Rising M2 money supply will see crypto become ‘Super Massive Black Hole’: Raoul Pal

October 31, 2023 Coin Telegraph

Historically, the cryptocurrency market has benefited from the rise in global money supply, as the majority of bull runs in the past coincided with the rise in fiat supply.

The rising total money supply (M2) could propel crypto into another bull rally and help it outperform the traditional markets, according to Raoul Pal, co-founder and CEO of financial media platform Real Vision. Pal’s X post highlighted the correlation between the rising fiat market supply and the start of the crypto bull run.

Pal, in an X (formerly Twitter) post, shared a graph comparing Bitcoin’s (BTC) yearly performance against the global M2 money supply, indicating the simultaneous rise of Bitcoin and global M2 supply. Historically, the Bitcoin and cryptocurrency markets have started outperforming the traditional financial markets with a rise in global M2 supply.

*Bitcoin vs. global M2 supply. Source: Global Macro Investor*

The chart above shows that Bitcoin’s price is on the verge of decoupling from the traditional market with a rising M2 supply, which has been the case historically, as evident from the spike in BTC’s performance in 2021, 2017 and 2014.

*Bitcoin/NDX vs. global M2 supply. Source: Global Macro Investor*

Pal said he “loves Global M2... this is when BTC outperforms the NDX and crypto becomes the Super Massive Black Hole.”

The M2 is the amount the United States Federal Reserve estimates to be in circulation; it comprises all cash that people own and all money placed in savings accounts, checking accounts and other short-term savings instruments like certificates of deposit.

A Bitcoin bull run is often linked to the block reward halving every four years, with the next one scheduled for April 2024, as it reduces the market supply of BTC against growing demand. However, the halving is not the sole factor behind the surge, as several macroeconomic factors also play a key role.

Over the past decade, Bitcoin’s price has made significant gains during the fast growth of M2, owing to a reduction in interest rates, quantitative easing and fiscal stimulus. On the contrary, during times of monetary tightening by central banks, the cryptocurrency market has struggled to gain bullish momentum. The 2021 bull market coincided with 6% or higher aggregate M2 growth at the Fed, European Central Bank, Bank of Japan and People’s Bank of China.

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BlackRock fined $2.5M by SEC for incorrect investment disclosure

October 25, 2023 Coin Telegraph

BlackRock fined .5M by SEC for incorrect investment disclosure

Asset Management

The SEC charges for the world’s largest asset manager came on the same day as a DTCC listing of its spot Bitcoin ETF was spotted, however, a spokesperson from DTCC confirmed that the listing has been there since August.

The United States Securities and Exchange Commission has fined investment adviser BlackRock Advisors, LLC $2.5 million, accusing it of failing to accurately describe investments in the entertainment industry that comprised a significant portion of a publicly traded fund it managed.

According to the SEC's filing, between 2015 and 2019, BlackRock Multi-Sector Income Trust (BIT) made sizeable investments in a print and advertising business called Aviron Group, LLC, that worked on one to two films annually, through a loan facility.

The SEC alleged that BlackRock incorrectly referred to Aviron as a company that provided "Diversified Financial Services" in a number of BIT's annual and semi-annual reports that were made available to investors publicly. The SEC also alleged that BlackRock misrepresented Aviron's interest rate by claiming that it was higher than it actually was. However, the asset manager discovered these errors in 2019 and corrected information about Aviron's investment in the following years.

Andrew Dean, Co-Chief of the Enforcement Division’s Asset Management Unit at the SEC said that the investment advisers have a responsibility to provide accurate vital information about the assets of the funds it manages, and “BlackRock failed to do so with the Aviron investment.”

BlackRock agreed to pay a $2.5 million penalty for the incorrect investment disclosure agreement. Although the investment was unrelated to the crypto ecosystem, the world’s largest asset manager has been in the crypto limelight for its proposed spot Bitcoin ETF.

The SEC charges against BlackRock for investment discourse failure came on the same day as its spot Bitcoin exchange-traded fund (ETF) was noticed listed on the Depository Trust & Clearing Corporation (DTCC) listing prompting many to believe the spot Bitcoin approval is near.

*iShares Bitcoin ETF listing on DTCC. Source: DTCC*

Bloomberg ETF analyst Eric Balchunas called DTCC listing “all part of the process” of bringing a crypto ETF to market. However, within hours of the DTCC listing, the spot Bitcoin ETF was removed from the platform and reappeared within hours, creating confusion among the crypto community, However, a DTCC spokesperson later confirmed that iShares Bitcoin ETF has been listed on the platform since August, and said the move is not indicative of any regulatory approval.

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Bitcoin ETF to trigger massive demand from institutions, EY says

October 23, 2023 Coin Telegraph

Bitcoin Price

Bitcoin is facing a lot of pent-up demand from institutions amid investors closely monitoring spot Bitcoin ETF news, Ernst & Young’s global blockchain leader Paul Brody says.

Bitcoin (BTC) is in massive demand from institutional investors but awaits a spot BTC exchange-traded fund (ETF) approval to trigger a buying rally, according to a blockchain executive at the professional services provider Ernst & Young (EY).

EY’s global blockchain leader Paul Brody believes that Bitcoin faces a lot of pent-up demand from institutions due to United States regulators not approving a spot Bitcoin ETF for years.

Brody discussed the outlook for the cryptocurrency adoption on CNBC’s Crypto Decrypted on Oct. 23, declaring that trillions of dollars in institutional money are waiting to enter Bitcoin once a BTC ETF is approved.

“But any of these other institutional funds, they can’t touch this stuff unless it’s an ETF or some other kind of regulatory blessed activity,” EY’s blockchain expert said, adding:

“If you look at people who are buying Bitcoin, they are buying it as an asset. They are not buying it as a payment tool. Those who are buying Ethereum, are buying it as a computing platform for business transactions and DeFi [decentralized finance] services.”

Brody’s remarks come amid global investors closely watching the crypto regulatory process by the U.S. Securities and Exchange Commission (SEC), which has not approved a single spot Bitcoin ETF so far. A number of companies, including Grayscale Investments, ARK Investment, BlackRock and Fidelity, have filed with the SEC for multiple Bitcoin ETF products and are awaiting a regulatory response.

Grayscale, which in August 2023 won an SEC lawsuit for a spot Bitcoin ETF review, has recently filed an S-3 form registration statement with the SEC to list its Grayscale Bitcoin Trust on the New York Stock Exchange Arca.

According to Bloomberg senior ETF analyst Eric Balchunas, a recent amendment to the spot Bitcoin ETF by ARK Invest and 21Shares is a “good sign” of progress and impending approvals. The ETF expert believes that the ETF amendments filed in mid-October 2023 could be in direct response to concerns the SEC has asked ETF issuers to address.

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UK tops crypto activity in Central, Northern and Western Europe: Chainalysis

October 18, 2023 Coin Telegraph

Analysis

Crypto adoption in the United Kingdom has been growing as the country adopts more regulations targeting crypto and stablecoins, the study shows.

The United Kingdom has emerged as a major cryptocurrency economy worldwide and the biggest crypto country in terms of raw transaction volume in Central, Northern and Western Europe (CNWE), according to a new study.

The blockchain analytics firm Chainalysis released two new chapters of its 2023 Geography of Cryptocurrency report on Oct. 18, including its brand new CNWE study and the second edition on Eastern Europe.

According to the CNWE-focused report, the region was the second-largest crypto economy in the world over the past year, behind only North America. The region accounted for 17.6% of global transaction volume between July 2022 and June 2023, receiving an estimated $1 trillion in on-chain value during the time period.

The U.K. has topped CNWE’s biggest crypto economies list and ranked third in the world in terms of transaction volumes after the United States and India. According to Chainalysis, the U.K. received an estimated $252.1 billion in cryptocurrency transactions in the past year.

Other big crypto economies in the CNWE included Germany and Spain, which received around $120 billion and $110 billion in crypto transactions over the past year, respectively. These countries are followed by major crypto economies like France, Netherlands, Italy, Switzerland, Sweden and others.

*Top countries by cryptocurrency value received between July 2022 and June 2023. Source: Chainalysis*

Some crypto analysts have previously hinted at growing crypto adoption in the United Kingdom. In February, the crypto tax platform Recap reported that London was the world’s most crypto-ready city for business, beating Dubai and New York.

The significant level of crypto adoption in the U.K. comes amid the country adopting several cryptocurrency regulations. The U.K. government has been steadily progressing toward adopting the Financial Services and Markets Bill, which adds a definition of crypto assets to the existing financial services legislation and provides a regulatory framework for stablecoins like Tether (USDT).

In October 2023, the U.K. Financial Conduct Authority enforced the Financial Promotions Regime, establishing a regulated standard for crypto firms to promote their business without hurting investors. Previously, the U.K. also adopted the U.K. crypto “Travel Rule” in September 2023, requiring crypto asset businesses in the U.K. to collect, verify and share certain information about certain crypto asset transfers.

In addition to the CNWE report, Chainalysis also released a detailed report on Eastern Europe, which is the fourth-largest crypto market, according to the firm. The region received $445 billion in crypto between July 2022 and June 2023, representing 8.9% of global transaction activity during the analyzed period.

Chainalysis did not immediately respond to Cointelegraph’s request for information about the methodology of its study and what types of crypto transactions were included in the analysis. This article will be updated pending new information.

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US government among largest Bitcoin hodlers with over $5B in BTC: Report

October 16, 2023 Coin Telegraph

US government among largest Bitcoin hodlers with over B in BTC: Report

bitcoin regulation

The $5-billion estimation is based on three major seizures linked to the Bitfinex hack and Silk Road, meaning the actual holdings could be much larger.

The United States government has become one of the largest Bitcoin (BTC) holders, with over 200,000 BTC worth more than $5 billion despite selling a few thousand BTC worth millions earlier this year.

According to a data analysis based on public filings, crypto firm 21.co estimated that the U.S. government still holds 194,188 BTC, estimated to be worth $5.3 billion. The firm noted in its analysis that these are “lower-bound estimations of the U.S. government holdings based on publicly available information.”

*U.S. government Bitcoin holdings. Source: Dune*

The analysis tracked the Bitcoin movement of the U.S. government wallets associated with the three largest BTC seizures since 2020, namely the Silk Road seizure of 69,369 BTC in November 2020, the Bitfinex Hack seizure of 94,643 BTC in January 2022, and the James Zhong seizure of 51,326 BTC in March 2022.

*Key Bitcoin seizures by U.S. government. Source: Dune*

The government Bitcoin stash is kept primarily offline in encrypted storage devices known as hardware wallets kept under the Justice Department and the Internal Revenue Service. The U.S. government made two significant seizures in 2022.

Seized assets do not instantly belong to the government. The U.S. Marshals Service, the principal agency charged with selling seized property, only receives possession of the seized Bitcoin after a court issues a definitive forfeiture judgment.

The U.S. government also sells a portion of the seized Bitcoin from time to time through an auction system based on court liquidation orders. The most notable government auction dates back to 2014, when billionaire Tim Draper bought 30,000 BTC from U.S. government auctions in 2014.

However, in recent years, the U.S. government has turned to crypto exchanges to sell seized Bitcoin over public auctions. One such sale came in March earlier this year when the government sold 9,118 BTC on Coinbase, as confirmed through a public filing.

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Hong Kong police recover $11M worth of assets in JPEX case: Report

September 27, 2023 Coin Telegraph

Hong Kong police recover M worth of assets in JPEX case: Report

bitcoin regulation

The JPEX scandal has grown to become one of the largest fraud cases in the country, with over 2,300 victims and losses estimated at over $175 million.

The Secretary for Security of Hong Kong, Chris Tang Ping-keung, has vowed to bring justice to people who fell victim to the JPEX crypto exchange fraud, local media has reported. In a press conference on Wednesday, Sept. 27, the security chief’s office said police are actively looking for the key operators behind the JPEX crypto exchange that orchestrated the country’s largest digital asset fraud.

During the press conference, Tang Ping-keung revealed that the police had made 12 arrests in the case so far and seized more than 8 million Hong Kong dollars ($1 million) in cash, as well as assets worth 77 million HK$ ($9.8 million), including real estate and digital currency, according to a report by the South China Morning Post.

Tang added that the police were actively looking for the ringleaders in the case and called their capture a major factor in solving it.

The operators of the JPEX crypto exchange are accused of running an unauthorized crypto platform and defrauding customers of millions of dollars. Tang also notified the press that they are working with the country’s regulators to put specific measures in place to avoid any such fraud in the future.

Local police in Hong Kong received 2,369 complaints from victims who lost their hard-earned money by investing in the unregulated exchange. The total monetary value of the fallout is estimated to be around 1.4 billion HK$ ($178 million).

The police have made 12 arrests in the case, including three JPEX Technical Support Company employees, along with two YouTubers, Chan Wing-yee and Chu Ka-fa.

The first signs of trouble related to JPEX emerged on Sept. 15 when several users complained about difficulty withdrawing funds. As the news about withdrawal issues gained traction, the platform notoriously raised its withdrawal fees to 999 Tether to deter users from withdrawing funds after a warning from regulators.

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Bitcoin gains legal recognition as digital currency in Shanghai China

September 26, 2023 Coin Telegraph

Bitcoin mining

A similar report from another Chinese court earlier in September recognized cryptocurrencies as virtual properties protected by law.

The Shanghai Second Intermediate People's Court in China has reportedly recognized Bitcoin as a unique and non-replicable digital asset while acknowledging its scarcity and inherent value.

The Chinese court released a report on Sept. 25 discussing the development of internet technologies. The report noted that with the development of Internet technology, digital currencies such as Bitcoin stand out as unique and non-replicable. The report noted that among a sea of virtual currencies, Bitcoin is different and unique from the rest of the digital assets.

The report also shed light on some of the unique properties of Bitcoin including its relative scarcity and property attributes. The report noted that Bitcoin inherits key currency features such as scalability, ease of circulation, storage, and payment. Bitcoin continues to see global usage despite its decentralised nature and lack of central authority administration.

The latest judicial report acknowledging Bitcoin and its attributes as an asset class gives Bitcoin and other digital currencies in China more legitimacy. Despite a blanket ban on cryptocurrencies in China, legal arguments for defining bitcoins as personal property have gained a lot of traction from the local Chinese courts.

The latest recognition from one of the key courts in Shanghai comes despite the hostile attitude of Beijing towards Bitcoin. China imposed a blanket ban on all forms of cryptocurrency activities including Bitcoin mining in 2021. However, several courts in China over the years have recognized Bitoin and other digital assets as legal properties protected by law.

As Cointelegraph reported earlier this month, a People’s Court in China released a report assessing the legality of virtual assets and analyzing the criminal law attributes of these digital assets. The report observed that digital assets qualify as legal property and thus are protected by the law.

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Chamber of Digital Commerce launches Digital Power Network miners’ coalition

September 19, 2023 Coin Telegraph

bitcoin regulation

The new advocacy group already represents over half the country’s Bitcoin hash rate and will seek to shape energy policy and champion Bitcoin and blockchain.

Cryptocurrency miners have a new voice in Washington with the launch of the Digital Power Network (DPN), a new coalition affiliated with the Chamber of Digital Commerce. The network is off to a promising start, with many of the United States’ biggest miners on board.

The DPN is the first affiliate of the Chamber, and shares many of the same team members. Its origins stretch back to the Chamber’s Mining Initiative, which “pioneering the introduction of the first pro-proof-of-work resolution in the U.S. House of Representatives.”

Rep. Pete Sessions' resolution on proof-of-work crypto mining. Source: govinfo.gov

Alena Ricci, vice present of marketing at the Chamber and head of marketing at the DPN, explained to Cointelegraph that the resolution was submitted by Texas congressman Pete Sessions in March. “Bitcoin Mining will play a critical role in rebuilding energy independence in the USA,” Sessions tweeted at the time.

The DPN is debuting with 11 members – Argo, BitDigital, BitFarms, Coinmint, Cipher Mining, DigitHost, Hive, Marathon, Riot, Sustainable Bitcoin Protocol and Terawulf. Together they represent over 50% of the U.S. Bitcoin (BTC) hash rate, the DPN said. According to a statement:

“The Digital Power Network spearheads policy advocacy for digital asset mining and shapes the future of energy policy. Its mission is to champion Bitcoin and blockchain technology to revolutionize energy markets.”

The DPN has its work cut out for it. A bill reintroduced into Congress in March, prior to Sessions’ resolution, would require the Environmental Protection Agency to investigate crypto miners. The Biden Administration included a 30% tax on electricity used by crypto miners in its FY2024 budget, although that proposal may have been dropped.

Exciting News!

Today, we're thrilled to announce the launch of @digitalpowerUS, a visionary consortium that's set to revolutionize the energy landscape! Representing over 50% of U.S. #Bitcoin Hash Rate, this initiative is a game-changer for the future of energy policy. pic.twitter.com/8wtpRy1dyD
— Perianne (@PerianneDC) September 19, 2023

The DPN will work alongside the Digital Energy Council, a lobbying group founded in August by former Chamber director of energy policy Thomas Mapes.

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South Korea focuses on OTC crypto regulations as unlawful deals reach $4B

September 18, 2023 Coin Telegraph

South Korea focuses on OTC crypto regulations as unlawful deals reach B

bitcoin regulation

According to the Korea Customs Service report, the value of unlawful foreign exchange transactions made using digital currency was estimated to be worth $4 billion last year.

South Korean regulators have turned their focus to over-the-counter (OTC) crypto trades amid growing concerns about their use for criminal activities. The financial regulators in the country are reportedly monitoring trading in the OTC crypto market.

According to a report published in a local daily, deputy chief prosecutor Ki No-Seong and Park Min-woo of the Financial Services Commission (FSC) and other vital regulatory officials attended a session on “Criminal Legal Issues Related to Virtual Assets” with a focus on the unregulated OTC crypto market. During the event, No-Seong called for regulating the OTC crypto market due to money laundering concerns.

A Google-translated version of Seong’s statement read:

“Illegal virtual currency OTC companies have overseas corporations and are engaged in the business of converting illegally obtained virtual currency into Korean won or foreign currency. There is a need to regulate these companies as undeclared virtual asset trading businesses.”

The term “OTC crypto market” describes exchanges that are not officially recognized by the government. Digital currency OTC transactions include all transactions outside regulated platforms, including peer-to-peer (P2P) exchanges. According to the report, there are a total of 172 cryptocurrencies available on Upbit, the largest regulated crypto platform in South Korea, while OTC platforms offer up to 700 cryptocurrencies.

The report cited several instances of the use of OTC platforms to convert digital assets into Korean won. The International Crimes Investigation Department of the Incheon District Prosecutors’ Office arrested and indicted three people on charges of engaging in illegal foreign exchange transactions between October 2021 and October 2022.

The arrested trio were found to be purchasing $70.9 million (94 billion won) worth of digital currency from overseas OTCs at the request of Libyans and then sending it to Korea to be converted into cash, according to the report. The value of unlawful foreign exchange transactions made using digital currency was estimated by the Korea Customs Service to be worth $4 billion (5.6 trillion won) last year.

Over the years, South Korea has become known for its stringent crypto regulations and has several regulations in place to tackle crypto-related crimes. The country’s regulators have become more proactive in the wake of Terra’s collapse.

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South Korean Bitcoin lender Delio plans to sue regulators: Report

September 14, 2023 Coin Telegraph

bitcoin regulation

South Korean financial regulators accused Delio of fraud and embezzlement and seized its assets in July earlier this year.

South Korean Bitcoin lender Delio is reportedly preparing for an administrative lawsuit against regulators for the wrong interpretation of law leading to an investigation and hefty fine against the crypto lending firm.

Bitcoin lender Delio said the allegations of fraud and embezzlement levied by the Financial Service Committee (FSC) are baseless, according to a report published in a local daily. The crypto lender claimed that the regulator implied the law unreasonably in a situation where there were no clear regulations for virtual asset deposit and management products.

The report revealed that the Financial Intelligence Unit (FIU) recommended the dismissal of Delio CEO Jeong Sang-ho through a sanctions announcement on Sept. 1. Delio claimed that this was a clear indication that the financial authorities were putting pressure on Delio to close down the business rather than giving them a chance to revive. The FIU also imposed a three-month business suspension on Delio and a fine of $1.34 million (1.83 billion won.)

The firm also warned that the assets seized by regulators could put its operations in jeopardy.

Delio CEO Jeong Sang-ho said that these FIU sanctions leave a lot of room for unreasonable legal interpretation and arbitrary application,” and such behaviour by financial authorities could kill the domestic virtual asset industry.”

The major issue of conflict remains the interpretation of the existing laws, around whether a lending company that lends cash using virtual assets as collateral is considered a virtual asset business operator and whether the act of imposing a lock-up constitutes 'storage' of virtual assets under the Special Financial Services Act.

Delio argued that it is unclear whether virtual asset deposits and management products are considered financial products under the current law. One of the lawyers for the firm noted that there are no provisions for virtual asset-related laws and regulations regarding the virtual asset management business.

The lawyer said that the FIU arbitrarily interpreted virtual asset deposits and management products as financial investment products and sanctioned them which is the case of wrong interpretation of the law.

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