Crypto

Cryptocurrency won’t go mainstream until US solves its problems, says Chainalysis CEO

Published

2 months ago

May 16, 2024

Cryptocurrency won’t go mainstream until US solves its problems, says Chainalysis CEO

Cryptocurrency may not become a fully mainstream financial instrument until concrete regulations for the highly volatile industry are drawn up and enforced by authorities in the US, the chief executive of blockchain company Chainalysis has said.

While acknowledging that current cryptocurrency frameworks are “actually pretty good and functional”, the $2.33 trillion industry’s other issues need to be addressed, especially when it comes to protecting investors and consumers, Michael Gronager told The National.

The US, the world’s biggest economy that is also considered the most important financial market as the Federal Reserve sets the global tone for interest rates – should take the lead on this, he said.

“In finance, everyone looks towards to the US first trying to figure out what’s going on, and then whether the regulation has already been created in other places first … it’ll be changed to adapt the US framework once it’s figured out,” Mr Gronager said.

“We’ve seen that in the past; we’ll see that again with crypto. So, we are kind of waiting for the US to solve some of these things and that’s where things stand today.”

The US granted the cryptocurrency sector a major victory in January when it finally approved the country’s first spot Bitcoin ETFs, clearing the way for trading on the New York Stock Exchange, the Cboe Global Markets and the Nasdaq Composite, and making Bitcoin more accessible to retail traders.

ETFs “definitely boosted the sentiment of crypto”, Mr Gronager said.

In addition, US authorities have been vigilant in clamping down on the sector, running after irregularities and illicit activity within the ranks.

Their actions have claimed some of the biggest names, including Sam Bankman-Fried, the former chief executive of FTX who was sentenced to 25 years in prison for fraud, and former Binance chief executive Changpeng Zhao, who in November pled guilty to charges related to money laundering and was handed a four-month prison sentence on April 30.

“The FTX case was so unique; it was less tied to crypto and more tied to a traditional fall because everything happened behind closed doors, and was related to how that company was run by the people behind it,” Mr Gronager said.

“The lesson learned by the industry and regulators is that if it’s a non-regulated business in your jurisdiction and you don’t have any ways to think that your funds would be good, they’re probably not good,” he added, also noting the collapses of Three Arrows and Celsius Network in 2022.

The fates of those companies, coupled with job losses at the time, triggered the so-called cryptocurrency winter, a period in which the sector cooled down, dragging Bitcoin to below its key $20,000 psychological level in June 2022 and wiping out about $2 trillion from the digital asset industry’s market capitalisation.

“Celsius and Three Arrows were the symptoms of a way too hot finance market. And the newest kids in finance were the crypto exchanges and some crypto projects – they were definitely the ones who overleveraged completely,” Mr Gronager said.

“And some of them did it in an illegal way. And that was basically what we saw there. We also saw established venture capital firms over-leveraging their investments and getting in big trouble, but most of them actually survived it.”

For the broader finance industry, Mr Gronager believes there is a “solid and pretty good framework” that tackles money laundering and terrorist financing.

Applied to the cryptocurrency sector, the $4.3 billion settlement between Binance and the US Department of Justice last November is an indication that authorities have taken a stance and this is being taken very seriously.

“We had all the big banks … each getting billion-dollar fines; now you’re seeing the same in the crypto space and that raises the bar, ensures compliance will be high priority, and a good understanding and responsibility of the industry,” Mr Gronager said.

Among the most notable fines imposed on financial institutions for compliance failures are JP Morgan Chase’s $2.6 billion settlement in the aftermath of the Bernard Madoff Ponzi scheme in 2014 and Credit Suisse’s $5.28 billion payment in 2017 for misconduct on sales of residential mortgage-backed securities.

“There’s now a price on not doing compliance or making mistakes.”

Regulations are key to establishing trust in the cryptocurrency industry, and governments should play an active role in ensuring this, said Mr Gronager, who counts the UAE as among “the top three to five in terms of the global landscape” of finance and cryptocurrency, as well.

He said the Emirates has had “a good way of working with the [crypto] industry, ensuring that there’s adequate regulation”, at par with other global financial centres such as New York, London and Singapore.

The total value of cryptocurrency transactions in the UAE from the first quarter of 2023 to the first quarter of 2024 hit $39.2 billion, data provided by Chainalysis to The National shows.

Institutional investors, those who invest more than $1 million, made up the biggest chunk of UAE transactions with 59 per cent, while professional investors ($10,000 to $1 million) were at 39 per cent and retail investors (up to $10,000) were at 2 per cent, the data showed.

“The UAE, in general, is very advanced and sophisticated in [cryptocurrency] use cases and is probably one of the few markets where decentralised finance is more relevant than centralised exchanges, demonstrating that the level of sophistication is pretty high,” Mr Gronager said.

Updated: May 16, 2024, 3:00 AM

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Crypto

Why Bitcoin and Trump Are Once Again Crypto’s Biggest Story

Published

7 hours ago

July 26, 2024

Press Room

Why Bitcoin and Trump Are Once Again Crypto’s Biggest Story

It’s day two of Nashville’s Bitcoin Conference, but many attendees are waiting for day three.

The reason? Saturday (July 27), at 2 p.m., is when U.S. Republican presidential nominee Donald Trump will give a keynote address to the conference.

The former president and current hopeful, who once dismissed bitcoin as a “scam” competing against the U.S. dollar, is now positioning himself as a proponent of the crypto industry.

Trump has already raised more than $4 million in crypto for his campaign war chest, and the crypto audience represents an attractive and lucrative voting bloc, particularly given their ongoing disillusionment with the current state of existing domestic digital asset policy.

A free T-shirt being offered to attendees of the conference reads “Vote Trump.”

Per a Barron’s report, the prevailing sentiment among certain bitcoin investors and enthusiasts is that Trump will use his speech to make a major announcement, something along the lines of throwing his support behind having the U.S. government buy bitcoin as a “strategic reserve” asset, akin to foreign currencies, or oil.

Central banks’ investment in bitcoin would lend credibility to cryptocurrency, potentially elevating it to a status similar to gold in terms of being a store of value. Any such move could have a far-ranging influence on discussions around digital currencies and monetary sovereignty.

Trump, who has pitched himself as the “crypto president,” isn’t the only politician speaking at the crypto festival. Republican former candidate Vivek Ramaswamy, independent U.S. presidential candidate Robert F. Kennedy Jr., and lawmakers from both parties — including Sen. Cynthia Lummis of Wyoming — are also slated to speak.

See also: Trump Running Mate J.D. Vance’s Antitrust Views Divide Business Leaders

Crypto Industry Looks to Increase Beltway Influence

Trump’s rebranding as a crypto-friendly candidate is part of a larger trend among Republicans to embrace digital currencies and blockchain technology. This strategy aims not only to attract a young and tech-savvy demographic but also to tap into the substantial financial resources of the crypto sector. By aligning with the interests of cryptocurrency enthusiasts, Trump and his party are seeking to leverage the political and economic potential of this burgeoning industry.

Trump’s running mate, J.D. Vance, has maintained a positive view on the digital asset sector throughout his political career, and voted as a senator accordingly.

The Republican Party’s platform states that the GOP will “end Democrats’ unlawful and unAmerican Crypto crackdown” and “defend the right to mine Bitcoin.”

And as PYMNTS wrote earlier this month, the need for clear regulatory frameworks remains one of the most pressing issues facing the crypto industry.

“What we are seeing, where it’s the UK, Japan, Singapore … even the European Union, more than two dozen countries have come together to provide a framework for crypto regulation,” Ripple’s CEO Brad Garlinghouse said last week (July 17). “It’s frustrating that we as a country can’t get that framework in place. And instead, we have this interminable litigation coming from the SEC that really isn’t solving the problem.”

Ripple earlier this year donated $25 million to the crypto industry super PAC Fairshake, with Garlinghouse saying at the time that those donations would continue each year, as long as the sector had its naysayers.

Read more: Blockchain’s Benefits for Regulated Industries

As the 2024 elections approach, the cryptocurrency sector is poised to play an increasingly significant role in American politics, across both parties.

Per a Politico report on Tuesday (July 23), billionaire investor and bitcoin enthusiast Mark Cuban believes that Democratic Presidential Nominee Kamala Harris would be “far more open” to crypto, though he noted that was “certainly not confirmed by the VP.”

Potentially contributing to the more mainstream embrace of crypto is the fact that institutions are starting to warm up to digital assets, too.

Coinbase Asset Management is reportedly creating a tokenized money market fund, while asset manager BlackRock introduced a tokenization of real-world assets: a fund called BUIDL that holds U.S. Treasurys and gained $500 million of assets following its launch in March.

The tokenization of real-world assets is a function of the blockchain landscape that has captured the imagination of various players across payments, finance and commerce, PYMNTS reported in April.

As PYMNTS Intelligence’s latest report revealed, regulated industries, including healthcare and financial services, must adhere to numerous requirements, such as know your customer (KYC), anti-money laundering (AML) and data privacy regulations. Blockchain could help these industries in that regard.

Crypto

Trump Will Headline Bitcoin 2024 Conference—His Latest ‘Crypto President’ Rebrand Effort

Published

14 hours ago

July 26, 2024

Press Room

Trump Will Headline Bitcoin 2024 Conference—His Latest ‘Crypto President’ Rebrand Effort

Topline

Former president and one-time bitcoin detractor Donald Trump will speak at Bitcoin 2024 in Nashville, Tennessee, this weekend alongside other political figures, looking to further his rebrand as a “crypto president” ahead of Election Day.

Trump will speak at the conference on Saturday. (Photo by Brandon Bell/Getty Images)

Getty Images

Key Facts

Characterized as the world’s largest bitcoin conference, the three-day event hosted at the Music City Center convention complex features a wide range of speakers such as independent presidential candidate Robert F. Kennedy Jr., political commentator and comedian Russell Brand and former Republican presidential candidate Vivek Ramaswamy.

The conference features educational panels, networking opportunities and entertainment experiences such as a Karate Combat/Influencer Fight Club viewing and a screening of a bitcoin movie, “God Bless Bitcoin,” which features interviews with people such as billionaire Dallas Mavericks owner Mark Cuban and skateboarding legend Tony Hawk.

Trump will give a 30-minute keynote address Saturday during the conference’s final day, in a speech that will likely attempt to court voters and capitalize on support he has already received from key cryptocurrency figures like the Winklevoss twins.

Tickets to the conference are pricey, starting at $699 and reaching as high as $21,000 for a single ticket—though prospective attendees can get tickets at a 21% discount if they purchase them with bitcoin.

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Surprising Fact

Edward Snowden, the whistleblower behind one of the largest classified documents leaks in the history of the National Security Agency, is expected to speak Friday from Russia, and has called the cryptocurrency “the most significant monetary advance since the creation of coinage.”

Tangent

Bitcoin traded down more than 2% at just under $65,000 Thursday afternoon, having mostly plateaued in the last three months, posting gains of a fraction of a percent. It has surged more than 53% since the start of the year.

Big Number

$1.8 million. That is how many dollars worth of bitcoin Trump supporters donated to the Republican nominee through the end of June, according to The Wall Street Journal.

Key Background

The bitcoin conference has historically been used by public figures and companies as an event to announce partnerships and initiatives. In 2021, the president of El Salvador, Nayib Bukele, announced at the event that the country would be making bitcoin a legal tender. Attendance has been inconsistent in recent years, as 25,000 people appeared at the convention in 2022 (when the crypto market experienced one of its worst crashes ever) and 12,000 attended in 2023, according to Bloomberg. Bitcoin 2024 has yet to share attendance numbers, though big-name speakers like Trump could generate more tickets than prior years.

What Has Donald Trump Said About Bitcoin?

Trump has increasingly warmed up to cryptocurrency as Election Day draws closer, ditching the skepticism he had for it years ago. While president in 2019 he said he was not a fan of bitcoin and other cryptocurrencies, calling their values “highly volatile and based on thin air” in a tweet. He also told Fox News in 2021 bitcoin “just seems like a scam,” saying he did not like it “because it’s another currency competing against the dollar.” Since then, Trump has embraced cryptocurrency, allowing supporters to donate to his campaign with bitcoin and selecting a running mate in JD Vance, R-Ohio, who supports and owns at least $100,000 worth of bitcoin. The cryptocurrency market may benefit from Trump winning in November, with bitcoin remaining “sensitive” to the election as its price is “positively correlated with the probability” of a Trump victory, according to Bernstein analysts led by Gautam Chhugani. Trump’s Democratic challenger, Vice President Kamala Harris, is likely to adopt the regulation-centric crypto policies of her former running mate, President Joe Biden.

Marathon Digital Buys $100 Million Worth of Bitcoin

Published

21 hours ago

July 25, 2024

Press Room

Marathon Digital Buys 0 Million Worth of Bitcoin

Key Takeaways

Bitcoin miner Marathon announced the purchase of $100 million worth of bitcoin.
This takes the company’s bitcoin holdings to more than 20,000, worth roughly $1.3 billion.
Marathon said it’s reverting to a strategy of holding all the bitcoin it mines on its balance sheet.

Marathon Digital (MARA) bought more bitcoin.

The bitcoin miner said Thursday that it recently purchased $100 million of the cryptocurrency on the open market, adding that it now owns over 20,000 bitcoin — worth roughly $1.3 billion on the open market — and intends to acquire more.

It also says it now plans to keep all the bitcoin it mines, which it called a “full HODL strategy.”

Marathon CFO Salman Khan explained that a recent dip in bitcoin prices, combined with the company’s strong financial position, provided an ideal opportunity to expand its holdings. The company had lately been selling bitcoin to cover operating expenses.

As of June 30, Marathon held $268 million in cash. The company is set to report its second-quarter earnings on August 1.

Marathon stock was recently up about 1%, with bitcoin down roughly 2% over the past 24 hours to a bit under $65,000, according to CoinDesk.

“We believe bitcoin is the world’s best treasury reserve asset and support the idea of sovereign wealth funds holding it,” said Marathon CEO Fred Thiel. “We encourage governments and corporations to all hold bitcoin as a reserve asset.”