Crypto News Headlines (24-Feb-2023)

The Federal Reserve Board announced Thursday it had again rejected crypto bank Custodia’s bid for Fed supervision, after previously denying the application last month.

The Fed board voted against reconsidering Custodia’s application, a press release said. According to a list of votes, the decision was unanimous, consistent with last month’s initial denial of Custodia’s application to become a member of the Federal Reserve system.

“The Board previously concluded that the firm’s application as submitted was inconsistent with the required factors under the law. The Board’s rules permit an applicant to request that the Board reconsider its application decision,” Thursday’s release said, though it did not share much information beyond that.

Software analytics company MicroStrategy recorded a paper loss of over a billion dollars on its Bitcoin (BTC) holdings in 2022 but says it has no plans to stop trading the digital asset.

MicroStrategy released its 2022 Q4 and year-end earnings on Feb. 2 showing the recorded impairment charges on its BTC holdings, net of gains on sale, was nearly $1.3 billion over the full year 2022.

Despite the paper losses, on a Feb. 2 earnings call MicroStrategy’s chief financial officer, Andrew Kang, said:

“We may consider pursuing additional transactions that may take advantage of the volatility in Bitcoin prices, or other market dislocations that are consistent with our long-term Bitcoin strategy.”

Coinbase is joining the competition of Ethereum L2 scaling projects, such as Polygon, Arbitrum, Optimism, Loopring, Starknet, and others, by launching an L2 called Base. The company announced the launch of the Base testnet on Thursday and advised the public to stay tuned for the upcoming mainnet launch.

On Twitter, Coinbase stated, “Base is an Ethereum L2 that offers a secure, low-cost, developer-friendly way for anyone, anywhere, to build decentralized apps. Our goal with Base is to make onchain the next online and onboard 1B+ users into the crypto economy.”

Coinbase detailed on Thursday that the team building Base has been working with OP Labs and the Optimism Collective.

The cryptocurrency exchange explained that Base will be open-source and will leverage Optimism’s OP Stack. Coinbase detailed it is also collaborating with Optimism. “We see this toolkit as an open platform that anyone can contribute to, fork, and extend to help the crypto economy scale,” Coinbase’s blog post said.

Australia’s financial regulator will carry out a “targeted review’ into Binance’s derivatives business in the country after the company revealed it had classed some users incorrectly.

On Thursday, Binance tweeted that it had liquidated the positions of 500 of its users in Australia, after identifying an error in how the accounts were labeled.

“Our team identified a small number of Australian users who were incorrectly classed as ‘Wholesale Investors’ on Binance,” the exchange said.

Under Australian law, a wholesale investor is someone who has more experience trading and potentially more funds to do so. If they do not meet the criteria to be a wholesale client, they are classed as retail traders, who are not allowed to trade derivatives.

Galaxy Digital has invested $44 million into an institutional cryptocurrency custody platform to tap into its proprietary asset storage and management capabilities.

Mike Novogratz’s cryptocurrency investment firm has completed the acquisition of GK8, which has developed its own patent cryptocurrency custody technology aimed at giving secure asset management for institutional users.

The service specializes in providing cold vault technology that allows the execution of transactions without internet connectivity. Its in-house multi-party computation (MPC) vault provides the ability to automate transactions, and the service also provides access to decentralized finance networks, tokenization, NFT and trading.

Crypto markets were trading mostly sideways, with some major tokens up a little but others falling slightly after the latest jobs data showed labor markets remaining stubbornly tight.

Initial jobless claims for the week ending Feb. 18 fell by 3,000 to 192,000 but arrived below the consensus estimate of 200,000. Strong jobs data has been thorny for the U.S. Federal Reserve in its efforts to reduce inflation rates from 6.4% to its target rate of 2%.

Strong jobs data, which is generally an economic boom, has counterintuitively weighed against asset prices because a strong employment environment leads to higher prices as organizations ratchet up wages to recruit and retain scarce talent.

Indonesia’s Ministry of Trade is reportedly aiming to roll out a national crypto exchange by June this year, six months after its previous target of December 2022.

Trade Minister Zulkifli Hasan shared the new target launch date on Feb. 2 at the opening of Crypto Literacy Month in Jakarta, noting that the government is currently reviewing which companies meet their criteria to become part of the exchange, according to local reports.

There are five active crypto exchanges which are currently registered with the country’s regulators, and according to Zulkifli the ministry’s crypto exchange could encompass all of them.

While these exchanges are currently facilitating all trades within the nation, the ministry’s exchange would act as a clearing house and custodian in the local crypto market.

Binance, the largest crypto exchange by trading volume, intends to hire a number of professionals this year for its technology hub in Iași, Romania’s third largest city. The hub was established in 2022 and the company is now recruiting its staff.

Job openings are already available for IT specialists, including in backend, quality assurance, frontend, and mobile, the Romania Insider portal reported. Expertise is needed in Java, typescript, iOS and Android, automation, and framework. Binance Country Manager for Romania Ilie Pușcaș stated:

Binance is constantly hiring and developing around the world, and Romania, recognized for its high skills in IT and technology, is an important point on our map.

Continuing its increased scrutiny of the cryptocurrency industry, the U.S. Federal Reserve released a new statement on Thursday reminding banks of the risks inherent in dealing in cryptocurrency and related assets.

“Certain sources of funding from crypto-asset-related entities may pose heightened liquidity risks to banking organizations due to the unpredictability of the scale and timing of deposit inflows and outflows,” the statement said.

Agencies joining the Federal Reserve in its bank crypto warning are the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC).

Australian residents have been identified as the primary targets of a sophisticated network of cryptocurrency call-center scammers — suspected to be run by Israel-based crime bosses. 

Evidence uncovered after a full-scale raid of four Serbian call centers and 11 residences by Serbian, German, Bulgarian and Cypriot authorities found that Australians were among the top countries being targeted. The news came from a Feb. 23 report by The Australian.

The raids saw fifteen people arrested and $1.46 million in cryptocurrencies seized.

According to the report, scammers from these call centers allegedly used advertisements on social media to lure in victims and offer promising investment opportunities with lucrative returns.