Crypto News Headlines (05-Jul-2023)

Danish bank Saxo has been ordered by Denmark’s financial regulator to shed its own crypto holdings, the authority announced on Wednesday.

The Danish Financial Supervisory Authority’s (FSA) explained that it isn’t legal for banks to conduct such activity as ancillary bank business for reasons of financial stability under current regulations.

“Saxo Bank A/S’ trading in crypto assets for its own account has taken place in order to cover risks in connection with the offering of other financial products,” the statement said. “However, this does not change the fact that the activity, in itself, is not permitted for Danish financial institutions …”

The banking industry remains under scrutiny as U.S. banks grapple with hundreds of billions in unrealized losses, with some estimates reaching as high as $1.7 trillion. Attention has particularly turned to Bank of America (NYSE: BAC), the second-largest financial institution in the United States boasting an estimated balance sheet of around $2.39 trillion.

Recently, the FDIC released data indicating that Bank of America is confronting a loss of approximately $109 billion. During the Covid-19 pandemic, when interest rates were low and funds were readily accessible, Bank of America seemingly made a substantial investment in assets such as U.S. government bonds.

At that point, the bank, along with many others, deemed these bonds as safe and risk-free investments, despite their comparatively modest yields. However, the situation altered as inflation surged and the approach to economic management shifted.

STORJ, the Ethereum-based token underpinning the eponymous decentralized cloud storage platform, soared to a ten-month high of $0.55 earlier on Wednesday, becoming one of the top-performing crypto assets in the past 24 hours.

Although the price of STORJ is falling fast, trading at $0.25 at the time of this writing, it still represents a 16% increase on the day and a 67% rise over the last week.

The last time STORJ changed hands at $0.55 levels was in September 2022, according to data from CoinGecko.

A relatively small coin, STORJ at some point on Wednesday also saw its market cap almost double from yesterday’s values below $39 million, moving the asset up to the 348th place in the rankings.

“The increase in volatility following the SEC’s lawsuit against Binance US and Coinbase, and the positive outlook in the market following the filing of spot Bitcoin ETFs by the likes of BlackRock and Fidelity, have contributed to an increase in trading activity last month,” said CCData.

Still, spot trading volumes remain at historically low levels. Spot trading volume in the second quarter was the lowest since Q4 2019, according to the report.

For the derivatives market, volumes increased by 14% in June, representing 78.7% of the crypto market. That, however, is down from 79.1% in May, marking the first drop in derivatives market share in four months, an indication that the EFT filings spurred spot accumulation of crypto assets, according to the report.

Crypto futures exchange OPNX has launched a credit currency for margin trading, according to a July 5 statement made to Cointelegraph from the exchange’s co-founder, Mark Lamb. Called “oUSD,” the currency is available in its “phase 1” iteration, meaning that users cannot receive it without depositing crypto assets into the exchange.

In a future “phase 2” version, the platform intends to make oUSD available to users who deposit crypto into on-chain contracts to allow for possible “bankruptcy remoteness,” Lamb stated.

In the currency’s litepaper, oUSD is identified as a solution to three problems. First, lenders do not want to trust platforms to hold cash loans backed by crypto collateral. Second, exchanges and lending platforms don’t want to lend cash to margin traders, as this practice led to multiple bankruptcies during the 2022 bear market. Third, crypto derivatives traders want “portfolio margin,” or the ability to borrow and trade based on their crypto holdings rather than their stablecoin holdings.

Crypto trading volumes rose in June for the first time in three months amid optimism following the filing of spot bitcoin exchange-traded-fund (ETF) proposals by asset manager BlackRock and other large institutions.

The combined spot and derivative trading volumes on centralized exchanges climbed 14% to $2.71 trillion, according to a report by CCData. That’s the first monthly increase since March, said the report.

Several high-profile U.S. institutions filed or refiled for spot bitcoin ETFs with the U.S. Securities and Exchange Commission (SEC) last month, including Invesco and WisdomTree, along with Fidelity.

Crypto exchange Binance today announced that it is ceasing all deposits and withdrawals for the ten Multichain-bridged tokens that were previously part of a deposit suspension by the exchange after certain transactions on the Multichain (MULTI) protocol froze in May.

The ten tokens are bridged to Binance Chain, Ethereum, Avalanche, and Fantom; users can still withdraw them via other networks supported by the exchange.

The mysterious problems afflicting Multichain’s cross-chain bridge began back in late spring after users flooded Multichain’s Telegram complaining that certain pending transfers were stuck.

A lawyer leading the United Kingdom’s Law Commission’s review of the application of British laws toward digital assets has stressed the need for further clarity around cryptocurrency lending.

Laura Burgoyne unpacked the details of the organization’s four major recommendations to the U.K. government in an interview with Cointelegraph. This comes after a lengthy review process of existing legal frameworks in the country and how they’ve been applied to the digital asset sector to date.

As reported by Cointelegraph on July 3, the Law Commission is calling for the creation of a distinct category of personal property for cryptocurrencies and digital assets. In addition, the body recommended the establishment of an industry-specific panel and a legal framework for crypto-related assets, as well as legal reforms to clarify whether the asset class falls under the scope of the U.K.’s Financial Collateral Arrangements Regulations (FCAR).

Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark criticized cryptocurrencies, stablecoins, and central bank digital currencies (CBDCs) in a lengthy tweet on Tuesday. Stark is currently president of cybersecurity firm John Reed Stark Consulting. He founded and served as chief of the SEC Office of Internet Enforcement for 11 years. He was also an SEC enforcement attorney for 15 years.

The longterm crypto skeptic wrote:

The creation of a CBDC is perhaps the most absurd financial idea in the history of monetary policy.

He argued: “First off, just like crypto and stablecoins, you must begin by answering the question of what problem does a CBDC actually solve. Why do we need a CBDC? There is no answer to that question.”

Financial regulators in Denmark are coming after cryptocurrency service providers, declaring that local banks are not allowed to hold cryptocurrency to hedge against trading risks.

On July 4, the Danish Financial Supervisory Authority (DFSA) officially ordered the local investment bank Saxo bank to dispose of its own holdings in crypto.

The regulator said that Saxo Bank’s crypto activity “lies outside of the legal business area of financial institutions,” citing section 24 of the Denmark’s Financial Business Act.

According to the DFSA, Saxo Bank offers its customers the opportunity to trade a number of cryptocurrency products through its platform. The firm also offers several crypto-linked exchange-traded funds and exchange-traded notes, the regulator noted, adding that “it is possible to speculate on crypto assets.”