ALSO: Hong Kongโs proposed cryptocurrency exchange regulations value TradFi chops over cryptocurrency knowledge. What are the key potential changes?
Good morning. Hereโs whatโs happening:
Prices: Cryptoโs 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 wonโt resemble what it looked like in previously, if the Government passes proposed cryptocurrency exchange rules.
CoinDesk Market Index (CMI)
1,204.65
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ0-diff-returns-stringโ class=โdiff-valueโ>+14.6 1.2 percent
Bitcoinย (BTC) $27,139
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ1-diff-returns-stringโ class=โdiff-valueโ>+235.9 0.9 percent
Ethereumย (ETH) $1,849
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ2-diff-returns-stringโ class=โdiff-valueโ>+27.9 1.5 percent
S&P 500 daily close
4,145.58
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ3-diff-returns-stringโ class=โdiff-valueโ>โ47.0 1.1 percent
Gold
$1,978
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ4-diff-returns-stringโ class=โdiff-valueโ>+3.4 0.2 percent
Treasury Yield 10 Years
3.7 percent
0.0
BTC/ Ethereumย (ETH) prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET
Bitcoinย (BTC) Rises Slightly and Waits
Good morning,
Bitcoinย (BTC) is initiateย 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 memeย cryptocurrency season? A hedge against danger season? Or a danger investment season?
Tough to tell these days.
1 day it seems like Bitcoinย (BTC) and ether are making a slow and steady push upwards, then theย following memecoin comes along and shoots into the stratosphere. On other days it seems like thereย is a flight to quality. Consider the data point of staked ether hitting an all-time high.
Since Ethereumโs 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 regardlessย of over a monthโs wait to become a network validator, driven by large ether holders seeking passive income, and anticipated deflationary forces that may increase etherโs price, making the 4-5 percent annual yield an attractive proposition.
โWith Ethereumโs Shanghai over and investors nursing memecoin hangovers, the cryptocurrencyย market is โsans narrative,โ Charmyn Ho, head of cryptocurrency insights at Bybit, wrote in a note to CoinDesk.
Ho writes that the imminent Ethereumย (ETH) EIP-4844 upgrade, which boosts transaction throughput via a process wasย known proto-danksharding, could favor Layer 2 solutions like Arbitrum, Optimism, and promising new entrants like Mantle, possibly ushering an โL2 season,โ while the cryptoย altcoin market drifts towards Bitcoinย (BTC) amid a fluctuating yield curve.
Onย theย otherย hand, atย thisย time, the narrative is tricky to pin down.
โWith most coins struggling to break their 20-week moving averages, it seems premature to talk of an incoming โaltseasonโ or โmemeseasonโ,โ Ho stated. โ Nonetheless, we are still seeing financialย resources move the opposite way โ from cryptoย altcoins to Bitcoinย (BTC) and Ethereumย (ETH). Inย doingย so, most cryptoย altcoins are sliding on their Bitcoin pairs.โ
Largest Gainers
Largest Losers
Insights
New Hong Kong Regulations Value TradFi Chops
Severalย months ago, cryptocurrency Twitterati thought that Hong Kongโs next virtual investment regulations would unlock a geyser of degen financialย resources and jumpstart the China cryptocurrency narrative.
After all, Hong Kong was, at one time, the home of cryptocurrenciesย growth story in its early days. Binanceย Cryptoย exchange, Bitfinex, Tetherย (USDT), Justin Sun, and numerous other cryptocurrency stakeholders likewise as Initial Coin Offering (ICO) teams once wasย known Hong Kong home as the cityโs fast-paced and free-flowing markets on overdrive were a natural match for crypto.
It was hoped that all this would make Hong Kongโs cryptocurrency scene great onceย more โ bringing back the fast times of the past.
Onย theย otherย hand, the Securities and Futures Commissionโs (SFC) latest draft of the guidelines that came out Tuesday afternoon Hong Kong time discouraged the idea.
Asย ofย now, most of the virtual investment platforms of trading accessible to the public are not regulated by the SFC, and the SFC hasnโt 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 2023โs Hong Kong is going to be like anything of the past.
Retail Can Trade โ After Onboarding
Yes, retail investors will be able to trade cryptocurrency in Hong Kong. Onย theย otherย hand, not every retail investor will be able to trade cryptocurrency in Hong Kong.
The exact criteria of what constitutes an onboarding process hasnโt been precisely defined, but the SFC reveals that the automatic trading nature of virtual assets โnecessitates strict requirementsโ.
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 investorโs understanding of virtual assets accordingย to their education, work, and prior trading experience.
Platforms will be required to setย up limitations on the size of positions, and the SFC reveals that exact exposure limit will be determined accordingย to a know-your-client process the exchange conducts.
TradFi Licenses Prioritized
Inย 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. Theyย need have aย 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.
Itโs understood that numerous exchanges intending to apply for licenses in Hong Kong, such as Binanceย Cryptoย exchange, have begun to heavily hire ex-TradFi types who hold these licenses โ cryptocurrency knowledge be damned.
Exchanges Must Provide Financial Disclosures
The new regulations mandate cryptocurrency exchanges toย sustain a minimum of HKD 5,000,000 ($640,000) in financialย resources at all times and submit monthly financial reports to the SFC, which include a summary of both assets ( inย particularย where and when they are deposited) likewise as liabilities such as bank loans or other credit facilities.
Post- FTXย Tradingย 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 โ liabilities. It looks like this requirement from the SFC will address this.
Not Every Cryptoย Token Can Be Listed; Retail Wonโt Have Stablecoins
Part of the SFCโs proposed regulations is what effectively amounts to a 12- 30ย days cooling-off period betwixt the launch of a cryptoย token and when itโs able forย listing on regulated exchanges.
โ Althoughย while a 12- 30ย days requirement may not have prevented theย pastย few collapses of some cryptoย tokens, this requirement aims toย lower the danger of reasonably hard-to-detect fraud likewise as the possible impact on the price of a cryptoย token of the marketing efforts leading up to its initial offering,โ the SFC writes.
Listed cryptoย tokens must likewise have a smart contract audit completed by an independent assessor. Similarly, cryptoย 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 doesnโt feel it would be โappropriateโ to publish a list of virtual assets eligible for retail trading.
Perhaps the most controversial part of this would be the ban on cryptoย stablecoins for retail traders, as the SFC finds them unsuitable for retail traders owingย to the propensity for runs and the lack of regulation.
Retail traders will only get access to cryptoย stablecoins once local regulations for the investment class are in place.
Custodians Excluded
FTXย Tradingย Ltd customers in Japan live in something of a parallel universe to their peers elsewhere.
Because regulations in Japan โ implemented post-Mt. Gox โ require exchanges that operate in the company to use thirdย party custodians that segregate funds, Japanese customers have been able to withdraw cryptocurrency and fiat from FTXย Tradingย Ltd Japan since early February.
Onย theย otherย hand, this willย not the case in Hong Kong.
The SFC reveals that since thereย is no regulatory regime for custodians of virtual assets, allowing that would hinder their supervision and enforcement.
This mayย be considered counterintuitive, since numerous cryptocurrency custodians already exist in Hong Kong, like Hex Trust. Alessio Quaglini, the CEO of Hex Trust, has long wasย 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) Unitedย 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 โ 1st Moverโ on CoinDesk TV:
FTXย Tradingย Ltd CEOโs Legal Billings Hint at Comeback for Cryptocurrency Exchange; Bitcoinโs Reaction to Debt Ceiling Stalemate
The new CEO of FTXย Tradingย Ltd, John Ray III, billed just over 6.5 hours in his last cycle reviewing and working on what seemsย to be FTXย Tradingย Ltd 2.0 materials. Laura Shin, โThe Cryptopiansโ author and โUnchainedโ podcast host joined โ 1st Moverโ to discuss. Plus, LUKSO co- founder and chief blockchainย tech architect Fabian Vogelsteller discussed LUKSOโs next mainnet launch. And, Bitcoinย (BTC) (BTC) was back over $27,000 โ 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.
Headlines
CoinDesk Indices Tendency Indicator Hints at Continued Downturn for Bitcoin, Ether: Bitcoinย (BTC) and Etherโs 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 facilitatesย 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 blockchainย 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.
Shibaย Inuย (SHIB)ย Puppynet Testnet Logs 10M Transactions, Putting Ecologicalย system Cryptoย Tokens in Focus: Ecologicalย system cryptoย tokens shiba inu, leash and bone will be used to transact on theย following Ethereum-based blockchain.
James Rubin.
CoinDesk Market Index (CMI)
1,204.65
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ0-diff-returns-stringโ class=โdiff-valueโ>+14.6 1.2 percent
Bitcoinย (BTC) $27,139
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ1-diff-returns-stringโ class=โdiff-valueโ>+235.9 0.9 percent
Ethereumย (ETH) $1,849
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ2-diff-returns-stringโ class=โdiff-valueโ>+27.9 1.5 percent
S&P 500 daily close
4,145.58
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ3-diff-returns-stringโ class=โdiff-valueโ>โ47.0 1.1 percent
Gold
$1,978
ey_Takeawaysโ>Key Takeaways => Mainย Points=โ4-diff-returns-stringโ class=โdiff-valueโ>+3.4 0.2 percent
Treasury Yield 10 Years
3.7 percent
0.0
BTC/ Ethereumย (ETH) prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET
