2023-12-21 14:51

The U.S. platform, which drew industry barbs for insisting crypto can comply with SEC rules, is now approved for clearing, though it won't begin for a few months at least. Prometheum Inc., with the latest regulatory notch on its belt, is about to finally test whether a viable crypto platform can operate entirely within U.S. Securities and Exchange Commission (SEC) regulations, according to a FINRA document outlining the expanded licensing. The letter, signed Wednesday by co-CEO Benjamin Kaplan, has to be resubmitted to FINRA to finalize the new status.. Prometheum was already the first and only special-purpose crypto broker dealer licensed under SEC rules. It's now obtained approval to clear and settle digital assets securities trades. While the company hasn't yet made its first trade or earned its first dollar of revenue, co-CEO Aaron Kaplan said it will begin taking custody of institutional clients' assets within the next quarter. "There's a significant amount of institutional pent-up demand that's been looking to participate in the space," Kaplan said in an interview, saying that's been illustrated by all the interest in the potential approval of a bitcoin spot exchange-traded fund by the SEC. Kaplan said the regulatory questions plaguing U.S. crypto have kept some institutions on the sidelines, and an approved firm that speaks the same compliance language as them "will allow those institutions to feel comfortable and allow for that pent up demand to be met." A FINRA spokesperson said the self-regulatory organization had no comment. Path to compliance The company's latest approval from the Financial Industry Regulatory Authority, a securities industry standards and licensing organization that reports to the SEC, will likely rekindle the tense debate over Prometheum's status. Kaplan has been an aggressive advocate of his company's approach to compliance, even as most of the crypto industry has devoted years of policy energy in explaining how it's impossible to run a digital-assets platform under existing rules. Companies have actually made that case in court, with U.S. exchange Coinbase arguing in April that "existing SEC registration and disclosure requirements are incompatible with digital assets." The problem for the crypto sector: If Prometheum succeeds, it undermines everybody else's core complaint about operating in the U.S. Other companies have been waging expensive and time-consuming court battles with the SEC over how the agency defines crypto securities and demands registration from exchanges. Prometheum intends to begin its digital asset custody services for asset managers, hedge funds and other financial institutions in the first quarter of 2024. By the second quarter, the company plans to make trading and clearing available to clients – first for institutional customers, then retail investors. Kaplan also sees it as a potential platform for the tokenization of traditional securities, he said. As Prometheum rose to prominence this year for its sector-contrary view on compliance, Kaplan waged a rhetorical war with crypto competitors, which got the CEO tapped to testify in Congress. Some in the industry have predicted Prometheum's business model will never happen, despite the unusual and unprecedented regulatory licensing. Token listings The SEC hasn't made the process of trading digital assets especially clear, with Chair Gary Gensler insisting that the same securities laws that have always applied to investment contracts should apply in the same way to virtually all cryptocurrencies. So far, judges haven't entirely agreed with that view. Still, the commission will only openly acknowledge a single crypto name as being outside its securities jurisdiction: bitcoin. The agency routinely names other tokens as securities in enforcement cases, but that leaves the remaining thousands of tokens in a regulatory limbo. However, both Gensler and his predecessor, Jay Clayton, have publicly stated their view that most cryptocurrencies are securities. Other, unregistered crypto platforms have made their own decisions about which tokens won't trigger the SEC's securities alarm, and their choices have often run afoul of enforcement actions from the regulator. Prometheum has previously acknowledged that, when it got its approval as one of about 70 SEC-regulated alternative trading systems (ATSs), it disclosed examples of the securities it would support – a couple of which have also been marked as such by the agency. It told the regulator it could offer Flow (FLOW), Protocol Labs’ Filecoin (FIL), The Graph (GRT), Compound (COMP) and the Celo platform’s CELO, for instance. "The public discussion that basically almost every digital asset besides bitcoin is likely a security gives us a significant amount of potential assets which we can support for custody and trading," Kaplan said. When asked what specific tokens the company expects to take on, he said he's "not answering specifics about assets." Kaplan said Prometheum will make further announcements next year. He also declined to say whether the SEC had given the company any specific guidance as the company approached this latest approval. "There's been standard communication with our regulators," Kaplan said. Unregistered securities? Industry executives and lobbyists contend that Prometheum would only be able to trade securities registered with the SEC. And since the bulk of crypto assets remain on the outside, they said the company will have nothing to trade. But Prometheum argues that the SEC's requirements, such as routine disclosures, are primarily the responsibility of whoever is backing an asset and not the job of a trading platform like this one. "While we support the SEC’s registration and accompanying disclosure requirements for issuers under federal securities laws, it is the SEC, not Prometheum, that is responsible for enforcement," Kaplan said. An ATS, Kaplan said, has more leeway than a more acutely regulated national exchange. He said a registered exchange has to work with issuers to list their assets, but an ATS has a "different consideration." "An alternative trading system chooses to support an asset based on its customers' needs," he said. About 50 employees work at Prometheum and its affiliates, Kaplan said, and public records show eight registered brokers ready to handle trading there. Now that the company is licensed for custody, trading, clearing and settling, Kaplan said, it can "service the lifecycle of a digital asset" all in one shop. With the doors set to open soon, the coming months will be the true test for the company. Until Prometheum operates as a custodian and trading platform for a while without the SEC rolling in to tell the company to cut it out, the business will remain surrounded by doubts from its detractors. The SEC could also further boost the relevance of Prometheum if it finalizes its recent proposal to demand registered investment advisers only park their clients' crypto assets with "qualified custodians" – a term that Gensler argued doesn't include today's crypto exchanges. The rule is targeted for an April list on the SEC's latest rulemaking agenda. As a crypto-native firm licensed to take custody of digital assets, Prometheum could be on a very short list. SEC Chair Gensler also gave Prometheum another shout-out – though not by name – on Friday when he rejected Coinbase's petition for the agency to write wide-ranging regulations tailored to the industry. Gensler said that the current approach is working fine, and he offered as an example the fact that one broker is already registered. Read More: The Crypto Industry’s New Favorite Punching Bag – Prometheum – Asks for a Chance https://www.coindesk.com/policy/2023/12/21/prometheum-earns-final-regulatory-nod-to-try-hand-at-fully-compliant-crypto/

2023-12-21 10:41

What to watch for in 2024, according to market analysts. Layer-1 blockchain Solana (SOL) led the way in 2023 in terms of token price gains, with other altcoins Avalanche (AVAX), Stacks (STX) and Helium’s (HNT) following closely behind. The digital asset gains came as the largest cryptocurrency by market value, bitcoin (BTC), also witnessed a strong year amid growing optimism that spot bitcoin exchange-traded funds (ETFs) will be approved early in the new year. Solana, which began its sharp increase in mid-October, has gained over 700% since the start of the year. The rally was unaffected by the U.S. Securities and Exchange Commission naming the token among other cryptos as “unregistered securities,” in a complaint against cryptocurrency exchange Coinbase in June. Solana also fared well despite its relationship with collapsed exchange FTX and its founder Sam Bankman-Fried, whose trial ended in November. Bankman-Fried was a prominent backer of Solana and acquired over $1 billion worth of the tokens through his companies Alameda Research and FTX. Most of SOL’s gains came following the conclusion of the trial. The network has since seen increased growth in monthly active addresses and the launch of several memecoins including BONK, which was listed recently on crypto exchange Coinbase. “There were real questions around Solana’s survival after the collapse of FTX, but it has instead thrived with increasing activity on the chain, a newfound appreciation for its innovative technology, and several high profile airdrops,” said Brian Rudick, a senior strategist at GSR. HNT Helium’s HNT also made considerable gains in 2023, most of them in December, following the company’s move into the mobile space. HNT gained 500% over the year. Helium migrated to Solana in April from its own blockchain. Helium is a blockchain-based network for Internet of Things devices that uses nodes as hotspots to connect wireless devices to the network. According to Christopher Martin, director of research at Amberdata, 2023 was a huge year for Helium because of its jump into the mobile sector. “The network seems to have major plans in mobile and IoT, and allowing mobile plan users to earn tokens (MOBILE) by supporting the network and pay the monthly bill with them, creates a flywheel effect for the network,” said Martin. He also noted that “the recent BONK craze has led the Solana Saga phone to sell out (since the phones come with a BONK claim), which also has a free 30-day subscription to Helium Mobile,” said Martin. “In short, there's a lot of anticipation for MOBILE and HNT to grow with the mobile network due to the symbiotic relationship between the network benefits of user growth.” AVAX For Avalanche, there have been a number of institutional partnerships that helped lift the token. AVAX has gained 300% year-to-date. Avalanche announced a partnership with Amazon Web Services in January and was part of J.P. Morgan and Apollo Global's blockchain platform, Onyx’s proof-of-concept project in November. Chris Newhouse, a former derivatives trader and the founder of Infiniti Labs, a DeFi advisory and consulting firm, said Avalanche’s rally this year has mostly been down to trading on news. “Although this time, I’d argue this isn’t ALL due to the alt L1 narrative that was previously traded in the last cycle (SoLunAvax) where people were just rotating in and out of different L1s and altcoins,” “Avalanche has made massive strides with institutional partnerships, associating themselves with Apollo and JP Morgan, as well as a previous AWS partnership made at the beginning of the year, and is shaping itself to be one of the best chains conducive to institutional activity,” said Newhouse in an interview with CoinDesk. Bitcoin also had a strong year in terms of price action, mainly due to enthusiasm surrounding a potential spot bitcoin ETF. The cryptocurrency has gained 164% year-to-date. Rudick said in an interview that the ETF hype was the main catalyst, but a supportive macroeconomic environment helped as well. STX Stacks (STX), the native token of Stacks Network, gained 623% over the year. The token rallied in March amid booming hype for Bitcoin Ordinals, a way to inscribe data to the Bitcoin blockchain, and growing total value locked (TVL) on the protocol. Stacks is known for being the first token distributed through the first-ever U.S. Securities and Exchange Commission (SEC) qualified token offering in 2019. Stacks is a Bitcoin layer-2 protocol for smart contracts that’s attempting to transform and extend Bitcoin’s functionality from its widely known role as an alternative payment system to a more versatile, programmable platform. Stacks Network’s TVL has surged over the year too, climbing to $50 million from $6 million in January, according to data from DeFiLlama. More recently, Stacks jumped by 27% on Wednesday following a series of positive comments from veteran investor Tim Draper. 2024 Predictions Rudick said he expects to see bitcoin and ether (ETH) continue to rally in the new year, helped in part by inflows of likely approvals of spot bitcoin ETFs in the U.S. He also noted that in 2024, “we see decentralized identity ushering in a new wave of blockchain users given plans or announced interest from China, the EU, Brazil, and others.” Martin said that aside from the ETF focus early in the new year, real-world assets will be the booming segment to watch. “We’ve seen the foundations being set up this year but we haven't seen the mainstream catch up just yet.” Newhouse said, looking forward, the “Decentralized Physical Infrastructure (DePIN) narrative” will continue to be a hot topic, with tokens such as RNDR and HNT recently outperforming the market. DePINs use cryptocurrency tokens to incentivize building of real-world infrastructure. “Traditional fund managers have also expressed interest specific in HNT, with Bill Ackman supporting the token in 2022,” Newhouse added. https://www.coindesk.com/markets/2023/12/21/solana-avax-helium-led-digital-assets-gains-this-year-whats-next/

2023-12-21 09:52

The worldwide order by a British Virgin Islands court applies to Su Zhu, Kyle Davies and Davies' wife, Kelly Chen. More than $1 billion in assets belonging to the founders of the bankrupt crypto hedge fund Three Arrows Capital (3AC) have been frozen by a British Virgin Islands court, according to the firm's liquidators, Teneo Restructuring. The worldwide court order, issued Monday, applies to founders Su Zhu and Kyle Davies as well as Davies' wife, Kelly Chen, Teneo said in an email. Zhu was jailed for four months in Singapore in September for failing to help wind up 3AC. He is expected to be released this month for good behavior. 3AC filed for Chapter 15 bankruptcy in July last year after the collapse of stablecoin issuer Terra caused irrecoverable losses. Teneo has been seeking $1.3 billion and included Chen in the order to use all available avenues to maximize returns to creditors, whose claims total more than $3 billion. "The order is specifically designed to prevent the Founders and Ms. Kelly Chen from disposing of or otherwise dealing with assets in any way that might frustrate eventual enforcement by the liquidators," Teneo said in a statement. On Wednesday, a Singapore court applied a domestic freezing order for assets located there. https://www.coindesk.com/policy/2023/12/21/court-freezes-1-billion-of-assets-of-three-arrows-capital-founders/

2023-12-21 09:24

Overall crypto market capitalization crossed the $1.7 trillion mark on Wednesday for the first time since May 2022. Bitcoin (BTC) neared the $44,000 level early Thursday and reversed some losses, which were caused by the sudden drop in U.S. stocks on Wednesday. The S&P 500 index closed 1.42% lower, impacting riskier assets such as bitcoin. Some analysts pointed out that a correction was overdue as market indications were in overbought territory and the expiry of a certain type of options created selling pressure. Bitcoin and trending tokens such as Solana’s SOL and Avalanche’s AVAX took a hit after the broader market plunge but climbed in early Asian hours on Thursday. SOL extended gains to 15% in the past 24 hours, and extended gains from a multi-week rally to over 55%. Traders’ optimism around bitcoin remained strong ahead of an expected spot exchange-traded fund (ETF) approval in the U.S., which could bolster demand, and the halving event scheduled for April 2024, which has historically preceded bull runs for the crypto market. However, some traders pointed out current bitcoin market metrics flashed signs of cooling down after a month-long rally – suggesting a low period of volatility ahead of the holidays. “This week has witnessed a sideways trend, with bitcoin moving between $40,500 and $43,500 and ether between $2,150 and $2,250,” said Rachel Lin, CEO and co-founder of SynFutures. “Both these coins and the broader market are consolidating near their recent highs following a rapid increase in value during November.” “One notable effect of this sideways movement is the cooling down of RSI, which, two weeks ago, was in highly overbought territory. Bitcoin’s weekly RSI stands at around 75, down from 82 at the beginning of the month,” Lin added. The RSI indciator calculates the magnitude of price movements for assets, with readings below 30 indicating prices of an asset have fallen further than its fundamental value. https://www.coindesk.com/markets/2023/12/21/bitcoin-climbs-near-44k-as-us-stocks-nurse-biggest-three-month-loss/

2023-12-21 08:16

In a recent note, the Singapore-based digital assets trading firm said expects topside resistance for bitcoin in the $45k-$48.5K region. The January launch of a bitcoin (BTC) spot exchange-traded fund (ETF) is expected to face subdued demand initially, which could lead to a ‘sell the news’ scenario, Singapore-based QCP Capital wrote in a recent note. This could result in short-term volatility for bitcoin, which will shift the focus towards ether (ETH). “It is likely that the actual demand for the bitcoin spot ETF at the start will fall short of market expectations,” QCP wrote. “We expect topside resistance for bitcoin in the $45k-$48.5k region and a possible retracement to 36k levels before the uptrend resumes.” Bitcoin is currently trading above $43,700 during Asia business hours, up 2% on-day. QCP writes that ether is seen as a potential secondary investment option with an anticipated market shift from bitcoin, and speculative interest in a forthcoming ether spot ETF could drive ether prices higher, even before the ETF’s actual launch. “Ether might also be an interesting laggard play here,” they wrote. “This kind of headline excitement could create some speculative uplift for ETH price whether it is warranted or not.” CoinDesk reported that BlackRock (BLK), Nasdaq (NDAQ), and the Securities and Exchange Commission (SEC) held their second meeting in a month to discuss rule changes for listing the bitcoin ETF, with BlackRock modifying its proposal to include cash redemptions, aligning with SEC preferences. Grayscale also recently had a second meeting with the SEC. Bitcoin is up 17% in the last month, according to CoinDesk Indicies data, as anticipation builds around the ETF. https://www.coindesk.com/markets/2023/12/21/bitcoin-could-retract-to-36k-before-uptrend-resumes-qcp-capital-says/

2023-12-21 06:24

The tax code now contains a definition of "digital ruble account" and has rules for the taxation of transactions with digital rubles. Russia’s digital ruble has been integrated into the nation’s tax code after its President Vladimir Putin signed the move into law, according to local news platform Telesputnik. The tax code now contains a definition of “digital ruble account” and has rules for the taxation of transactions with digital rubles. Russia has been pushing forward with its digital ruble, in part as a means to circumvent financial restrictions in the form of sanctions imposed on it for its actions against Ukraine. Putin signed the digital ruble bill into law in July. The Bank of Russia has been working on the Digital ruble as a central bank digital currency project since 2020. The new law will allow authorities to recover digital currency if the taxpayer does not have enough funds in their bank accounts. It also permits authorities to suspend transactions on digital ruble accounts and requires that the platform operator provide documents to reflect funds have been written off from the taxpayer’s account. Russia’s Central Bank has previously said that citizens and businesses should be able to use the CBDC “at their own request" starting 2025. Read More: Russian Lawmaker Predicts That Digital Ruble Will Displace Banks https://www.coindesk.com/policy/2023/12/21/vladimir-putins-signature-brings-digital-ruble-into-russias-tax-code/