Crypto News Headlines (16-May-2022)

The Luna Foundation Guard (LFG), official stewards of Terra’s bitcoin reserves, released a statement on Monday documenting how it disbursed millions of dollars worth of crypto in its failed attempt to maintain the peg of stablecoin terraUSD (UST).

In the statement, LFG notes that its BTC reserves have depleted almost entirely — from around 80,000 BTC to about 300. The remaining assets, which mostly comprise of the crashed UST and LUNA tokens, will apparently be used to compensate investors.

In one of the most calamitous events in crypto memory, the $40 billion Terra ecosystem collapsed last week when the UST stablecoin — which is supposed to be worth $1 — dropped below 20 cents. The LUNA token, which is designed to serve as a sort of shock absorber for UST’s “algorithmic” dollar-pegging mechanism, crashed from $80 to below $0.002.

In a tweet on Monday, LFG said it sold off most of the BTC in its reserves for UST as Terra’s ecosystem was beginning to collapse early last week.

LFG said it transferred over 50,000 BTC “to trade with a counterparty” on May 8, as the UST price was originally starting to slump.

HM Treasury, the U.K. Treasury Department, is moving forward with plans to regulate payment stablecoins despite a crypto market meltdown last week, The Telegraph reported Saturday.

The affirmation followed the collapse of Terra which saw algorithmic stablecoin terrausd (UST) lose its peg to the U.S. dollar and terra (LUNA) fall to near zero.

A HM Treasury spokesman said:

Legislation to regulate stablecoins, where used as a means of payment, will be part of the Financial Services and Markets Bill which was announced in the Queen’s Speech.

“This will create the conditions for issuers and service providers to operate and grow in the UK, whilst ensuring financial stability and high regulatory standards so that these new technologies can be used reliably and safely,” the spokesperson added.

Prince Charles delivered the Queen’s Speech last week, outlining the British government’s legislative agenda for the next parliamentary year. Two of the bills put forward specifically mention crypto assets.

Grayscale Investments has today announced that its “Future of Finance” exchange-traded fund (ETF) will list on the London Stock Exchange, Borsa Italiana, and Deutsche Börse Xetra.

ETFs are a popular investment tool that lets investors buy commodities or a basket of shares for a relatively low management fee.

The Grayscale Future of Finance UCITS ETF (GFOF) is thus a way for investors to make a single stock purchase to bet on the performance of a variety of companies heavily committed to the crypto economy.

The fund is based on the Bloomberg Grayscale Future of Finance Index (BGFOF), which tracks the performance of financial services companies “projected to be leaders of the emerging digital economy.”

These include stocks such as Robinhood, PayPal, Block, and Coinbase, and several crypto mining and energy management firms, including Argo Blockchain, Northern Data, and Canaan.

Sam Bankman-Fried, the founder of crypto exchange FTX, has criticized the efficiency of Bitcoin (BTC) as a payment network, only to meet heavy backlash from the crypto community.

During an interview with the Financial Times, Bankman-Fried fueled environmental concerns associated with the Bitcoin network’s mining consensus, proof-of-work (PoW), and claimed it’s not scalable enough to accommodate millions of transactions.

He advocated for the use of proof-of-stake mining consensus instead and claimed it is better suited for blockchain payment networks. He said:

“Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and lower energy cost. Proof of stake networks are.”

Bankman-Fried comments resonated with the recent calls for a complete ban on PoW by a group of billionaire lobbyists comprising Ripple co-founder and several other environmental groups. However, Bitcoin proponents have been actively fighting against the ongoing narration calling for a change in the code of the Bitcoin network’s mining consensus.

Binance CEO Changpeng Zhao said the crypto exchange made large paper gains on its investment in Luna but has now lost practically all of them.

The exchange invested $3 million into the Terra ecosystem in 2018, receiving 15 million Luna tokens. At Luna’s peak price, that investment was worth $1.6 billion, according to Zhao. Yet due to last week’s collapse of Luna — and its related stablecoin TerraUSD (UST) — that investment has now plummeted in value to just $3,400. Or, in Zhao’s words, “not much.”

Yet it’s not all bad news. The exchange received around $10.3 million worth of UST in staking rewards (likely through Anchor, which offered up to 20% yield). While that would be worth $74 million if UST was holding its peg to the dollar and not trading at its current value of $0.13, it means Binance is still up on its initial investment.

Stocks limped across the finishing line on Friday to close lower for a sixth consecutive week, a losing streak as bad as any that investors have seen over the past decade.

As gutting as that sounds, Goldman Sachs figures things could get worse. Much worse.

In a note to clients, the investment bank’s equities team calculated twin full-year forecasts for the S&P 500.

The base case is for the benchmark to close out 2022 at 4,300, a near-7% premium over Friday’s close. This assumes Corporate America will be able to eke out profits as they adapt to a coming slowdown.

The worst case is far bleaker. It involves a full-on recession slamming the U.S. economy, and that would mean stocks falling a further 10% to close out 2022 at 3,600.

Lloyd Blankfein, Goldman’s former CEO, and current senior chairman, appears to be banking on the latter scenario. On Sunday, he told a Face the Nation interviewer that there’s a “very, very high risk” the American economy will slump into a recession.

WASHINGTON, D.C. — Terra may be on the ropes after last week’s dramatic death spiral, but the cryptocurrency’s name is still loudly emblazoned on the ballpark of Major League Baseball’s Washington Nationals.

As the team wrapped up a series against the visiting Houston Astros on Sunday, CoinDesk went to see if the $38.5 million advertising deal had worked. Were people at the ballpark aware of Terra? Had anyone bought the asset, now worth far less than a penny, when it was trading at $115 on opening day just a few months ago?

Responses from the stadium’s employees and patrons would suggest not. Few had heard of Terra’s demise despite the attention it’s captured in the cryptosphere, with even fewer owning the asset, or any cryptocurrency altogether. One elevator operator said Terra was Latin for “dirt.”

Nevertheless, Terra may be a name Nationals fans eventually come to recognize. In February, LUNAtics rubber stamped a proposal to place the blockchain’s name on in-stadium branding for the next five years, with payment for the deal being made up-front and in U.S. dollars.

Famed value investor Bill Miller is still bullish about bitcoin despite recent price declines. He confirmed in an interview with CNBC Thursday that he owns “a lot” of bitcoin and hasn’t sold any.

Miller is the founder of Miller Value Partners and currently serves as its chairman and chief investment officer. He manages the firm’s Opportunity Equity and Income Strategy funds. Prior to Miller Value Partners, he co-founded Legg Mason Capital Management.

He explained that if bitcoin goes down to half its current price, he wouldn’t be surprised due to its volatility. However, “I would be grim because I own a lot of it,” the fund manager said.

Miller was asked, “Are you selling any [bitcoin], have you sold any?” He replied:

The short answer is no.

However, he clarified that he sometimes sells “stuff” to meet margin calls. “I’ve sold stuff to meet margin calls because I’m always on margin and the stuff that you sell is the stuff that is very, very liquid, for me anyway,” he explained, without mentioning BTC specifically.

In a release setting out its priority areas, the Australian Taxation Office (ATO) reminded consumers that selling a token can attract capital gains tax, just as it would for the sale of property, shares, or another asset.

Taxes on the sales of digital tokens, including non-fungible tokens (NFTs), were identified as one of the areas where the taxman is frequently seeing errors.

“Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” said ATO assistant commissioner Tim Loh.

At a time when many cryptocurrencies have taken a hit amid the fallout of Terra’s collapse, Loh also had a stark reminder for those offloading digital assets for less than they originally paid.

“Remember you can’t offset your crypto losses against your salary and wages,” he said.

On Feb. 2, the city of Miami cashed out its cryptocurrency MiamiCoin for the first time, depositing $5.25 million into city coffers. Miami mayor Francis Suarez hailed it as a “historic moment” and predicted the cryptocurrency could one day even replace municipal taxes as the government’s primary source of funding.

MiamiCoin’s creator, an organization called CityCoins, has been no less enthusiastic, portraying the coin as a financial experiment that will empower citizens with a “community-driven revenue stream” while spurring new digital city services.

Miami is not the only city with big cryptocurrency dreams. CityCoins announced a similar cryptocurrency for New York in November 2021, and plans to release a coin for Austin, Texas, soon. Other cities have launched their own crypto ventures: Forth Worth, Texas, for example, will soon be running bitcoin mining rigs in city hall.