favorable environment for the cryptocurrency ecosystem due to its regulatory clarity and adoption by institutional players, in contrast to the uncertain regulatory landscape in the United States.
Institutional involvement in the crypto industry provides regulatory certainty and clarity, forcing regulators to address taxation, compliance, and reporting challenges, benefiting the entire industry and legitimizing digital assets.
Summary: U.S. regulators provided minimal updates to the global crypto community this week, with the SEC approving VanEck's Ethereum futures ETF and lawmakers in Washington appearing to be less proactive than their European counterparts, while various crypto-related incidents and controversies unfolded on social media platforms.
The market capitalization of stablecoins has dropped by 35% in the past 18 months due to factors such as reduced retail participation, surging US treasury yield, and high opportunity cost, with only a few stablecoins like USDT remaining resilient and dominant in the market. The decline is attributed to traditional finance rates exceeding crypto-native yields, and the market share decline of US-native stablecoins is seen as a result of U.S. regulation hostility. Stablecoins are considered the "killer app" of the crypto industry, comprising a significant portion of settlement activity on public blockchains. The trend is expected to reverse when there is revived interest in crypto trading, steady interest rate cuts, and a pro-crypto regulatory environment.
Coinbase, the top US crypto exchange, is focusing on international markets due to regulatory uncertainty in the US and aims to bring a billion people into crypto.
Crypto exchange Bitstamp is in talks with several big European banks to offer cryptocurrency services, indicating that the European Union's regulatory framework is enabling traditional financial institutions to enter the digital asset space, in contrast to the US where regulators are cracking down on crypto.
The chief content officer of CoinDesk, Michael Casey, discusses the future of cryptocurrency and the challenges facing the industry, including regulation and the need for decentralized systems to protect against fraud and manipulation by centralized entities. Despite recent setbacks, Casey remains optimistic about the potential of blockchain technology and the importance of creating a safer, more decentralized financial system.
Wary investors are more likely to be drawn to cryptocurrencies by market-based improvements to safety, such as insurance against theft and loss, than by enhanced government regulation, according to a recent survey.
Coinbase, the largest US crypto exchange, argues that a proposed IRS rule to define crypto brokers and regulate tax payments will threaten the industry and invade Americans' privacy.
The recent reports of militant groups, including Hamas, receiving financing via digital currencies has increased scrutiny on the cryptocurrency industry, leading to a push by Elizabeth Warren to impose new anti-money laundering rules on crypto and an examination by Senate Banking Chair Sherrod Brown into crypto's role in the Israel attacks, highlighting concerns over the potential use of cryptocurrencies in terrorism financing and financial crime.
Crypto finance, despite its claims of decentralization and independence from state-backed money, is heavily dependent on centralized platforms and is a vehicle for financial speculation rather than a means of escape from state control, according to Ramaa Vasudevan, professor of economics. Moreover, the growth of crypto will compound the volatility of global capitalism and its environmental impact is significant due to the energy-intensive process of mining and validating crypto tokens. The rise of stablecoins has been crucial in the development of crypto finance, but it is ultimately dependent on conventional currencies for stability. The recent crash of crypto finance has revealed its fragility and the absence of central banks as lenders of last resort exacerbates financial instability. Crypto finance fits into the wider picture of financialization and asset-price bubbles, promoting inequality and concentration of wealth. Ultimately, the politics of money and its relationship with the state are contested in the crypto sphere, as it neither depoliticizes nor democratizes money. Finally, crypto finance has become a battleground in the economic competition between the United States and China, with both countries striving for dominance in the digital currency space.
The crypto industry in Asia is flourishing as it attracts projects and investors looking to avoid regulatory uncertainties in the US, leveraging favorable policies and growing crypto adoption in the region.
The Australian government plans to regulate cryptocurrency exchanges by requiring them to obtain a financial services license from the local financial regulator, aiming to address consumer protection and innovation in the digital asset sector. However, the proposal has received mixed reactions from crypto exchanges in Australia, with some praising the regulation for providing appropriate protections, while others express disappointment as it attempts to fit crypto into existing financial services rules rather than establishing a dedicated framework. The consultation paper is open for feedback until December 1, 2023.
The Australian Treasury has proposed new regulations to regulate cryptocurrency exchanges under existing financial services rules, receiving praise from crypto exchanges for providing regulatory certainty and promoting industry growth and innovation. However, some express concerns about fitting the crypto industry into existing financial services regulation.
Prominent Bitcoin developers and market analysts emphasize the strong value proposition of BTC in comparison to other cryptocurrencies, citing its resilience and potential as a long-term store of value and means of wealth protection, particularly in the face of economic uncertainties and hyperinflation in various countries.
Cryptocurrencies have shown slight growth amid macroeconomic challenges, as investors remain optimistic about the approval of spot Bitcoin exchange-traded funds by regulators.
The U.S. government is increasing its scrutiny of the cryptocurrency industry following reports of Hamas receiving funding through digital currencies, prompting lawmakers to demand a plan from the White House and Treasury to prevent crypto financing of terrorism.
The crypto industry is actively lobbying Congress for laws that clarify how cryptocurrencies will be regulated, with recent events highlighting the industry's financial support for political campaigns.
Retail investors have a unique opportunity to own cryptocurrency assets before institutional investors, according to macro guru Raoul Pal, who likens the risk curve of digital assets to traditional assets during tough market times and describes Ethereum as the larger "nation state" in the crypto economy.
The recent attack on Israel by Hamas has raised concerns about the use of cryptocurrencies for terrorism funding, leading U.S. lawmakers to ask for measures to prevent crypto-financed terrorism, while the Treasury has designated crypto "mixers" as money-laundering hubs; however, critics argue that these proposals could have negative consequences for the crypto industry as a whole.
Bitcoin's bullish momentum has extended to the wider crypto market, with all sectors experiencing gains, while US equities, particularly big tech, have underperformed, suggesting a shift in the investment landscape.
