The biggest crypto news and ideas of the day |
Were you forwarded this newsletter? Sign up here. Don't want this newsletter? Unsubscribe |
|
|
Founded in 2018, Hex Trust is a leading digital assets financial service provider, delivering custody, staking, markets and investment solutions to over 300 institutional clients, including banks, funds, exchanges, financial institutions, protocols, brokers, and foundations.
With a presence in Hong Kong, Singapore, Dubai, France, and Italy, Hex Trust is recognized for delivering secure, regulated, and compliant solutions on institutional-grade infrastructure.
Get access to our comprehensive and regulated suite of services built on our proprietary and fully-integrated infrastructure.
|
|
|
Japan Tightens Disclosures |
Japan's Financial Services Agency (FSA) is considering classifying crypto assets as financial products similar to securities in a move to enhance investor protection by requiring businesses to disclose more information, Nikkei reported.
The FSA is conducting a closed study session with experts to asses current regulations. Once that's complete, the agency plans to announce regulatory reforms by June, Nikkei said.
Any reforms could may enhance the attractiveness of spot cryptocurrency exchange-traded funds (ETFs), should they become available. In August, the boss of the FSA said “cautious consideration” needs to be given to any decision to approve crypto-related ETFs. |
|
|
Eric Council Jr., the Alabama man charged with hacking the X account of the U.S. Securities and Exchange Commission (SEC) to falsely post the agency had approved bitcoin exchange-traded funds, is set to plead guilty in the case. A "Consent Order of Forfeiture," filed in D.C. federal court shows Council has agreed to plead guilty to Conspiracy to Commit Aggravated Identity Theft and Access Device Fraud, and will forfeit $50,000 in proceeds from these offenses. Council, according to the prosecution, used a fake ID to trick a phone store employee into helping him and co-conspirators access a device with access to the SEC’s X account. Judge Amy Berman Jackson has set Council's sentencing for May 16. The case stems from the then highly anticipated SEC approval of spot bitcoin ETFs, with the security breach leading to a post shared on the agency’s account one day before the actual approval. At the time, the approval of these funds was eagerly anticipated as these were widely expected to bring in significant flows from institutional investors. The false X post sent the price of bitcoin briefly surging. The FBI arrested Council in October for hijacking the SEC’s X account. |
|
|
Goldfinch Prime: A New Leader In The Emerging RWA Opportunity The tokenized real-world asset (RWA) market is experiencing a rapid surge, with VanEck projecting it will exceed $50 billion by 2025. In traditional finance, private credit loans provide non-bank financing, mainly to small and medium-sized enterprises (SMEs). This lending process has now evolved in the RWA space, creating on-chain private credit secured by real-world collateral. Continue reading |
|
|
Crypto-Friendly CFPB and OCC |
The crypto industry can likely look forward to two more agencies falling into line on its digital assets policy aims: the Office of the Comptroller of the Currency, which is one of the chief U.S. banking regulators, and the Consumer Financial Protection Bureau, where the lights are effectively being shut off.
The sector's dicey relationship with U.S. banking can be expected to be further mitigated with the arrival of a new stand-in chief at the OCC, Rodney Hood, the crypto-friendly former chairman of the U.S. credit-union watchdog. As with other key financial oversight positions, President Donald Trump has tapped somebody who embraces cryptocurrency technology. When running the credit-union agency in 2021, he'd said, "Cryptocurrency needs to be a part of the credit union system. If you don’t have it, it's going to hurt your ability to compete with other financial services providers." Substituting banks for credit unions in that sentiment could mean a rethinking of the OCC's guidance to banks in 2021 that contributed to the rift between crypto firms and U.S. banking services.
The main thrust of the 2021 guidance from the OCC, Federal Deposit Insurance Corp. and the Federal Reserve was that banks shouldn't get into crypto business without getting a formal sign-off from their regulators that the products or services could be handled without risking the institution. But the industry has argued that the resistance from the agencies went even farther than that and pushed banks away from digital assets entirely. Trump's new acting head of the FDIC, Travis Hill, has already said he's ordered "a comprehensive review of all supervisory communications with banks that sought to offer crypto-related products or services" with the aim of opening a path for banks to engage with digital assets.
With the removal, also, of the Securities and Exchange Commission's crypto accounting policy that effectively piled additional capital requirements on banks that wanted to handle crypto for clients, the banking impediments for digital assets may be falling away. At the Consumer Financial Protection Bureau, the watchdog established after the global financial meltdown in 2008, is seeing its very existence under assault from Republicans who have long had issues with the agency's fights with corporations. Trump installed his budget chief, Russ Vought, as the acting head of CFPB, and he's moved to choke off its financing and cripple its operations.
A cheer went up from certain figures in crypto, including Brian Armstrong, the CEO of Coinbase. His company was a frequent subject of consumer complaints logged on the agency's database — almost 8,000 at last count. Armstrong said in a post on social media site X that the agency "should be deleted, " calling it an unconstitutional "activist organization that has done enormous harm to the country." (Though the U.S. Supreme Court ruled last year that the CFPB's operation doesn't run afoul of the Constitution.) Apart from what past leadership saw as its duty to protect consumers harmed by crypto firms, the agency was also seeking some additional policy authority over the industry. In January, its now-dismissed previous director pushed for a stablecoin regulation that the industry felt was an overreach that also threatened self-hosted wallets. But the proposal is unlikely to move further now that the agency's activity has been frozen in the Trump administration.
The administration's CFPB attack has drawn resistance from Democratic lawmakers, including Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, and Representative Maxine Waters, who occupies that same role at the House Financial Services Committee.
"Elon Musk and the guy who wrote Project 2025, Russ Vought, are trying to kill the Consumer Financial Protection Bureau," Warren said in a video released on Monday, criticizing Trump's administration for its pursuit of the consumer agency. "This is the payoff to the rich guys who invested in his campaign and who want to cheat families — and not have anybody around to stop them."
Democrats intend to hold a rally at the CFPB later Monday afternoon.
Also on Monday, Waters released the text of the stablecoin bill she'd worked out with her previous Republican counterpart on the committee, former Chairman Patrick McHenry. This more bipartisan compromise effort, though, isn't what's currently on offer from Republicans. However, if both chambers eventually seek a bipartisan agreement on stablecoins that can comfortably pass muster in the Senate, it may have to address Democrats' concern about giving the states a high level of supervisory authority over stablecoin issuers. |
Base Team Refutes Eth Allegations |
A member of layer 2 scaling solution Base has refuted rumors that its sequencer Coinbase has been selling ether (ETH).
"Coinbase has accumulated $300M+ in ETH, which is more than 2x all of Base's ETH earnings over time," Base member Kabir.base.eth said on X Sunday. "Base and Coinbase have and continue to hold ETH and publicly disclose our long term holdings (100K ETH+, $300M+)." Kabir added that Base uses offchain custody for security and audit reasons (that's why funds move to Coinbase), stressing that the Ethereum layer 2 solution earns and spends as much as possible in ETH, using it for Layer 1 costs and granting support. CoinDesk reached out Coinbase for a comment on the matter.
Kabir's comments came after pseudonymous observer Santisa said Base has been transferring all sequencer fees to Coinbase since the debut, and the sequencer has likely sold these coins. Coinbase is supposedly the only sequencer node on Base that sequences and finalizes transactions in a specified order and improves transaction throughput (speed). Coinbase charges a fee, collected in ETH, for this sequencer role.
Santisa's take echoed Sonic Labs founder Andre Cronje's concerns about the use of centralized sequencers in layer 2 solutions that lead to profit models that don't fully align with the broader Ethereum values.
In essence, while Layer 2 scaling solutions earn a substantial revenue from transaction fees, they send a small portion of that to the Ethereum mainnet for data availability and security purposes. In other words, most fees collected in ETH is either retained or offloaded into the market, reducing the fee revenue and associated ETH burning on the mainnet. That has an adverse impact on ETH's supply.
"L2s are why Ethereum is inflationary again. SCALE ETHEREUM. They can get the Sonic tech for free. 0 charge. Will 1000x their throughput," Cronje said on X.
|
The Takeaway: Make Stablecoins Bipartisan |
By Kirsten Gillibrand, U.S. Senator for New York For the past century, the U.S. has reigned as the economic superpower of the world. The key to this sustained economic might is a regulatory environment that encourages and enables technological innovation. From semiconductors to personal computers to internet 1.0 and 2.0, U.S. companies have led in developing cutting-edge technologies because our country empowers its builders and creators. Unfortunately, when it comes to Web3 – the next generation of the internet built on blockchain, digital assets, and cryptocurrencies – we are trailing and are at risk of falling further behind. In 2023, the European Union passed comprehensive cryptocurrency regulation [americanbar.org], and numerous meaningful provisions went into effect this past summer. China’s central bank has been promoting its digital yuan [forbes.com], which threatens the U.S. dollar’s role as the global reserve currency. The U.S. is just watching, while our opponents move pieces on the chessboard. It is absolutely essential to our country’s future that the U.S. enact clear and sensible cryptocurrency regulations that foster innovation and keep Web3 jobs within our borders, protect consumers, and maintain the dominance of the U.S. dollar. We should start with stablecoins. For newcomers, stablecoins are cryptocurrencies whose values are pegged to national currencies or high-quality financial assets. This gives them stability and enables them to play a crucial role in the digital economy, where they combine the transaction speed and low cost of digital assets with the price stability of traditional reserve currencies. The U.S. is already playing a major role in this space. According to one report, more than 95% of stablecoins are “linked to the U.S. dollar.” The many use cases of stablecoins have earned them support from policymakers across the ideological spectrum. Conservatives value their low-cost, frictionless and instantaneous payment abilities, which can lower costs on merchants and consumers and spur startups and economic activity. Progressives appreciate their use in lowering the cost of remittances and reaching the underbanked and underserved, and their ability to increase access to basic financial services. It must be acknowledged that, as with any new technology, stablecoins have challenges. Some stablecoins, backed by complex algorithms instead of stable reserve currency, have collapsed due to design flaws. Additionally, unlike bank deposits, stablecoins are not FDIC insured, creating risks should the issuer go bankrupt. While concerns have been raised about money laundering, stablecoins aren’t misused for this purpose any more than traditional cash. But for the public to have confidence in stablecoins, and for businesses to adopt them, we need clear regulations to provide consumer protection, to govern issuers and to guard against money laundering. The bipartisan Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, which I introduced Feb. 4 alongside Senators Bill Hagerty, Cynthia Lummis, and Tim Scott, will address these challenges, and create a clear regulatory environment that enables the cryptocurrency environment to thrive. It protects consumers by holding stablecoin issuers to strict reserve requirements, requiring them to maintain one-to-one reserves in cash and cash equivalents. The bill prohibits the issuing of unbacked, algorithmic stablecoins, the collapse of which have led to substantial losses. To address their use for illicit purposes, it requires approved stablecoin issuers to comply with U.S. anti-money laundering and sanctions rules. Finally, the bill clarifies rules around conservatorship and procedure should a stablecoin issuer experience insolvency. While this bill will undoubtedly be tweaked as it moves through Congress, it has already received input from a wide swath of stakeholders, including industry participants, academic experts and federal regulators. It’s a true bipartisan effort that will empower innovators and builders while simultaneously rooting out bad actors. Laying the groundwork for the next century of American exceptionalism is a mission that should unite us all, and positioning the United States at the leading edge of the next iteration of the internet is key to that goal. Stablecoins are already playing an important role, and it’s critical we act now to maintain our position as the leader in global economic competitiveness. Read the full op-ed here. |
|
|
|
