Asias First Crypto Move: A Narrative-Less Season

Asias First Crypto Move: A Narrative-Less Season


Hong Kong’s proposed crypto exchange rules prioritize traditional finance knowledge over crypto expertise and may lead to significant changes in the crypto market.

ALSO: Hong Kong’s proposed cryptocurrency exchange regulations value TradFi chops over cryptocurrency knowledge. What are the key potential changes?

Good morning. Here’s what’s happening:

Prices: Crypto’s narrative this year has varied so broadly that one dominant thread is difficult to pin down. Bitcoin was hovering comfortably over $27K.

Insights: Cryptocurrency in Hong Kong won’t resemble what it looked like in previously, if the Government passes proposed cryptocurrency exchange rules.

CoinDesk Market Index (CMI)

1,204.65

ey_Takeaways”>Key Takeaways => Main Points=”0-diff-returns-string” class=”diff-value”>+14.6 1.2 percent

Bitcoin (BTC) $27,139

ey_Takeaways”>Key Takeaways => Main Points=”1-diff-returns-string” class=”diff-value”>+235.9 0.9 percent

Ethereum (ETH) $1,849

ey_Takeaways”>Key Takeaways => Main Points=”2-diff-returns-string” class=”diff-value”>+27.9 1.5 percent

S&P 500 daily close

4,145.58

ey_Takeaways”>Key Takeaways => Main Points=”3-diff-returns-string” class=”diff-value”>−47.0 1.1 percent

Gold

$1,978

ey_Takeaways”>Key Takeaways => Main Points=”4-diff-returns-string” class=”diff-value”>+3.4 0.2 percent

Treasury Yield 10 Years

3.7 percent

0.0

BTC/ Ethereum (ETH) prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

CoinDesk Market Index (CMI)

1,204.65


ey_Takeaways”>Key Takeaways => Main Points=”0-diff-returns-string” style=”font-size:12px !important;float:left;margin-right:5px;color:#a3a3a3 !important”>+14.6 1.2 percent

Bitcoin (BTC) $27,139


ey_Takeaways”>Key Takeaways => Main Points=”1-diff-returns-string” style=”font-size:12px !important;float:left;margin-right:5px;color:#a3a3a3 !important”>+235.9 0.9 percent

Ethereum (ETH) $1,849


ey_Takeaways”>Key Takeaways => Main Points=”2-diff-returns-string” style=”font-size:12px !important;float:left;margin-right:5px;color:#a3a3a3 !important”>+27.9 1.5 percent

S&P 500 daily close

4,145.58


ey_Takeaways”>Key Takeaways => Main Points=”3-diff-returns-string” style=”font-size:12px !important;float:left;margin-right:5px;color:#a3a3a3 !important”>−47.0 1.1 percent

Gold

$1,978


ey_Takeaways”>Key Takeaways => Main Points=”4-diff-returns-string” style=”font-size:12px !important;float:left;margin-right:5px;color:#a3a3a3 !important”>+3.4 0.2 percent

Treasury Yield 10 Years

3.7 percent

0.0

BTC/ Ethereum (ETH) prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

Bitcoin (BTC) Rises Slightly and Waits

Good morning,

Bitcoin (BTC) is initiate the trading day in East Asia up 0.9 percent to $27,139, while ether is up 1.5 percent to $1,849.

Are we in a meme cryptocurrency season? A hedge against danger season? Or a danger investment season?

Tough to tell these days.

1 day it seems like Bitcoin (BTC) and ether are making a slow and steady push upwards, then the following memecoin comes along and shoots into the stratosphere. On other days it seems like there is a flight to quality. Consider the data point of staked ether hitting an all-time high.

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Since Ethereum’s Shapella upgrade on April 12, the amount of staked ether has surged, CoinDesk recently informed, with 4.4 Million more coins deposited for staking.

All this is regardless of over a month’s wait to become a network validator, driven by large ether holders seeking passive income, and anticipated deflationary forces that may increase ether’s price, making the 4-5 percent annual yield an attractive proposition.

“With Ethereum’s Shanghai over and investors nursing memecoin hangovers, the cryptocurrency market is ‘sans narrative,’ Charmyn Ho, head of cryptocurrency insights at Bybit, wrote in a note to CoinDesk.

Ho writes that the imminent Ethereum (ETH) EIP-4844 upgrade, which boosts transaction throughput via a process was known proto-danksharding, could favor Layer 2 solutions like Arbitrum, Optimism, and promising new entrants like Mantle, possibly ushering an “L2 season,” while the crypto altcoin market drifts towards Bitcoin (BTC) amid a fluctuating yield curve.

On the other hand, at this time, the narrative is tricky to pin down.

“With most coins struggling to break their 20-week moving averages, it seems premature to talk of an incoming ‘altseason’ or ‘memeseason’,” Ho stated. “ Nonetheless, we are still seeing financial resources move the opposite way – from crypto altcoins to Bitcoin (BTC) and Ethereum (ETH). In doing so, most crypto altcoins are sliding on their Bitcoin pairs.”

Largest Gainers

Investment Ticker
Returns
DACS Sector
Solana (SOL) Solana (SOL) +1.5 percent Smart Contract Platform
Ethereum (ETH) Ethereum (ETH) +1.4 percent Smart Contract Platform
Gala
GALA
+1.4 percent Entertainment

Largest Losers

Investment Ticker
Returns
DACS Sector
Decentraland
MANA
−0.9 percent Entertainment
Chainlink
LINK
−0.8 percent Computing
Dogecoin (DOGE) Dogecoin (DOGE) −0.7 percent Currency

Insights

New Hong Kong Regulations Value TradFi Chops

Several  months ago, cryptocurrency Twitterati thought that Hong Kong’s next virtual investment regulations would unlock a geyser of degen financial resources and jumpstart the China cryptocurrency narrative.

After all, Hong Kong was, at one time, the home of cryptocurrencies  growth story in its early days. Binance Crypto exchange, Bitfinex, Tether (USDT), Justin Sun, and numerous other cryptocurrency stakeholders likewise as Initial Coin Offering (ICO) teams once was known Hong Kong home as the city’s fast-paced and free-flowing markets on overdrive were a natural match for crypto.

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It was hoped that all this would make Hong Kong’s cryptocurrency scene great once more – bringing back the fast times of the past.

On the other hand, the Securities and Futures Commission’s (SFC) latest draft of the guidelines that came out Tuesday afternoon Hong Kong time discouraged the idea.

As of now, most of the virtual investment platforms of trading accessible to the public are not regulated by the SFC, and the SFC hasn’t announced a list of license applicants.

Taking a glimpse at this draft, which plays a part of the consultation process, the SFC is beating down the idea that cryptocurrency in 2023’s Hong Kong is going to be like anything of the past.

Retail Can Trade – After Onboarding

Yes, retail investors will be able to trade cryptocurrency in Hong Kong. On the other hand, not every retail investor will be able to trade cryptocurrency in Hong Kong.

The exact criteria of what constitutes an onboarding process hasn’t been precisely defined, but the SFC reveals that the automatic trading nature of virtual assets “necessitates strict requirements”.

Platform operators must secure the suitability of retail clients through comprehensive onboarding processes, the SFC reveals, including danger tolerance assessment and a holistic evaluation of an investor’s understanding of virtual assets according to their education, work, and prior trading experience.

Platforms will be required to set up limitations on the size of positions, and the SFC reveals that exact exposure limit will be determined according to a know-your-client process the exchange conducts.

TradFi Licenses Prioritized

In addition of these exchanges, just like any other traditional financial institution in Hong Kong, will be two key positions: the Responsible Officer and the Licensed Representative.

These individuals will traditionally have to fit within the criteria the SFC uses for these roles in the TradFi space. They need have a mix of relevant degrees (though does such a thing exist for crypto?), management experience and local equivalents to FINRA licenses from the Hong Kong Securities and Investment Institute.

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It’s understood that numerous exchanges intending to apply for licenses in Hong Kong, such as Binance Crypto exchange, have begun to heavily hire ex-TradFi types who hold these licenses – cryptocurrency knowledge be damned.

Exchanges Must Provide Financial Disclosures

The new regulations mandate cryptocurrency exchanges to sustain a minimum of HKD 5,000,000 ($640,000) in financial resources at all times and submit monthly financial reports to the SFC, which include a summary of both assets ( in particular  where and when they are deposited) likewise as liabilities such as bank loans or other credit facilities.

Post- FTX Trading Ltd, numerous exchanges are publishing Proof of Reserves, a form of on-chain audit to build confidence in their liquidity. Nonetheless, these have been criticized for lacking one key metric – liabilities. It looks like this requirement from the SFC will address this.

Not Every Crypto Token Can Be Listed; Retail Won’t Have Stablecoins

Part of the SFC’s proposed regulations is what effectively amounts to a 12- 30 days cooling-off period betwixt the launch of a crypto token and when it’s able for listing on regulated exchanges.

“ Although while a 12- 30 days requirement may not have prevented the past few collapses of some crypto tokens, this requirement aims to lower the danger of reasonably hard-to-detect fraud likewise as the possible impact on the price of a crypto token of the marketing efforts leading up to its initial offering,” the SFC writes.

Listed crypto tokens must likewise have a smart contract audit completed by an independent assessor. Similarly, crypto tokens must be large-cap virtual assets included in at least two acceptable indices announced by two independent index providers.

Nonetheless, the SFC stated that it doesn’t feel it would be “appropriate” to publish a list of virtual assets eligible for retail trading.

Perhaps the most controversial part of this would be the ban on crypto stablecoins for retail traders, as the SFC finds them unsuitable for retail traders owing to the propensity for runs and the lack of regulation.

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Retail traders will only get access to crypto stablecoins once local regulations for the investment class are in place.

Custodians Excluded

FTX Trading Ltd customers in Japan live in something of a parallel universe to their peers elsewhere.

Because regulations in Japan – implemented post-Mt. Gox – require exchanges that operate in the company to use third party custodians that segregate funds, Japanese customers have been able to withdraw cryptocurrency and fiat from FTX Trading Ltd Japan since early February.

On the other hand, this will not the case in Hong Kong.

The SFC reveals that since there is no regulatory regime for custodians of virtual assets, allowing that would hinder their supervision and enforcement.

This may be considered counterintuitive, since numerous cryptocurrency custodians already exist in Hong Kong, like Hex Trust. Alessio Quaglini, the CEO of Hex Trust, has long was known for specific custodian regulations for digital assets, but it looks like that request has met deafening silence.

Important events.

10:00 a.m. HKT/SGT(2:00 UTC) New Zealand Monetary Policy Statement

2:00 p.m. HKT/SGT(6:00 UTC) United Kingdom Consumer Price Index (YoY/April)

2:009 a.m. HKT/SGT(18:00 UTC) United States FOMC Minutes

CoinDesk TV

In case you missed it, here is the most up-to-date episode of ” 1st Mover” on CoinDesk TV:

FTX Trading Ltd CEO’s Legal Billings Hint at Comeback for Cryptocurrency Exchange; Bitcoin’s Reaction to Debt Ceiling Stalemate

The new CEO of FTX Trading Ltd, John Ray III, billed just over 6.5 hours in his last cycle reviewing and working on what seems to be FTX Trading Ltd 2.0 materials. Laura Shin, “The Cryptopians” author and “Unchained” podcast host joined ” 1st Mover” to discuss. Plus, LUKSO co- founder and chief blockchain tech architect Fabian Vogelsteller discussed LUKSO’s next mainnet launch. And, Bitcoin (BTC) (BTC) was back over $27,000 – as President Biden and House Speaker Kevin McCarthy left their meeting on Monday without having reached a deal on the debt ceiling. Unizen head of research and analytics Ajay Dhingra shared his cryptocurrency markets analysis.

READ NOW
Whale shakes crypto world with 1.4k BTC move after decade-long silence

Headlines

CoinDesk Indices Tendency Indicator Hints at Continued Downturn for Bitcoin, Ether: Bitcoin (BTC) and Ether’s streak of monthly profits is in danger of ending.

LabDAO Raises $3.6M to Decentralize Drug Discovery: The project likewise launched its new PLEX client that facilitates the burden of resource-intensive computations for scientific data.

Number of Ether Staked Has Surged by 4.4 Million Since Shapella Upgrade: Staking refers to locking coins in the blockchain tech network in return for rewards.

Aave V2 Users Temporarily Unable to Access $120M on Polygon After Governance Bug: All funds remain safe and a governance proposition is underway to update the faulty strategy, developers said.

Shiba Inu (SHIB)  Puppynet Testnet Logs 10M Transactions, Putting Ecological system Crypto Tokens in Focus: Ecological system crypto tokens shiba inu, leash and bone will be used to transact on the following Ethereum-based blockchain.

James Rubin.

CoinDesk Market Index (CMI)

1,204.65

ey_Takeaways”>Key Takeaways => Main Points=”0-diff-returns-string” class=”diff-value”>+14.6 1.2 percent

Bitcoin (BTC) $27,139

ey_Takeaways”>Key Takeaways => Main Points=”1-diff-returns-string” class=”diff-value”>+235.9 0.9 percent

Ethereum (ETH) $1,849

ey_Takeaways”>Key Takeaways => Main Points=”2-diff-returns-string” class=”diff-value”>+27.9 1.5 percent

S&P 500 daily close

4,145.58

ey_Takeaways”>Key Takeaways => Main Points=”3-diff-returns-string” class=”diff-value”>−47.0 1.1 percent

Gold

$1,978

ey_Takeaways”>Key Takeaways => Main Points=”4-diff-returns-string” class=”diff-value”>+3.4 0.2 percent

Treasury Yield 10 Years

3.7 percent

0.0

BTC/ Ethereum (ETH) prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

Source

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