Category: Crypto News

The Securities Commission of The Bahamas (SCB) has begun public consultation for its Digital Assets and Registered Exchanges (DARE) Bill 2023, seeking to develop and expand the legislative framework for cryptocurrencies following the collapse of the bankrupt crypto exchange FTX.

According to an official statement, the consultation will run from April 25, 2023, through May 31, 2023, and interested parties are to submit their comments on the bill via a designated email address.

SCB Publishes the DARE Bill 2023

The commission disclosed that the DARE Bill 2023 seeks to expand its definition and list of crypto business activities to include customer and investor protection measures, risk management, and market innovation and development provisions.

The bill will toughen reporting requirements for crypto businesses providing custodial wallet services, digital asset exchange, advice on and management of virtual assets, and staking services. It will also offer a comprehensive approach to the regulation of stablecoins.

Drafted with the help of international law firm Hogan Lovells, the DARE Bill will enhance the DARE Act 2020. The SCB is benchmarking the DARE Act with frameworks from jurisdictions like the European Union, Hong Kong, and the US. Through continuous monitoring of the crypto sector, the commission aims to review the DARE Act to fit international regulatory advancements.

Christina Rolle, executive director of the SCB, said: “I am pleased to present for consultation the Digital Asset and Registered Exchanges Bill 2023, which will modernize andThe Bahamas strengthen requirements for conducting digital asset businesses in The Bahamas, and for the protection of consumers, investors, and the markets.”

The DARE Bill to Ban Algorithmic Stablecoins

The securities regulator is working towards putting the bill into effect in The Bahamas by the end of Q2 2023, aiming to quickly enforce measures to prevent a repetition of the FTX saga.

The Bahamas was the global headquarters of FTX before its demise in November. The exchange’s founder Sam Bankman-Fried, who currently faces fraud charges, also lived in Nassau, the capital of the Caribbean country.

With the DARE Bill, the SCB seeks a proactive approach to minimize systemic and contagion risks while encouraging innovation in the local crypto industry.

“Once passed, DARE 2023 will be among the most advanced pieces of digital asset-legislation in the world and will align with The Bahamas’ commitment to facilitating development and innovation in a well-regulated environment,” Rolle added.

American cryptocurrency exchange Gemini has announced the upcoming launch of Gemini Foundation, a crypto derivatives platform for non-US investors that will offer contracts denominated in Gemini dollars (GUSD).

Gemini to Offer Crypto Derivatives Products to Non-US Customers

According to a blog post, the first derivatives contract on the Gemini Foundation platform will be a Bitcoin perpetual contract (BTC/GUSD), with an Ethereum perpetual contract (ETH/GUSD) to launch soon, alongside others.

Gemini Foundation, available to individuals and institutions, will enable customers to leverage their crypto assets to open long or short positions. Eligible users will be allowed to trade spot and derivative products and execute their trading strategies on the platform.

The new platform will be available to users in select locations, including Singapore, Hong Kong, India, Bahamas, Nigeria, Egypt, South Korea, Argentina, and El Salvador. Investors in the US will have no access to the platform.

“Gemini Foundation will offer customers a capital-efficient, highly available, and trusted venue to trade derivatives. Purpose-built for both individuals and institutions, Gemini Foundation combines powerful trading tools with an elegant user experience. Whether you’re a professional trader or just getting started, Gemini Foundation is designed to help you succeed,” the crypto exchange said.

Gemini to Charge All Fees in GUSD

Furthermore, customers can fund their Gemini Foundation account by converting USD and USD Coin (USDC) into GUSD on a 1:1 basis with no additional costs. All perpetual funding payments and realized and unrealized profits and losses (P&L) will be in GUSD. Likewise, all fees will be charged in GUSD.

In addition, the derivatives platform will have default leverage of 20x and maximum possible leverage of 100x. 

Gemini’s move comes as several US-based crypto firms are spreading their tentacles to offshore regions amid the regulatory uncertainty in the country. While American regulators try to understand if cryptocurrencies fit into the securities or commodities category, some locations like the UK are making progress with their crypto regulation.

Meanwhile, Gemini is not the only exchange looking to establish its presence outside the US. Coinbase, the largest American crypto trading platform, recently bagged a regulatory license from Bermuda and is set to launch a derivatives exchange in the territory soon.

The $1 billion asset-sale plan between bankrupt cryptocurrency broker Voyager Digital and Binance.US,  the American affiliate of the world’s largest crypto exchange Binance, is set to move forward after several objections from the US government and regulators.

Voyager to Move On With $1B Asset-Sale Plan

According to a tweet by the official handle of Voyager’s Unsecured Creditors Committee, the government, the bankrupt entity, and the court have reached a resolution that will allow the plan to become effective soon.

“The resolution is embodied in a joint stipulation providing that the appeals will continue with respect to the Plan’s exculpation provision. The Government has agreed that the Plan may move forward without such provision and will not otherwise be subject to the stay,” the committee said.

The agreement comes after the plan has been opposed a good number of times by the US Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Department of Justice (DOJ).

Voyager filed for voluntary Chapter 11 bankruptcy protection in July after halting withdrawals due to a liquidity crunch caused by the plunge in crypto assets then. The company began restructuring to protect users’ assets and maximize value for its shareholders.

Toward the end of last year, Voyager auctioned its assets, and the now-bankrupt crypto exchange FTX won the bid to acquire them for $1.4 billion. Following FTX’s demise, Binance.US entered an agreement with Voyager to acquire the assets for $1 billion, a deal set to unlock 51% of customers’ funds as soon as possible.

Voyager, US Government, Court Reach Resolution

In January, US District Judge Michael Wiles of the bankruptcy court for the Southern District of New York approved the deal and asked both entities to work out a purchase agreement and solicit creditor votes on the sale.  

Roughly 97% of Voyager account holders voted in favor of the deal, which was set for final approval by the court in March. However, the SEC, DOJ, CFTC, and other state authorities opposed the plan because it could involve the sale of unregistered securities, and the involved parties were under fraud violation investigations.

After much back-and-forth arguments, all concerned entities have reached a resolution that allows the plan to go on before a legal appeal filed by the DOJ on the case is handled.

Leading American cryptocurrency exchange Coinbase has secured a regulatory license from the Bermuda Monetary Authority (BMA) to offer financial services in the country and is set to launch a derivatives exchange in the region soon.

Coinbase Obtains Bermuda Regulatory License

According to a blog post, Coinbase sought the Digital Asset Business Act from the BMA due to the country’s regulatory approach to the crypto sector. Bermuda was one of the first financial centers to release clear crypto regulations in 2018 and is currently known for its transparent, compliant, and cooperative regulatory environment.

“Bermuda was chosen as one of our international hubs as the BMA is a highly respected and experienced financial regulator that is led by a world-class executive team and board of directors. The BMA is also a member of several international organizations and maintains close relationships with other regulatory agencies around the world,” the exchange said.

In addition, people familiar with the matter told Fortune that Coinbase intends to launch a derivatives exchange in Bermuda as soon as next week. The development follows reports that the crypto exchange has been in contact with institutional customers, market makers, and investment firms about establishing a new offshore trading platform.

Coinbase Expands Offshore

Coinbase’s move toward Bermuda aligns with the expansion of its international business through a “Go Broad & Go Deep” strategy. Bermuda’s regulatory environment differs from that of the US, which has yet to provide clear rules for the crypto sector or even decide if crypto assets are commodities or securities.

Over the years, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have engaged in a regulatory turf over who is to oversee the crypto industry. Both have issued contradictory rules and statements that have confused market participants and driven them out of the country.

The exchange’s CEO Brian Armstrong recently stated during a conference at the Fintech week in London that crypto firms are most likely to develop in offshore havens if the US and the UK fail to provide regulatory clarity for the industry.

Meanwhile, Coinbase has extended its crypto services to other regions besides Bermuda, including Singapore, Brazil, Canada, Dubai, and Europe.

Ethereum-based non-fungible token (NFT) marketplace Blur dethroned OpenSea as the leading NFT platform in Q1 2023, as the trading volume for digital collectibles surged by 68%, according to a new report by crypto data platform CoinGecko.

OpenSea Loses its Top Position as NFT Trading Volume Surges

As per the report dubbed “2023 Q1 Crypto Industry Report,” a majority of the NFT trading volume for the first quarter came from Blur, a new marketplace launched in October. Blur’s market share grew from 52.8% in December to 71.8% in March, and OpenSea’s fell from 29.3% to 21.7% within the same period.

While Blur found its way to the leading position of the top six NFT marketplaces in Q1, the trading volume for digital collectibles rose by 68% to $4.5 billion from $2.1 billion in Q4 2022. 

Although many chains recorded an uptick in trading volume for the first quarter, the ecosystem of the proof-of-stake (PoS) blockchain platform, Solana, shrunk. The trading volume of Magic Eden, Solana’s largest marketplace, plunged by 67.9% from $73.9 million in December to $23.6 million in March. The migration of y00ts and DeGods – two popular NFT collections – to other chains worsened the fall.

Besides the NFT space, the decentralized finance (DeFi) sector also saw a significant uptrend. DeFi market cap surged by 65.2% in Q1, accounting for $29.6 billion in gains majorly spurred by liquid staking governance token performance.

Crypto Market Gains $406B in Q1

The outstanding performance of liquid staking governance tokens stemmed from the buzz around Ethereum’s Shanghai upgrade. Upon confirmation of the Shapella upgrade, the market cap of the governance tokens recorded a 210.9% increase. After outperforming lending protocols, liquid staking governance is currently the third-largest category in DeFi.

Notably, the growth of decentralized exchanges (DEXs) outpaced that of centralized exchanges (CEXs) twice due to regulators’ global crackdown on the latter. While CEXs grew by 16.9% in Q1, DEXs saw 33.4% growth within the same period.

Meanwhile, the general crypto market finished Q1 with a market cap of $1.2 trillion, a 48.9% increase from the previous quarter. The market rounded 2022 off with a market cap of $829 billion and gained $406 billion in the last three months. 

Rostin Behnam, the chairman of the United States Commodities Futures Trading Commission (CFTC), has accused the world’s largest cryptocurrency exchange Binance of intentionally violating the agency’s rules, as it is clear that the exchange had to register its products and offerings.

Binance Intentionally Offered Products to US Customers

According to a Bloomberg report, Chair Behnam commented on the CFTC’s recent case with Binance during an event hosted by Princeton University. The chairman reprimanded the crypto exchange over its compliance with US futures and derivatives regulations, suggesting that the platform knowingly allowed US users on its platform.

The commodities regulator recently filed a lawsuit against Binance for a list of alleged violations, including the operation of an illegal derivatives exchange and willful evasion of federal laws. The case was filed at the US District Court for the Northern District of Illinois on March 27, with Binance CEO Changpeng Zhao (CZ) and the exchange’s former compliance officer Samual Lim, also mentioned as defendants.

The CFTC accused the defendants of committing multiple violations of the Commodity Exchange Act (CEA) and engaging in a strategy of regulatory arbitrage for their commercial benefit. 

The complaint alleged that Binance offered unregistered crypto derivative products to US-based VIP customers, despite laws restricting them from using the platform. The agency accused Binance of enabling such users to evade compliance rules by instructing them to conceal their locations using virtual private networks (VPNs).

Behnam Reiterates That Ether is a Commodity

Overall, the CFTC charged Binance, CZ, Lim, and affiliated entities with seven counts, including failure to register as a Futures Commission Merchant (FCM), failure to supervise diligently or implement anti-money laundering and know your customer (AML/KYC) measures, provision of illegal commodities options, and law evasion.

The agency sought civil monetary penalties, disgorgement, permanent trading and registration bans, and a permanent injunction against further CEA and CFTC regulations violations.

“These are not unsophisticated individuals. They are starting large companies and offering futures contracts and derivatives to US customers,” Behnam said at the Princeton event.

The CFTC chair insisted that if a company chose to offer futures contracts in the US, there was a clear understanding that they had to register with the agency and comply with its rules.

Meanwhile, CFTC Chair Behnam restated that Ether, the second largest cryptocurrency and native token of the Ethereum network, and stablecoins are commodities.

Popular social media and microblogging platform Twitter has partnered with Israeli financial services company eToro to bring cryptocurrencies, stock, and financial assets trading to its users.

Twitter Starts Crypto and Stock Trading

According to a CNBC report, the crypto and stock trading feature was integrated into the Twitter app on Thursday. The new service will allow Twitter users to view market charts for various financial instruments and buy and sell crypto assets and stocks from eToro.

The new update comes three months after Twitter added pricing data for cashtags. Since December, the platform’s users have been able to view real-time trading data from TradingView on index funds and shares of some companies like Tesla (TSLA) and assets like Bitcoin (BTC). All they have to do is use Twitter’s “cashtag” feature, which entails searching for a ticker symbol with the dollar sign in front of it. 

Since January 2023, Twitter has recorded over 420 million searches for cashtags, with a daily average of 4.7 million. Due to the alliance with eToro, the cashtags feature will be expanded to cover more financial instruments and asset classes.

Speaking with CNBC, Yoni Assia, founder and CEO of eToro, said: 

“As we’ve grown over the past three years immensely, we’ve seen more and more of our users interact on Twitter [and] educate themselves about the markets. There is very high quality content, real-time content on financial analysis of companies and what’s happening around the world. We believe this partnership will enable us to reach those new audiences [and] connect better the brands of Twitter and eToro.”

Users can now click a button that says “view on eToro,” which would take them to the financial services company’s site where they can buy and sell assets. It is worth mentioning that eToro also uses TradingView as its data partner.

Musk Transforms Twitter

The latest developments are a part of American billionaire Elon Musk’s plans for Twitter since he took over the platform as CEO last year in a $44 billion deal. The billionaire has revealed that he plans to turn the social media platform into a “super app,” offering users a wide range of services.

Meanwhile, a recent court filing shows the Twitter CEO has changed the platform’s corporate name to X Corp after merging it with a shell company bearing the same name. The move aligns with his decision to turn Twitter into a super app. 

Adrienne A. Harris, superintendent of the New York State Department of Financial Services (NYDFS), has revealed that the closure of US crypto-friendly Signature Bank was not because it had ties to the crypto sector.

Signature’s Collapse Had Nothing to Do With Crypto

According to a report from the Wall Street Journal, Superintendent Harris made the comments during the Links crypto conference hosted by blockchain analytics firm Chainalysis on Wednesday.

Harris disclosed that Signature Bank was closed due to liquidity problems within its management. The superintendent described the events leading up to the bank’s failure as a new type of bank run. The bank had many uninsured deposits while lacking adequate liquidity management protocols to meet withdrawal requests.

Last month, the NYDFS shut down Signature Bank to prevent an impending banking crisis. The financial watchdog claimed the move was to protect the US economy and banking system as two other entities – Silvergate Capital Bank and Silicon Bank – had collapsed due to severe liquidity issues.

Prior to Signature’s closure, several crypto firms had turned to the bank after Silvergate, a major crypto-friendly lender, went into voluntary liquidation. Signature’s discontinuation dealt a significant blow to the US crypto space, as several entities had large funds deposited at the bank.

The NYDFS placed Signature in the receivership of the Federal Deposit Insurance Corporation (FDIC) to protect depositors and marketed the remains of the bank to interested buyers.

Not Operation “Choke Point 2.0”

Signature’s closure sparked rumors that the government was trying to eliminate crypto by cutting off its access to the banking system. People even claimed the move aimed to send an anti-crypto message, tagging it “Operation Choke Point 2.0.”

“The idea that the taking possession of Signature was about crypto and this is Choke Point 2.0 is really ludicrous,” Harris said.

The NYDFS head further explained that the crypto industry still lacked maturity in compliance despite its growing prominence. She added that such compliance programs needed adequate technology like blockchain analytics tools and trained professionals to use them.

“There is still a lack of maturity around Bank Secrecy Act-anti-money-laundering [compliance] and cybersecurity. We’re eager for the day when those systems mature and scale as the business side does,” Harris added.