Getting a token from inception to market is no mean feat and more often takes years of planning and commitment. Achieving fair price discovery and stability requires just as much commitment and energy. Generally speaking, market makers categorize the token pricing journey into four main phases: pre-generation construction, primary listing, price discovery and expansion, and […]
Bitcoin News
China and UAE Praise Potential Role of CBDCs in Cross-Border Trade
China and the United Arab Emirates (UAE) have acknowledged the crucial role of central bank digital currency (CBDC) in facilitating cross-border trade and investment. In a joint statement, the two countries expressed their commitment to deepening bilateral and multilateral cooperation with respect to their CBDCs. China also expressed appreciation for the UAE’s recent direct cross-border […]
Bitcoin News
What Is the Howey Test? Understanding Its Role in Crypto Regulation
This year, with the U.S. Securities and Exchange Commission (SEC) increasing enforcement on businesses accused of offering unregistered crypto securities to American investors, regulators, attorneys, and judges have been utilizing the Howey Test to ascertain whether specific crypto assets constitute an “investment contract” and thereby fall under U.S. securities laws. Below is an in-depth exploration […]
Bitcoin News
Ethena’s (ENA) Crucial Role In Bitcoin Bull Market: Expert Identifies Critical Factors For Sustainable Growth
The recent volatility in the Bitcoin (BTC) price and its struggle to consolidate above the ,000 mark has raised questions about the sustainability of its ongoing bull run.
However, market expert Charles Edwards, co-founder of Capriole Invest, believes that the decentralized finance (DeFi) protocol Ethena Labs (ENA) could significantly extend and boost Bitcoin’s bull market to new heights.
In a recent post on social media site X (formerly Twitter), Edwards suggested that Ethena’s actions, such as constraining over-leverage in derivatives markets and reducing spot supply, can propel Bitcoin’s price higher for a longer period.
Bitcoin Bull Market Boost
To provide further context as to why Edwards is suggesting this possibility, on April 4th, Ethena Labs announced its intention to engage in a cash-and-carry trade involving Bitcoin.
According to the protocol’s announcement, Ethena Labs can manage risk and provide a more stable backing for its product by buying and shorting Bitcoin.
One of the key factors Edwards highlights is Ethena’s ability to constrain over-leverage in Bitcoin derivatives markets. By doing so, Ethena aims to prevent excessive risk-taking and potential market instability.
Additionally, Ethena’s taking spot supply off the market can reduce selling pressure, thus supporting Bitcoin’s price and prolonging the bull market.
The protocol also noted that Bitcoin derivative markets offer superior scalability and liquidity compared to Ethereum (ETH). This characteristic reportedly makes Bitcoin a suitable asset for delta hedging, a risk management strategy employed by Ethena.
With billion of Bitcoin open interest available for Ethena to delta hedge, the capacity for its synthetic dollar product, USDe, to scale has increased significantly. Ethena Labs noted in their announcement the following:
In just 1 year, BTC open interest on major exchanges (exc. CME) has grown from bn to bn, while ETH OI has grown from to bn BTC derivative markets are growing at a faster pace than ETH and offer better scalability and liquidity for delta hedging
Weighing The Risks
While Edwards’ statement is optimistic about Ethena’s impact on Bitcoin’s bull market, one user raised concerns about potential downsides. Edwards acknowledges that execution risks, such as custody failure or delta neutrality failure, could have adverse effects.
Edwards identifies custody risk as the most significant risk in this context. However, he highlights that any negative impacts will likely be short-lived, and market forces will ultimately dictate Ethena’s net annual percentage yield (APY).
In short, by limiting over-leveraging in future markets and reducing spot supply, Ethena could significantly support the price of BTC and extend the current bull run.
Currently, BTC’s price has experienced a significant decline, plummeting to the ,800 level. This marks a 4.3% decrease compared to Monday’s price.
In parallel, Ethena’s native token, ENA, has also followed the overall downtrend of the market, reflecting BTC’s price movement with a 4% decrease. Presently, ENA is trading at .22.
Featured image from Shutterstock, chart from TradingView.com
USDC to Go Native on Celo Blockchain, Eyeing Role as Gas Currency
The Celo Foundation has partnered with Circle to bring USDC, a leading stablecoin, into its network. This integration not only diversifies Celo’s stablecoin offerings but also positions USDC to become an official gas currency on the blockchain.
Celo Embraces USDC for Enhanced Digital Currency Functionality and Gas Payments
The Celo Foundation has announced that Circle will make its US Dollar Coin (USDC) native to the Celo ecosystem. This integration positions USDC to potentially become an official gas currency for Celo, subject to a future governance proposal.
USDC, a leading stablecoin pegged to the US dollar, joins Celo’s diverse stablecoin offerings, including Mento’s Creal and Exof, which are pegged to the Brazilian real and West African franc, respectively.
Celo, a mobile-first and Ethereum Virtual Machine (EVM)-compatible blockchain, is designed to cater to real-world applications. The adoption of USDC is a stride towards enhancing digital currency use in everyday transactions.
With a market cap of around 5 billion, stablecoins have become increasingly crucial as real-world assets (RWAs), offering widespread financial access and inclusivity through uncomplicated, permissionless, and borderless asset transfers.
Celo’s stablecoin applications, spanning remittances, savings, lending, aid distribution, and peer-to-peer (P2P) transactions, will be augmented by USDC’s integration.
In a notable feature of the Celo network, network gas fees (transaction costs) can be paid with stablecoins, enhancing the payment experience. Clabs, the leading contributor to the Celo technology stack, will propose enabling USDC as a gas payment option for the Celo community’s consideration.
Isha Varshney, Head of Strategy and Innovation at the Celo Foundation, expressed enthusiasm about bringing more RWAs onchain through the partnership with Circle, saying that stablecoins have “proven to be among the industry’s prevailing use cases.”
Shamus Noonan, Senior Manager of Business Development at Circle, echoed these sentiments: “This partnership will help broaden access for USDC and leverage Celo’s mobile-first user-base in regions where blockchain adoption is highest.”
Do you think it’s a good idea to be able to pay for gas with stablecoins? Share your thoughts and opinions about this subject in the comments section below.
Tether Criticizes UN Report for Ignoring USDT’s Role in Helping Developing Economies
Tether, the issuer of the stablecoin USDT, has blasted the findings of a United Nations Office on Drugs and Crime study which ignore the stablecoin’s “role in helping developing economies in emerging markets.” According to Tether, the stablecoin’s use of public blockchains means every transaction is trackable, making it “an impractical choice for illicit activities.”
Developing Economies Neglected by the Global Financial World
Tether, the issuer of the stablecoin USDT, has criticized the United Nations Office on Drugs and Crime (UNODC) study for singling out the stablecoin’s use in illicit activities. Tether argues that the UNODC report ignores the stablecoin’s “role in helping developing economies in emerging markets.” According to the stablecoin issuer, the global financial world often neglects these markets because “servicing such communities would be unprofitable.”
In its statement on Jan. 15, Tether rebuffed the UNODC assessment of USDT, stating that its collaboration with global enforcement agencies ensures “unparalleled monitoring” of the tokens. The use of public blockchains makes every tether transaction trackable thus making USDT “an impractical choice for illicit activities.”
As reported by Bitcoin.com News, the UNODC’s study also found USDT at the heart of many pig butchering scams. Jeremy Douglas, the UNODC’s regional representative for Southeast Asia, asserts that criminals use the stablecoin because they are aware that crypto-related regulations “are way behind illicit activity.”
Tether, however, counters the study’s findings by pointing to the freeze of tokens worth over 0 million in the past few months. For Tether, this act is proof of its commitment to eradicating the criminal use of cryptocurrencies. Meanwhile, the stablecoin issuer said it takes issue with what it sees as the UNODC’s bias against USDT.
“The UN’s analysis ignores the traceability of Tether tokens and the proven record Tether has of collaborating with law enforcement. Rather than focusing solely on risks the UN should also discuss how centralized stablecoins can improve anti-financial crime efforts,” the stablecoin issuer said.
Tether also urged the UNODC to consider working with the industry because doing so will help it “understand and execute modern strategies to fight financial crime.” Instead of attacking the stablecoin, the UNODC should instead consider engaging in a collaborative dialogue with the stablecoin issuer, Tether added.
What are your thoughts on UNODC’s findings against USDT? Let us know what you think in the comments section below.
Report Highlights USDT’s Role in the Underground Economy of Cambodia
A recent report from the South China Morning Post (SCMP) explains the enabling role that Tether’s USDT has on the underground Chinese-linked economy of Cambodia. The stablecoin is allegedly used in different activities like sidestepping capital controls for Chinese nationals, who can use it as an exchange device to acquire tools to facilitate online scams.
Tether’s USDT Present In Shadow Economy of Cambodia
A recent article published by the South China Morning Post (SCMP) has revealed the role that USDT, the largest dollar-pegged stablecoin in the cryptocurrency market, plays in enabling underground activities in Cambodia. According to SCMP, the cryptocurrency is widely available in exchanges targeting the Chinese expat community that lives in Cambodia.
Huione Pay, a Cambodia-approved financial platform, hosts a series of Telegram groups providing exchange services for cryptocurrency assets, including USDT. According to SCMP’s investigation, some of these groups offer tools to facilitate scam operations involving international SIM cards and data on Chinese citizens overseas.
Also, the report detected operators advertising bank cards that can be used to receive money from scam victims, criminal background checks, company records, and bank statements. The operators allegedly accept USDT for these services. Cambodia has banned cryptocurrency since 2017.
Jeremy Douglas, the United Nations Office on Drugs and Crime’s regional representative, explained that using cryptocurrency has overwhelmed local authorities that have been unable to keep up with the tech.
He stressed:
The capacity of criminal groups running online gaming, scams, money-laundering operations and underground banks is far more advanced than most enforcement agencies in Southeast Asia.
Tether has recently stepped up its compliance efforts, cooperating with the U.S. by proactively freezing all funds in addresses part of the Office of Foreign Assets Control (OFAC) Specially Designated Nationals and Blocked Persons list (SDN List). Also, the company revealed the extent of its collaboration with U.S. government agencies, stating it had “onboarded” the U.S. Secret Service on its platform and was in the process of doing the same with the Federal Bureau of Investigation (FBI).
What do you think about Tether’s alleged role in the Cambodian shadow economy? Tell us in the comments section below.
Survey: 4 in 5 Institutional Investors Agree Crypto Has Important Role in Global Financial Industry
An institutional investor survey conducted by digital asset bank Sygnum indicates a shift from skepticism to advocacy, “with over 80% now agreeing that crypto has an important role to play in the global financial industry,” said the bank’s digital asset research manager. “It’s now truly becoming a trusted gateway that is rapidly transforming the economic landscape.”
Sygnum’s Institutional Investor Survey
Digital asset bank Sygnum launched its inaugural institutional crypto market report last week. The report, titled “Future Finance 23,” features an institutional investor survey the bank conducted at the beginning of Q4 with more than 150 respondents possessing an average of over 10 years of investment experience. They included Sygnum’s institutional client base and equity investors, banks, hedge funds, multi and single-family offices, foundations, and asset managers.
According to the survey, 87% of respondents invest in “blockchain protocol tokens like bitcoin, ethereum, and solana (Layer 1 protocols).” In addition, 57% of respondents plan to increase their crypto asset allocation in the future.
Regarding why they invest in crypto, the report notes that 66% of respondents said it’s to “gain exposure to the crypto megatrend” while 46% cited portfolio diversification as their investment driver. Sygnum described:
This illustrates ongoing institutional adoption and growth of hybrid traditional-crypto portfolios, as well as a deepening knowledge of blockchain technologies.
Moreover, among respondents who plan to maintain or increase their crypto asset allocations, 62% expect higher future returns.
Meanwhile, 37% of investors “consider crypto a superior investment than traditional assets, demonstrating its attractiveness as a traditional-market hedge,” the report details. “Direct token investments remain the top choice for all respondents, indicating a clear preference for investment via direct ownership of tokens and generating yields through staking. This preference might shift as financial products continue to evolve and diversify.”
Sygnum Digital Asset Research Manager Lucas Schweiger, the report author, commented:
As the crypto industry has evolved, many institutional investors have also evolved from sceptics to evangelists, with over 80% now agreeing that crypto has an important role to play in the global financial industry. It’s now truly becoming a trusted gateway that is rapidly transforming the economic landscape.
Fabian Dori, Chief Asset Management Officer and Sygnum Group Deputy CEO, opined: “Over 85% of institutional crypto investors in our study believe that being regulated is essential to building trust. This is further confirmation that Sygnum’s founding strategy to be fully regulated from day one in all our regions was the right one.”
What do you think about this institutional investor survey? Let us know in the comments section below.
A Chat With Paolo Ardoino: What’s Behind The Bitcoin Price Rally, New Role As CEO, And Adoption
A year ago, our team sat down with Paolo Ardoino, CTO at crypto exchange Bitfinex, to talk about the Bitcoin price and the events that, for many, triggered the long crypto winter: the FTX collapse, and the downfall of major companies in the space.
Now, we sat down with Ardoino once again to talk about the underlying reasons fueling the current Bitcoin price rally, Bitfinex’s partnership with El Salvador, their ambition for the long term, and his new position as CEO at Tether, the company behind stablecoin USDT.
Ardoino draw a parallel between Bitcoin adoption and the legacy financial market, saying that adoption happens “slowly” but much more in the traditional system. In addition, he claims to be unbothered by his new role to focus more on the work. This is what he told us:
Q: What does your new position mean for you personally and for Bitfinex as a company? Will there be any changes for the users?
Paolo: No changes at all. I mean, I think on the Bitfinex side, again, my role didn’t change, and so things are progressing at the same pace, with the same attention to our user base. Same excitement for Bitcoin adoption and building Bitcoin infrastructure. So, absolutely no changes on the side. And also on the other side, I’ve been involved in strategy decisions for the last few years. I have always been excited to not just do development but also work on the strategy and the business side. So, also no changes there (…) Given the fact that I’ve been, anyway, leading the strategy made sense to just adjust the title on the Tether side as well.
For me. I mean, I’m the same guy that keeps working, keeps coding, keeps doing things that he likes all day long (…) So I like to think that for me, nothing changes. I’m not the type of guy that goes around with fanfare for title changes. I just like to work. I like the two companies that I’m working in. My passion is my work; it is my hobby.
Q: Having celebrated two years since the Bitcoin Law made BTC legal tender in El Salvador, do you believe it has significantly impacted the population? Are more people using Bitcoin now compared to 2021?
Paolo: So that’s a good question. So first of all, I am always carefully explaining that while we all want change, that is fast change can never be fast. People are historically by nature are reluctant to change. So I think it’s important that people keep that in mind because. I lived part of my time in Switzerland and I was talking to a few banks and local administrations in Switzerland and they were confirming that even for the credit cards and debit cards, it took 15 years to be widely used because people the first time they had the debit cards and credit cards in their pockets, and we are talking about Switzerland, that is basically the country of finance and banks, yet the adoption was so low because people didn’t trust that the piece of plastic that they have in their pockets. So with Bitcoin it’s the same, right?
So it’s about earning trust over time. I don’t think Bitcoiners need to push Bitcoin down people’s throats. I think Bitcoiners have to be patient, to explain things in a way that is simple to understand. Sometimes we bitcoiners are a bit too hard to comprehend or too hard to follow just because we like to use big words and complex explanations but that is not what we should be doing. We should be crafting education that is good for a kindergarten teacher or a taxi driver, school bus driver who is selling groceries. That is the real adoption takes time to understand, to get this type of feedback and to adapt the educational processes for that. So I’m sure that the Bitcoin adoption will come. There is a lot of new companies that I’m meeting this, that are moving here in El Salvador to help with the process, to provide further infrastructure, to invest themselves in education. So it’s just a process that takes time and sometimes you have mainstream media trying to demonize the work, pace, and speed at which things are moving here. But again, they are always forgetting that in traditional finance things always move even slower than these. So, I would say that Bitcoin adoption in Salvador is a success and will be even more successful in the next years.
Q: Could you share details about Bitfinex’s partnership with El Salvador? What initiatives are you currently working on, and what projects do you hope to develop in the coming years?
Paolo: We partnered with two educational projects. One is called Torogoz Dev, which focuses on leveraging the expertise of developers here to instruct and teach other developers. And so to create a community of developers that understand really well Bitcoin, the importance of that is that we want El Salvador to be able to grow its internal knowledge and internal infrastructure and software development base. It’s fine to bootstrap it with people coming from that side, but it’s more and more important to have knowledge and a strong base of developers drawing from the inside. And then also Mi Primer Bitcoin is another partnership that we achieved for a location that is more suitable for the broader public.
Then we obtained a securities license so that our goal there is to make sure that El Salvador will become the central financial hub for Central and South America. And I think it has all the chances to do that because the local administration, the president, the government are really forward looking. They seem to think things are on the right track to bring companies or have companies that can leverage securities here in El Salvador to raise capital for their companies, for their enterprises. And it’s quite unique because imagine the United States, if you are a small company that has around between 0,000 and million of market cap, it’s almost impossible to get a loan or to raise capital publicly because then you would need to go to a bank. But the banks are extremely expensive and they will take huge fees and it would cost too much in lawyers for you. So people don’t do that, small companies don’t do that, but Bitfinex Securities aims to create a more democratic access for companies that want to raise capital through securities.
Q: Turning to Bitcoin’s current market activity, there’s a widespread belief that the potential approval of a spot Bitcoin ETF has bolstered the rally. What is your perspective on this? Do you sense a shift in the market dynamics?
Paolo: So I think that since 2022 after FTX, Bitcoin has been extremely oversold. So I think that slowly but steadily it has recovered over the last months. We don’t see much Bitcoin (supply) the sell side right now. Institutions are accumulating Bitcoin left and right. So that is also one of the reasons, in my opinion, why the price is going up. And even with the Bitcoin ETF even further, you can argue easily that that will drive Bitcoin adoption. So I think it’s normal to see the price moving also considering the Halving next year.
I think people started to realize that there is a big difference between Bitcoin and everything else, every other token. So people are going for something that maybe doesn’t do 100x in a few days as some random tokens, but is a certainty, right? Is something that is stable, has a strong user base, has strong fundamentals, and that cannot be said for all the other tokens. So that’s why we are seeing this growing excitement around Bitcoin.
As of this writing, Bitcoin trades at ,400 after cooling off during the day. The cryptocurrency reached a yearly high north of ,000.
Cover image from Unsplash, chart from Tradingview
Crypto’s Role in Terrorism Financing Overestimated, Chainalysis Shows
Inaccurate methodologies have resulted in overstated metrics about the use of cryptocurrency by terror groups fighting Israel, according to Chainalysis. The analytics company has tried to “correct the record” on crypto’s role in terrorism financing amid ongoing hostilities in the Middle East.
Terrorism Financing Is a Small Portion of Already Small Illicit Crypto Volume, Says Chainalysis
Blockchain forensics firm Chainalysis has turned attention to some “overstated metrics and flawed analyses” in recent reporting about the leveraging of cryptocurrency by terrorist groups like Hamas, Hezbollah, and the Palestinian Islamic Jihad.
While working in support of efforts to freeze and seize digital assets that may be used to fund their activities, the analytics company recognized that some terrorist organizations raise, store, and transfer funds using crypto. At the same time it also pointed out:
Terrorism financing is a very small portion of the already very small portion of cryptocurrency transaction volume that is illicit.
“Terrorist organizations have historically used and will likely continue to use traditional, fiat-based methods such as financial institutions, hawalas, and shell companies as their primary financing vehicles,” Chainalysis said in a blog post on Wednesday.
It highlighted the employment of “inaccurate methodologies for estimating cryptocurrency’s role in terrorism financing” and noted that the inherent transparency of blockchain technology makes crypto less suitable for illicit activities.
The article examines the role of service providers in such transactions such as the Gaza-based Buy Cash business that provides money transfer and crypto exchange services which was recently sanctioned by the U.S. Treasury Department.
It also gives an example with a wallet affiliated with terror financing and its counterparties, among which are about 20 suspected service providers. The company’s analysts have found that eight of these have also transacted with Garantex, a sanctioned Russian exchange that, according to a recent report by the Wall Street Journal, moved money for Gaza groups.
While emphasizing that disrupting facilitators like these is a priority, Chainalysis also notes that “not all funds received by service providers are terrorist funds.” It warns that tracing through service providers could lead to inaccurate conclusions as when someone sends crypto to an address used by a service provider, it’s often pooled and co-mingled by the platform with the funds of other users.
What are your thoughts on the findings in the Chainalysis blog post? Share them in the comments section below.