The Federal Reserve Bank vice chairman delivered a speech at the Philad elphia Fed’s fintech event on September 8, focusing on the central bank’s role in financial innovation, which primarily encompasses research and supervision, with a notable mention of the FedNow Service.
Michael Barr, the vice chair for supervision at the Federal Reserve, emphasized their commitment to central bank digital currency (CBDC) research, framing it as fundamental research that could potentially support a CBDC payments infrastructure or enhance the existing payments system.
Barr specifically highlighted the importance of system architecture for recording transactions and ownership in ledgers and explored tokenization models, in line with a FEDS Notes publication that underlined the compatibility of tokenized platforms with central bank money functioning as a settlement asset.
In an unusual punctuation choice for Federal Reserve communications, Barr underscored the significance of the Fed’s novel activities supervision program, introduced the previous month.
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This program entails a dedicated team of supervisors providing feedback to federally supervised banks, enabling them to obtain “written supervisory non-objection” for novel activities involving stablecoins and related endeavors, aligning with Office of the Comptroller of the Currency (OCC) policies outlined in interpretative letters 1174 and 1179.
Barr stressed the importance of strong federal oversight of stablecoins, in line with the OCC’s guidance, asserting that dollar-pegged stablecoins rely on the trust of the central bank and indicating support for ongoing legislative efforts.
He voiced concerns, stating, “If non-federally regulated stablecoins were to become a widespread means of payment and store of value, they could pose significant risks to financial stability, monetary policy, and the U.S. payments system.”
Barr also highlighted the Federal Reserve’s role in facilitating 24-hour instant payments through the FedNow Service, which was introduced in July. While current usage volumes of the service remain modest, he emphasized that it falls on depository institutions to make this service widely accessible, encompassing large banks, regional banks, community banks, and credit unions.
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Coinbase CEO, Brian Armstrong, has made bold predictions regarding the pivotal role of cryptocurrency in the upcoming United States elections in 2024.
In a recent interview with Yahoo Finance, Armstrong emphasized that many officials in Washington, D.C. do not yet grasp the substantial influence wielded by the crypto community’s voting bloc.
Armstrong firmly asserted, “I don’t think everybody in DC actually fully realizes how powerful the crypto voting community block is.
And I think 2024 is an election where the voters of America are really going to hold candidates’ feet to the fire and say, what is your position on crypto?”
Highlighting the growing crypto adoption in the U.S., Armstrong pointed out that approximately 56 million Americans have already engaged with cryptocurrencies, a number five times larger than electric vehicle users.
These crypto enthusiasts represent a formidable voting demographic that is expected to demand answers from candidates about their stance on cryptocurrency-related policies.
Presidential hopefuls have already begun addressing the cryptocurrency issue in their campaigns.
For instance, Florida’s Governor Ron DeSantis has pledged to prohibit central bank digital currencies (CBDCs) if he secures the presidency, citing privacy concerns as a primary reason.
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Similarly, Robert F. Kennedy Jr. has expressed reservations about exploring the concept of a digital dollar. Despite these reservations, both candidates have adopted crypto-friendly campaign strategies.
In terms of the current political landscape, crypto asset manager Grayscale recently reported that Joe Biden and Donald Trump, who are leading in their respective parties’ 2024 presidential polls, have expressed a favorable attitude towards exploring CBDCs.
Coinbase, a prominent cryptocurrency exchange, has actively lobbied in Washington, D.C. for a clear regulatory framework within the crypto space.
Congressional discussions on bipartisan bills aimed at establishing comprehensive rules for crypto firms and users are currently underway.
However, Armstrong also suggested an alternative route, hinting at the possibility of a new chair at the Securities and Exchange Commission (SEC) in 2024.
This reference alludes to a potential replacement for Gary Gensler, who had filed a lawsuit against Coinbase in June, alleging violations of securities laws related to several tokens traded on the platform.
The crypto industry awaits the outcome of these regulatory discussions and the potential impact of the 2024 elections on cryptocurrency policy in the United States.
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Vitalik Buterin’s X (previously Twitter) account was reportedly hacked.
Blockchain expert ZachXBT revealed that the hack resulted in losses exceeding $691,000 from users who clicked on a malicious link.
On September 9, Dmitry Buterin, Vitalik’s father, warned on X that his son’s account had been breached.
He urged followers to disregard a particular post, which has since been deleted.
This misleading post celebrated “Proto-Danksharding’s” introduction to Ethereum.
The hacker baited users with a link for a free commemorative NFT, tricking them into connecting their wallets, and then stole their assets.
Ethereum developer Bok Khoo, aka Bokky Poobah on X, has stated that his CryptoPunk NFTs were among the assets lost.
At present, a CryptoPunk NFT’s floor price is 46.99 Ether, translating to roughly $76,837.
ZachXBT has kept his 438,200 followers updated on the hacker’s moves.
He disclosed that the most valuable stolen NFT is CryptoPunk #3983, valued at 153.62 ETH or about $250,543.
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An X user, Satoshi 767, speculated that Buterin might have skimped on security measures for his X account.
This user suggested that Buterin should admit to his operational security lapses and reimburse the affected individuals.
He theorized that the breach could either be an internal job at X, a direct physical threat to Buterin, or, most probably, a SIM swap.
Yet, ZachXBT countered this by highlighting Buterin’s prominence, suggesting he’s an attractive target for various hacking methods.
He emphasized the uncertainty around the breach being a SIM swap and proposed that an insider might have been bribed or used a panel.
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On September 8, United States Representative Tom Emmer, the Majority Whip of the U.S. House of Representatives, sponsored an appropriations amendment aimed at restricting the U.S. Securities Exchange Commission’s (SEC) use of funds for digital asset enforcement.
Emmer, a vocal critic of the SEC’s actions in the cryptocurrency industry, particularly the leadership of SEC Chair Gary Gensler, alleged that Gensler had exceeded his authority, resulting in adverse consequences for the American people.
Emmer urged Congress to employ available methods and proper procedures to prevent potential misuse of taxpayer funds by Gensler and the SEC.
Emmer’s history includes co-sponsoring several bills designed to improve regulatory transparency within the United States.
He asserted that Gary Gensler had abused his authority to expand the Administrative State, to the detriment of the American people, emphasizing the necessity for Congress to employ all available tools, including the appropriations process, to restrain Gensler from further leveraging taxpayer dollars.
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The appropriations amendment Emmer introduced will limit the SEC’s use of funds for digital asset enforcement until comprehensive rules and regulations are established.
Concerns have arisen due to the absence of cryptocurrency regulations, with Emmer suggesting that the SEC’s substantial expenditures on legal disputes with numerous crypto entities might constitute a “weaponization” of taxpayer funds.
In a separate legislative move, Emmer introduced the Blockchain Regulatory Certainty Act, which clarifies that blockchain developers and service providers should not be classified as money transmitters, as they do not hold consumer funds in custody.
This distinction is intended to relieve non-custody providers from unnecessary compliance burdens that could hinder innovation in the United States, ensuring that validators, miners, and other noncustodial service providers are not grouped together with custody providers.
Prominent figures in the blockchain sector, including Blockchain Association CEO Kristin Smith and Crypto Council CEO Sheila Warren, voiced their support for Emmer’s proposed legislation.
Additionally, Emmer threw his support behind Representative Warren Davidson’s SEC Stabilization Act, which aims to remove Gary Gensler from his position as SEC chair.
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Stuart Alderoty, Ripple’s chief legal officer and general counsel involved in the SEC vs. Ripple Labs case, has labeled the SEC’s most recent submission as a “contradictory shift,” asserting that it carries little weight.
In response to the SEC’s recent filing to bolster its interlocutory appeal, Alderoty took to X (formerly Twitter) to characterize the submission as yet another instance of a “hypocritical pivot.”
Within his statement, Alderoty pointed out what he perceives as inconsistencies in SEC Chair Gary Gensler’s stance, citing manipulative actions and a desire for increased regulation.
Alderoty emphasized that despite Gensler’s prior assertion that cryptocurrency regulations were clear and non-negotiable for the industry, the SEC now urgently seeks an appeal to address complex legal issues.
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Another attorney, James Filan, took a swipe at the SEC, mocking its newfound concern for conserving judicial resources and highlighting the SEC’s previous attempt to halt proceedings in the case.
Pro-XRP lawyer John Deaton noted that, to those unfamiliar with the case, Alderoty’s response might seem harsh; however, among those well-versed in the matter, it merely reflects the sentiments of the federal judge overseeing the proceedings.
In the Grayscale lawsuit, federal judges have criticized the SEC’s claims as “arbitrary and capricious.”
Furthermore, Ripple’s executive chairman, Chris Larsen, anticipates that the SEC’s strategy of enforcing regulations through legal actions may soon reach a conclusion in the near future.
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Australian fintech firm Block Earner is moving forward with its plans to launch a crypto-backed loans product, despite facing an upcoming court date with the financial regulator over alleged unlicensed financial product offerings.
This new crypto loan offering allows Australian crypto investors to leverage their digital assets as collateral for cash loans.
Similarly, SALT, a lending platform based in Colorado, provides crypto-backed loans to U.S. clients, while Coinbase previously offered a similar service to its U.S. customers before discontinuing it in May this year.
Block Earner’s initial rollout of this crypto loan product is slated for the end of September, initially supporting loans using Bitcoin as collateral.
The co-founder of Block Earner, Charlie Karaboga, has emphasized that these loan products have been meticulously designed to align with existing licensing models in a cautious manner.
Karaboga’s firm faced legal troubles last November when it was sued by the Australian Securities and Investments Commission for allegedly offering crypto-linked fixed-yield earning products without an Australian Financial Services (AFS) license.
At that time, Karaboga criticized the regulator for its lack of clarity and asserted that Block Earner had diligently developed products in line with ASIC’s guidelines.
Karaboga explained that Block Earner’s regulatory challenges and actions against competitor Finder appeared to be reactionary, possibly linked to the collapse of FTX in November.
However, Block Earner decided to close its “earn” products and refund all users in response to ASIC’s legal actions.
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Learning from past experiences, James Coombes, the head of business at Block Earner, stated that the new product launch had already obtained the necessary Australian credit license, distinguishing it from the earlier “Earn” product.
Looking ahead, Karaboga anticipates that rapid regulatory advancements in jurisdictions like Singapore, Hong Kong, and the United Kingdom will compel the Australian government to keep pace or risk losing its share of the crypto enterprise market.
He expects increased regulatory clarity in the next 12 to 18 months.
Karaboga emphasized that Australia’s high per-capita GDP and its early adoption of crypto technology have made its citizens prime targets for scammers.
Nonetheless, he believes that domestic regulators are pro-crypto and inclined to support innovation in the industry.
Binance Australia General Manager Ben Rose shares this view, expressing confidence that Australian regulators will favor crypto in the long run.
Furthermore, Coinbase’s recent listing of Australia as a primary expansion location outside the U.S. underscores the country’s growing significance in the crypto space.
Block Earner’s Federal Court hearing is scheduled for November, with a decision expected by January.
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The United States Financial Accounting Standards Board (FASB) has ushered in a new era for crypto accounting, aiming to dispel the “poor optics” that have haunted companies holding digital assets, according to Berenberg Capital analysts.
On September 6, FASB gave the green light to fresh regulations regarding cryptocurrency reporting and fair valuation on corporate balance sheets.
Mark Palmer, Berenberg’s senior equity research analyst, emphasized the benefits of these changes, particularly for companies like MicroStrategy.
Now, they can report their digital asset holdings each quarter without being burdened by impairment losses.
“The change should help MicroStrategy and other companies that hold digital assets to eliminate the poor optics that have been created by impairment losses under the rules that the FASB has had in place,” Palmer noted.
MicroStrategy, which started accumulating Bitcoin in August 2020, had incurred a substantial $2.23 billion in cumulative impairment losses.
Over the past three years, its quarterly reports often displayed significant impairment losses on its BTC holdings due to price fluctuations, inviting negative news coverage that inaccurately portrayed a decline in the company’s intrinsic value.
The newly approved rules, slated to become effective in 2025, empower crypto-holding firms to report their assets at fair value.
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Consequently, their quarterly reports will accurately reflect the current values of these assets, allowing for adjustments based on any price rebounds.
This marks a departure from the current scenario, where impairment losses must be recognized and remain unaffected by subsequent price recoveries.
MicroStrategy holds the distinction of being the world’s largest corporate Bitcoin holder, boasting 152,800 BTC as of July 31, valued at approximately $3.9 billion.
The new rules can be applied proactively, and Berenberg predicts that MicroStrategy will do just that, potentially valuing its BTC holdings at $8.8 billion by April 2024.
Berenberg’s note highlights MicroStrategy CEO Michael Saylor’s past remarks about the FASB’s “hostile” and “punitive” treatment of crypto, which he believed deterred more companies from embracing a Bitcoin investment strategy. Saylor now sees these accounting changes as a positive catalyst:
“A change in the accounting treatment would be a significant positive catalyst for the price of Bitcoin, as it would spur adoption by tech companies.”
In conclusion, FASB’s new rules promise a brighter and more accurate accounting landscape for companies holding cryptocurrencies, potentially fostering greater adoption within the technology sector.
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Casa, the cryptocurrency self-custody platform, has expanded the capabilities of its Ether vaults, enhancing user privacy.
Following the introduction of a multisignature Ethereum self-custody vault to its existing Bitcoin custody service in June 2023, Casa now permits users to employ an Ethereum pay wallet as a relay for their transactions.
This development marks Casa’s commitment to providing a secure environment for users to manage their ETH holdings, enabling up to five private keys to safeguard their assets.
Previously, Casa assisted users in their interactions between ETH vaults and the Ethereum blockchain through its proprietary Casa Relay.
While this facilitated various actions, including contract deployment and transaction execution, it exposed users’ Ethereum addresses to public scrutiny via blockchain scanning tools.
To address this privacy concern, Casa has introduced the ETH pay wallet, a single-signature alternative wallet that serves as a transaction relay for vault users.
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Casa’s CEO, Nick Neuman, emphasized that gas fees and transactions originating from an ETH pay wallet would not be linked to Casa on-chain, affording users a greater degree of anonymity.
This feature was in development prior to the launch of the ETH custody vault, demonstrating Casa’s proactive approach to enhancing its services.
Nick Neuman clarified that while the ETH pay wallet enhances on-chain privacy, it does not provide the anonymity associated with certain obfuscation tools in the cryptocurrency space.
All on-chain activity remains visible, but the key advantage is the removal of the connection to Casa on-chain.
Using the ETH pay wallet does entail additional steps compared to the Casa Relay, and users are responsible for covering gas fees with their pay wallet.
However, the added privacy benefit makes it an attractive option for those seeking to prevent the linkage of their on-chain ETH addresses to Casa.
Casa’s commitment to user privacy and security is evident in its continuous efforts to improve its self-custody offerings.
With the introduction of the ETH pay wallet as a relay, Casa users now have more control over their transactions and can enjoy enhanced privacy when managing their Ethereum assets.
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The race to establish the first Ethereum exchange-traded fund (ETF) in the United States has officially commenced, triggered by recent 19b-4 filings submitted by the Chicago Board Options Exchange (CBOE).
These filings effectively set the stage for the Securities and Exchange Commission (SEC) to make a crucial decision.
On September 6th, CBOE submitted two 19b-4 applications to the SEC, seeking approval for the listing of the ARK 21Shares Ethereum ETF and the VanEck Ethereum ETF on its BZX Exchange.
This marks a significant development, as it signifies the initiation of the countdown towards a decision by the SEC.
Bloomberg ETF analyst James Seyffart took to Twitter to highlight the significance of these 19b-4 filings compared to the previously submitted S-1 filings.
He pointed out that the clock is now ticking for the SEC to make a determination, and declared that the “Spot Ethereum ETF Race is officially on.” Seyffart estimated a final decision deadline around May 23, 2024.
In the financial world, a 19b-4 form is utilized by self-regulatory organizations, like stock exchanges, to request a rule change from the SEC.
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In contrast, an S-1 filing merely indicates a firm’s intention to list a specific investment product on a national exchange.
The SEC is now obliged to review the 19b-4 filings and make a decision, although it has the authority to delay its decision, as it has previously done with spot Bitcoin ETFs.
Notably, ARK Invest and 21Shares collaborated to submit an S-1 filing to the SEC on September 6th, whereas VanEck’s S-1 filing dates back to July 2021. Seyffart anticipates that more spot Ethereum ETF filings will emerge in the coming days.
Furthermore, it’s worth mentioning that on August 17th, the SEC signaled its intention to approve Ethereum Futures investment products.
Concurrently, various firms, including Grayscale Investments and BlackRock, are actively pursuing approval for spot Bitcoin ETFs, intensifying the competition in the ETF space.
In conclusion, the race for the first Ethereum ETF in the United States has officially kicked off with the 19b-4 filings, and market participants are eagerly awaiting the SEC’s decision, which will have significant implications for the cryptocurrency investment landscape.
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Ether’s price has experienced a remarkable 31.3% surge between March 10 and March 18, coinciding with the Federal Reserve’s intervention to address the Silicon Valley Bank’s insolvency with a $300 billion injection. Subsequently, Ether (ETH) has maintained a daily closing price exceeding $1,600.
However, concerns are now emerging regarding Ether’s ability to sustain this support level.
This skepticism arises amidst the bearish sentiment prevailing in the cryptocurrency sphere and declining metrics within the Ethereum network.
Over the last six months, the cryptocurrency landscape has been fraught with negative developments.
One prominent issue is the financial struggles of Digital Currency Group (DCG), the parent company of Grayscale mutual fund manager.
Worries are escalating that a portion of the $4.8 billion worth of ETH deposits in the Grayscale Ethereum Trust might be liquidated to address DCG’s debts.
Furthermore, two global heavyweights in the crypto exchange arena, Binance and Coinbase, are embroiled in legal disputes with the United States Securities and Exchange Commission (SEC).
Additionally, initial excitement surrounding the prospect of futures-based Ether exchange-traded funds (ETFs) in early August has waned, with these instruments differing from spot ETFs as they don’t involve actual ETH coins.
In addition to these unfavorable market conditions, Ethereum’s on-chain metrics reflect a stagnation in demand, both in terms of ETH investments and smart contract transactions.
The number of Ethereum addresses holding at least $1,000 worth of ETH deposits is at its lowest level in nearly six months, despite Ether’s peak price of $2,130 in mid-April.
Part of the waning investor interest is attributed to Ethereum’s average transaction fee remaining above $4 for the past six months.
Consequently, despite fluctuations in network staking metrics, there seems to be no increase in the total number of investors when using the $1,000 threshold as a proxy.
Furthermore, data on decentralized application (DApps) activity on the Ethereum network supports the idea of a lack of new users.
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Even when excluding the significant 60% decline in the Uniswap NFT Aggregator, the average number of active addresses across the top Ethereum network DApps has decreased by 4% compared to the previous month.
From cryptocurrency games to decentralized exchanges, nonfungible token marketplaces, and Web3 services, all sectors have seen a decline in active users, according to DappRadar.
Regarding token activity on the network, with the exception of stablecoins and Wrapped ETH, no project has recorded more than 13,000 unique receiver addresses over the past week.
This analysis underscores the current constraint of Ethereum’s network by its relatively high transaction fees, limiting active user numbers.
Without an increase in network activity, catalysts for a price recovery, such as potential network upgrades and cost reduction or improved user privacy implementations, remain elusive.
Furthermore, recent developments have disappointed Ethereum enthusiasts.
Visa has integrated Solana blockchain settlement capabilities, and Coinbase has announced plans to assist partners in converting old USDC versions to the new format, following Circle’s USD Coin (USDC) introducing native accounts and transfers on the Base chain.
Rune Christensen, co-founder of MakerDAO, has even proposed developing the project’s native chain based on Solana’s codebase, despite its previous affiliation with Ethereum.
Given the overall bearish sentiment in the cryptocurrency market, including legal challenges faced by exchanges and dwindling interest in cryptocurrencies according to Google Trends data, the likelihood of Ether’s price dipping below the $1,600 support level has increased.
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