Taiwan authorities have arrested an individual suspected of laundering a record 10.4 billion Taiwanese dollars ($320 million) via digital assets. This marks the largest single case of crypto-related money laundering in the island nation’s history.
Identified only by the surname Qiu, the suspect was arrested in June upon his return from a trip to Southeast Asia, according to Taichung’s Criminal Investigation Bureau and local media.
The case emerged from an investigation initiated last year into a fake securities trading app. A probe led authorities to trace financial transactions, ultimately revealing Qiu’s alleged involvement in the scheme.
Law enforcement officials report that Qiu funneled money through multiple accounts. He exchanged them for tether (USDT) — a crypto pegged to the US dollar — and then sold the digital asset to convert it back into cash with the goal of obscuring the origin of the funds.
Qiu allegedly profited by taking a 1% commission from each transaction, and he also traveled frequently to Southeast Asian countries. These include Malaysia and the Philippines, where he is suspected of having connections with gambling and fraud syndicates.
Authorities seized several luxury items from Qiu, including high-end vehicles and expensive watches. They also confiscated 21,000 Taiwanese dollars ($647) in cash, laptops, financial cards and other evidence.
Three additional suspects were also arrested in connection with the case, as authorities continue to investigate the source and destination of the laundered funds.
Taiwan, along with several other Asian jurisdictions, is intensifying its anti-money laundering regulations for cryptocurrencies. The case is expected to add impetus to these efforts, similar to recent events in Hong Kong.
Taiwan’s Financial Supervisory Commission (FSC) penned a letter to the banking industry in July, prohibiting individuals from purchasing digital assets using credit cards.
The regulator labeled digital assets as highly volatile and speculative while stipulating credit cards should not be used for transactions involving gambling, stocks and derivatives.
The Commodity Futures Trading Commission has disbursed $16 million in whistleblower awards this year, with most tip-offs pertaining to individuals in the crypto industry.
In a statement on Tuesday, CFTC Commissioner Christy Goldsmith Romero pointed out two whistleblowers alone garnered $15 million for information leading to successful enforcement cases.
While the CFTC didn’t specify the nature of those cases, Romero emphasized the key role whistleblowers play in helping the agency mitigate fraud and illegality, particularly in digital assets.
“The majority of the tips received this year involved crypto — an area that continues to have pervasive fraud and other illegality,” Romero said.
Romero also recognized the role of the CFTC’s education and outreach office, noting its focus on improving financial literacy, particularly in relation to crypto-related scams.
“With the rise of crypto, more retail customers have come under the CFTC’s jurisdiction, making even more critical the efforts of the CFTC’s Whistleblower Program and the Office of Customer Education and Outreach.”
In its annual report released this month, the regulatory body highlighted a continued surge in tips concerning digital asset fraud and romance scams, although specific figures were not disclosed.
Scams often start with a text from an unfamiliar number or through interactions on social media. Victims frequently lose substantial sums, misled into believing these individuals are romantic partners, according to the CFTC.
The regulator is intensifying efforts to curb activities it considers illegal, as it aims to establish itself as the leading industry watchdog, alongside the US Securities and Exchange Commission.
Last month, the commodities regulator charged three DeFi operators Opyn, ZeroEx, and Deridex for running unlicensed trading platforms and conducting unauthorized leveraged transactions involving digital assets.
Legal specialists and some insiders at the CFTC swiftly challenged the action against ZeroEx, noting the platform engages in spot trading; a market segment currently beyond the CFTC’s regulatory authority.
Bitcoin has snapped off its second-largest monthly gain this year as the asset begins a new phase of upward momentum, analysts speculate.
The world’s largest digital asset is trading at $34,545 — up less than 1% on the day after clawing back losses from a swing low from $34,000, exchange data shows.
Bitcoin’s performance for October is one of the year’s best month’s after rising more than 28% following a period of low volatility in the third quarter. Only the month of January — a 40% increase — stands out as a better performer in 2023.
“Volatility levels for bitcoin (BTC) and ether (ETH) have shown signs of maturation for the asset class, as the typical investor profile steadily shifts to be more institutional and less retail-oriented,” Pedro Lapenta, head of research at Hashdex said.
“BTC has historically rewarded investors that have allocated to the asset when its volatility is low.”
In a notable development for traders and analysts, October’s upward trajectory in the market has culminated in a technical “golden cross” on the daily chart.
The bullish signal occurs when a short-term moving average, such as the 100-day, crosses above a long-term moving average, such as the 200-day.
Historically, a golden cross is viewed as a strong indicator of a looming upward trend and is often accompanied by increased trading volumes.
Matteo Greco, research analyst at publicly listed digital asset and fintech investment firm Fineqia International noted bitcoin’s outperformance relative to other digital assets.
With its dominance climbing by 1.7% over the last seven days, marking the fifth consecutive week of growth, bitcoin ended the week at over 54%.
BTC’s strong influence is also evident in the total digital assets market cap, which currently stands at $1.33 trillion. This is similar to the figure recorded in mid-July at $1.22 trillion, Greco added.
“Despite the current price increase, the total market cap remains comparable to when BTC price peaked at around $31,500, signaling that the recent surge in BTC price is more about a shift of capital from altcoins to bitcoin rather than a net inflow,” Greco said.
The US Bankruptcy Court for the District of Delaware approved Monday the amended Chapter 11 liquidation plan for Bittrex and its associated entities, including Desolation Holdings LLC.
Despite the procedural rigor behind the ruling, questions remain as the court-approved decision moves the Seattle-based company toward liquidating its assets to repay creditors.
Bittrex filed for Chapter 11 bankruptcy relief in the US in May. Rather than reorganizing its debts, which is often the objective of Chapter 11 filings, the company elected a plan of liquidation.
With the green light from the court, Bittrex is now authorized to proceed with the selling off of its US-based assets, per a court filing on Monday.
The court’s confirmation came after a series of filed motions, hearings and supplemental plans.
Included in these were various declarations in support of the plan in October. Yet, the path to this confirmation has not been without hurdles.
The court overruled objections to the plan but did not disclose specific details about these objections. That raised questions about the potential issues that might have been voiced by creditors or other parties involved in the proceedings.
Less than a month after facing charges from the Securities and Exchange Commission for operating an unregistered securities exchange, Bittrex filed for bankruptcy in May. By the end of April, the Seattle-based firm ceased its US operations.
In June, the court ordered that Bittrex be allowed to re-enable withdrawals following its bankruptcy declaration a month earlier. At the time, the exchange reportedly owed digital assets to more than 100,000 US-based creditors.
Bittrex’s next steps involve the execution of its liquidation plan. The company needs to pay all necessary legal fees until the bankruptcy case is finished. It also needs to file regular reports about their financial situation, per the filing.
After months of stagnation and false starts, the crypto market is gaining momentum.
Renewed optimism over the likely approval of a spot US ETF fueled last week’s rally in both bitcoin (BTC) and ether (ETH), kick-starting market volatility once more.
“The markets are constantly fluctuating, influenced largely by the sentiments of investors,” Konstantin Shulga, CEO and co-founder of Finery Markets told Blockworks.
“In recent times, we have observed a squeeze in call options for options sellers, while future indicators are becoming less optimistic as the market adjusts to the sudden rise of bitcoin.”
October was a turbulent month, with bitcoin’s price witnessing a significant 15% drive above $35,000 last week.
With this backdrop, Alex Thorn, Galaxy’s head of firm-wide research, believes more upward momentum could become a likely.
In a post on X, Thorn articulated the possibility of another gamma squeeze for the world’s largest digital asset. A gamma squeeze forces options dealers to adjust spot exposure rapidly, often leading to volatility expansion. In the case of negative gamma, even as the price of bitcoin moves higher, dealers need to buy up bitcoin in large quantities to remain properly hedged.
“When dealers are short gamma and price moves up, or when they are long gamma and price moves down, they need to buy spot to stay delta neutral,” Thorn said.
Should the asset’s price reach the $35,750-$36,000 range, Thorn suggests options dealers would need to purchase an additional $20 million in spot bitcoin for every 1% upward move.
Although the impact of last week’s options expiries could potentially dampen such explosiveness this time around, Thorn maintains that the scenario is still in play.
In addition to discussing the gamma squeeze, the Galaxy Research head examined a range of derived metrics based on on-chain data.
Thorn highlighted a widening divergence between the bitcoin supply held by long-term holders and that which has moved within the last 24 hours, indicating a decline in on-chain liquidity.
The 4-year rolling Z-score, a ratio of market price to realized price, suggests that bitcoin is not overvalued and remains in a structurally sound position, Thorn added.
A sparse cost basis between the current price and the $38,400-$39,100 range was observed by the research head with 83% of bitcoin’s supply having not moved since prices were lower than they are currently.
Divergence of opinion
Not all market observers concur, instead musing that the market would likely experience calmer activity following the excess froth from last week’s move.
“I think a further gamma squeeze higher is unlikely at this stage, Lachlan Feeney, founder and CEO of Labrys told Blockworks.
“Bitcoin is already trading higher than it typically would at this stage in a bull market. I expect the market to remain relatively subdued for a decent while longer, and don’t expect any significant moves higher any time soon.”
Le Shi, Head of Trading at Auros agreed saying Thorn’s comments while accurate in theory and when looked at independently, posed challenges when viewed in practical terms.
“There are two crucial contextual factors that could mitigate any potential impact,” Shi said.
The $20 million worth of purchases per 1% would not actually carry significant weight considering the liquidity of bitcoin, Shi noted, taking into account futures open interest and daily turnover.
“Thorn’s comments assume that those who hold long gamma positions do not engage in any hedging in the opposite direction during a rally,” the trading head continued.
“In reality, some portion of the aforementioned amounts will be offset by long gamma players engaging in hedging activities too.”
Since the spring of this year, Isaac Patka of AI security firm Shield3 and Paradigm research partner Sam, better known as Samczsun, have been working alongside blockchain projects to improve security in the wake of cyber threats that have continued to plague the industry.
In early August, the duo launched SEAL 911, a Telegram bot designed to connect users with vetted security experts aiming to enhance cybersecurity disclosure and swiftly prevent DeFi hacks potentially worth hundreds of millions of dollars.
That initiative was established in the hopes of countering multiple industry-related hacks that have taken place this year, including Curve Finance’s $70 million exploit in July.
Now the pair are hoping to up the ante, establishing a new emergency drill initiative designed to assist budding blockchain protocols in their fight against malicious hackers and potential attack vectors.
Blockworks reached out to Patka to get a better sense of their undertaking and the lessons they have learned over the past few months.
Blockworks: Can you walk us through the inception of this emergency drill initiative? What was the driving force behind it?
Patka: I first met Sam through our mutual friend Jeanne. I met Jeanne at DWeb camp 2022 when I was presenting some of my previous open source & standards projects. I heard that Sam was looking for some help in building some training infrastructure for protocol teams to practice being in a war room prior to a real emergency.
The idea resonated with me because at that time I was working on some research and tools related to identifying and avoiding social attacks and dependency failures in decentralized communities.
I volunteered to help get a proof of concept off the ground and after a quick brainstorming call in the spring, I got to work on outlining the drill framework for Compound Labs, which was the first team that offered to participate in a drill.
Blockworks: You mentioned the role of “comprehensive recon” in your drills. How does this initial step set the stage for the rest of the exercise?
Patka: In the recon phase I get up to speed with all of the features, smart contracts, documents and publicly available information about the target protocol. I’m trying to figure out what the “control surface” is for any privileged users [or] admins, how the protocol interacts with [or] relies on other protocols, how they monitor the health of the system, what risk processes exist, how they introduce things like protocol upgrades or new feature releases, and if there are inconsistencies in the system if it’s deployed across different networks.
This recon becomes the foundation for the tabletop scenarios where we talk through potential issues.
Blockworks: The use of tabletop simulations seems like an interesting approach. Could you elaborate on what goes into these simulations and how they inform the subsequent steps?
Patka: After the recon phase, I put together a script with a few scenarios and talk through them with the whole team on a call. These scenarios help us understand their incident response procedures, their monitoring and their social/ comms style. The questions we’re asking at this point are:
“X” has happened. How was the team alerted? Was there monitoring that caught this, or did someone from the community reach out to the team?
Who are the stakeholders and subject-matter experts who know how to deal with this
If this incident impacts other protocols, who has the contact info for that team?
If this requires a response from a multi-sig, who are the signers, and how are you reaching out to them? How fast do you think they will respond?
All of this helps us find potential “hot spots” or things that we want to stress test in a live scenario.
Blockworks: What criteria do you use to select the protocol teams you’re going to drill with? Do you have any prerequisites?
Patka: At this phase, we’re trying to work with teams where we think we can both help them by providing some training, but also learn from them about how the top protocol teams in the space operate, and share those practices with the wider community.
So while we don’t have specific prerequisites, a good fit now is a team that contributes to a protocol with fairly widespread adoption and has been through a few incidents already so we can learn about a variety of team styles.
However, as our infrastructure is becoming more robust and easier to set up, I would enjoy working with some teams earlier on in their protocol to provide some training to people who have never been in a war room before.
Blockworks: Your first test was with the Compound protocol. Can you delve into some of the unique challenges or lessons learned from that initial test?
Patka: The biggest planning challenge was identifying a scenario that was not too catastrophic to be frustrating, but interesting enough to be engaging and would involve some diagnosis and coordination.
We considered a variety of things like external protocol failures, governance attacks and contract upgrade issues. We ended up simulating a bug that made the protocol slowly start losing funds so that we could see how their monitoring would pick up on the process and how they would respond.
One of the biggest lessons here was on the social, coordination layer. I was impressed with the close collaboration between the protocol devs and the auditors and protocol guardians in diagnosing the issue.
On a technical level, the first drill also involved a lot of late-night debugging infrastructure, getting the network fork, and block explorer, and monitoring infra stability.
Blockworks: You talked about avoiding zero-day vulnerabilities in your drills. Can you explain the reasoning behind this decision and how it affects the integrity of the exercise?
Patka: The reason we avoid “zero-day” vulnerabilities or other very widespread catastrophes is so that we can engage the protocol team in something they could reasonably respond to, and something contained within their protocol’s ecosystem. For example, we haven’t done drills around things like compiler bugs, or consensus layer failures.
However, I think these widespread issues would be interesting to simulate in cross-protocol drills where we could get multiple teams and perhaps users of the protocols all interacting with a forknet where something has gone wrong to make it realistic and build social resiliency.
Blockworks: You mentioned Yearn’s “emergency procedure cards” during your test with them. How common is this practice across other protocols, and would you recommend it as a standard?
Patka: I haven’t seen other protocols that implement emergency procedure cards like Yearn yet, but I’d highly recommend it. In many protocols, but especially with Yearn, there are many external integrations that require specific context and subject matter expertise.
When some incident happens, you don’t want to be spending time re-reading your own docs & contracts instead of taking action. Having emergency procedures for specific scenarios helps teams make decisions quicker and more confidently. Writing these emergency procedures is a mandatory step of the risk [and] diligence process of deploying Yearn strategies.
I’d recommend adding emergency procedures to the risk/diligence processes for other protocols, for example when deciding whether or not to integrate with various assets as collateral sources or adding them to markets.
Blockworks: What are some key performance indicators you look at during and after a drill to measure its effectiveness?
Patka: I look for some indicators of both our performance as organizers of the drill and how well the team did. For our side, I’m looking at the stability of our infrastructure and how well the team adapts to the simulated environment.
On the project side, I’m keeping a timeline of at what point issuers are discovered, how long until there is a diagnosis, and how long until there is some consensus around the action to take.
We also send out a postmortem survey to teams to find out what they learned, what they plan to improve in their processes, and how we can improve our simulations.
Blockworks: Can you share some overarching trends or common gaps you’ve noticed in protocol security as a result of these drills?
Patka: I’m not sure if it’s a gap but there seems to be less of a formal “on-call” system across various protocols than I expected. There is an ‘always online’ aspect of the crypto culture where people seem to just assume the right developer or multi-sig signer will be available when needed.
This generally seems to work but I’m curious to explore if some more formalization of roles and schedules would help. I’ve also noticed that monitoring and governance varies for protocols across different L1s/ L2s where they have code deployed. I think there is room for improvement across the industry on how protocols that straddle multiple networks manage their contracts.
Blockworks: Looking ahead, are there plans to broaden these drills to include more protocols or even different types of tests?
Patka: For sure, we are looking to broaden drills to include different types of protocols, or perhaps multiple protocols at the same time. We also want to get to the point where these are easy enough to run that teams can hold regular training for community contributors to build their experience in incident response. I’d also love to engage with new security engineers who might want to learn about security by designing scenarios and configuring simulations.
This interview has been edited for brevity and clarity.
When digital asset valuations surge, crypto mining stocks naturally benefit, much like other commodity producers.
Data shows that major firms including Marathon Digital (MARA), Bitfarms (BITF) and Riot Platforms (RIOT) are posting double-digit gains over the past five days, between 17% and 19%.
Speculation for crypto mining stocks has been fueled by the crypto market rally at the beginning of the week, which saw the price of bitcoin (BTC) cement a new yearly high above $35,000.
Miners faced significant challenges last year attributable to rising electricity costs, the Ukraine-Russia conflict and falling crypto prices — sending respective share prices tumbling.
In the face of those challenges and by the beginning of this year, miners managed to recover substantial losses in their valuations by August — clawing back some 150% to 200% in year-to-date terms.
As a result, over the past 12 months, MARA has exceeded its earnings per share (EPS) estimate in 25% of instances, whereas the broader crypto mining industry has outperformed the EPS estimate 61.8% of the time during the same timeframe, TipRanks data shows.
BITF and RIOT have also managed to beat similar EPS estimates leading to a rush of new investments in the wake of the crypto industry’s rising valuations.
Operating headwinds
It comes as the spot prices for existing bitcoin ASICs continue to set all-time lows, bitcoin mining consulting firm BlocksBridge noted in its weekly miner note.
Cheaper mining equipment is helping to drive down some operational costs in the face of bitcoin’s increasing hashrate — a sign of heightened competition amongst miners, Blockworks was previously told.
While miner profitability took a hit last month due to fresh local highs in those hash rate figures, it appears the sector is retaining resiliency.
Various previous-generation models, which offer a hash rate between 25 and 38 J/TH — including the Antminer S19, Avalon 1326, and WhatsMiner M30S+ — are now priced below $10 per TH/s, BlocksBridge said.
Still, it remains to be seen whether miners can sustain their good fortunes in tandem with rising operational costs.
According to data from the US Bureau of Labor Statistics, electricity prices rose 1.1% from the month of August through to September, putting further strain on households and businesses.
However, on Monday, US-regulated digital asset services firm BitOoda noted in its weekly report Coal plants need to secure fuel a year in advance and are now accumulating more coal than they can manage.
Current coal stock levels are high compared to recent years, despite a 29 gigawatt reduction in coal capacity since 2020. This could put downward pressure on power prices in the US if plants have to operate uneconomically to deplete excess coal, BitOoda said.
“A mild winter would likely result in lower prices with coal stocks at those high levels,” the digital asset services firm said.
Recent market moves have placed two major blue-chip digital assets trending back above their long-term moving averages, often cited by technical analysts as a pivot from bearish to bullish sentiment.
Bitcoin, whose price surge this week saw the asset rise more than 14% to top out at a yearly high above $35,000, first crossed over its 200-day moving average on Oct. 16. On the weekly view, BTC has also crossed that threshold over the same period.
The 200-day MA is a widely observed technical indicator used by traders and analysts to gauge the long-term trend of an asset.
When the current price of an asset is above its 200-day MA, it’s generally considered to be in an upward trend, signaling bullish sentiment. Conversely, when the asset’s current price is below that average, it is seen as a bearish indicator.
Or, so the thinking goes from those looking to read the tea leaves of recent events. Earlier warning signs this year, presented by an ominous daily “death cross,” failed to amount to notable sell-side price action. Instead, bitcoin rose 7.6% to test long-term moving average resistance at the beginning of the month.
“The move above is more significant when volatility increases and there is a notable trend shift,” Sam Holman, derivatives analyst at Zerocap told Blockworks. “In 2023, it’s been trading above and below quite frequently this year so it holds less merit currently.”
Monday and Tuesday’s $4,000 price bump has further widened the gap between the asset and its closing price over the last 200 days, representing a more than 20% difference.
“I’d expect it to hold as a support level if we see a retracement from the current levels lower,” Holamn said. That posits a potential pullback to $28,000 based on the average’s trajectory.
Michael Silberberg, Head of Investor Relations at Alt-Tab Capital told Blockworks detractors are being proven wrong, with $400 million in short liquidation during the previous 24 hours.
“Retail investors are making their move to invest in the market before the institutions change the name of the game forever, with spot buys outpacing sells by 50%,” he said.
The surge appears to have been initiated by reports that BlackRock is gearing up to launch a spot Bitcoin ETF, K33 Research wrote in a note on Tuesday. Slated for cash seeding in October, BlackRock has designated the ticker “IBTC” for its potential upcoming bitcoin ETF.
Ether (ETH) too has followed suit having crossed above its 200-day MA in late Tuesday trading. The asset is just shy of $10 from its closing price over the same period, meaning it would take a small move to the downside to bring the long-term technical view back into seller territory.
While the asset has lagged behind, ether has continued to exhibit signs of resiliency, notching its first daily higher high close since July.
According to data provided by Etherscan, daily transaction counts have held steady for the previous six months after briefly spiking to 1.6 million on Sept. 13. Active ether addresses have also kept their balance, nestling along the 400,000 total over the same period.
After a period of market uncertainty, several large-cap cryptos are flashing signs of a comeback.
The surge is being led by bitcoin (BTC) and ether (ETH) along with other noteworthy digital assets on the back of heightened interest surrounding possible ETF approval next year.
“After the SEC declined to appeal its loss to Grayscale in the circuit court, an approval of a physically-backed BTC ETF in the US became increasingly more likely,” CoinShares head of research James Butterfill said in a statement to Blockworks.
Bitcoin has seen its price increase by 19% over the last seven days, trading at $34,100 as of Wednesday at 6:00 am ET. The asset has registered a 24-hour volume of $44 billion, bolstering its market capitalization to a whopping $661 billion, CoinGecko data shows.
Ether is also on an upward trajectory, with a 14% increase in price over the past week. At $1,785 ether’s 24-hour volume stands at $27.5 billion, contributing to a market cap of $215 billion.
“What we are potentially seeing is a permanent thawing of so-called ‘crypto winters,’” Diogo Monica, co-founder and president of Anchorage Digital told Blockworks. “While the digital asset market will always have bulls and bears, institutional adoption is pushing us closer to perpetual spring.”
That warming is contributing to other notable rises across major cryptos in the top 20 market cap rankings.
Solana (SOL) and Chainlink (LINK) have outshone their larger counterparts in terms of weekly performance. SOL registered a remarkable 33% increase over the past seven days to above $31. Meanwhile, LINK surged by a staggering 49% over the week to stand at $11, marking it as the best performer among large-cap coins.
A spokesperson for analytics firm CryptoQuant told Blockworks that given recent activities with the LINK, the hype is taking up the crypto space. “It’s not artificial,” they said. The firm pointed to increased trading volume across centralized exchanges as well as increased daily active addresses and total tokens transferred from senders to receivers.
Data also shows XRP and Cardano (ADA) have been enjoying the uplift. XRP has experienced a 14% increase over the last week to $0.56, while Cardano has seen a 13% rise to $0.27 in the same period.
Not all crypto within the top 20 have shared the same trader enthusiasm.
BNB, the native token of the Binance platform, and Shiba Inu (SHIB), the meme coin that previously caught the world’s attention, have been lagging. BNB saw a weekly increase of just 6.4% to $225, while Shiba Inu struggled with a mere 7% increase over the same period.
That’s a far cry for BNB which, at its height, had topped out at $704 on May 21, 2021, data shows.
“While the future is inherently uncertain, the current trajectory and market sentiment suggest a promising outlook for bitcoin and the broader cryptocurrency market,” Butterfill said.
Volatility across the crypto derivatives market leaped to fresh local highs this week following a surge led by major blue chip asset bitcoin (BTC).
A two-month period of relatively muted market activity had placed the world’s largest digital asset in relative stasis, trading within a $2,000 range. But on Monday, the market sprang to life, with a 14% rise in the asset’s price topping out at just above $35,000 on Tuesday.
That activity caused a flush of large leveraged short positions, creating a short squeeze — short sellers closing out their positions “en mass” — Bradley Duke, chief strategy officer at ETC Group told Blockworks.
“Only hindsight will be able to tell us if this rally actually has legs, but it feels like enthusiasm for bitcoin is starting to return,” he said.
Open interest for bitcoin futures initially tanked on the back of those liquidations, wiping roughly $1 billion from the market. That has since retraced, indicating new contracts are being opened post-rally, according to Aditya Jalan, APAC trading manager at FalconX.
Interestingly, open interest in listed BTC options on Deribit has increased to $13 billion and is now at the highest level in USD terms since the bull market of Q4 2021, Jalan said.
Blockworks was told by several analysts that options trading tends to attract a more professional audience compared to futures trading, leading to fewer retail investors participating in this segment of the crypto market.
Consequently, the incidence of liquidations and declines in open interest are less frequent in options trading compared to futures, crypto algorithmic trading firm Auros said.
Implied volatility over a 30-day period for bitcoin options contracts shows the rally has also pushed the value to its highest point since the end of June, at just above 59%, data from T3’s Bitcoin Volatility Index shows.
To put that into context, the index has only crossed over that level five times this year.
Contributing factors
According to Mark Connors, head of research at 3iQ, the recent volatility in the crypto derivatives market can be attributed to a combination of factors.
“Historically low cold coming into this week and favorable developments in spot BTC events combined to ignite a chase by some market makers to get longer gamma,” Connors said.
This means that changes in market sentiment occurred more quickly than market makers could adjust their hedges, leading to a shift in open interest across different derivatives vehicles, he said.
Connors emphasized these factors contributed to the surge in BTC price but were not the primary driver behind it.
“We do not think the options positions drove the spike to $35,000, rather they augmented the move somewhat,” he added.
At the same time, BlackRock’s proposed iShares Bitcoin ETF, carrying the ticker IBTC, reappeared on the Depository Trust and Clearing Corporation website after disappearing early on Tuesday.
The initial listing on the Depository website was attributed by analysts as a catalyst for continued bullish fervor surrounding a potential greenlight of a US bitcoin ETF in the year ahead.
Bitcoin Lightning network-based business payments service Lightspark threw its support for the new Universal Money Address (UMA) standard on Monday, positioning it as a game-changer in making global payments as “easy as sending an email.”
The open-source initiative facilitates real-time settlement while incorporating compliance messaging and foreign exchange capabilities for fiat currencies.
Launched last week, UMA is being touted as an extension of LNURL, a standard protocol designed to simplify the process of making payments, according to its GitHub repository.
UMA boasts secure transactions and open payments in any currency, leveraging bitcoin’s global liquidity, for cost-effective solutions, Lightspark said in a statement on Monday.
According to UMA’s documentation, the standard’s operation is delineated into four key steps:
The sender’s Virtual Asset Service Provider (VASP) contacts the receiver’s VASP using the recipient’s UMA, gathering essential information like the receiver’s preferred currency and applicable legal regulations.
The sender then specifies the amount to send in the receiver’s currency, incorporating all requisite legal and compliance data.
Following this, money is transferred using standard Lightning Network procedures. An invoice is generated by the receiver’s provider, which the sender settles.
Finally, the transaction is logged with a compliance provider for record-keeping and any subsequent analysis.
Led by David Marcus, known for his previous involvement in Meta’s unsuccessful Libra stablecoin and as a former PayPal executive, Lightspark is hoping to attract business users by solving the oft-criticized user experience pain point associated with digital asset applications.
Lightspark operates within a competitive arena alongside established projects like Ripple and Stellar, both of which already offer cross-border payment solutions.
Unlike Strike, Lightspark targets enterprise users and is not available for individuals’ personal use.
To bolster adoption, Lightspark said it is offering enterprise-grade SDKs in multiple programming languages, such as Go, Rust, JavaScript/typescript, Python, and Kotlin+Java.
Bitnob, an Africa-focused cross-border payments company, has already jumped on board, becoming the region’s first to adopt UMA as part of the company’s own growth and activation program.
Additional adopters are expected to include industry players like Coins.ph, Foxbit, Ripio, and Xapo Bank, focusing primarily on cross-border transactions.
Meanwhile, infrastructure platforms Bakkt and Zero Hash have announced plans to incorporate UMA into their service offerings, extending the standard’s reach further, Lightspark said.
Bitcoin’s (BTC) market moves this week pushed the asset into fresh local highs as the world’s largest digital asset further cemented its lead against other major blue-chip cryptos.
The asset rose above $30,000 early Monday morning before driving higher, blowing past several resistance levels not seen since the collapse of Terra in May of last year.
Bitcoin is now trading around $34,100, down slightly, after climbing more than 14% and reaching a peak of just over $35,100 in early Tuesday trading. The activity has sent the asset’s dominance, or total share of the market, to a two-and-a-half-year high, of around 54%.
Aditya Jalan, trading manager for APAC at FalconX told Blockworks BTC’s dominance was lining up with trading activity from institutional investors who have been “strongly skewed” toward buying BTC over ETH in the last week.
“Without a new and compelling narrative for ETH, we see no reason for this BTC dominance to dissipate in the near future,” Jalan said.
“We are also seeing institutions being constructive in BTC options markets with an increased appetite for upside structures in the $32,000-$36,000 strikes with one-month expiry.”
Bitcoin trading has witnessed heavy volatility, with roughly $1 billion in open interest evaporated over a 24-hour period. Total short liquidations for the bellwether asset have also risen to more than $216 million — the largest to date this year, CoinGlass data shows.
Le Shi, head of trading at Auros told Blockworks “several interplaying factors” are contributing to the heady price action, including last week’s false ETF news which flushed an initial $100 million worth of shorts.
Shi said he also believed the market received an “indirect boost” later in the week when the SEC moved to drop its lawsuit against Ripple founders, further stoking speculation that the floodgates might soon open for regulated listings.
The bullish uplift followed a formalized win in the DC Circuit Court of Appeals for Grayscale Investments in its bid against the SEC to convert its bitcoin trust (GBTC) to an ETF on Monday.
While just a formality — in which the SEC will now have to mediate with Grayscale on a potential path forward — industry participants are growing increasingly optimistic about that outcome, Blockworks previously reported.
On-chain metrics are flashing signs of resiliency for the world’s largest digital asset, bitcoin (BTC), as individuals continue to hold onto their coins in the face of broader market uncertainty.
The asset is into its fifth consecutive daily win, setting a fresh three-month high above $30,900, Blockworks data shows.
Total open interest for bitcoin options contracts across Bybit, Binance, OKX and Deribit has reached levels not seen for more than two months, at just over $6.46 billion.
Liquidations for BTC futures jumped to a total of $31.5 million on Sunday, CoinGlass data shows. Even still, activity has remained relatively uneventful compared to last week’s Oct. 16’s $100 million wipeout on the false approval announcement of a US spot bitcoin ETF.
“While the ETF news was proven to be fake, there has been a clear shift in sentiment from ‘if’ to ‘when’ in terms of whether the SEC will approve any applications in the next few months,” Berkeley Cox, derivatives analyst at Zerocap told Blockworks.
This shift was further echoed in the options market on Sunday, where the 25 delta skew has tilted towards bullish territory, a position not observed since January’s surge, Cox noted.
Given the continued rise in front-end implied volatility (IV), long calendar options strategies may become increasingly appealing. Market participants are focusing on the prospect of ETF approval — or at the very least, a spike in volatility — by late December to early January, Cox said.
According to CryptoQuant’s Exchange Depositing Transactions for BTC, based on a seven-day moving average, total deposits to centralized platforms have fallen to their lowest levels since May 21, at just above 34,600 BTC.
The analytics firm believes a higher value indicates more individuals are willing to sell to the spot market while conversely, a dip lower indicates users are holding onto their coins and are expecting a future price rise.
“There seems to be no eminent selling pressure from long-term holders despite the $30,000 price tag,” a spokesperson for CryptoQuant told Blockworks.
Meanwhile, declining active addresses can point to participants seeking to hold onto the asset rather than utilize it as a medium of exchange or transfer it to exchanges during periods of profit-taking, Blockworks was previously told.
The total number of active addresses when viewed over a seven-day average has dipped to the lowest point Since Dec. 28, data shows.
After a lengthy legal battle with the US Securities and Exchange Commission, LBRY has followed through with plans to close up shop.
In a farewell post, the company blamed its closure on a lost judgment to US regulators, adding it could no longer meet its financial obligations.
The development follows LBRY’s previous notice of appeal in September against a court ruling favoring the SEC, a move that was seen as a last-ditch attempt to keep the company afloat.
As a blockchain-based content-sharing platform, LBRY aimed to disrupt traditional digital publishing platforms via its decentralized protocol.
However, the firm fell under the SEC’s scrutiny for alleged securities violations concerning its LBRY Credit tokens (LBC). The company argued against classifying its token as a security.
Despite these efforts, the company was dealt a crippling blow when the court sided with the SEC following the agency’s lawsuit against it in March 2021.
The regulator initially sought $22 million from the platform, though that was scaled back to just $111,000 after the SEC acknowledged its financial struggles.
LBRY’s existing debts include obligations to the SEC, its legal team and a private debtor. With no way to cover these, its assets, including its app Odysee, are being placed into receivership.
All board members, executives, and employees have resigned. The company’s domain, social media handles and GitHub repository will also be utilized to satisfy the debts, according to the post.
The LBRY network itself remains active, given its decentralized structure. Over 1.7 million identities and 30 million pieces of content have been published to the LBRY blockchain.
The US Treasury’s Financial Crimes Enforcement Network (FinCEN) is zeroing in on crypto transaction mixers.
Released Thursday, FinCEN’s Notice of Proposed Rule Making (NPRM) brands crypto transaction mixing as a “primary money laundering concern.”
The proposal would require regulated financial institutions to report transactions when there is reason to suspect involvement in transaction mixing, particularly concerning activities outside the US.
Mixing is a process that blends different streams of crypto transactions to obscure the original source, thereby making it more difficult to trace individual transactions.
While the proposed rule aims to bolster transparency and curb illicit financial flows, questions remain over its real-world efficacy, particularly given crypto’s inherently decentralized and pseudonymous nature.
The agency’s proposal is part of a broader Treasury offensive against mixing services that began in earnest last year.
Blender.io and Tornado Cash, platforms both implicated in North Korean money laundering activities by US authorities, have spurred regulatory efforts to curb their use.
“[Convertible virtual currency] mixing offers a critical service that allows players in the ransomware ecosystem, rogue state actors and other criminals to fund their unlawful activities and obfuscate the flow of ill-gotten gains,” FinCEN Director Andrea Gacki said.
FinCEN argues its latest proposal aligns with ongoing efforts to counteract a spectrum of threats, from sanctions-dodging countries to groups like Hamas and Palestinian Islamic Jihad.
The US Chamber of Commerce has filed an amicus brief questioning the US Securities and Exchange Commission’s authority as the agency proceeds with its case against Binance.
The Chamber posits the SEC’s regulation-by-enforcement approach not only stifles innovation but also prompts market participants to relocate offshore to avoid uncertain regulatory conditions in the US.
As a trade association, the Chamber aims to promote the adoption and use of digital assets and blockchain technology. Based in Washington DC, the organization serves as an advocate for public policy surrounding the asset class and the underlying technology that powers it.
A crucial part of the Chamber’s argument differentiates between what constitutes an “asset” and an “investment contract.” It argues that tokens — which can represent a wide array of rights — are not themselves investment contracts.
The SEC argues the assets traded on Binance are securities under federal law, whereas Binance maintains they are commodities, putting them outside the SEC’s jurisdiction.
Additionally, the Chamber’s brief touches on constitutional issues, arguing that the SEC’s unilateral, regulation-by-enforcement actions could be at odds with the separation of powers and due process principles.
According to the Chamber, such tactics may exceed the SEC’s mandate and infringe on constitutional norms that underpin American governance.
“The SEC’s decision nevertheless to consider most digital assets as securities raises grave separation of powers concerns under the Major Questions Doctrine because the SEC is asserting jurisdiction over a major part of the economy that Congress did not intend for it to regulate,” it said.
While the Chamber’s filing holds no judicial weight, its influence and timing could prove pivotal as the exchange has faced increasing regulatory scrutiny, not only in the US but globally as well.
In a separate case involving the SEC and Coinbase in August, several similar briefs were submitted in defense of the exchange.
Like Binance, those briefs argued that the SEC’s understanding of what constitutes an “investment contract” is both fundamentally misguided and at odds with existing legal precedent.
They also further caution that a court decision siding with the regulatory body could have significant and broad ramifications for the cryptocurrency sector.
The renewed conflict between Israel and Hamas has raised fresh questions among global policymakers over the role of crypto in terrorist financing activities.
Authorities in Israel moved this week to freeze crypto accounts said to be used to solicit donations for Hamas. Crypto exchange Binance is said to have aided in the process.
Australia’s financial watchdog issued a warning about an alleged Hamas fundraising effort on Telegram. In the United States, lawmakers like US Senator Elizabeth Warren have demanded action on crypto-based terror financing.
Warren co-wrote an op-ed published Wednesday by the Wall Street Journal, renewing her call for tighter rules on crypto platforms.
The Journal this week also published a report on Hamas’ crypto fundraising, which suggested that such efforts helped fund its recent attacks on Israel.
The attacks — resulting in the deaths of an estimated 1,400 Israelis, triggered new fighting between the Israeli military and Hamas in Gaza. Israel’s bombing campaign in Gaza has left more than 3,000 dead and more than 10,000 injured, according to Gazan health officials.
In an apparent effort to push back on some of the prevailing claims about crypto financing, blockchain analytics firm Chainalysis argued for a more nuanced approach in a new blog post.
“In order to measure the scale of terrorism financing in cryptocurrency and identify opportunities for disruption, investigators and other experts need to understand the role of service providers,” it said.
In examining confirmed cases of terrorist financing, intermediary entities like money service businesses frequently play a role. The transaction volumes processed by such intermediaries usually exceed those of individual participants, Chainalysis said, but are less than those handled by mainstream exchanges.
Some of these service providers operate in a manner similar to over-the-counter (OTC) brokers, while others resemble traditional, street-level financial operations like hawalas, Chainalysis said.
The New York-based analytics firm said that by following the flow of funds on-chain, the data begins to take on a more complex form, particularly when an individual sends crypto to an address used by a service provider.
“To the untrained eye, it might appear that $82 [million] worth of cryptocurrency was raised for terror financing,” the firm said. “But it is much more likely that a small portion of these funds were intended for terrorist activity and a majority of the funds processed through the suspected service provider were unrelated.”
“Only the service provider knows which deposits and withdrawals are associated with specific customers, and that information is kept in their order books, which aren’t visible on blockchains or in investigative solutions,” Chainalysis wrote.
“It therefore is often not productive to continue following funds once they’ve been deposited at a service, as the owner of the funds isn’t usually the one moving them after that point.”
When a user transmits cryptocurrency to any type of service, that service amalgamates the incoming funds with the capital from other users, further distorting the derivation of funding.
In one example, Chainalysis showed that of the roughly $82 million one particular address had received, only around $450,000 worth of funds were transferred from a known terror-affiliated wallet.
“Given the activity of this address, the person or group of people controlling it is likely not the same person that controls the terror-affiliated wallet, but is rather a service provider that knowingly or unknowingly facilitated the terror financing activity,” the firm said.
Hong Kong’s BC Technology Group has denied reports suggesting the possible sale of its licensed crypto platform, OSL.
Reporting from Bloomberg on Sunday had initially suggested BC Technology was exploring the sale of OSL, one of only two digital asset platforms licensed under Hong Kong’s new crypto framework.
A valuation of $1 billion HK ($127.8 million) was reportedly under consideration and the company was said to be open to selling specific segments of OSL rather than the entire business.
While it is not uncommon for corporations to refrain from commenting on market rumors, BC Technology took the step of issuing an official denial.
In a statement, BC Technology categorically dismissed the reporting as “factually inaccurate and highly misleading.”
Blockworks has reached out to BC Technology to learn more.
The statement also observed there had been an “unusual movement” in the trading volume and share price of BC Technology. However, the firm’s board said in its statement it was unaware of any particular reason for the volatility.
Exchange data shows shares of BC Technology, which went public in Hong Kong in 2012, shed more than 34% of its share price to $2.70 HK ($0.35) on Tuesday. It has since clawed back some of those losses to stand at $3.35 HK ($0.43) per share as of the time of writing.
OSL provides a range of services including prime brokerage, exchange and custody services for crypto. It also extends trading infrastructure to financial institutions.
The platform currently operates within a shifting regulatory landscape in Hong Kong. While the region had initially restricted trading of digital assets for retail investors, Hong Kong has since switched its stance, aiming to become a hub for crypto.
Hong Kong’s securities regulator also moved to implement tougher rules for digital asset companies, including a crypto licensing regime, that began in June.
The Fantom Foundation confirmed Tuesday that a “small number” of its wallets had been compromised, with losses amounting to roughly $550,000.
Around 99% of the Foundation’s funds reportedly remain untouched and secure, the company said in a statement on X, formerly Twitter.
Based on those figures, the remainder of its $55 million treasury remains unaffected.
Preliminary investigations have brought to light possible vulnerabilities via a zero-day hack in Google Chrome. However, the exact cause and mechanism of the breach remain under scrutiny, Fantom said.
Blockworks has reached out for clarification but has so far received no response.
While the affected wallets bore the label “Foundation Wallets,” they had previously been transitioned away from organizational use.
These wallets were under the management of a Fantom employee, suggesting a more targeted nature to the attack rather than a broad sweep, the company said.
“A Fantom employee’s personal wallets were compromised. Some of these impacted wallets were labeled “Foundation Wallets”, but they were no longer being utilized by the organization and had been reassigned to a Fantom employee, making this a targeted personal attack,” it said.
While the Foundation’s attempted to demonstrate confidence in the safety of its primary funds, some eyebrows are being raised considering the targeted nature of the breach and the security of reassigning foundation wallets to employees.
Reassigned wallets, especially those under the purview of employees, should ideally have rigorous security measures in place, prompting questions about internal security protocols.
Reddit has announced the end of its Community Points beta program, set to take place next month.
Reddit cited “scalability limitations” and an uncertain regulatory landscape as contributing factors to the program’s discontinuation, according to a Tuesday statement. Reddit did not immediately respond to a request for comment.
“Though we saw some future opportunities for Community Points, there was no path to scale it broadly across the platform,” Reddit user u/cozy__sheets, who is part of the Community team, wrote.
It’s unclear which specific regulations Reddit is concerned about, though some users pointed to the possibility of it centering on tax complications or securities classifications.
Reddit introduced Community Points, built atop Ethereum, to incentivize participation within specific subreddit communities roughly three years ago.
Users earned tokens — referred to as “Moons” in the r/CryptoCurrency subreddit — for activities like posting and commenting. Others, such as “Donuts” and “Bricks” tokens, were also earned across subreddits r/EthTrader and r/FortniteBR, respectively.
These tokens could then be used for a variety of features, such as purchasing subreddit-specific awards. They could also be bought and sold on decentralized exchanges Uniswap and Sushiswap.
Next month, users will no longer see Points in their Reddit Vault — the platform’s digital wallet — nor will they be able to earn points in their respective communities, the statement reads.
Moderators of r/CryptoCurrency appeared caught off guard by the announcement. “We are very disappointed in Reddit’s decision today and want to clarify that we were not made aware of this decision until one hour ago,” they said in a statement.
In a stickied comment, the moderators clarified the “Moons” currently held by community members would remain intact. “Transfer functionality in the smart contract is not being shut off and Reddit is removing their control over the contract,” the moderators wrote.
In a Monday interview with Fox Business, Larry Fink, CEO of the world’s largest asset manager, addressed the market’s swift reaction to inaccurate reports that BlackRock’s iShares spot Bitcoin ETF had secured approval from the US Securities and Exchange Commission.
Amid the market tumult, bitcoin experienced a surge across multiple trading platforms. On the Binance bitcoin/tether market — responsible for 8% of bitcoin’s 24-hour trading volume — bitcoin peaked at $30,000, marking a 7% increase in approximately 30 minutes.
This $2,000 surge in the asset’s price caused widespread market volatility and pushed hourly liquidations past the $100 million mark, as Blockworks previously reported. Bitcoin (BTC) has since retracted.
BlackRock CEO Larry Fink noted that despite the inaccuracy of the reports, the market’s response is indicative of the high level of latent demand for crypto products.
“I think it’s just an example of the pent-up interest in crypto, and we’re hearing from clients around the world about the need for crypto,” Fink said. “Some of this rally is way beyond the rumor, I think the rally today is about a flight to quality with all the…issues around the Israeli war now [and] global terrorism,” Fink said.
Fink also observed a broader trend of investors seeking safer assets in uncertain times.
“There’s more people running into a flight to quality whether that is Treasurys, gold or crypto, depending on how you think about it,” he said “I believe crypto will play that type of role as a flight to quality.”
In an effort to navigate the increasingly complex regulatory landscape of the digital asset market, EY announced Monday the rollout of the fourth generation of its EY blockchain analytics tool.
Fidelity Digital Assets, a branch of Fidelity Investments, has become the first enterprise client to leverage the tech, available via EY Blockchain’s Software as a service platform.
The web-based analytics tool, used by the company’s audit team since 2018, is designed to assist organizations in internal risk management by offering third-party on-chain data queries and wallet address derivations.
Reconciler currently supports a range of blockchains, including Bitcoin, Litecoin, Bitcoin Cash, Ethereum, and Ethereum Classic. Additionally, it provides support for various ERC-20 tokens such as BAT, DAI, MKR, KNC, ZRX, LINK, CV, and MANA.
EY’s suit of blockchain tools, which has gone through various iterations over its six-year history, plans to add further support for additional blockchains “based on client demand.”
Support for xpub address derivation, block explorers and staking analytics will also be made available sometime in the future, EY said.
Brad Jones, the assistant governor of the Reserve Bank of Australia, outlined the potential benefits of adopting tokenization of domestic markets during a weekend speech.
Speaking at the Australian Financial Review Cryptocurrency Summit on Sunday, Jones emphasized the possibilities of integrating tokenization into Australia’s financial infrastructure.
“The first set of estimates points to hypothetical transaction cost savings in Australian financial markets in the range of $1 – 4 billion AUS [$631 million – $2.52 billion] per year,” Jones said.
Jones cited potential savings that could rise to as much as $13 billion AUS [$8.2 billion] per year for issuers, based on assumptions including “reduced liquidity premia” and lowered costs of the new issuance of financial instruments.
However, Jones cautioned that the figures are “not forecasts” but rather hypothetical scenarios grounded by certain assumptions.
“Ultimately, it won’t be possible to make concrete statements about the effects of asset tokenization…until the ecosystem is better developed,” he said.
Jones outlined multiple candidates for tokenized money, including unbacked cryptocurrencies, asset-backed stablecoins and tokenized bank deposits. He suggested that the adoption of a wholesale central bank digital currency (CBDC) could be the most stable and risk-free option.
“Of the various forms of tokenized money under consideration, only a wholesale CBDC would be completely free of credit and liquidity risk,” Jones said.
Australia is currently exploring the possibility of retail CBDCs, which differ from wholesale CBDCs, with the central bank conducting research to explore their feasibility and potential to reduce capital friction.
Ferrari has begun to accept crypto as a form of payment for its vehicles as it broadens its appeal to those who had previously made their fortunes within the industry.
According to a report by Reuters on Sunday, enthusiasts in the US will be able to pay using crypto following demand from wealthy customers, Ferrari’s chief marketing and commercial officer Enrico Galliera reportedly said.
Payments are now being accepted in bitcoin (BTC), ether (ETH) and stablecoin USDC. Plans for other payment providers may be used as the company looks to expand the method across various regions.
Prices for the vehicles will not be adjusted if a customer pays using crypto, per the report. Fees and surcharges will also not apply.
Crypto payments company BitPay is being tapped by the luxury car maker to facilitate transactions in the States, with further plans to expand those efforts into Europe next year.
Other regions are also slated for the program, though a timeline or specifics of which locations for the rollout was not provided. Blockworks has reached out to learn more.
“This will help us connect to people who are not necessarily our clients but might afford a Ferrari,” Galliera said.
Auto manufacturers have shied away from offering customers the ability to pay using crypto, citing the asset’s supposed excessive carbon footprint. Ferrari, however, said changes in code, presumably ETH’s switch to proof-of-stake last year, meant that was now less of a concern.
Others have cited crypto’s fluctuations as a reason for steering clear.
In a bid to avoid the volatility often associated with the asset class, BitPay will instantly convert crypto into fiat on behalf of Ferrari’s dealers, per the report.
“This was one of our main goals. Avoiding both our dealers and us to directly handle cryptocurrencies and being shielded from their wide fluctuations,” the Ferrari executive added.
The Australian government is pushing ahead with plans to regulate domestic crypto exchanges by requiring them to hold a financial services license.
Viewed as perhaps the most expansive reform for the industry to date, the move aims to bolster consumer protection, promote industry innovation and offer greater operational clarity, according to a proposal paper on Sunday.
In an attempt to bring crypto platforms under existing Australian financial services laws in line with other industries, such platforms will also be required to adhere to specific obligations.
Those include minimum standards for token holding, custody software protocols and transactional integrity, according to a fact sheet.
“Close to a quarter of Australian adults today own digital assets and adoption continues to grow,” Adam Percy, domestic crypto exchange Swyftx’s general counsel told Blockworks.
“The Government consultation is thoughtful and we agree that the primary focus should be to make sure cryptocurrency users can access blockchain technology with appropriate protections and that there’s room for innovation,” Percy continued.
While digital asset platforms in Australia manage billions of dollars in assets and offer services like trading and staking, there is heightened scrutiny, not only in Australia but globally, due to past platform failures that resulted in substantial losses for consumers.
“Consumer harms associated with digital assets have centered around the vulnerabilities of intermediaries,” the government proposal states.
“Collapses of crypto platforms, both locally and globally, have seen Australians lose their assets or be forced to wait their turn amongst long lines of creditors,” Stephen Jones, assistant treasurer and minister for financial services said.
“The proposed reforms seek to reduce the risk of these collapses happening by lifting the standard of the operation of platforms and increasing oversight.”
Digital asset platforms will have to meet general license obligations, consistent with other license holders under Australian financial service laws.
Moving forward
In addition to general obligations, unique regulations will apply to specific digital asset activities such as trading, staking, tokenization and fundraising, the proposal reads.
Those targeted measures are designed to minimize the exploitation of regulatory loopholes and are inspired by digital asset regulation frameworks in the EU, UK, Canada and Singapore, the government said.
The proposed regulations focus on service providers rather than digital assets themselves. The framework, according to the government, is designed to be technologically neutral.
Feedback on the proposal is open until Dec. 1, with draft legislation planned for further consultation next year.
The implementation will follow a twelve-month transitional period should the legislation be signed into law.
Authorities in McLennan County have settled a lawsuit with Lux Vending, operating as Bitcoin Depot, following the wrongful seizure of $15,000 from one of its bitcoin ATMs.
The lawsuit was dismissed after the county acknowledged the funds were improperly confiscated following a scam that targeted an 82-year-old Crawford woman, local media reported Thursday.
The scam was reported by the elderly victim who was deceived into withdrawing $15,000 in cash and depositing it into a Bitcoin machine. This reportedly followed her falling victim to a ransomware attack initiated by a malicious email link.
Legal action had originally been filed against county investigators for allegedly violating due process. They had obtained a warrant to seize the funds from a Bitcoin Depot kiosk located at a Sunoco store.
The lawsuit also aimed to have the court recognize Bitcoin Depot as the lawful owner of the seized money.
McLennan County Sheriff Parnell McNamara, who had previously stood by the actions of his officers, declined to comment on the lawsuit’s resolution or on Judge Scott Felton’s admission that the funds had been seized erroneously, KWTX News reported.
Blockworks has reached out to the sheriff’s department but has received no response.
Sheriff McNamara had previously likened the situation to routine law enforcement procedures for recovering stolen property and returning it to rightful owners.
In a letter to Bitcoin Depot, Judge Felton clarified that the initial seizure was based on the mistaken belief that the funds belonged solely to the elderly victim.
Judge Felton also acknowledged county officials were not aware of Bitcoin Depot’s terms and conditions when the money was returned to the elderly woman.
An attorney representing McLennan County revealed the settlement involved no payments to Bitcoin Depot, per the reports. The company had sought official acknowledgment that it was not involved in the scam, which was the work of a third-party international fraudster.
McLennan County, located in central Texas, is part of a wider network of bitcoin ATMs operated by Bitcoin Depot. As of October, the company has 6,625 different machines spread across the US, representing a 9.8% share of the total market, data shows.
Coinbase has voiced strong opposition to the US Treasury Department’s proposed rules on broker reporting of digital asset transactions, citing concerns over user privacy and an uneven playing field with traditional financial services.
In a letter disclosed on Thursday, Lawrence Zlatkin, Coinbase’s Vice President of Tax, criticized the proposed regulations for imposing an “unprecedented, unchecked and unlimited tracking on the daily lives of Americans.”
In August, the IRS issued a 300-page proposal that revises the definition of a “broker” in accordance with the Infrastructure Investment and Jobs Act, including crypto exchanges, which provides guidelines on tax compliance for both the brokers and their clients.
Policymakers have touted the act as an attempt to bring tax reporting standards for the industry in line with those of other traditional financial sectors.
The IRS intends to implement those rules in two years, which drew criticism from leading US Senators who urged the agency to push for swifter implementation, on Wednesday.
Regardless of the timeline, Zlatkin said the rules would require “government surveillance of the choices Americans make about their most private health care decisions, or even when they purchase a cup of coffee.”
Coinbase is urging the IRS and the Treasury to revise the proposed regulations, limiting compliance requirements to parties directly involved in digital asset transactions akin to traditional finance. The company is also advocating for sufficient time to develop complex systems for compliance and to explore blockchain solutions for tax reporting.
“The proposed regulations, as written, would impose an incomprehensible and unduly burdensome set of new reporting requirements,” Zlatkin wrote, highlighting concerns that the IRS would be “bombarded with data,” including trivial transactions with “zero or negligible taxable income.”
The letter also emphasized a lack of parity between the crypto sector and traditional finance in tax reporting. It argues that Congress intended the legislative language to cover entities directly involved in asset transactions, akin to traditional financial brokers.
However, the proposed rules interpret this so broadly that it could include anyone facilitating digital asset transactions, the letter reads.
“The result will be services that are slower, costlier and far less efficient,” Zlatkin said, adding that the unrealistic timelines for compliance contrast sharply with the five-year period given to financial institutions in 2008.
The regulations exceed mere tax reporting on financial gains, implying that tax codes are being used to pick winners and losers in tech — a misuse of tax legislation, he added.
Coinbase’s letter is the first of two it plans to submit, with the next expected to offer more detailed technical comments, Zlatkin said.
Mastercard in conjunction with the Reserve Bank of Australia and the Digital Finance Cooperative Research Centre, revealed Thursday the latest results of their CBDC pilot project.
Notably, the pilot included a live transaction where an NFT was purchased on the Ethereum blockchain using a “wrapped” version of the CBDC, according to a statement.
Jointly developed with financial services company Cuscal and blockchain platform Mintable as part of the bank and cooperative’s research project, the tech is designed to make CBDCs interoperable across various chains.
The pilot, which places a real legal claim on the RBA, involved selected industry participants and demonstrated how a CBDC could provide payment and settlement services to Australian households and businesses.
“Mastercard has seen demand from consumers to participate in commerce across multiple blockchains, including public blockchains,” Richard Warmold, the company’s Division President of Australasia said.
“This technology not only has the potential to drive more consumer choice, but it also unlocks new opportunities for collaboration between the public and private networks to drive genuine impact in the digital currency space.”
During the live test, Ethereum wallets of both the buyer and seller were ‘allow-listed,’ demonstrating the tech’s capacity to enforce controls on public blockchains.
Securing the necessary quantity of the pilot CBDC on the RBA’s dedicated platform, the project then generated a corresponding amount of wrapped pilot CBDC tokens on Ethereum.
Authorization protocols are strict. The pilot CBDC can only be held, used and redeemed by authorized parties who have cleared Know Your Customer verifications and have been risk-assessed by licensed service providers.
The project is part of a broader strategy under Mastercard’s wider Multi-Token Network (MTN) initiative, launched in June 2023, that aims to act as a “testbed for developing live pilot applications and use cases with financial institutions, fintechs and central banks,” Blockworks previously reported.
It aligns with Mastercard’s ambition to leverage blockchain tech across an array of payment use cases to facilitate what the company is touting as the mainstream adoption of digital currencies.
US Senators, led by Elizabeth Warren D-MA and Angus King I-ME, are pushing for a faster roll-out of tax reporting regulations for crypto brokers, instead of a projected two-year timeline.
In a letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, the Senators pointed to potential lost revenues totaling $50 billion annually and the need to conform to the Infrastructure Investment and Jobs Act’s stipulations.
“We are alarmed by the self-inflicted two-year delay for the rule’s implementation, which would… disadvantage law-abiding Americans and cause the federal government to lose out on billions of dollars in tax revenue,” they said.
The billions of dollars in lost revenue are largely attributed to misunderstandings about crypto tax obligations or intentional tax evasion, according to the Senators.
In August, the IRS released a comprehensive 300-page proposal detailing crypto tax reporting guidelines with updated provisions relating to the definition of a “broker” as stipulated in the Jobs Act more than two years ago.
The act seeks to establish clear tax reporting standards for the crypto industry, attempting to provide, what policymakers have touted as, greater transparency comparable to other traditional financial sectors.
The senators commended the essence of the proposed regulations and the agencies’ endeavors to ensure continued crypto activity reporting by taxpayers.
However, they had expressed significant concerns that the final rule would not be in effect until 2026, even though it had been initially scheduled for the next year.
The Treasury Department and IRS have taken nearly two years to promulgate rules concerning those stipulations, making it highly doubtful that the Administration would adhere to Congress’s directive, the senators said.
“Limiting any further delay in the implementation of the Administration’s proposed rule would combat industry efforts to evade regulation, provide clarity to law-abiding taxpayers and generate billions in tax revenue from a chronically tax-avoidant industry,” they said.
As such, policymakers are urging the agencies to implement the proposed crypto broker reporting rule as “rapidly as possible” and have requested an update by no later than Oct. 24.
As bitcoin (BTC) solidifies its dominance over its main rival ether (ETH), traders are showing a clear preference, despite the crypto market witnessing its most prolonged liquidity crisis in years.
Data from market intelligence firms Glassnode and K33 show the crisis, echoing patterns seen during the 2014-15 and 2018-19 bear markets, has persisted for over 535 days.
One significant date for market observers is on Friday when the US Securities and Exchange Commission is poised to make its decision to appeal the recent Grayscale court ruling linked to its spot BTC ETF application.
An absence of an SEC appeal could spark a market reaction, though its longevity remains in question, K33 said in a recent note.
Bitcoin’s continued appeal seems rooted in its role as “digital gold” in risk-averse scenarios and rising anticipation surrounding the potential rollout of spot bitcoin ETFs, the market intelligence firm added.
Elsewhere, derivatives markets are revealing subtle shifts.
CME’s next month premium and BTC perpetuals’ offshore funding rates have both seen an uptick, suggesting cautious optimism, K33 alluded.
However, with offshore funding rates still lingering below the neutral mark and continued outflows from BTC ETFs, the market, despite its optimism, seems hesitant to expect further price rises, K33 said.
Even as ether trails behind, bitcoin’s steadfast position as traders’ preferred digital asset highlights its impressive year-long trajectory, boasting a rise of over 63% this year. The world’s second-largest digital asset, meanwhile, is up just half that amount at 30% to $1,560, Blockworks data shows.
Analysis points to the Realized Cap data — which underscores the dormant nature of coins transferred on-chain — suggesting very few coins transferred on-chain are being used to take profit or minimize losses, Glassnode said in a blog post on Monday.
“Liquidity continues to dry up across the digital assets as network settlement, Exchange interaction and capital flows reside at cycle lows, heavily underscoring the current acute apathy experienced by the market,” it said.
