Crypto News Headlines (28-Feb-2023)

The Federal Reserve Board announced Thursday it had again rejected crypto bank Custodia’s The cryptocurrency market is off to a much better start this year than most had expected with the token universe up 42% year-to-date to $1.1 trillion, Bank of America (BAC) said in a report on Friday.

“We expect 2023 to be the year of token price divergence,” the report said, “with tokens that provide utility and a call on cash flows outperforming meme and governance tokens.”

The bank views cryptocurrencies that power smart contract-enabled blockchain platforms, on which developers can build applications, as growth assets exposed to the same risks as growth stocks. It notes that these cryptos, and small-cap liquid tokens, have led this year’s rally.

Ethereum is another step closer to its next major upgrade dubbed Shanghai.

The Shanghai-Capella, simply called Shapella, upgrade was activated at epoch 56832 at 4:04 AM UTC as scheduled and finalized at 4:17 AM UTC on February 28. This specific test run tested one of the key Ethereum Improvement Proposals (EIPs), that of withdrawing staked Ethereum from the network.

Since Ethereum launched its Beacon Chain in 2020 and began its journey to becoming a proof-of-stake (PoS) network, more than 17 million ETH has been staked on the network. Users haven’t been able to withdraw these assets, however. The Shanghai upgrade, which is slated for March, will finally unlock this feature.

The Prudential Regulatory Authority (PRA), which regulates banks in the U.K., is planning to propose rules on issuing and holding digital assets, Vicky Saporta, executive director of prudential policy at the Bank of England, said in a speech Monday.

The country is trying to firm up its approach on crypto, including stablecoins and other digital settlement assets that could pose a risk to financial stability. Once the Financial Services and Markets Bill becomes law, authorities will have powers to regulate the sector. The U.K. government is currently consulting on its regulatory approach.

New standards for PRA-regulated firms will be coherent with rules for other sectors, according to a footnote accompanying the text of the speech. The Basel Committee on Banking Supervision, the banking industry’s global regulator, published a standard on how banks should treat crypto exposure in December.

According to an announcement from the privacy-centric bitcoin wallet platform Wasabi Wallet and the bitcoin payment processor Btcpay, merchants now have the ability to obfuscate their incoming and outgoing bitcoin (BTC) transactions.

The technology comes in the form of a new plugin for Btcpay, which was developed by Andrew Camilleri and based on Wasabi Wallet’s Wabisabi coinjoin coordination protocol. The Btcpay plugin’s scheme “protects the privacy of all their incoming and outgoing transactions by preventing sensitive information about their store’s payment history from leaking to unconcerned parties,” Wasabi explained in a summary sent to News.

The crypto industry has been raising its lobbying efforts amid the crypto winter that began last year. In 2022, market participants spent $25.57 million on lobbying in the United States. 

This number appears in a study published by the Money Mongers on Feb. 23. The count is based on data from OpenSecrets, a nonpartisan nonprofit, tracking the lobbying expenses (which should be publicly accessible by law) in the U.S.

According to this data, the general rise of the industry’s lobbying budgets made up 922% in five years between 2017 and 2022. In 2017, when the price of Bitcoin rocketed for the first time, the young industry spent only $2.5 million on lobbying efforts, while last year, this number stood at $25.57 million. In the previous year alone, the stakeholders raised their expenses by 121.41% from $11.54 million in 2021.

Robinhood Markets (HOOD) received an investigative subpoena from the U.S. Securities and Exchange Commission regarding its crypto operations shortly after the FTX crypto exchange filed for bankruptcy protection in November, the popular trading platform revealed in its latest 10-K filing.

The subpoena concerned, among other things, Robinhood’s “cryptocurrency listings, custody of cryptocurrencies, and platform operations.”

Robinhood also received similar subpoena requests from the California Attorney General’s office regarding its trading platform, custody of customer assets, customer disclosures and coin listing. The company said it is cooperating with California’s investigation.

Northeast Pennsylvania, a unique Bitcoin mining experiment is about to come online.

Called Nautilus, Terawulf is spinning up a nuclear-powered mining facility.

First announced back in 2021, Terawulf said that when Nautilus is at full capacity later in Q1 this year, the facility’s fleet of 15,000 mining rigs will have a hash rate of 1.6 exahashes per second (EH/s). That amounts to 1.6 quintillion hashes every second, or about 0.54% of the total computational power of the entire Bitcoin mining network today, which is currently running at 294.09 EH/s.

A second Ethereum test network (testnet), known as Sepolia, successfully replicated withdrawals of staked ether (ETH) today, bringing the Ethereum blockchain closer to its highly anticipated Shanghai Upgrade.

The upgrade was triggered at epoch 56832 at 4:04 UTC and finalized at 4:17 UTC (11:17 p.m. ET).

The Shanghai Upgrade will mark Ethereum’s complete transition to a fully functional proof-of-stake network, enabling validators to withdraw rewards earned from adding or approving blocks to the blockchain.

There is one more test, on Ethereum’s Goerli testnet, that is planned before Shanghai goes live.

The test on Sepolia was designed to provide developers with another dress rehearsal of the withdrawals similar to those that will happen on the main Ethereum blockchain. Testnets copy a main blockchain, in this case Ethereum, and allow developers to test any changes to their applications in a low-stakes environment.

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, explained why he believes all crypto tokens other than bitcoin are securities in an interview published Thursday by New York Magazine’s Intelligencer.

Gensler believes that the securities watchdog has all of the legal tools needed to oversee the crypto sector, the publication conveyed, adding that the SEC boss explained that pretty much every sort of crypto transaction already falls under the SEC’s jurisdiction except spot transactions in bitcoin itself and the actual purchase or sale of goods or services with cryptocurrencies.

The SEC chairman was quoted as saying:

Everything other than bitcoin … you can find a website, you can find a group of entrepreneurs, they might set up their legal entities in a tax haven offshore, they might have a foundation, they might lawyer it up to try to arbitrage and make it hard jurisdictionally or so forth.

Australian residents have been identified as the primary targets of a sophisticated network of Cryptocurrency lawyers have rebuffed comments made by the head of the United States securities regulator, who claimed in a recent interview that every cryptocurrency except Bitcoin BTC $23,480 is a security that falls under its jurisdiction.

In a wide-ranging Feb. 23 New York Magazine interview discussing crypto, Securities and Exchange Commission Chair Gary Gensler claimed “everything other than Bitcoin” falls under the agency’s remit.

He added other crypto projects “are securities because there’s a group in the middle and the public is anticipating profits based on that group,” which he said is not the case with Bitcoin.