CoinLoan Weekly: Mixed stress, EU’s crypto regulation, BTC as commodity
From over $21,400, BTC slid to $18,817.43 after midnight on Friday, July 1. Next, the price spiked and entered a slim range between $19,000 and $19,530. On Monday, July 4, BTC gained momentum and approached $20,000.
The Fear & Greed Index was stuck in extreme fear mainly due to the Fed’s aggressive approach to rates, fears of a recession, and big shocks in the crypto industry. Inflation and uncertainty caused by supply-chain disruptions and the Russia-Ukraine conflict were still causing distress across all markets.
At the time of writing, BTC is trading at $19,812.44, with a 24-hour rise of 1.6% and a 7-day loss of -5.9%.
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Following BTC’s trajectory, ETH descended from $1,240 to a 7-day low of $1,010.15 on Thursday, June 30. After the next day’s uptick, Ether traded just under $1,080 until climbing again on Monday, June 4.
While ETH approached the psychological low of $1,000, bears did not have much time to exploit the weakness as bulls seemed to be buying on dips. Now, they are trying to lift the price above the 20-day EMA ($1,192) and take over.
As of now, ETH is trading at $1,125.00, with a 24-hour gain of +4.3% and a 7-day drop of -6.3%
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In contrast to the past few weeks, XRP shed more value than BTC and ETH. From nearly $0.37 on Monday, June 27, its price fell to $0.308832 on Thursday, June 30, before a fleeting rebound. During the weekend, XRP was trapped between $0.31 and $0.32.
The cryptocurrency traded inside a symmetrical triangle. While it usually foretells continuation, it could also precede reversal. The pattern shows that both bears and bulls are hesitant.
As of now, XRP is trading at $0.324457, with a 24-hour slide of -0.2% and a 7-day loss of -10.0%.
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EU officials reach agreement on bloc-wide crypto regulation
Key institutions and member states of the EU are ready to tame the Wild West of crypto. The agreement on the MiCA (Markets in Crypto-Assets) regulatory proposal has been reached thanks to a trilogue between the European Parliament, Commission, and Council.
MiCA will only become law after being approved by the Parliament and the governments of member states. The EU is expected to become the first broad region with unified crypto regulation around 2024. Currently, crypto is only governed by the national legislation in some European countries.
Previously, European officials reached a consensus on a set of AML (anti-money laundering) rules for crypto transactions. MiCA will require platform authorization and sufficient safeguards for users. The licenses will be issued by national regulators, which will have to report authorizations of big businesses to the European Securities and Markets Authority (ESMA).
Stefan Berger, the rapporteur for the package, tweeted, “Europe is the first continent with cryptoasset regulation,” noting that the draft does not include a prohibition of Proof-of-Work (PoW). However, ESMA is developing standards for the disclosure of information on crypto companies’ environmental impact.
Holders of stablecoins will be able to claim their money back free of charge at any time. Stablecoin issuers will have to establish a registered office in the bloc. According to the Blockchain for Europe lobby group, this may result in a situation in which “stablecoins will basically have no ways to be profitable.”
The rules do not apply to NFTs unless they become fungible, but the authorities have 18 months to decide if standalone regulation is needed.
SEC chair confirms Bitcoin is a commodity
The prolonged bearish phase has prompted new calls for regulation. While the Spring 2022 Regulatory Agenda does not include crypto-focused proposals, CNBC's interview with the Securities and Exchange Commission (SEC) chair Gary Gensler gives some clues.
Although some cryptocurrencies have “the key attributes of a security,” so they are “under” the SEC, Gensler classified Bitcoin as a commodity without extending the label to other assets. He stressed the need for collaboration between the SEC and the Commodity Futures Trading Commission (CFTC) as “there’s a lot of work to be done to really protect the investing public and many of these tokens.”
Previously, Gensler described his vision of “one rule book on the exchange” to The Financial Times. It would govern all trading pairs to prevent fraud and manipulation. According to David Lesperance, an international tax and immigration advisor, this would prevent slipping through the loopholes while the “legislative turf war is on.”
The CFTC is aiming to regulate crypto directly under the Responsible Financial Innovation Act. If the latter becomes law, cryptocurrencies will be treated as commodities, while the industry will have to support the CFTC and take on new responsibilities. Frank Corva, Finder’s senior analyst for crypto and blockchain, considers the “one rule book” unrealistic as not all digital assets serve the same purpose.
Amy Lynch, a former SEC insider and compliance expert, supposes the Treasury could unveil stablecoin regulation before the SEC comes up with further rules, “or, it may work the opposite direction.” The biggest difficulty is a collaboration between the SEC, the Treasury, the CFTC, the National Futures Association, and the Financial Industry Regulatory Authority.
Crypto exchanges and ETFs are the key actors pushing the regulation issue via the SEC filings. “The industry will keep pushing until the SEC acts [...] The crypto markets want regulation to level the playing field and add legitimacy to the market.”