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CFTC head looks to new Congress for action on crypto regulation

February 3, 2023 Coin Telegraph

CFTC

"I will continue to engage and provide technical assistance to draft legislation, as requested,” said Rostin Behnam.

Rostin Behnam, chair of the United States Commodity Futures Trading Commission, or CFTC, has said he will be continuing efforts for the agency to regulate non-security tokens.

In remarks released for a Feb. 3 American Bar Association event, Behnam pointed to “bankruptcies, failures, and runs” as part of the justification for Congress to give the CFTC the authority to address regulation for cryptocurrencies. According to the CFTC chair, the commission was "well positioned" to address any regulatory gaps but deferred to U.S. lawmakers to pull the trigger on legislation.

“Regulation is necessary to protect customers and to prevent failures which cannot predictably be contained within any boundaries across the domestic and global financial markets,” said Behnam. “Regardless of whether one or many occur in 2023 or 2033, we must act. There is a new Congress, and I will continue to engage and provide technical assistance to draft legislation, as requested.”

Today @CFTCbehnam will deliver a keynote address at the ABA Business Law Section Derivatives & Futures Law Committee Winter Meeting. Read it as prepared here: https://t.co/PZuT4vzrBr
— CFTC (@CFTC) February 3, 2023

According to the CFTC chair, budget increases for the commission would also help grow its enforcement team, which brought 69 crypto-related actions to date — a list that includes FTX, Ooki DAO, and others. Behnam said the team was “working towards another strong year of precedent-setting cases” against fraudulent or illegal digital asset projects.

Though the political makeup of the 118th Congress differs slightly from that of its predecessor, it’s unclear if the CFTC will be given additional authority under Behnam. One of the pieces of legislation lawmakers may revisit is the Lummis-Gillibrand Responsible Financial Innovation Act — a bill first introduced in June 2022 aimed at addressing the roles of the CFTC and Securities and Exchange Commission on crypto regulation.

DeFi enjoys a prolific start to 2023: Finance Redefined

February 3, 2023 Coin Telegraph

Coin Telegraph

DeFi marks a perfect entry into 2023 with a bullish January and TVL nearing $50 billion.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you significant developments over the last week.

2023 started on a bullish note for the entire crypto market, including the DeFi ecosystem, with most of the tokens posting double-digit gains in January and recording multi-month highs. Aside from the bull rally, January also saw a 93% year-on-year decline in losses from DeFi exploits and hacks.

The slew of regulatory action against the Mango Markets exploiter is being hailed as a big win for the DeFi sector. The United States Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have taken action against the alleged fraudster, which shows that DeFi is becoming a “safer and more welcoming environment,” according to credit rating firm Moody’s.

Amid all the positive developments, Solana DeFi protocol Everlend shut down over liquidity issues stemming from the FTX crisis and told users to withdraw funds. North Korean hackers also tried laundering $27 million in Ether (ETH) from the Harmony bridge attack.

The bullish momentum of the top 100 DeFi tokens continued into February as the total value locked (TVL) in DeFi protocols reached nearly $50 billion, with most tokens registering another weekly price surge.

DeFi enjoys prolific start to 2023: DappRadar

DeFi protocols experienced a boom in TVL across different staking pools in January. The market hit $74.6 billion worth of staked assets, increasing by 26% from December.

In its latest monthly report, DappRadar outlined the growth of the DeFi sector alongside rejuvenated nonfungible token (NFT) markets, which have also had upticks in trading volume and sales.

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Crypto exploit losses in January see nearly 93% year-on-year decline

Aside from the bullish crypto market rally in January, there’s been more positive industry news as the month saw a steep decline in losses from exploits compared to January 2022.

According to data from blockchain security firm, PeckShield, as of Jan. 31, there were $8.8 million in losses from crypto exploits. There were 24 exploits over the month, with $2.6 million worth of crypto sent to mixers such as Tornado Cash. The breakdown of assets sent to mixers includes 1,200 ETH and approximately 2,668 BNB.

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Regulatory action against Mango Markets exploiter is a win for DeFi — Moody’s

Recent charges brought against Mango Markets exploiter Avraham Eisenberg will positively impact the DeFi space, according to credit rating firm Moody’s.

In a Jan. 31 note from Moody’s Investor Service, the assistant vice president of decentralized finance, Cristiano Ventricelli, stated that enforcement actions brought by the two leading U.S. market regulators in January mean that DeFi is moving toward a “safer and more welcoming environment.”

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Solana DeFi protocol Everlend shuts down over liquidity issues

Solana DeFi protocol Everlend is closing down its operations and urging clients to withdraw funds from the platform.

The company announced the decision on Twitter on Feb. 1, saying that despite having “enough runway” to continue operating, it would be a gamble under current market conditions.

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North Korean hackers try to launder $27M in ETH from Harmony bridge attack

North Korean exploiters behind the Harmony bridge attack continue to try and launder the funds stolen in June 2022. According to on-chain data revealed on Jan. 28 by blockchain sleuth, ZachXBT, the perpetrators moved 17,278 ETH over the weekend, worth about $27 million.

The tokens were transferred to six crypto exchanges, ZachXBT wrote in a Twitter thread, without disclosing which platforms had received the tokens. Three primary addresses carried out the transactions.

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DeFi market overview

Analytical data reveals that DeFi’s total market value remained over $40 billion this past week, trading at about $48.1 billion at the time of writing. Data from Cointelegraph Markets Pro and TradingView show that DeFi’s top 100 tokens by market capitalization had a bullish week, with nearly all the tokens registering price gains.

dYdX (DYDX) was the biggest gainer again, with a 39% surge on the weekly charts, followed by Fantom (FTM), which continued last week’s bullish momentum and registered a 33% weekly surge.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.

Kazakhstan’s digital currency in pilot stage, per Binance, National Bank joint report

February 3, 2023 Coin Telegraph

CBDC

The Central Asian country’s CBDC project is right on time, according to a 2020 roadmap, as consumers and merchants use the currency in a controlled environment.

The National Bank of Kazakhstan (NBK) has launched a digital tenge pilot project, according to a report published jointly by the bank and Binance on Feb. 3. The report looked at global approaches to digital asset regulation, the digital asset industry and decentralized finance (DeFi) in Central Asia and the Commonwealth of Independent States in particular.

In his introduction to the report, NBK Deputy governor Berik Sholpankupov wrote about the bank’s vision of a “collaboration between Traditional Finance and DeFi” that could increase financial inclusion and support international trade. He added:

“In Kazakhstan, we also started a practical R&D project to explore how our CBDC – Digital Tenge, can bridge the world of crypto with traditional fiat payments infrastructure.”

Sholpankupov’s statement confirmed that the NBK is on time with plans set out in its official roadmap. Kazakhstan announced its digital tenge project in 2020. The project is set to run through the end of 2025. The report also stated:

“A Digital Tenge CDBC initiative […] Is already in a pilot phase using the controlled environment, real consumers and merchants. Currently, BNB Chain and NBK are testing CBDC integration with the [BNB] public decentralised blockchain to bridge the gap even further between traditional banking and crypto ecosystem.”

Kazakhstan’s Astana Financial Services Authority (AFSA) granted Binance a permanent license to manage a digital asset platform and provide custody services in October 2022. Later that month, the NBK said in 2022 that it would integrate its CBDC on the Binance BNB chain.

On Jan. 27, the ASFA published a consultation paper examining the shortcomings of the Astana International Financial Centre’s Digital Asset Trading Facility (DATF) regulatory framework, which was developed in 2018. That report suggested additional risk mitigation measures and potential changes to the regulatory framework. Kazakhstan is one of the world’s largest Bitcoin (BTC) miners.

Alongside the National Bank of Kazakhstan, #Binance presented a bilateral report on the “State of the Digital Assets Industry and DeFi in Central Asia”.

The joint report provides an overview of crypto adoption, general trends of DeFi, and the local digital assets industry.
— Binance (@binance) February 3, 2023

Value of WisdomTree’s crypto holdings fell 61.9% in Q4

February 3, 2023 Coin Telegraph

Bitcoin Price

The fund manager’s crypto portfolio has booked a loss in three of the past four quarters, according to recent financial statements.

United States fund manager WisdomTree saw the value of its digital asset holdings decline sharply in the fourth quarter, reflecting the prolonged bear market in Bitcoin (BTC) and other cryptocurrencies.

WisdomTree’s cryptocurrency funds held $136 million worth of assets as of Dec. 31, 2022, down from $163 million at the beginning of the quarter and marking a $23 million depreciation, the company disclosed in its quarterly earnings report on Feb. 3. The funds witnessed only $4 million worth of redemptions or outflows during the quarter. Twelve months earlier, WisdomTree’s cryptocurrency portfolios held $357 million worth of assets.

The fund manager posted a net loss of $28.3 million in the fourth quarter, though operating revenues increased to $73.31 million. Net flows were $5.3 billion, marking the ninth consecutive quarter of positive inflows.

The nearly 62% year-over-year drop WisdomTree’s crypto portfolio is consistent with the decline in the broader cryptocurrency market over the same period. At the end of 2021, the total market capitalization of cryptocurrencies was north of $2.2 trillion — it fell to roughly $795 billion one year later, according to CoinMarketCap.

WisdomTree incurred its biggest crypto loss in the second quarter of 2022, when its portfolio depreciated by $235 million. At the time, crypto markets were reeling from the collapse of Terra Luna and its spillover effects on hedge fund Three Arrows Capital and crypto lender Celsius — the latter two companies filed for bankruptcy in July.

WisdomTree offers several blockchain-focused funds that provide access to the digital-asset sector through traditional financial infrastructure. In December, WisdomTree was greenlighted by the United States Securities and Exchange Commission to list nine additional blockchain-enabled funds. However, efforts to list a spot Bitcoin exchange-traded fund have been rejected by the securities regulator multiple times.

For all the negativity surrounding crypto assets lately, institutional investors have stepped up to buy the dip, according to crypto financial services platform Matrixport. Data provided by the firm suggested that U.S.-based institutional investors have driven the lion’s share of Bitcoin buying recently.

Cryptocurrencies

DeFi enjoys prolific start to 2023: DappRadar

Crypto exploit losses in January see nearly 93% year-on-year decline

Regulatory action against Mango Markets exploiter is a win for DeFi — Moody’s

Solana DeFi protocol Everlend shuts down over liquidity issues

North Korean hackers try to launder $27M in ETH from Harmony bridge attack

DeFi market overview

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