Crypto News Headlines (15-March-2022)

The U.K.’s National Crime Agency (NCA) has called for the regulation of crypto mixing technology that can disguise transactions which would otherwise been traceable on the blockchain, according to a report by the Financial Times.

Also known as “CoinJoin”, crypto mixers can be used by criminals to disguise the origin of cryptocurrency through multiple parties contributing many inputs to a transaction, obfuscating the details of its origin.

“They can be used to provide a “layering” service, churning criminal cash obscuring its origins and audit trail, similar to how a cash business might be used by criminals to legitimize cash through the banking system,” Gary Cathcart, the NCA’s head of financial investigation, said in an interview with FT published on Tuesday.

The NCA wishes for regulation that would require mixers to comply with money laundering laws, carrying out customer checks and audit trails of funds swapping hands on their platforms.

CoinJoin usage hit a peak of 65,000 BTC ($2.5 billion) in January 2021, equivalent to 0.35% of the total bitcoin transacted that month.

Crypto exchanges and wallet developers such as Wasabi have responded to crypto mixing by barring transactions from their services that facilitate CoinJoins.

Binance, which runs the world’s largest cryptocurrency exchange, said on Tuesday it has been granted a license to operate as a crypto asset service provider in Bahrain, strengthening the company’s foothold in the Middle East as its trading platform faces mounting scrutiny from financial regulators elsewhere.

“The license from Bahrain is a milestone in our journey to being fully licensed and regulated around the world,” Changpeng Zhao, cofounder and CEO of Binance, said in a statement. “I’m proud of the hard work of the Binance team to meet the stringent criteria of the Central Bank of Bahrain, not just locally but globally by ensuring that we meet and exceed the requirements of regulators and protect users with strong anti-money laundering and counter-terrorism financing policies.”

Binance said the license was the company’s first of its kind in the Gulf states. The regulatory green light will allow Binance to provide crypto asset trading, custodian services and portfolio management to customers, the firm added.

Celebrity investor Kevin O’Leary told CNBC on Friday that one-fifth of his investment holdings are tied up in cryptocurrencies and companies operating in the nascent digital asset industry.

“I have millions of dollars, 20% of my portfolio is now in cryptocurrencies and blockchain,” O’Leary said in an interview on “Squawk Box.” Blockchains are the distributed digital ledgers on which cryptocurrencies run.

Cryptocurrencies have attracted considerable attention and investment in recent years, including from large institutions and high-profile figures like hedge fund manager Paul Tudor Jones and fund manager Bill Miller. Many tout bitcoin, the world’s largest cryptocurrency by market value, as a long-term store of value. There’s a raft of other, smaller digital tokens, too.

Crypto backers say it remains early earnings for the industry — bitcoin itself has only been around since January 2009. Still, crypto startups are attracting billions of dollars of venture capital.

At the same time, the burgeoning asset class remains volatile, and re

Kazakhstan’s crackdown on illegal crypto mines has forced another 106 miners to stop operations, according to a government statement today.

Following investigations by the country’s financial monitoring agency and other state bodies, 55 of the mines closed voluntarily and 51 where forced to shut down, the statement said. The 51 are suspected of tax and customs evasion and placing equipment in special economic zones without permission, according to the statement.

The inspections revealed that some notable political and business figures were involved in crypto mining. According to the statement they included Bolat Nazarbayev, the brother of former President Nursultan Nazarbayev; Alexander Klebanov, the chairman of Central Asian Electric Power Corp., which provides electricity to more than 2 million people, according to its website; and Kairat Itegmenov, listed by Forbes as Kazakhstan’s 17th-richest man.

The central Asian country has been dealing with severe electricity shortages since autumn 2021, in part due to an influx of crypto miners from China, but also because of infrastructure failures. The government has decided to crack down on illegal mines to deal with the energy problems.

In total, the financial monitoring agency has opened 25 criminal cases and seized 67,000 machines valued at 100 billion Kazakh tenge ($193 million), according to statement.

In late February, the government said it busted 202 megawatts worth of illegal crypto mines.

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has passed the much-anticipated Markets in Crypto Assets Regulation (MiCA) legislative package, which aims to coordinate the EU’s regulatory approach to the crypto industry.

After an earlier vote on Monday, the legislation does not include language about a proposed ban on proof-of-work mining, which was framed as a “de facto Bitcoin ban.”

The legislation passed an ECON vote with a 31-23 majority, with four individuals abstaining.

One of the top priorities of the legislation is “ensuring that the EU financial services regulatory framework is innovation-friendly and does not pose obstacles to the application of new technologies,” according to the MiCA package text. The package also takes aim at four “general and related objectives,” including achieving legal certainty for the industry.

While bitcoin’s four-month bearish price action appears to have scared away retail leverage traders, institutions focused on longer-term horizons seem unperturbed.

That’s evident from the recent large outflow of coins from the U.S.-based crypto exchange Coinbase (COIN), according to blockchain analytics firm Glassnode.

A total of 31,130 bitcoin left Coinbase last week, the highest single-week outflow since 2017, data tracked by Glassnode show.

“Large outflows like this one are actually part of a consistent trend in the Coinbase balance, which has been stair-stepping downwards over the last two years,” Glassnode said in a weekly newsletter published Monday. “As the largest exchange by BTC balance, and a preferred venue for U.S. based institutions, this further supports the adoption of Bitcoin as a macro asset by larger institutions.”

The past week’s outflow has pushed the number of coins held on the Nasdaq-listed exchange to a four-year low of 649,500 BTC. The balance held across all centralized exchanges has dropped to 2,519,403 BTC, the lowest number since November 2018.

The declining exchange balance means fewer coins are available for liquidations on the exchange. In other words, the sell-side liquidity is drying up, suggesting scope for a sharp move on the higher side, especially as the coins withdrawn from Coinbase were moved to a largely inactive wallet.

“If we look at the Illiquid Supply Shock Ratio (ISSR), we can see a significant uptick this week, suggesting that these withdrawn coins have been moved into a wallet with little-to-no history of spending,” Glassnode said.

Bitcoin was last seen trading near $38,600, representing a 2% drop on the day.

The U.S. Department of Labor came out this week with an unusually strong warning about cryptocurrencies pushing their way into 401(k) retirement accounts. Over the last few months, some financial institutions have started marketing crypto investments as potential options in these highly regulated accounts, and that’s a problem according to the DOL.

“At this early stage in the history of cryptocurrencies, however, the U.S. Department of Labor has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets,” the department writes.

They’re correct. Pushing crypto investments onto people, the vast majority of whom would have a hard time even knowing what the total of fees charged to their accounts are, should be beyond any reasonable professional ethics in the financial industry. This is asking people to potentially take a deep and unpleasant bath and undermine value they’ve built up over many years and will need in retirement.

Metaverse Game Studios has raised $10 million in an investment round led by blockchain gaming company Animoca Brands, crypto-focused hedge fund Pantera Capital, Solana Ventures, and metaverse investment company Everyrealm.

OKX Blockdream Ventures, Mechanism Capital, Morningstar Ventures, Huobi Ventures, Shima Capital, Ancient8, and Rainmaker also participated in the round.

Metaverse Game Studios’ first title is Angelic, which aims to be a AAA MMORPG in a sci-fi world. Its developers have previously worked on AAA games like League of Legends, Far Cry, Metro Exodus, and Halo 3.

Angelic released its first gameplay footage back in September 2020 and has plans to release “Founder Series” NFTs, token sales, airdrops, and two demos this year.

Monthly statistics show the largest stablecoin in terms of market capitalization, tether (USDT), increased by 2% this month as the valuation crossed the $80 billion mark. USDT is massive compared to the rest of the stablecoins in the crypto economy as its valuation represents 42.78% of the $187 billion stablecoin economy today.

Furthermore, tether’s $80 billion market capitalization equates to 4.46% of the entire $1.83 trillion crypto economy. The second-largest stablecoin in terms of market capitalization, usd coin (USDC) only increased by 0.3% this past month.

USDC has a market valuation of around $52.3 billion today which equates to 2.92% of the crypto economy and 27.96% of the stablecoin economy. Metrics on March 14, 2022, indicate that between USDC and USDT, the market capitalizations combined equate to more than 70% of the entire stablecoin economy.

Hong Kong’s stock market had its worst day since 2008 this week, with the Hang Seng China Enterprises Index (HSCEI), an index of mainland China companies listed in Hong Kong, closing down 7% Monday and dropping another 4% by mid-day Tuesday.

BTC vs Hang Seng Index (HSI) vs Hang Seng China Enterprises Index (HSCEI). (Tradingview)

Overall the HSCEI is down 16% in the last 5 days, while the overall Hang Seng is down 11%.

Bloomberg reported that the Hang Seng Volatility Index, which is used to measure volatility in the Hong Kong stock market, has topped 40. This is the first time that the index has gone over 40 since March 2020, when the Covid-19 pandemic began and global markets imploded.

The price of bitcoin (BTC) seems to be fairly unaffected by the market volatility and is nearly flat over the last week. At the time of writing, bitcoin was trading at $38,804, up 0.5% in the last 24 hours, according to CoinGecko.

Flora Li, Huobi Research Institute Director, told CoinDesk that this market volatility was largely driven by regulatory developments in China and the U.S., and is unrelated to broader macroeconomic factors which is why it has not impacted the crypto market.

“Last Friday the SEC disclosed a list of delisting risks that included five U.S.-listed Chinese companies, sparking investor concerns about the delisting of Chinese stocks, so Chinese and U.S. investors have been selling off,” she told CoinDesk via email. Investors in Hong Kong have also been selling because of connections between the territory’s market and that in China, she added.