CoinDesk Crypto

The director of the People’s Bank of China’s (PBoC) Digital Currency Research Institute says designing its digital currency to be fully anonymous isn’t “feasible.”

Mu Changchun said the bank needs to balance privacy for users with “international consensus” on risk control, according to a report from STCN, a state-owned daily newspaper.

“The anonymity of the central bank’s digital currency is limited under the premise of controllable risks,” Mu said at the China Development Forum in Beijing on Saturday. “A completely anonymous central bank digital currency is not feasible” as it would would violate anti-money laundering, anti-terrorist financing and anti-tax evasion regulations, he said.

Related: ‘Wolf of Wall Street’ Jordan Belfort Predicts Bitcoin Hitting $100K

However, Mu argued the digital yuan would provide more privacy than commercial payments products like bank cards, WeChat or Alipay, which are tied more closely to the banking system.

The most anonymous digital yuan wallet would be linked to a cellphone number and allow users to make small payments. Those wishing to transact larger amounts would need to upgrade to one with more know-your-customer verification procedures, according to Mu.  

China is leading major nations in the development and piloting of a central bank digital currency (CBDC), but the project has raised concerns around the amount of insight it would give authorities into users’ financial data and behavior.

Read more: China, Singapore Look Ahead to CBDC Future at World Economic Forum

Related: Crypto Is Banned in Morocco, but Bitcoin Purchases Are Soaring

Its planned “controllable anonymity” will mean the central bank could observe and monitor transactions taking place while the transacting parties would remain private. But it still allows the PBoC to analyze transactions to monitor “crimes.”

Mu said digital yuan wallets use “ID anonymization technology” meaning personal information is concealed from “counterparties, operating agencies and other commercial institutions.” However, too great an emphasis on anonymity raises the cost of fighting crime, and could bring severe consequences, he said.

Related Stories

• First Mover – Mar 24, 2021
• All About Bitcion – Mar 23, 2021

What exactly are NFTs? Is this just another digital vs. analog battle brewing or something more? We take a deep look into the emerging technology.

Bitcoin-related Internet searches are jumping in Turkey after President Recep Tayyip Erdoğan’s ouster of the nation’s top central banker sent the local currency, the lira, plunging in foreign-exchange markets.

The Google search value for the term “Bitcoin” more than quadrupled to 100 on Sunday after Erdoğan dismissed central bank governor Naci Agbal, triggering fears of a sharp slide in the lira (TRY).

The lira plunged at least partly on concerns the new top central banker might implement capital controls as a way of tamping down the nation’s high inflation rate. Such a move would represent an alternative to implementing rate hikes, which are known to preserve the fiat currency’s value.

Related: ‘Wolf of Wall Street’ Jordan Belfort Predicts Bitcoin Hitting $100K

It’s possible some Turks see bitcoin as a way to deal with any potential capital controls or as a store of value if inflation accelerates or if the currency’s value falls further against global counterparts.

At press time, Google Trends, a barometer for gauging general or retail interest in trending topics, was returning a value of 41 on “Bitcoin” – still significantly higher than the levels seen last week. Meanwhile, search values for gold remain flat in Turkey in the wake of the latest financial upheaval.

Google Trends provides access to a mostly unfiltered sample of actual search requests made on Google and scales searches on a range of 0 to 100, according to the company. A score of 100 indicates it is the maximum number of searches observed for a term during a given time frame.  

Agbal raised interest rates by 200 basis points last week and has been widely credited for bringing stability to the lira’s exchange rate during his four-month tenure, as Bloomberg noted. As such, his dismissal has pushed the lira lower.

Related: People’s Bank of China Official Says Fully Anonymous Digital Yuan ‘Not Feasible’

The lira hit a 4.5-month low of 8.28 per U.S. dollar early Monday and was last seen changing hands near 7.92 per U.S. dollar, representing a 10% drop on the day, according to data source TradingView.

Arresting the sell-off may be challenging because the new central bank head, Sahap Kavcioglu, isn’t a fan of rate hikes as a way of curbing inflation or exchange rate slide, according to Bloomberg. Also, Erdogan appears to believe interest rate hikes cause inflation rather than control it.

It remains to be seen if there is a sustained decline in the lira and a rise in hedging demand for bitcoin. Some observers maintain that an impending currency crisis would accelerate the adoption of bitcoin in Turkey. The activity on local exchanges has picked up in the past 24 hours or so.

Also read: Bitcoin and Inflation: Everything You Need to Know

“There was a spike [in volumes] during the weekend because classical finance markets were closed,” Onur Gözüpek, cryptocurrency consultant at crypto exchange BtcTurk Pro, told Coindesk in an email.

Gözüpek added that users are buying stablecoin tether (USDT) as an alternative to the greenback. “Banks have lately stopped exchanging the dollar and euro on online banking systems,” Gözüpek said. “Currently USDT/TRY has the second highest trading volume after the BTC/TRY pair on BtcTurk.”

Related Stories

• Crypto Is Banned in Morocco, but Bitcoin Purchases Are Soaring
• First Mover – Mar 24, 2021

A lawyer has described as “bombshells” comments made by the magistrate judge in the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and blockchain payments tech provider Ripple.

In a YouTube video published Saturday, attorney Jeremy Hogan, who is not involved in the case, said Judge Sarah Netburn of the Southern District Court in New York interrupted the discussion to apparently suggest the XRP cryptocurrency is more like a currency than a security.

“My understanding about XRP is that not only does it have a currency value but it has a utility, and that utility distinguishes it from bitcoin and ether,” the judge said, according to Hogan.

Related: Osprey Funds CEO: Trust Funds Will Morph Into ETFs

This matter is at the heart of the SEC’s case against Ripple because the regulator claims XRP had been sold by the company and its executives without either being registered as a security or the firm seeking an exemption.

“No matter what the SEC may try and argue, a currency and a security are, by definition, in opposite … These are two different things,” Hogan said. He added the judge offering the view that XRP has utility is “exactly what Ripple wants the court to be thinking.”

Netburn’s comments came during a virtual hearing, observed by Hogan, over the SEC’s attempt to obtain personal financial information from Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen.

The second “bombshell,” said Hogan, came as Netburn questioned whether “everyone who sold XRP – including you and me – are selling illegal securities” based on the SEC’s prior argument. The SEC attorney responded by saying that, under Section 4 of the Securities Act, only Ripple and its affiliates (meaning employees, Hogan said) could be accused of illegal sales.

Related: Financial Watchdog Group Updates Guidance Affecting DeFi, NFTs

This being the case, exchanges that have stopped selling XRP since the SEC action could now potentially relist it, according to Hogan, who stressed he wasn’t offering legal advice.

However, Park Bramhall, senior counsel at Lowenstein Sandler LLP, takes a different view. “The fact that the SEC has apparently stated that parties other than Ripple and its affiliates can resell XRP under Section 4 of the Securities Act doesn’t mean that exchanges are free to relist XRP,” he said.

“What the SEC appears to be saying here is that, in its view, parties other than Ripple and its affiliates can rely on the exemption from registration provided under Section 4(a)(1) of the Securities Act for resales of XRP, and that exemption is only relevant if XRP is deemed to be a security,” he told CoinDesk.

See also: Ripple’s Chris Larsen Files Motion to Dismiss SEC Case Over XRP Sales

Netburn is not the primary judge in the case but she is assisting District Judge Analisa Torres with aspects of the case such as discovery and mediation.

“If I’m Ripple, I’m feeling pretty good that my mediator and consulting summary judgment judge just said on the record what I essentially argued in my pleadings,” Hogen said.

There was no official court documentation on the hearing available at press time.

UPDATE (15:25 UTC, March 22 2021): Add comment from Park Bramhall.

Related Stories

• Former SEC Chief Clayton to Chair Investment Giant Apollo
• Danish Red Cross Backs $3M Blockchain Volcano Catastrophe Bond

A lawyer has pointed out two “bombshells” dropped by the magistrate judge in the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and blockchain payments tech provider Ripple.

In a YouTube video published Saturday, attorney Jeremy Hogan, who is not involved in the case, said Judge Sarah Netburn of the Southern District Court in New York interrupted the discussion to apparently suggest the XRP cryptocurrency may not be a security as the SEC claims.

“My understanding about XRP is that not only does it have a currency value but it has a utility, and that utility distinguishes it from bitcoin and ether,” the judge said, according to Hogan.

Related: ‘Wolf of Wall Street’ Jordan Belfort Predicts Bitcoin Hitting $100K

This matter is at the heart of the SEC’s case against Ripple because the regulator claims XRP had been sold by the company and its executives without either being registered as a security or the firm seeking an exemption.

“No matter what the SEC may try and argue, a currency and a security are, by definition, in opposite … These are two different things,” Hogan said. He added the judge offering the view that XRP has utility is “exactly what Ripple wants the court to be thinking.”

Netburn’s comments came during a virtual hearing, observed by Hogan, over the SEC’s attempt to obtain personal financial information from Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen.

The second “bombshell,” said Hogan, came as Netburn questioned whether “everyone who sold XRP – including you and me – are selling illegal securities” based on the SEC’s prior argument. The SEC attorney responded by saying that, under Section 4 of the Securities Act, only Ripple and its affiliates (meaning employees, Hogan said) could be accused of illegal sales.

Related: People’s Bank of China Official Says Fully Anonymous Digital Yuan ‘Not Feasible’

This being the case, exchanges that have stopped selling XRP since the SEC action could now potentially relist it, according to Hogan, who stressed he wasn’t offering legal advice.

See also: Ripple’s Chris Larsen Files Motion to Dismiss SEC Case Over XRP Sales

Netburn is not the primary judge in the case but she is assisting District Judge Analisa Torres with aspects of the case such as discovery and mediation.

“If I’m Ripple, I’m feeling pretty good that my mediator and consulting summary judgment judge just said on the record what I essentially argued in my pleadings,” Hogen said.

There was no official court documentation on the hearing available at press time.

Related Stories

• Crypto Is Banned in Morocco, but Bitcoin Purchases Are Soaring
• First Mover – Mar 24, 2021

Bitcoin (BTC) has been stuck in a range of $54,000 to $60,000 over the past few days. The near 40% rise from the Feb. 28 low is slowing as traders continue to take profit from the March all-time high around $61,000.

• The 50-period volume weighted moving average (VWMA) on the four-hour chart has flattened over the past week, which signals a slowing uptrend.
• The last time the VWMA declined was during the February sell-off.
• A flatter moving average could also be a sign of sideways price action, reflecting indecision between buyers and sellers.
• Bitcoin will need to defend lower support around $54,000 and break above $61,000 to resume the short-term uptrend.
• On the daily chart, initial support is around $50,000.

Related Stories

• ‘Wolf of Wall Street’ Jordan Belfort Predicts Bitcoin Hitting $100K
• People’s Bank of China Official Says Fully Anonymous Digital Yuan ‘Not Feasible’
• Crypto Is Banned in Morocco, but Bitcoin Purchases Are Soaring
• First Mover – Mar 24, 2021

India’s digital asset investors face more uncertainty amid reports the government is mulling a block on internet protocol (IP) addresses of exchanges and companies that trade cryptocurrencies.

• The claim comes via a report Monday from local magazine Business Today, citing a source with knowledge of the matter, but cannot be verified.
• Previously, India has attempted to block IP addresses of adult sites and some apps, according to Business Today, but with limited success due to the use of virtual private networks (VPN).
• India’s government has said it plans to introduce a bill in the current session of parliament that would ban “private cryptocurrencies,” though its scope is far from clear.
• There have been mixed signals regarding the planned legislation, with one government official stating India would completely ban cryptocurrency use, and another suggesting that will not be the case.
• Minister of Finance and Corporate Affairs Nirmala Sitharaman said earlier this month, “From our side, we are very clear that we are not shutting all options. We will allow certain windows for people to do experiments on the blockchain, bitcoins or cryptocurrency.”
• In February, Indian cryptocurrency exchanges launched the #IndiaWantsBitcoin campaign, an initiative to convince parliament to regulate cryptocurrencies rather than impose an outright ban.

Read more: India’s Central Bank Chief Airs ‘Major Concerns’ About Crypto Risks

Related Stories

• ‘Wolf of Wall Street’ Jordan Belfort Predicts Bitcoin Hitting $100K
• People’s Bank of China Official Says Fully Anonymous Digital Yuan ‘Not Feasible’
• Crypto Is Banned in Morocco, but Bitcoin Purchases Are Soaring
• First Mover – Mar 24, 2021

The central bank of Nigeria (CBN) has clarified a statement it issued last month that seemed to order financial institutions to shut down all accounts associated with cryptocurrency trading.

According to a report on Sunday, bank officials have said the directive is not to be mistaken for an outright ban. Instead, the bank said it has reiterated an already imposed 2017 ban on institutions facilitating cryptocurrency transactions.

Speaking on behalf of the bank’s chief, Godwin Emefiele, deputy governor Adamu Lamtek said the bank had never banned cryptocurrency activity in the country.

Related: India May Block IP Addresses of Crypto Exchanges: Report

The CBN did not place restrictions from use of cryptocurrencies and we are not discouraging people from trading in them, said Lamtek. “What we have just done was to prohibit transactions on cryptocurrencies in the banking sector.”

Lamtek was speaking at the 30th seminar for Finance Correspondents and Business Editors held in the country’s capital, Abuja.

Confusion arose last month when the CBN said it was reminding regulated banking institutions that “dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.” Institutions were told to “identify persons and/or entities” transacting with cryptocurrency or operating crypto exchanges.

That prompted many bitcoin users in the inflation-hit nation to take to social media in anger, seeking clarification on the bank’s order. In response, the CBN provided a five-page statement that included a pledge to protect Nigerian citizens from the risks of cryptocurrencies. 

Related: Bidding on NFT of First-Ever Tweet Ends Today; Top Offer Remains at $2.5M

See also: Nigerians Turn to Stablecoins for Protection Against Inflation

Related Stories

• Crypto Long & Short: Bitpanda’s Raise Is About More Than Market Infrastructure
• AMD, Unlike Nvidia, Won’t Try to Block Crypto Miners From Using Its Chips: Report

The auction on a tokenized version of the first tweet ever sent is due to end in a few hours with a top bid of $2.5 million, where it’s been stuck for more than two weeks.

• The first-ever tweet was sent by Twitter founder and CEO Jack Dorsey 15 years ago today:

• Earlier this month, Dorsey called attention to a tokenized version of that tweet on the non-fungible token (NFT) platform Valuables.
• Even though the tweet was minted in December 2020, Dorsey’s action ignited a brief bidding war between Justin Sun, the founder of TRON and the CEO of BitTorrent, and Sina Estavi, whose LinkedIn profile describes him as CEO of Malaysia-based (and TRON-affiliated) Bridge Oracle.
• Estavi’s $2.5 million offer has been the high bid since March 6.
• While there was initial skepticism as to whether Dorsey would actually “sell” the NFT of the tweet, on March 9 he said via tweet (how else?) that the auction would end on March 21 and that he would accept the winning bid.

• GiveDirectly is a non-profit organization that specializes in giving direct cash transfers to low-income people, without strings attached. “Africa response” in Dorsey’s tweet likely refers to its “COVID-19 Africa Response” campaign.
• Given Twitter is based in San Francisco, it’s possible Dorsey won’t consider the auction over until midnight West Coast time.  

Related Stories

• Crypto Long & Short: Bitpanda’s Raise Is About More Than Market Infrastructure
• AMD, Unlike Nvidia, Won’t Try to Block Crypto Miners From Using Its Chips: Report
• Scaramucci Says More Companies Should Be Holding Bitcoin on Their Balance Sheets
• Hal Finney’s ‘Bitcoin and Me’

Chipmaker Advanced Micro Devices said it’s not going to restrict its graphics cards from being used for mining cryptocurrencies after rival Nvidia installed a limiter on some of its chips to prevent their use in mining ether, according to a report in PC Gamer.

• “The short answer is no,” PC Gamer quoted a product manager at AMD as saying regarding a potential mining limiter during a call.
• That stance is in contrast to Nvidia which last month installed a limiter to ensure its GeForce RTX 3090 graphics cards “end up in the hands of gamers” instead of cryptocurrency miners after gamers complained how mining demand was causing shortages.
• Of course, AMD may not have had much of a choice in not trying to limit how its chips are used. Not only is Nvidia’s 24GB GeForce RTX 3090 the best GPU chip for mining, because AMD’s drivers are all open-source, it limits the company’s control over them, PC Gamer noted.

Related Stories

• Bidding on NFT of First-Ever Tweet Ends Today; Top Offer Remains at $2.5M
• Crypto Long & Short: Bitpanda’s Raise Is About More Than Market Infrastructure
• Scaramucci Says More Companies Should Be Holding Bitcoin on Their Balance Sheets
• Hal Finney’s ‘Bitcoin and Me’

More companies should be holding bitcoin on their balance sheet due to the explosive growth of the U.S. monetary supply, former White House Communications Director and hedge fund founder Anthony Scaramucci said on CoinDesk TV.

• In a wide-ranging interview, the founder of SkyBridge Capital on Friday called the increase in the money supply a “silent tax on American savers.”
• “A responsible CFO or responsible treasurer will have to think about other assets to hold as a potential story of value for their companies.”

Also in the interview:

• The reason he’s so bullish on bitcoin is that it’s a “solution” to the undercutting of the Bretton Woods agreement that back in the early 1970s. Bitcoin has the potential to “start to standardize money again and that will be better for the working poor and the middle class.”
• Because of this, bitcoin could quite possibly one day be the currency of the world someday unless the U.S. dollar becomes digitized and is “no longer going to be influenced by politicians and policymakers.” But that would need to happen quickly, he said.
• SkyBridge now holds more than $600 million in bitcoin.
• Asked he if sees SkyBridge having an Ethereum-based product some day, Scaramucci said “Yes, I see that happening.
• Asked if he’s looking at decentralized finance, Scaramucci said, “Yes, so stay tuned.”
• He’s even more optimistic about the price of bitcoin than his year-end prediction of $100,000 would indicate but won’t change his forecast to avoid making this clients think he’s crazy. “I think they’ve grown to think that I am nuts.”
• His foray into politics has hurt him with both Republicans and Democrats but if his fund keeps performing it will cease to matter, noting his core fund is up almost 40% since last April and up 12 1/2% year to date. “I think if we continue to perform like that I think people are going to become indifferent to my political views.”
• Scaramucci registered SkyBridgeBitcoin.com the day after he was fired from the White House.
• He likes bitcoin at $20,000, $30,000 more than he liked it at $400 “because of the scaling nature of it.”
• He’s less worried about former U.S. President Trump’s negative views on bitcoin than he is about U.S. Treasury Secretary Janet Yellen, U.S. Federal Reserve Chairman Jerome Powell and European Central Bank President Christine Lagarde all of whom have said negative things about bitcoin.

Related Stories

• Hal Finney’s ‘Bitcoin and Me’
• Financial Watchdogs Have DeFi in Their Sights, Alter Wording Around NFTs
• Coinbase Delays Highly Anticipated Direct Listing to April: Report
• Why Kentucky Is Trying to Become a Crypto Mining Hub

Innovative areas within cryptocurrency such as decentralized finance (DeFi) are firmly on the radar of global regulators, according to draft guidance released on Friday by the Financial Action Task Force (FAFT), a global anti-money laundering (AML) body.

As well as clarifying its wording on decentralized exchanges (DEXs), the mechanisms that power DeFi platforms and apps, the FATF also made an oblique reference to non-fungible tokens (NFTs) that are exploding in popularity.

NFTs and DeFi present added challenges to FATF, which is already struggling to graft AML rules onto pseudonymous-by-design transactions in the flourishing cryptocurrency industry.

Related: Coinbase Delays Highly Anticipated Direct Listing to April: Report

When it comes to DeFi platforms, the FATF said its standards may not apply to the underlying software or technology, but entities involved with the “DApp,” such as owners or operators may now be considered virtual asset service providers (VASPs) – regulator-speak for crypto entities that must meet the same AML requirements as traditional finance. So, it’s a clear shot across the bows of DeFi founders, investors and VC firms. 

As well as adding clarity on DeFi, the FATF guidance makes a careful change of terminology, which appears to nod in the direction of NFTs.

A specific reference to “assets that are fungible” – which has important implications in light of the current NFT craze – has been replaced by “assets that are convertible and interchangeable,” pointed out Siân Jones, senior partner at XReg Consulting.

“NFTs that can be converted or exchanged for fiat currency or other virtual assets were always in scope, and remain so,” said Jones, the driving force behind the widely adopted AML data-sharing standard, IVMS101. “Some terms that were capable of being construed by stakeholders in ways that FATF had not originally intended have been replaced by language that more closely expresses the FATF’s intentions.”

Related: Why Kentucky Is Trying to Become a Crypto Mining Hub

In a blog post summarizing the key points of the new guidance, blockchain analytics form CipherTrace concluded that only NFTs that can facilitate money laundering and terrorism financing are “virtual assets” in the eyes of the FATF.

“Some non-fungible tokens (NFTs) that may not initially appear to constitute VAs may in fact be VAs due to secondary markets that enable the transfer or exchange of value or facilitate money laundering, terrorist financing, and proliferation financing,” said CipherTrace.

Related Stories

• First Advisor, Scaramucci-Led SkyBridge Team Up to File for Bitcoin ETF
• Coinbase Settles With CFTC for $6.5M Over Old Trading Practices

Cryptocurrency exchange Coinbase’s highly anticipated public offering has been shifted to April after its plan for a March listing “slipped,” according to a Bloomberg report citing people familiar with the matter.

• No reason was given for the delay, but Bloomberg noted the U.S. Securities and Exchange Commission (SEC) has been reviewing the San Francisco-based exchange’s plan for a direct listing.
• Coinbase formally announced its plans to go public on the Nasdaq in January and this past week registered for as many as 114.9 million shares to be traded.
• Coinbase Class A shares will debut on the Nasdaq Global Select Market under the ticker “COIN.”
• CoinDesk reached out to Coinbase but did not receive a response by press time.
• Yesterday, it was announced Coinbase will pay $6.5 million in a settlement with the Commodity Futures Trading Commission (CFTC) over allegations the exchange “self-traded” digital assets between 2015 and 2018.

Read more: Coinbase Is Going Public: Everything You Need to Know

Related Stories

• Why Kentucky Is Trying to Become a Crypto Mining Hub
• First Advisor, Scaramucci-Led SkyBridge Team Up to File for Bitcoin ETF
• Coinbase Settles With CFTC for $6.5M Over Old Trading Practices
• Is Bitcoin Due for a Price Correction?

First Trust Advisors and SkyBridge Capital, the hedge fund run by former White House Communications Director and recent bitcoin convert Anthony Scaramucci, have become the latest firms to seek to offer a bitcoin exchange-traded fund (ETF).

• In an S-1 filing with U.S. Securities and Exchange Commission (SEC) Friday, the firms applied to be able to offer the “First Trust SkyBridge Bitcoin ETF Trust.” First Advisor would be the adviser to the ETF, and SkyBridge would serve as the sub-adviser. Shares would trade on NYSE Arca, the filing said.
• The two firms are just the latest to file for an ETF. This bull run’s regulatory rush has seen WisdomTree file for a bitcoin ETF in March, NYDIG in February, Valkyrie in January and VanEck in December.
• Grayscale appears to be gearing up for an ETF product of its own. The crypto asset manager might apply for a new one or convert its existing bitcoin Trust into an ETF. The digital asset investment firm is owned by CoinDesk parent company Digital Currency Group.
• The flood of applications comes as the SEC is widely expected to approve the first bitcoin ETF this year.

Related Stories

• ‘Wolf of Wall Street’ Jordan Belfort Predicts Bitcoin Hitting $100K
• People’s Bank of China Official Says Fully Anonymous Digital Yuan ‘Not Feasible’
• Crypto Is Banned in Morocco, but Bitcoin Purchases Are Soaring
• First Mover – Mar 24, 2021

First Trust Advisors and SkyBridge Capital, the hedge fund run by former White House Communications Director and recent bitcoin convert Anthony Scaramucci, have become the latest firms to seek to offer a bitcoin exchange-traded fund (ETF).

• In an S-1 filing with U.S. Securities and Exchange Commission (SEC), the companies applied to be able to offer the “First Trust SkyBridge Bitcoin ETF Trust.” First Advisor would be the advisor to the ETF while SkyBridge would serve as the sub-advisor. Shares would trade on NYSE Arca, the filing said.
• The two companies are just the latest to file for an ETF. This bull run’s regulatory rush has seen WisdomTree file for a bitcoin ETF in March, NYDIG in February, Valkyrie in January, and VanEck in December of last year.
• Grayscale appears to be gearing up for an ETF product of its own. The crypto asset manager might apply for a new one or convert its existing bitcoin Trust into an ETF. The digital asset investment firm is owned by CoinDesk parent company Digital Currency Group.
• The flood of applications comes as the SEC is widely expected to approve the first bitcoin ETF this year.

Related Stories

• Coinbase Settles With CFTC for $6.5M Over Old Trading Practices
• Stimulus Checks, Bitcoin ETFs and Institutional Investment: Bitcoin’s Week in Review
• Is Bitcoin Due for a Price Correction?
• Bitcoin Pioneer Diego Gutierrez Zaldivar on the Crypto Outlook in Latin America

Crypto exchange Coinbase will pay $6.5 million in a settlement with the Commodity Futures Trading Commission (CFTC) over allegations the exchange “self-traded” digital assets.

According to a consent order published by the commodities regulator Friday, Coinbase self-traded a small amount of cryptocurrency between 2015 and 2018 through two of its automated trading programs. A now-former employee of the exchange also allegedly wash traded some amount of litecoin around that time period as well.

One of these programs was designed to project how much of any given cryptocurrency Coinbase was expected to sell on its retail brokerage app. The system would then purchase the suggested amount of cryptocurrency through its professional trading division (GDAX, now known as Coinbase Pro) and hold it in the exchange’s treasury.

Related: First Advisor, Scaramucci-Led SkyBridge Team Up to File for Bitcoin ETF

Self-trading is when “the same entity takes both sides of the trade,” a report by the U.S. Treasury Department and several financial regulators said in 2014. This type of market activity could be likened to wash trading, where an entity might pump the volume of an asset to make it appear as if more activity was occurring than in reality.

Importantly, the CFTC is not alleging that any Coinbase customers were harmed or that any wrongdoing occurred. Rather, it’s describing the activity as reckless but not intentional. This activity is no longer occurring, the CFTC said Friday.

Coinbase appears to have disclosed the investigation’s existence in its Form S-1, which the company filed ahead of publicly listing its shares on Nasdaq.

The CFTC began investigating “trades made in 2017 by one of the Company’s then-current employees,” according to the S-1. The investigation also included “the design and operation of certain algorithmic functions related to liquidity management on the Company’s platform.”

Related: Stimulus Checks, Bitcoin ETFs and Institutional Investment: Bitcoin’s Week in Review

While the CFTC has conducted other investigations into Coinbase, according to the S-1, including into an Ethereum “market event” and the bitcoin cash listing, this is the only investigation the exchange anticipated would have a “material adverse effect” on its operations.

In a concurring statement published with the settlement, CFTC Commissioner Dawn Stump wrote that while she agreed with the regulator’s findings, she wanted to ensure the public is aware that the CFTC doesn’t regulate spot exchanges.

Coinbase doesn’t offer any derivatives products and is therefore not registered with the agency, she wrote. The activity at the heart of Friday’s enforcement action also doesn’t impact any derivatives covered by the agency.

“The settled charges are based largely on conduct that is several years old, has not been repeated, and in the case of the charge of secondary liability, is based on conduct by an employee who left Coinbase years ago and who is not being charged,” she added.

In a statement shared with CoinDesk, a Coinbase spokesperson said the company neither admits nor denies the findings, but said the order does not find any Coinbase customers were harmed.

“We believe clear, common-sense regulations are needed to provide a stable trading environment for all market participants. Because of this, we proactively engaged with the CFTC throughout their investigation, and we believe that our conversations were constructive and contributed to an outcome that is satisfactory for both parties,” the spokesperson said.

UPDATE (March 19, 2021, 22:00 UTC): Added statements from Coinbase and CFTC Commissioner Dawn Stump.

Related Stories

• Is Bitcoin Due for a Price Correction?
• Bitcoin Pioneer Diego Gutierrez Zaldivar on the Crypto Outlook in Latin America

Convertible central bank digital currencies (CBDCs) offer countries a tantalizing chance to improve vital cross-border payment rails, researchers from the Bank for International Settlements (BIS) wrote in a March note.

Authors Raphael Auer, Philipp Haene and Henry Holden charted one road for cross-border CBDC finance in a detail-heavy research note. They offered a handful of potential mechanisms for multi-CBDC and took some pot shots at the public sector’s inevitable competitor.

The biggest benefits will only come if countries collaborate to eliminate traditional banking frictions for their new, interoperable form of money, the BIS researchers said.

Related: First Advisor, Scaramucci-Led SkyBridge Team Up to File for Bitcoin ETF

The paper balked at Libra’s (now Diem’s) plans to unite the digital payments world under a private entity’s cross-border global stablecoin. Interoperable CBDCs “are preferable” to the Facebook-led Diem project, the authors said, arguing convertible national cryptos “strengthen monetary sovereignty in the digital age” while private cryptos would simply shift the cross-border risks elsewhere.

Nevertheless the paper’s authors empathized with Diem’s desire to simplify cross-border finances. They said an interoperable, central banker-approved system for switching disparate CBDCs about would do a better job.

First, they’d have to convince central bankers that international collaboration on CBDC is worth the trouble. Aided by the fact that few countries have finalized their digital currency plans but troubled by the reality that competing interests abound, they described a long road ahead.

Central banks would have to coordinate on policy, technical standards, data requirements and regulation to establish a viable, linkable system. Authors pointed out that’s easier said than done; establishing the euro payments system took years.

Related: Coinbase Settles With CFTC for $6.5M Over Old Trading Practices

Monetary wonks could opt to build a “common distributed ledger” that houses multiple CBDCs. That’s an even harder lift, though. Multi-currency systems, which typically presage currency unions, are historically tricky beasts made no simpler by thorny issues of governance and access that come with DLT.

The authors said central banks have an opportunity to collaborate on these issues before launching otherwise walled-off CBDC systems. Indeed, only the Bahamas have issued a CBDC so far, leaving a “blank slate” for the rest of the world.

Related Stories

• Is Bitcoin Due for a Price Correction?
• Stimulus Checks, Bitcoin ETFs and Institutional Investment: Bitcoin’s Week in Review

• Bitcoin (BTC) trading around $58,882.38 as of 20:00 UTC (4 p.m. ET). Climbing 2.52% over the previous 24 hours.
• Bitcoin’s 24-hour range: $56,327.79-$59,242.58 (CoinDesk 20)
• BTC trades above its 10-hour and 50-hour averages on the hourly chart, a bullish signal for market technicians.

Bitcoin’s price struggled to push higher after briefly touching $59,000 when markets opened in the U.S. on Friday.

Investors continued to monitor the potential fallout from U.S. Treasury bond yields, which some analysts warn could lead to a correction in risky assets from bitcoin to stocks.

The 10-year Treasury note yield went as high as 1.74% on Friday, the highest since January 2020, after the Federal Reserve signaled Wednesday it would keep loose monetary policy for the foreseeable future.

Related: First Advisor, Scaramucci-Led SkyBridge Team Up to File for Bitcoin ETF

“If we continue to see the U.S. bond market questioning the Fed forward guidance, it could lead to more downside pressure in risk assets and start to weigh on bitcoin by extension,” Joel Kruger, cryptocurrency strategist at LMAX Digital, told CoinDesk. “We think this is a risk worth considering, especially with bitcoin already having moved so far and fast in 2021 thus far.”

Price charts also are sending signals the oldest cryptocurrency might be losing steam, with patterns appearing that suggest the market is reaching an overbought condition, according to analysts with Cryptowatch, a unit of the cryptocurrency exchange Kraken.

Read More: Bitcoin Price Gets Fed Boost but Bond Yields Could Play Spoilsport: Analysts

The Fed’s reaffirmation of its pledge to keep monetary policy loose theoretically should benefit bitcoin’s price in the short term. A growing number of investors are betting bitcoin might act as a hedge against inflation. Many Wall Street economists expect inflation will escalate once more people start going out and spur an economic recovery thanks to the coronavirus vaccine. But rising U.S. Treasury bond yields could create extra selling pressure for bitcoin along with traditional risky assets.

Related: Coinbase Settles With CFTC for $6.5M Over Old Trading Practices

“If rates go higher, it will force investors to rethink their long equity exposure and could open a big sell-off in stocks,” Kruger said. “And as things stand in the short term, because bitcoin is still a maturing asset, it still shares correlations with risk sentiment. So bitcoin would be somewhat exposed if something like this played out.”

In the bitcoin derivatives market, options open interest remained high above $14 billion after reaching an all-time high on Wednesday. 

It “indicates that this week’s price rally could be more speculative,” said Yves Renno, head of trading at Wirex, who also noted that the bitcoin December’s futures contract is currently quoted at a much higher price than bitcoin’s spot price.

Read More: Brazil Becomes Second Country in the Americas to Approve a Bitcoin ETF

“If there are no significant events that take place and shake the market again, such as new legislation that would favour the issuance of the first U.S. exchange-traded fund (ETF), or a new large tech player entering the crypto economy, then there seems to be very little fundamental support for a new bitcoin rally in the short-term,” Renno said.

Ether outperforms bitcoin as more BTCs are locked on Ethereum

Ether (ETH) was up on Friday, trading around $1,828.06 and climbing 3.20% in 24 hours as of 20:00 UTC (4:00 p.m. ET).

Alternative coins (altcoins) tend to see more price action after bitcoin logs new record high prices.

That happens because some traders and investors try to rotate into altcoins when bitcoin isn’t popping, in pursuit of potentially higher returns.

Read more: This Ether Options Play by Institutions Has Lottery Ticket Potential

Bitcoin has doubled this year, while ether saw more than 140% year-to-date returns, based on CoinDesk 20 pricing.

Notably, the total number of bitcoin locked in decentralized finance, which is largely based on the Ethereum blockchain, saw a sharp increase Friday, up 30% to 33,578 from a day ago, according to data from DeFi Pulse.

Other markets

Digital assets on the CoinDesk 20 are mostly higher Friday. Notable winners as of 20:00 UTC (4:00 p.m. ET):

• orchid (OXT) + 11.64%
• cardano (ADA) + 6.33%
• chainlink (LINK) + 3.55%
• 0x (ZRX) + 3.24%
• omg network (OMG) + 3.16%

Notable losers:

• cosmos (ATOM) – 2.68%
• xrp (XRP) – 0.44%

Equities:

• Asia’s Nikkei 225 closed in the red 1.41%.
• The FTSE 100 in Europe closed in the red 1.05%.
• The S&P 500 in the United States closed nearly flat, down by 0.060%.

Commodities:

• Oil was up 2.53%. Price per barrel of West Texas Intermediate crude: $61.52.
• Gold was in the green 0.40% and at $1742.67 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield climbed Friday jumping to 1.726%.

Related Stories

• Is Bitcoin Due for a Price Correction?
• Stimulus Checks, Bitcoin ETFs and Institutional Investment: Bitcoin’s Week in Review

One of New York City’s modern art meccas is preparing for a potential future of non-fungible tokens (NFTs), according to a new job posting. 

The Guggenheim Museum wants its next MBA intern to provide an evaluation of non-fungible token (NFT)-based art, which its administrators called a “nascent, fast-growing, highly scalable area of the art world.”

“How will blockchain and crypto currency [sic] change how a museum defines its collection strategy?” the posting mulls.

Related: Market Wrap: Bitcoin Near $59K as Worries on Bond Yields Increase

The Guggenheim is among the first traditional art museums to begin grappling with the NFT space amid the current market boom. A $69 million Christie’s auction of a Beeple NFT has caught the traditionally stuffy art scene by surprise. Sotheby’s, too, announced its intention to get more involved in the NFT space.

NFTs, which have been around for years, are a method for tracing and transferring digital ownership atop a blockchain network, most commonly Ethereum. They are the crypto world’s equivalent of an artist’s signature and a painting’s provenance.

“In what ways should the Guggenheim extend into a digital experience?” the posting asks of its applicants.

Detractors say NFT energy consumption is bad for the environment or argue the market is a bubble. Proponents claim NFTs democratize art and give creators space to market and profit. Guggenheim is more circumspect, fielding its own thoughts out to the interns.

Related: What Caused the Filecoin ‘Double Deposit’ on Binance?

The Guggenheim Museum did not respond to repeated CoinDesk inquiries.

Related Stories

• Bank of America Says DeFi Potentially ‘More Disruptive’ Than Bitcoin
• Looking for a Job? A Virtual Casino Is Hiring Real People

Days after being listed on Coinbase Pro, Cardano’s ADA token is available to Coinbase retail traders for the first time.

The San Francisco-based crypto exchange announced the listing Friday:

ADA is currently the third-largest cryptocurrency, with a market capitalization of $41.9 billion, according to CoinGecko.

Related: Market Wrap: Bitcoin Near $59K as Worries on Bond Yields Increase

Fans of the ADA token have long clamored for a Coinbase listing. The coin is up roughly 3% in the past hour, trading hands at $1.30.

Related Stories

• What Caused the Filecoin ‘Double Deposit’ on Binance?
• Bank of America Says DeFi Potentially ‘More Disruptive’ Than Bitcoin
• Goldman Sachs Analysts Say They’re Brutally Overworked