Thursday, 22 June 2023

Market Summary

Market Summary 22 June 2023

Bitcoin Price: US$ 29,993.89 (+5.96%)
Ethereum Price: US$ 1,889.11 (+5.42%)  


Circle Internet Financial, the stablecoin issuer behind USD Coin (USDC), has restarted its purchases of U.S. Treasury bills as reserve assets for its $28 billion stablecoin. Following the U.S. debt ceiling standoff last month, Circle had divested all its holdings. The Circle Reserve Fund (USDXX), managed by BlackRock, has begun accumulating direct holdings of Treasuries while also maintaining repurchase agreements as part of its reserves. This move comes after Circle reshuffled the backing of USDC to safeguard against potential fallout if the U.S. government failed to raise its borrowing capacity and defaulted on its debt. In a separate development, Bitcoin and Ether find themselves outside the criteria of the Howey Test, which determines whether an asset is a security. The four-pronged test evaluates factors such as the investment of capital, common enterprise, expectation of profit, and reliance on the efforts of others. Digital assets, including cryptocurrencies, are subject to scrutiny by the SEC if they meet these criteria and are associated with a central entity or intended for capital raising. However, Bitcoin and Ether exhibit distinctions in meeting the third and fourth prongs, possibly setting them apart from other tokens. Meanwhile, MakerDAO, the decentralised finance protocol and stablecoin issuer, has purchased an additional $700 million worth of U.S. Treasuries, bolstering the reserve assets backing its DAI stablecoin. This acquisition aligns with MakerDAO’s strategy of diversifying its asset holdings, which includes a focus on traditional financial assets like government bonds. The move is part of MakerDAO’s ongoing restructuring, involving the establishment of smaller autonomous units called SubDAOs and investments in yield-generating real-world assets to enhance protocol revenue in a period of modest demand for crypto lending.

Bitcoin has surpassed the $30,000 mark once again, buoyed by optimistic market sentiment driven by traditional finance (TradFi) players venturing further into the cryptocurrency space. The recent surge, with Bitcoin gaining over 10% in the last 24 hours, coincides with the filing of spot Bitcoin ETF applications by industry giants like BlackRock, Invesco, and WisdomTree. Additionally, the EDX crypto exchange, supported by major TradFi participants including Fidelity Digital Assets, Charles Schwab, and Citadel Securities, launched this week, offering several tokens, including Bitcoin, Ether, Bitcoin Cash, and Litecoin. The news has also sparked a rally in Bitcoin Cash, which saw a 25% increase. In another development, Deutsche Bank announced its application for a digital asset custody license in Germany. Furthermore, Valkyrie, a cryptocurrency fund manager, has joined the rush by filing for a Bitcoin spot ETF, adding to the growing number of financial firms seeking approval from the U.S. Securities and Exchange Commission (SEC) for such ETFs. Valkyrie already operates Bitcoin futures ETFs and the Valkyrie Bitcoin Miners ETF. Lawyers representing Binance, Binance.US, and CEO Changpeng “CZ” Zhao have filed a motion alleging that the SEC made misleading statements regarding an ongoing securities lawsuit. The motion seeks the SEC’s compliance with applicable rules of conduct and aims to prevent the regulator from issuing statements that could impact court proceedings. The legal teams argue that the SEC lacks evidence of any misuse or dissipation of customer assets and assert that the SEC’s press release may introduce unwarranted confusion and mislead the market and potential jurors.

A bipartisan group of US lawmakers has introduced the National AI Commission Act, a bill aimed at establishing a commission to study and regulate artificial intelligence (AI) in the country. The act proposes the creation of a national body that will bring together experts, government officials, industry representatives, and labor stakeholders to develop a comprehensive framework for AI regulation. The commission’s objective is to address potential risks associated with AI technology and provide recommendations for effective regulation. Meanwhile, during a House committee hearing, Federal Reserve Chair Jerome Powell acknowledged stablecoins as a form of money and expressed the Fed’s interest in having a robust federal role in overseeing stablecoins. Powell emphasised the importance of avoiding excessive private money creation at the state level. Additionally, the founders of Three Arrows Capital, a now-bankrupt hedge fund, have launched a new venture capital fund called 3AC Ventures. The partnership with Open Exchange aims to invest in projects within the OPNX ecosystem that contribute to a decentralised future.




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