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Policy & Regulation: U.S. SEC Issues Guidance on Crypto Asset Safekeeping and Accounting

(MT Newswires) -- The U.S Securities and Exchange Commission (SEC) has noted an increase in the number of U.S. listed companies holding cryptocurrencies, enabling customers to transact in crypto-assets while maintaining the critical cryptographic information needed to hold and safeguard the assets.

The securities regulator has said such companies should account for those assets as a liability on their balance sheet and disclose the related risks to investors. SEC’s Chairman Gary Gensler said:

“Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.”

The White House previously noted an increase in the total market capitalization of non-state digital assets from $14 billion in November 2016 to approximately $3 trillion in November 2021, according to CoinGecko pricing. The “dramatic growth” in markets for digital assets has:

“Profound implications for the protection of consumers, investors and businesses, including data privacy and security; financial stability and systemic risk; crime; national security; the ability to exercise human rights; financial inclusion and equity; and energy demand and climate change.” as expressed by the White House.

SEC’s guidelines will apply to many listed entities such as cryptocurrency exchanges and traditional firms like banks and retail brokers that increasingly offer cryptocurrency services besides holding digital assets on behalf of clients.

Since the existing accounting rules for safeguarding traditional client assets don’t explicitly mention protecting crypto assets, there isn’t a standard method for treating digital assets. SEC cited “significant” technological, legal, and regulatory risks in safeguarding digital assets in their guidance. They ought to be reflected as a liability on companies’ balance sheets. SEC wrote:

“The technological mechanisms supporting how crypto-assets are issued, held, or transferred, as well as legal uncertainties regarding holding crypto-assets for others, create significantly increased risks...including an increased risk of financial loss.”

The proposed changes will drastically affect financial disclosure and accounting practices, especially for leading publicly traded platforms. For example, according to the Wall Street Journal, Coinbase Exchange reported $21.3 billion in assets and liabilities at the close of 2021 out of a whopping $278 billion worth of crypto assets it held on behalf of customers.

Policy & Regulation: APRA Aims to Implement Crypto Regulation in Australia by 2025

(MT Newswires) -- The Australian Prudential Regulation Authority (APRA) has laid out a policy roadmap for the regulation of crypto-assets, with plans for execution by 2025. In a letter by Chair Wayne Byre, APRA instructed regulated entities who are undertaking crypto-related activities to engage with their supervisory agencies, while outlining risk management measures and standards specific to a variety of cases.

APRA plans to conduct consultations on requirements for the financial treatment of crypto-assets in 2023, with a draft being released in the next few months. Its roadmap anticipates that activities facing new regulations will include investment in crypto-assets, lending linked with crypto-assets, issuance of crypto-assets, and providing services associated with crypto-assets for customers.

APRA will advance requirements for operational risk management when engaging in crypto activities in areas such as control effectiveness, business continuity and service provider management. More specifically, the regulator will ask entities to provide robust risk management controls with clear accountabilities and reporting.

This means that entities must conduct comprehensive risk assessments before engaging in crypto-asset activities, whilst also implementing plans to mitigate against risks associated with dealing in crypto.

Furthermore, any business related to stablecoins will face increased security as the APRA is considering incorporating them into the existing framework for store-value facilities - a broad term for pre-payment to or storage of the value of money on a payment facility.

This comes as 21Shares announced that it will launch Australia's first spot exchange-traded products this month, one investing directly in Bitcoin (BTC) and the other in Ethereum (ETH). Both funds will be listed on the Cboe Exchange with prices being tracked against the Australian dollar.

Overall, Australia has the third-highest rate of digital asset adoption in the world, ahead of Indonesia and Hong Kong, with a staggering 18% of the population owning crypto, according to Finder. Finder’s Cryptocurrency Adoption Index measures the growth of crypto adoption globally through a survey of more than 41,000 individuals across 22 countries.

Corporate Adoption: Wall Street’s Top Execs are Embracing Crypto and Blockchain Technology

(MT Newswires) -- Major financial institutions like BlackRock, JPMorgan Chase and Goldman Sachs are hinting at plans to embrace cryptocurrency and blockchain technology on a wider scale, as outlined in their new quarterly results announcements.

BlackRock’s CEO, Larry Fink said during a company earnings call that the firm is effectively studying digital assets and their associated ecosystem, including crypto-assets, stablecoins, tokenization and permissioned blockchains. The earnings conference call was held on April, 13 this year and pertained to the company’s first quarter financial results.

Similarly, during an earnings conference call on April, 13 this year, JPMorgan’s CEO, Jamie Dimon highlighted the company’s goals for building out “blockchain-type things” in relation to its payments business.

Dimon added that more details are set to be revealed during JPMorgan’s investor day, which will be held on May 23 this year.

Dimon, who had once labeled Bitcoin (BTC) as worthless, first expressed a crypto-positive sentiment in his annual shareholder letter, detailing JPMorgan’s financial technology efforts and plans to use blockchain to move tokenized U.S. dollar deposits with the JPM coin. JPM Coin, the first cryptocurrency created by a major U.S. bank, is a digital coin designed to make instantaneous payments using blockchain technology.

"Decentralized finance and blockchain are real, new technologies that can be deployed in both public and private fashion, permissioned or not," Dimon wrote.

Another top U.S. investment bank seeking to embrace crypto and blockchain technology is Goldman Sachs. Its CEO, David Solomon expressed during a post-earnings call on April 14 this year that:

“Many central banks are looking at digital currencies and working to apply this technology to the local markets and determine the longer term impact on global payment systems. There is also significant focus on cryptocurrencies like Bitcoin where the trajectory is less clear as market participants evaluate their possibility as a store of value”.

As such, Goldman Sachs is looking for ways to expand its capabilities and support clients’ needs within current regulatory guidelines. Solomon emphasized that the bank cannot own or trade Bitcoin directly.

Last month, Goldman Sachs became the first major U.S. bank to execute an over-the-counter crypto transaction facilitated by the crypto financial-services firm Galaxy Digital Holdings, which was founded by ex-Goldman exec Michael Novogratz.

Breaking News: Terra Announces Plans to Bring BTC Reserves to $10 Billion, Sending LUNA Skyrocketing

(MT Newswires) -- Terra, an open source blockchain protocol that specializes in fiat-backed stablecoins, has announced plans to accumulate $10 billion worth of Bitcoin (BTC) to add to the project’s reserves.

The Luna Foundation Guard (LFG), a non-profit organization mandated to build reserves supporting Terra’s dollar-pegged stablecoin UST, has already bought $1.6 billion in Bitcoin since January this year.

The founder of Terra, Do Kwon, has expressed his ambition to turn the project, which is already one of the largest cryptocurrencies by market capitalization, into one of the largest single holders of Bitcoin in the world.

This goal is steadily becoming a reality with LFG acquiring around $125 million BTC each day, starting from March 22 to March 25 and then snapping up an astonishing 2943 BTC (worth approximately $139 million) in just a single day on March 30.

In fact, the project’s official Bitcoin address shows that Terra is now the owner of over 30,000 BTC - a reserve which Kwon hopes to cumulatively build to $10 billion.

As a result, Terra’s native staking and governance token, LUNA, has been hitting new highs week after week. On March 29 this year, LUNA’s price spiked by more than 10%, hitting a record high above $106.

LUNA’s latest peak on April 5 comes just shy of $120, leading it to become one of the top gainers of the week.

As for the BTC reserves, Kwon has stated that the funds will be used for a decentralized forex reserve and to backstop short-term UST redemptions LFG’s Bitcoin buying spree has now put Terra ahead of U.S. electric car maker, Tesla which holds $1.26 billion worth of BTC on its balance sheets.

In August 2021, Terra went live on Wormhole V2, an interoperability protocol designed to provide access to liquidity across chains, and then in October that same year, Chainlink price feeds were integrated on Terra’s testnet, providing developers with pre-built oracle solutions.

As it currently stands, LUNA ranks seventh in the list of cryptocurrencies worldwide by market capitalization at $38 billion.

Breaking News: Crypto Exchange Kraken Shuts San Francisco Global Headquarters as Crime Levels Spike

(MT Newswires) -- Jesse Powell, the CEO of Kraken, which is one of the largest cryptocurrency exchanges based in the United States, said in a statement that the company has closed its head office at 548 Market Street in San Francisco “after numerous employees were attacked, harassed, and robbed on their way to and from the office.”

In the statement, a copy of which was initially tweeted by San Francisco-based political commentator Richie Greenberg, Powell stated:

“We shut down Kraken’s global headquarters on Market Street in San Francisco after numerous employees were attacked, harassed, and robbed on their way to and from the office.”

According to Powell, San Francisco is a city that suffers with large-scale public safety concerns, drug abuse, homelessness, and crime, all of which are underreported because “it is so commonplace.” Powell opined that District Attorney Chesa Boudin wasn’t doing enough to criminalize and penalize law offenders. Powell went on:

“San Francisco is not safe and will not be safe until we have a DA who puts the rights of law-abiding citizens above those of the street criminals he so ingloriously protects.”

The decision by Kraken comes hot on the heels of a similar announcement in 2021 by Coinbase, a company which has expressed its intention to relocate from San Francisco come 2022. The firm never mentioned crime as a reason for its planned departure but attributed it to a commitment to creating a decentralized workplace. It would mean that just like Binance, which has operated as a remote global company since its launch, Coinbase won’t have a head office in a specific location.

The Twitter and Reddit communities responded to the move by Kraken by sharing some dark anecdotes about working in San Francisco. They averred that the soaring rents, averaging $3,000 per month, had caused a sharp rise in homelessness. The situation has deteriorated to the extent that there are mobile apps like “Snap Crap” that help residents navigate the city without risking stepping on human waste.

For a city that has a high concentration of crypto investments, according to a March 18, 2020 coin tracker report, Kraken’s decision and the social crises in San Francisco could affect the city’s hold on crypto, all while other U.S. cities and states have made their commitments to attracting crypto capital.

Influencers & Social Buzz: Robinhood’s CEO Believes That Dogecoin Could Become the Future Currency of the Internet

(MT Newswires) -- Robinhood’s CEO, Vladimir Tenev has publicly stated that he believes Dogecoin (DOGE), the dog-themed cryptocurrency that was started as a way to satirize the momentum surrounding cryptocurrencies, could become the future currency of the internet.

Regarded by some as the world’s most valuable parody, Dogecoin has achieved crypto stardom largely due to a push from Tesla’s CEO, Elon Musk who famously tweeted in April 2019 that Dogecoin may be his “fav cryptocurrency”.

The meme-based coin currently ranks 11th in the list of cryptocurrencies worldwide by market capitalization at $19.6 billion, according to CoinMarketCap.

In a thread of 12 Twitter posts, Tenev outlined what steps need to be taken to transform the memecoin into a usable asset for everyday payments and transactions on the internet. He drew attention to Dogecoin’s low transaction fees, which average at roughly $0.003 per transaction, beating the 1-3% network fees that major card networks tend to charge.

However, Dogecoin’s block size and block time are two of the main areas that require improvement if the cryptocurrency is to become widely adopted, Tenev noted.

More specifically, he stated that block time, which refers to the time between successive blocks being added to a chain to verify a transaction, ought to be fast enough that the transaction can be recorded in the next block in less time than it takes to pay at a point of sale terminal.

Dogecoin currently has a one MB block size and a one minute block time, meaning that project’s total throughput stands at around 40 transactions per second (TPS). Tenev argues that, at one minute, Dogecoin is still far outside the realm of becoming an effective means of payment. However, data from Cryptwerk does show that over 2000 merchants currency accept DOGE as a form of payment.

Tenev’s panacea, as outlined in his social media posts, is to increase the size of Dogecoin’s blocks or the amount of data stored in each block, thus potentially improving transaction speeds. Developers should also aim for a 10-gigabyte block over time, he added.

Notably, Robinhood’s users grew from over 500,000 in 2014 to 22.7 million in 2021, with net revenue reaching $91 million by the second quarter of last year. Still, the trading app lost $1.4 billion during the first quarter of 2021 as a result of emergency fundraising-related losses resulting from a public scandal that saw the app freeze trades for GameStop at the start of last year.

Crypto Explainer: What Is an NFT?

(MT Newswires) -- The NFT craze witnessed by crypto enthusiasts last year laid the groundwork for accelerated growth within the sector. The world of non-fungible tokens is filled with untapped potential. To understand what NFTs or non-fungible tokens are, we need to dig deeper into the basic structure of a blockchain.

An NFT is a unit of data that is stored on a blockchain, which is more like a digital ledger. This unit of data can come in many media forms like photos, videos, and audio. NFTs differ from cryptocurrencies which are fungible in nature.

NFT ledgers claim to represent a public certificate of authenticity or proof of ownership. However, the legal status of NFTs and ongoing regulatory uncertainty limits their usage. Some blockchain-based NFT collections such as World of Women offer full intellectual property rights over the respective digital images, enabling purchasers to license them out to whomever they want.

However, the concept of ownership ensures that for a given NFT, there is only one owner.

How do NFTs Work?

NFTs can be used to represent digital art, videos, images, and more. We have seen celebrities like Snoop Dogg release albums in the form of NFTs, and even TIME and Forbes have confirmed the launch of their NFT collections.

The Ethereum network holds a majority of NFT collections, followed by Binance Smart Chain and Solana Network. When an NFT collection is set for release, the valuable information stored in them drives their prices.

The price of each NFT is set by the market and hence, they are purchased and sold like any artwork via digital marketplaces.

In the past few years, the use cases for NFTs have expanded exponentially. They are used as in-game items and offer proof-of-ownership for collectors.

NFT gaming works by turning in-game items into NFTs that are then minted by the players using the native cryptocurrency of the game. Moreover, many such games have in-game marketplaces where players can easily buy and sell NFTs. These games are termed as play-to-earn games.

When someone buys an NFT, they are entitled to ownership of the asset, but it can always be traced back to its creator. With every transaction that occurs, the creator gets a cut while the digital marketplace takes a small fee and the remainder goes to the current owner.

What Makes NFTs Unique?

NFTs are unique because they represent proof of ownership and are non-fungible in nature. Take the example of Bitcoin. One BTC can be seamlessly exchanged for 1 BTC on any cryptocurrency exchange. There are parallels in the technology behind both Bitcoin and an NFT, but the usage of that technology differs.

If someone buys an NFT called ‘X,’ he cannot exchange it with another NFT called ‘Y.’ While 1 BTC can be exchanged for 1 BTC at any time, making its value fungible, NFTs are not interchangeable in the same way. This idea is best depicted by a baseball card collection. One card cannot be exchanged with another because those two hold different values.

Another important factor to note is that NFT images are files that can be copied or saved but they have been popularized because they aim to provide the emotion of owning something and give the owner digital bragging rights. While you can say that you have saved an NFT on the OpenSea NFT marketplace by right clicking it, it still doesn’t make you the owner and the copied image won’t sell for a dime on any marketplace.

There is another interesting aspect here which comes from the point of view of artists and art collectors. Digital artists have found a safe haven in the NFT industry as they can tap into new streams of revenue through the commodification of their creative work. With each NFT sale, they will receive recognition and if the popularity of the NFT skyrockets, the artist will also see his career achieve new horizons.

Summary

NFTs represent a whole new asset class within a sector that still needs regulation. The world of NFTs resembles the Wild West in the sense that scams are prevalent. However, there are many mainstream projects with huge potential that represent the next age of artwork. While governments around the world are still discussing regulation, NFTs continue to thrive as demand for these non-fungible tokens remains high.

Go Digital - Weekly Roundup: April 10-17

(MT Newswires) -- Our weekly wrap up for the crypto market will give you insight into all the biggest stories for this week, helping you keep record of all the important news and movements on cryptocurrencies that are transforming the global financial system.

The weekly candle for Bitcoin (BTC), the world’s biggest cryptocurrency, opened at $42,100 while the lowest price witnessed for BTC was $39,200, as data from CoinMarketCap shows. Overall, BTC fell nearly 5% in the last 7 days.

Weekly Digest

Let’s take a deep dive into all of the crucial news from this week:

Binance has Been Awarded In-Principle Approval to Operate as Crypto-Broker Dealer in Abu Dhabi

Binance, the world’s biggest cryptocurrency exchange, has been awarded an in-principle approval to operate as a crypto-broker in Abu Dhabi. The Financial Services Regulatory Authority (FSRA), which is located in the Abu Dhabi Global Market (ADGM) provided the green signal to the crypto exchange. After Bahrain and Dubai, this is the third regulatory approval for Binance in the Middle Eastern region.

Block and Blockstream are Partnering with Tesla to Build a Solar-Powered Bitcoin Mining Facility

Block, a digital payments company previously known as Square, and Blockstream, a blockchain technology company, have partnered with Tesla, an automotive electric vehicle firm, to create an off-grid solar-powered Bitcoin mine in West Texas which will be powered by Tesla’s 3.8-megawatt Solar PV array and its 12 megawatt-hour Megapack.

Coinbase Disables UPI Payment Method in India 3 Days After Trading Service Launch

Just days after integrating Unified Payments Interface (UPI) payments on its app in India, the biggest crypto exchange by trading volume in the USA, Coinbase, disabled this feature. Coinbase further added:

“As of April 10, buys are currently disabled due to an ongoing issue we’re experiencing with the UPI system. We’re working hard to resolve the issue, and we advise that you check your account periodically to see if the issue is fixed. Note that we don’t support another payment method to buy crypto at this time. Thank you for your patience and understanding.”

New York Senate Authorizes NYDFS to Assess Cryptocurrency Companies

The upper house of the New York State Legislature, the New York Senate aims to ramp up the Department of Financial Services’ (NYDFS) efforts to regulate the crypto space. The Senate passed the FY23 budget and as per the provisions in the budget, the NYDFS will now be able to formally assess companies within the industry.

Ethereum Co-Founder Vitalik Buterin Donates $5 Million in ETH to Ukraine

Ethereum co-founder Vitalik Buterin has donated a whopping $5 million in Ether (ETH) to Ukraine. Buterin donated around $2.5 million in ETH to Aid For Ukraine, followed by another $2.5 million to Unchain Fund.

Mastercard Enters the Metaverse with 15 NFT-Related Trademark Applications

Mastercard has filed for 15 NFT and metaverse-based trademarks, as per a tweet from U.S. trademark attorney Mike Kondoudis. As outlined in one of the trademark filings, Mastercard aims to provide virtual payments in the Metaverse and “other virtual worlds.”

Binance Partners with Station F to Open a $108 Million Web 3 Space in France

Binance is all set to open its space in STATION F, the world’s largest startup campus, in Paris. This is part of the company’s initiative, Operation Moon which was announced by the founder and CEO of Binance, Changpeng Zhao. “

Fortnite creators Epic Games raise $2B from Sony and KIRKBI

Epic Games, one of the biggest publishers in the gaming industry and the firm behind the Fortnite game, has raised $2 billion from Sony and LEGO’s parent company, KIRKBI. The firm is now valued at $31.5 billion. The funds will be used to create a metaverse where “players can have fun with friends, brands can build creative and immersive experiences and creators can build a community and thrive.”

Socios.com Signs Historic Multi-Year Partnership With 13 NFL Franchises

Socios.com, a fan engagement and rewards app, has signed multi-year partnerships with Super Bowl champions Los Angeles Rams, San Francisco 49ers, Cleveland Browns, Tampa Bay Buccaneers, LA Chargers, Washington Commanders, Miami Dolphins, Philadelphia Eagles, Atlanta Falcons, New York Giants, Baltimore Ravens, Pittsburgh Steelers and Chicago Bears.

Japan’s Largest Social Media App has Launched an NFT Marketplace

Japan’s largest social media application, LINE, has confirmed the launch of LINE NFT , an NFT marketplace which will initially offer 40,000 digital collectibles to its 90 million users. LINE app will allow users to buy and sell these NFTs via the Bitmax wallet.

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