Crypto News Headlines (03-Mar-2023)

Interest in bridging bitcoin (BTC) to the Avalanche smart contract blockchain (BTC.b) continues to swell as the supply of wrapped bitcoin (wBTC), the largest wrapped version of bitcoin on Ethereum, dwindles.

On Thursday, over 2,000 BTC ($44 million) was ported to Avalanche, the largest single-day BTC.b mint on record, according to data sourced from pseudonymous analyst 0xAcid’s dashboard on Dune Analytics. That has lifted the total circulating supply of BTC.b to 8,572.

According to 0xAcid, half of the bitcoin minted on Thursday has been moved to BENQI Finance. BENQI Finance is an Avalanche-based decentralized finance protocol, which allows users to lend, borrow and earn additional yields from digital assets.

A cycle of miner capitulation can be observed throughout Bitcoin’s history.

When times are good, miners stockpile their Bitcoin, restricting the supply of new coins during high demand and serving as an additional multiplier to the general upward price trend.

When times are bad, like the past few months, miners sell their Bitcoin treasuries—usually to cover operating expenses when mining is less profitable, like when Bitcoin’s price is low, or to pay off over-leveraged positions.

Users who have deposited funds to Bitzlato can now start to withdraw their coins, the recently seized crypto exchange said in a Telegram message. The announcement comes after a period of over a month during which the trading platform was unavailable.

The Hong Kong-registered exchange, better known to Russian-speaking traders, was taken down in a coordinated law enforcement operation in January when French authorities took control of its website and their American colleagues arrested its co-founder Anatoly Legkodymov.

The U.S. Justice Department believes Bitzlato has processed over $700 million in funds from criminal entities such as the darknet market Hydra and the Russian crypto pyramid scheme Finiko. According to Europol, it exchanged over $1 billion of illicit money.

Canadian alternative investment management firm Ninepoint is proposing changing the investment strategy of its bitcoin exchange-traded fund (ETF) to diversify from just buying bitcoin into other Web3 and blockchain-related equities.

The fund, Ninepoint Bitcoin ETF (BITC.CA), is traded on the Toronto Stock Exchange (TSX) and has about $21 million in assets under management, according to its website. It previously aimed to provide investors exposure to bitcoin, without having to buy the digital asset through a crypto exchange. With the price of bitcoin falling about 47% in last 12 months, Ninepoint is now proposing changing its strategy to diversify its holdings, according to a statement.

Silvergate Bank — a prominent lender to crypto firms — lost five partners on March 2 due to a slew of investigations and lawsuits against it.

Coinbase, Paxos, Gemini, BitStamp and Galaxy Digital were some of the most notable crypto firms using Silvergate as their banking partner. However, the termination of service by Coinbase has also forced a crypto hedge fund to look for an alternate banking partner.

On March 3, a crypto hedge fund called Digital Asset Capital Management (DACM), with assets worth over $400 million, announced it was looking for a new banking partner in Switzerland post-Silvergate chaos. DACM used Silvergate’s real-time network to move funds to and from Coinbase Global’s platform.

Bitcoin’s (BTC) early Friday slide, triggered by concerns about crypto-friendly bank Silvergate (SI), shook out bullish leverage from the futures market.

Exchanges liquidated longs or bullish bitcoin futures worth over $62 million during the Asian hours, the highest amount since August, according to data from Glassnode. Short liquidations worth just over $500,000 were also observed.

Liquidation happens when the market moves against a trader’s bullish/bearish bet, leaving them with insufficient funds to keep the leveraged trade open.

U.S. authorities last year controversially banned citizens from using the “coin mixer” Tornado Cash. But Ethereum developers have been working hard on a solution they hope Feds will stay away from: Privacy Pools. 

A demo released today of the new coin mixing app lets people send and receive Ethereum, the second-biggest cryptocurrency, anonymously. Though this time round, there’s a feature that proves the user is not a North Korean bad actor or some other type of criminal. 

The U.S. Treasury Department sanctioned Tornado Cash in August because they said criminals—mainly North Korean state-sponsored hackers, Lazarus Group—were using it to launder dirty cash.

British financial institution Nationwide Building Society allegedly sent an email to its customers on Thursday to inform them of restrictions on cryptocurrency purchases. According to the email shared by several people on Twitter, Nationwide wrote, “We will be introducing restrictions on purchasing crypto currency from 28 February,” elaborating:

The Financial Conduct Authority (FCA), who regulate the financial services industry, has highlighted certain risks associated with purchasing crypto currency.

“We will be introducing limits on card payments made to crypto exchanges from a current account,” the email continues, adding that the new daily card limit is 100 British pounds for Flexone accounts and 5,000 pounds for other current account types.

A coming offering from ForUsAll will allow employees to allot part of their 401(k) investments directly into the 28 constituents of the CoinDesk Market Select Index (CMIS).

“By leveraging CMIS, we can provide sophisticated self-directed investors access to a broad, diversified universe of the largest and most liquid crypto assets,” ForUsAll CEO David Ramirez said in a press release that noted this is the first index-based digital asset offering available on a 401(k) platform in the U.S.

CoinDesk Indices (CDI) is the creator of the Digital Asset Classification Standard (DACS). The CMIS uses the DACS and additional eligibility criteria to determine its constituents.

Two United States lawmakers have criticized crypto accounting guidelines outlined by the national securities regulator, arguing they places crypto customers at greater risk of loss.

The guidelines came from the United States Securities and Exchange Commission and became effective in April last year.

The guidelines ask financial companies holding crypto for customers to recognize all digital assets they do not control as a liability. They also state that digital assets should be backed by a safeguarding asset.

However, Senator Cynthia Lummis and Representative Patrick McHenry argued on March 2 that these guidelines will “likely” discourage regulated entities from engaging in digital asset custody, which is the opposite effect of what the regulator should be doing.