Bitcoin Community Cringes as Federal Reserve & the Treasury Look to Crack Down

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Bitcoin Community Cringes as Federal Reserve & the Treasury Look to Crack Down


The Bitcoin community is cringing as the Federal Reserve and the Financial Crimes Enforcement Network, a branch of the U.S. Treasury, looking to decrease the reporting requirements imposed on financial institutions.

Bitcoin Community Doesn’t Like the Recent “Travel Rule” Moves

These two entities are specifically targeting the so-called “Travel Rule,” which requires institutions to collect, retain, and share information about their clients. Those that have to abide by the Travel Rule include crypto exchanges. Integration of the Travel Rule into exchanges and other Bitcoin service providers is expected to take place next year.

The Fed and FinCEN are looking to reduce the threshold of the Travel Rule from $3,000 to $250. This means that if you bought $250 worth of Bitcoin from exchanges under this new rule, the exchange would be required to collect information regarding you.

A statement from the two authorities reads:

“Under the current recordkeeping and travel rule regulations, financial institutions must collect, retain, and transmit certain information related to funds transfers and transmittals of funds over $3,000. The proposed rule lowers the applicable threshold from $3,000 to $250 for international transactions. The threshold for domestic transactions remains unchanged at $3,000.”

Bitcoin investors and the crypto community believe that this is clearly an unneeded encroachment of privacy.

Matt Odell, an early Bitcoin adopter, commented:

“The travel rule will require invasive information sharing between companies for transactions greater than $250. The travel rule is extremely dangerous for users. Any company that chooses to comply without pushing back against regulators is part of the problem. It is that simple.”

Preston Byrne, a crypto-focused lawyer, echoed this. He said that “it should be $25,000,” not $250.

Part of a Wider Crackdown

This appears to be part of a wider crackdown against financial crimes, especially those enabled by crypto assets.

Jake Chervinsky, the general counsel for the developers of the DeFi app Compound Finance, said that a war is being waged against Bitcoin self-custody and privacy:

“I fear we’re heading for a world where withdrawing crypto from exchanges to self-custody is restricted as a means of attacking privacy. We’d have two separate crypto markets: one of ‘clean’ custodial coins & another of ‘dirty’ self-sovereign ones, with no bridge between.

This has been made clear by a number of recent enforcement efforts. Spain is looking to require all those that own Bitcoin or altcoins to report their holdings, while the U.S. DOJ and other agencies are releasing reports highlighting cryptocurrencies as a threat.

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Bitcoin Community Cringes as Federal Reserve & Treasury Look to Crack Down

UK Cooperative CEO Calls New R3 Corda Network ‘Next-Generation Bitcoin’

The chief executive officer (CEO) of Cordite Society Limited Richard Crook calls the new R3 Corda crypto-asset XDC “next-generation bitcoin.”

Cordite Society Limited, a United Kingdom-registered cooperative made of former bankers, has touted their new token XDC as an improvement upon the shortcomings of early crypto-assets. XDC is built upon the Public Corda Network, an open-source blockchain developed by distributed ledger technology (DLT) focused R3. 

Crook, a former executive at the Royal Bank of Scotland, told CoinDesk in an interview that XDC has been built from scratch to satisfy the demands of international regulators, including the Financial Action Task Force (FATF). 

He said, 

Regulators have set the requirements for what a digital currency needs to be, and that’s exactly where XDC fits in. It meets the requirements of most jurisdictions as a digital currency and is therefore a step ahead. We’re a next-generation Bitcoin or XRP.

He continued, saying XDC was designed to meet the basic functions of money and called the new token a “next-generation bitcoin or XRP.”

Crook also explained that XDC’s code will provide opportunities for central bank digital currencies (CBDCs) to run on the Corda blockchain, in addition to an expansion fo decentralized finance (DeFi). 

He highlighted the complexity of know-your-customer demands in finance and said XDC was poised to bridge the gap between user privacy and regulatory compliance. 

Featured Image Credit: Photo via Pixabay.com

Active Bitcoin Addresses Reach 2017s High When Price Was Near $20,000

Active wallet addresses on bitcoin’s network have reached their highest point since December 2017, when the price of BTC was trading for nearly $20,000. 

According to data collected by crypto analytics firm Glassnode, the number of active addresses or cluster of addresses owned by a single network participant has reached their highest point since December 9, 2017. User participation on the network has more than doubled over the past week, coinciding with bitcoin’s price rally from $11,300 to above $13K. 

Speaking in an interview with CoinDesk, a spokesperson for the Financial Conduct Authority (FCA)-regulated crypto index CF Benchmarks said the bump in wallet activity indicates growing investor participation with bitcoin. 

The spokesperson continued, 

Against the backdrop of PayPal’s announcement this week, it makes a lot of sense that interest in bitcoin is once again intensifying to heights not seen since late 2017.

In addition to the price rally, the surge in active bitcoin addresses follows on the heel of a monumental announcement by Paypal to provide support for BTC and other crypto-assets.

In a tweet published October 21, Galaxy Digital’s Mike Novogratz called PayPal’s news the “biggest” of the year for crypto. 

Featured Image Credit: Photo via Pixabay.com

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Bitcoin’s Stock Market Correlation Just Hit Zero for the First Time Since May

Bitcoin

Bitcoin

Bitcoin’s Stock Market Correlation Just Hit Zero for the First Time Since May


  • Bitcoin is now caught within an intense uptrend that has sent its price rocketing up to fresh yearly highs, with bulls currently testing these highs as they target further upside
  • This strength has come about due to the confluence of multiple positive news developments and has allowed BTC to far outperform the stock market
  • One bullish result of this recent rally has been Bitcoin’s correlation with the stock market diving to zero
  • This correlation previously plagued its price action and stopped it from seeing significant upside
  • One analytics firm is now noting that this is an incredibly bullish development

Bitcoin and the entire crypto market have been seeing some immense bullishness throughout the past few days and weeks, with sellers both being unable to gain any strong traction as BTC continues pushing higher.

Each rejection has only created slight selloffs that have been heavily absorbed by bulls. This is a positive sign that points to strength amongst its buyers.

Furthermore, BTC bulls have been catalyzing immense strength as of late, and it does appear that Bitcoin is on track to set significantly higher highs in the near-term.

This has caused its correlation with the stock market to plunge to zero, which is a bullish development.

Bitcoin Rallies to Yearly Highs as Buying Pressure Mounts

At the time of writing, Bitcoin is trading up just under 2% at its current price of $13,150. This is just a hair below its 2020 highs of $13,200 set a few days ago.

This level has proven to be resistance, but each rejection it has faced has grown progressively weaker.

It now appears that BTC is on the cusp of shattering this level and rallying to fresh highs.

BTC Shatters Correlation with the Stock Market 

One analytics firm noted that Bitcoin’s correlation with the stock market now sits at zero, which is a bull-favoring development.

“With Bitcoin’s +14.1% price surge this past week, its correlation to the #SP500 has dropped back to 0 for the first time since May on our 30-day rolling average model… BTC has historically thrived when its reliance on world markets, and other asset classes & industries, is minimal, and trading can operate independently…”

Bitcoin

Image Courtesy of Santiment.

As long as this trend persists throughout the coming few weeks as the election nears, it could mark the start of a new era in which Bitcoin is fully decoupled from equities.

This would bolster the safe haven narrative that many investors have subscribed to.

Featured image from Unsplash.
BTCUSD pricing data from TradingView.

Bitcoin’s Rivalry With Gold Plus Millennial Interest Gives It ‘Considerable’ Upside Potential: JPMorgan

Bitcoin has proven itself to be a risk asset, not a safe haven, with “considerable” potential upside, according to a Friday note from JPMorgan’s Global Quantitative and Derivatives Strategy team obtained by CoinDesk.

Writing to clients in “Flows & Liquidity,” one of JPMorgan’s flagship publications, the authors said that characterizing bitcoin as a “risk” asset rather than a “safe” asset is “more appropriate” based on the leading cryptocurrency’s increased positive correlation with the Standard & Poor’s 500 Index since March.

Bitcoin’s function as a risk asset is “likely more of a reflection of a need for an ‘alternative’ currency rather than a need for a ‘safe’ asset or ‘hedge’.”

“To some extent, this is also true with gold,” the authors add, although the yellow metal’s volatility is notably lower than bitcoin’s.

How investors currently perceive bitcoin’s value implies that it could “compete more intensely” with gold as an “alternative” currency over the coming years, the analysts wrote. Bitcoin’s role as a gold competitor is amplified by Millennial investors’ interest in cryptocurrency, according to the note, and the inevitability of the younger investor demographic becoming “over time a more important component” of the investor universe.

Bitcoin’s market capitalization would have to increase by a factor of 10 before it could match the total private sector investment in gold, the author’s note, adding that “even a modest crowding out of gold as an alternative currency over the longer term would imply doubling or tripling of the bitcoin price from here.”

“In other words, the potential long-term upside for bitcoin is considerable.”

Beyond Millennial investor interest, the note highlights the significance of corporate and legacy investor interest giving credibility to bitcoin as an investment vehicle. Specifically, PayPal’s Wednesday announcement of support for bitcoin and alternative cryptocurrencies (altcoins) is “another big step toward corporate support for bitcoin,” according to the note.

The authors also identify “strong growth” institutional investor interest in bitcoin indicated by activity in CME futures and options markets. As of Thursday, for example, CME bitcoin futures markets quietly became the second-largest measured by open interest, overtaking BitMEX and Binance, two dominant crypto-only trading platforms.

Utility as a story of value isn’t the only catalyst for potential upside, however. According to the authors, the price of bitcoin and altcoins could appreciate significantly if adopted as means of payment. “The more economic agents accept cryptocurrency as a means of payment in the future, the higher their utility and value,” the note says.

Ultimately, even though bitcoin “looks currently overbought for the near term,” the authors reiterate that the potential long-term upside for bitcoin is “considerable.”

CME’s Bitcoin Futures Rise Suggests Institutional Investors Are Starting to Swarm Toward Crypto

CME’s Bitcoin Futures Rise Suggests Institutional Investors Are Starting to Swarm Toward Crypto

The Chicago Mercantile Exchange (CME) has become the second-largest derivatives market for bitcoin futures in terms of open interest. The popular exchange has seen an influx of demand since the recent Paypal announcement and the Bitmex debacle as well.

  • Data shows that the Bitcoin Mercantile Exchange (Bitmex) open interest for bitcoin futures has taken a dive since it was charged with illegally operating in the United States.
  • CME Group’s rise in open interest began on Oct. 10, as Skew.com reported that the exchange added “nearly 1,500 contracts on the October expiry.”
  • Since launching in 2017, it’s taken three years for CME Group to catch up with the other bitcoin derivatives markets. CME is now the second-largest bitcoin futures market leader behind Okex in terms of open interest.

CME's Bitcoin Futures Rise Suggests Institutional Investors Are Starting to Swarm Toward Crypto

  • Skew.com’s statistics show that CME Group accounts for close to $800 million worth of bitcoin futures contracts this week.
  • The near $800 million represents over 15.9% of the aggregate open interest amongst 12 derivatives exchanges.
  • In terms of open interest, exchanges that follow Okex and CME include; Binance, Bitmex, Bybit, Huobi, FTX, Deribit, Bitfinex, Kraken, Bakkt, and Coinflex respectively.
  • Bitcoin proponents and luminaries believe CME’s open interest stems from banks and institutions beginning to support cryptocurrencies.
  • Chamath Palihapitiya, the CEO of Social Capital said: “After Paypal’s news, every major bank is having a meeting about how to support bitcoin. It’s no longer optional.”
  • In terms of aggregate bitcoin futures volumes, CME Group is still behind eight other derivatives exchanges. The top three bitcoin futures trading platforms by volume this week include Binance, Huobi, and Okex.

  • The increased open interest toward CME Group’s bitcoin futures derivatives contracts coincides with bitcoin’s (BTC) 14.21% price rise during the last seven days.
  • On Saturday, Skew.com tweeted about CME’s Commitment of Traders (COT) report. “Latest CME bitcoin futures COT report – leveraged funds net record short and institutional net record long,” Skew tweeted. “With market rallying, basis trades are increasingly attractive for hedge funds, currently yielding 10%+”

What do you think about CME Group’s bitcoin futures open interest outpacing Bitmex this week? Let us know what you think in the comments section below.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, Skew.com, Twitter,

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Frozen out? Bitcoin price correlation to other assets still undefined

What can I do to prevent this in the future?

If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware.

If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.

How US authorities are using old AML tools to crack down on crypto

What can I do to prevent this in the future?

If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware.

If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices.