Crypto News Headlines (16-Aug-2022)

Bitcoin (BTC) mining company PrimeBlock (Prime Blockchain) ended its plans to go public via a merger with blank check company 10X Capital Venture Acquisition (VCXA).

The two firms terminated their agreement by mutual consent on Aug. 12, according to a Securities and Exchange Commission (SEC) filing.

Plans for the listing were confirmed in April with expectations that the merger would be completed in the second half of 2022 carrying an enterprise value of $1.25 billion.

No official reason has been given for the decision. However, uncertain conditions that have set in across both the crypto and mainstream markets in recent months, could have been a factor.

SPAC deals have been a prevalent means for crypto companies to access public stock markets in recent years, but their attraction has cooled following the downturn in digital asset markets in recent months.

On Monday, one of Brazil’s largest brokerages XP launched its crypto trading branch XTAGE via a new partnership with Nasdaq.

The launch of XTAGE opens up new investment avenues to over 3.5 million customers, allowing customers to buy, sell, hold, and trade Bitcoin and Ethereum, according to the official announcement from Nasdaq.

XP employees piloted the crypto platform in May before integrating the service into the brokerage.

In the May announcement, executive vice president of XP Roland Chai said that “Nasdaq’s robust and flexible infrastructure technology, designed to meet market demands, as well as current and future regulatory structures, will allow XP to scale its platform reliably and introduce new asset classes as they grow and evolve.”

Indian Finance Minister Nirmala Sitharaman reportedly warned about cryptocurrency Saturday at an event organized by the BJP Economic Cell. She cautioned the public and entrepreneurs that cryptocurrency is not currency, stating:

The government has already warned. I think all of us will have to share our thoughts and move with a bit of caution on this.

On Thursday, News18 reported that the finance minister asked investors to exercise caution on crypto, emphasizing that a new law on cryptocurrency is coming soon.

Her statements came as India’s Enforcement Directorate (ED) probes cryptocurrency exchanges in relation to its money-laundering investigations. The law enforcement agency has frozen the assets of at least two cryptocurrency exchanges this month. Wazirx‘s bank assets worth $8 million were frozen on Aug. 5 and Vauld‘s bank and crypto assets worth about $46 million were frozen last week.

The United States Federal Reserve issued final guidelines that will be used to evaluate crypto company requests for master accounts.

The United States Federal Reserve has issued a final guideline to cryptocurrency companies to open accounts and payment services offered by Federal Reserve Banks. The bank said that many institutions offering new products and novel charters have asked for the so-called “master accounts,” and as such, it released this guideline on Aug. 15.

The Fed will use the guideline to evaluate requests for master accounts “with a transparent and consistent set of factors.” The notice offered some insight into how the guideline functions, saying that those with institutions with federal deposit insurance would experience a more streamlined process, “while institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks” would be subject to more intense reviews.

Singapore-based crypto lending platform Hodlnaut is seeking judicial management to manage its ongoing liquidity crisis and avoid the forced liquidation of assets in the current bear market.

The crypto lender informed its users in a Tuesday announcement that they have applied to the Singapore High Court to be placed under judicial management. The firm said:

“We are aiming to avoid a forced liquidation of our assets as it is a suboptimal solution that will require us to sell our users’ cryptocurrencies such as BTC, ETH and WBTC at these current depressed asset prices. Instead, we believe that undergoing judicial management would provide the best chance of recovery.”

Judicial management is a law in Singapore that allows financially troubled firms to rehabilitate themselves. Under this law, the court appoints an officer called the judicial manager for the troubled firm who takes over the charge from the company’s director for the time being. The appointment of a judicial manager can take up to a few months. Until the court confirms, the company may apply to appoint an interim judicial manager to act on a temporary basis in the same capacity.

Cryptocurrency exchange Huobi Global will stop offering derivatives trading services to users in New Zealand starting next week, just a couple of months after expanding operations to the country, the company said Tuesday.

The Seychelles-based exchange will halt services including coin-margined futures, coin-margined swaps, Tether (USDT)-margined contracts, options as well as any exchange traded products (ETP) to New Zealand-based users on Aug. 23, according to a notice on Huobi’s website.

On the same day, Huobi’s user agreement will be updated to include New Zealand as a “restricted jurisdiction” with respect to derivatives trading.

Huobi expanded operations to New Zealand as recently as June, saying it had been entered into the country’s financial services provider registry at the New Zealand Companies Office.

On Monday, Galaxy Digital Holdings (TSX: GLXY) explained that the company has terminated a proposed $1.2 billion stock and cash deal that would allow the crypto firm to acquire the digital asset custody business and financial services provider Bitgo. Galaxy’s announcement details that the abandoned deal was due to Bitgo’s “failure to deliver” specific financial documents.

“[Galaxy] exercised its right to terminate its previously announced acquisition agreement with Bitgo following Bitgo’s failure to deliver, by July 31, 2022, audited financial statements for 2021 that comply with the requirements of our agreement,” the crypto company detailed. “No termination fee is payable in connection with the termination.”

The news follows Galaxy’s exposure to the Terra blockchain implosion and the company’s founder Mike Novogratz addressing the LUNA subject in mid-May. The letter Novogratz wrote explained that “there is no good news in what happened in markets or to the Terra ecosystem,” but reminded investors of the core tenets of investing like taking profits along the way, and risk management. Novogratz stressed at the time that Galaxy Digital kept to the core tenets when it came to its investments in LUNA.

Up until now, American financial institutions that wanted to conduct both crypto transactions and traditional banking services have had to pick a lane.

That may soon change.

The Federal Reserve released formal guidelines this afternoon to oversee the process by which “institutions offering new types of financial products or with novel charters” could be granted so-called “master accounts,” a key financial status that allows for direct payments with, and access to, the Fed. All federally-chartered banks possess a master account.

The Fed’s 49-page ‘Final Guidance’ mentions the word “cryptocurrency” only once, when discussing the sort of novel institutions that may seek master accounts under these guidelines. But the subtext of today’s announcement is inextricably linked to the crypto industry.

Digital asset management firm, CoinShares, recently published the 92nd volume of its Digital Asset Fund Flows Weekly Report. Data from the report shows that ETH investment products recorded the highest inflow in the past week amongst digital assets. With a weekly influx of $16.3M, ETH essentially surpasses BTC, which saw outflows of $8.5M.

The asset with the second highest inflows last week was Solana, totaling $0.6M. ETH’s inflows from the previous week mark a nearly seven consecutive weeks of flows into the asset. This is indicative of exponentially increasing investor interests in the asset class.

The CoinShares report cites the upcoming Merge as a significant catalyst for this record. With clarity on the date for The Merge and entities taking preparatory measures, investors now see the imminent reality of the event. This has influenced the growing attention towards ETH.

A recent spike in short-term Bitcoin (BTC) holders could signal a “final flush” of sellers, meaning the capitulation events have played out, leaving the market ready for months of accumulation.

The latest “The Week On Chain” report from market analysis firm Glassnode on Monday points out that short-term holders (STHs) have expanded their holdings by 330,000 BTC since May’s catastrophic Terra collapse. As a result, they may be the canary in the coal mine signaling the path to market recovery.

During the mass sell-offs starting in May through June, Short-term holders of Bitcoin established a new trend by buying up extremely cheap coins at or below $20,000 which puts them in an “advantageous financial position.”