Crypto News Headlines (01-Dec-2022)

It’s winter out there in the real word and the digital assets market, yet crypto twitter is going bottom fishing.

And why not, as bitcoin (BTC), the leading cryptocurrency by market value, has recently bounced 10% to over $17,000 despite lingering FTX contagion fears and crypto lender Genesis filing for bankruptcy.

The Federal Reserve’s chairman Jerome Powell on Wednesday signaled that the central bank could slow the pace of liquidity-sucking interest rate hikes starting from December. Popular technical analysis indicators signal downtrend exhaustion in bitcoin, the leading cryptocurrency by market value.

As the collapse of the crypto exchange FTX shakes faith in the industry’s centralized players, Telegram is stepping in to build trustless and decentralized alternatives.

In his Telegram channel on Wednesday, Pavel Durov—the messaging platform’s founder and CEO—announced that the company would begin building “non-custodial wallets” and “decentralized exchanges” that would let millions of users safely trade their crypto.

“This way we can fix the wrongs caused by the excessive centralization, which let down hundreds of thousands of cryptocurrency users,” said Durov.

Italy plans to implement 26% capital gains on Crypto profits.

Regulators aim to encourage crypto asset reporting.

The move follows Portugal’s implementation of a similar tax slab on crypto.

Reports indicate that beginning in 2023, Italy intends to impose a capital gains tax on digital assets in an effort to increase its regulatory foothold in the cryptocurrency industry. Capital gains on digital asset trading of more than 2,000 euros would be taxed at 26%, as stipulated in the country’s budget plans for 2023.

The bill aims to increase transparency in the system by having citizens report their digital asset ownership. As such, under the proposal of Prime Minister Giorgia Meloni’s cabinet, taxpayers would be able to report the value of their assets as of January 1, 2023, for a 14% tax.

The proposed legislation includes transparency requirements and a stamp duty that applies to digital currencies. However, the bill is still subject to change in the parliament.

Cryptocurrency exchange Binance announced Wednesday that it has acquired 100% of Sakura Exchange Bitcoin (SEBC), a Japanese crypto exchange service provider that is regulated by Japan’s top financial regulator, the Financial Services Agency. The announcement explains:

Through this acquisition, Binance enters the Japanese market as a Japan Financial Services Agency (JFSA) regulated entity.

“By offering Japanese-regulated services through SEBC, Binance aims to support a responsible global environment for cryptocurrencies,” the announcement adds.

Crypto trading firm Auros Global appears to be suffering from FTX contagion after missing a principal repayment on a 2,400 Wrapped Ether (wETH) decentralized finance (DeFi) loan.

Institutional credit underwriter M11 Credit, which manages liquidity pools on Maple Finance, told its followers in a Nov. 30 Twitter thread that the Auros had missed a principal payment on the 2,400 wETH loan, which is worth in total around $3 million.

M11 Credit suggests that it is always in close communication with its borrowers, particularly after events in the last month, and said Auros is experiencing a “short-term liquidity issue as a result of the FTX insolvency.”

The correlation of bitcoin (BTC) and ether (ETH) to the U.S. Dollar Index (DXY) has once again turned negative. BTC’s correlation coefficient to the DXY has fallen to -0.36, after moving as high as 0.84 on Nov. 19.

Correlation coefficients measure the relationship between two assets, and range between 1 and -1. The former implies a direct pricing relationship between the assets, while the latter indicates an inverse relationship.

BTC had held a persistently inverse relationship to the DXY since July, before crossing into positive territory on Nov 9. In August, the correlation between the two assets fell to -0.94.

The CFTC chief has proposed that the average crypto investor should get different protection from professional and high-net-worth individuals.

In remarks prepared for a conference in Singapore, Commodity Futures Trading Commission (CFTC) commissioner Christy Goldsmith Romero said the current regime’s definition of a “retail investor” is too broad, covering everything from average households to millionaires and hedge funds.

She proposed that the CFTC should have two categories of retail customers so that additional protections can be targeted to each group.

The average daily aggregate trading volume of cryptocurrency investment products has surged 127% in November to $139 million, the highest volumes recorded since June 2022. Volumes rose in the wake of FTX’s collapse, which helped volatility in the space explode.

According to CryptoCompare’s latest Digital Asset Management Review report, the surge in trading volume seen last month helped break a downtrend trend in trading volumes seen since May of this year. Per the firm, the rising volume could be explained by the significant rise in trading activity caused by FTX’s collapse.

CryptoCompare’s report also details that the entire cryptocurrency market has, since February of 2021, been watching the Grayscale Bitcoin Trust (GBTC) discount widen as market stability declines.

United States Commodity Futures Trading Commission (CFTC) commissioner Christy Goldsmith Romero spoke at the Futures Industry Association Asia Derivatives Conference in Singapore on Nov. 30. She talked about “how to harness the best that technology offers, while protecting against emerging threats,” with particular emphasis on cybersecurity and crypto.

Goldsmith Romero had two proposals for protecting consumers and markets from the risks presented by cryptocurrency. The first was rather novel: “Protecting household retail investors starts with redefining who is a retail investor,” Goldsmith Romero said. Crypto investors are different, she said:

“Most are young-born after 1980, diverse, and make less than $50k a year. That is not the typical customer that the CFTC is used to seeing.”

U.S. Treasury Secretary Janet Yellen talked about the need for adequate crypto regulation following the collapse of crypto exchange FTX at an event hosted by the New York Times Dealbook Wednesday. She said:

I have been skeptical, and I remain quite skeptical.

While emphasizing the importance of ensuring that crypto assets have adequate customer protections, the treasury secretary noted that it is also important to remain open to financial innovations, particularly those that could lower cross-border transaction costs and help improve financial inclusion.