It has stated a variety of reasons for why the products cannot be “reliably valued” by retail consumers, such as financial crime, volatility and an inadequate understanding of crypto assets being the main ones. It was estimated that retail investors will save $53 million due to this ban.

This is despite the FCA releasing a research stating that U.K. consumers have invested an estimated $2.6 million in crypto assets.

Although the main intention of this ban is to protect retail investors from the complexity of these products, the assumption that retail investors in the U.K. have an inadequate understanding of crypto assets might be incorrect.

Jesse Spiro, global head of policy and regulatory affairs at Chainalysis — a blockchain analysis company — told Cointelegraph:

“Given the amount of available information and market intelligence that is now regularly produced on the cryptocurrency ecosystem, there are many retail investors that have a high degree of technical expertise and knowledge.”

Derivatives growth driven by institutional investors

Last year saw crypto derivatives go through an enormous growth phase, where the open interest in Bitcoin options multiplied threefold in 100 days, reaching a yearly high of $6.8 billion on Dec. 31 before growing even further in early January amid a bull run, reaching an all-time high of $10.5 billion on Jan. 7.

Even though this growth must include an increased interest from retail investors as well, there are several indicators pointing to the fact that it has mainly grown due to the involvement of institutional investors.

The Chicago Mercantile Exchange is one of the most important exchanges for institutional investors to give themselves exposure to digital assets through Bitcoin futures and options.

The platform has reported that Bitcoin’s (BTC) average daily volume grew 114% year-on-year in 2020, which took the average daily open interest on CME up by 252%.

The unique active accounts also rose to 6,700, showing an 84% growth year-on-year. The main indicator of institutional interest, the number of large open interest holders, grew to a record of 110 in December as evident from the chart below.

The United Kingdom’s Financial Conduct Authority banned the sale of crypto derivatives and exchange-traded notes to retail investors effective Jan. 9, 2021. The FCA’s main underlying reason for this is the products are “ill-suited for retail consumers due to the harm they pose.” 





Jay Hao, CEO of crypto and derivatives exchange OKEx, told Cointelegraph that “crypto assets are indeed volatile as the FCA points out, and many investors have lost a lot of money when trades don’t go their way.” However, he added:

“The problem is that when retail traders make a loss, they are not in a position to absorb it as comfortably as high-net-worth individuals or institutional investors.”

Regulated access to retail investors?

The reduced risk appetite of retail investors as compared to institutional investors is one of the reasons that retail investors need protection from a regulatory body. But this doesn’t necessarily mean that all retail investors are unsophisticated and that they shouldn’t have an option to use derivatives to hedge risk in their portfolio.

Haohan Xu, CEO and founder of Apifiny — a global liquidity and settlement solutions provider — told Cointelegraph:

“Derivatives do more than amplify gains and losses. They also help investors hedge risks. Just because someone is unsophisticated does not mean that someone should be denied certain options to hedge risks.

”The risks in the crypto derivatives market are comparable to the risks of the foreign exchange markets, which are also highly leveraged. In these markets, governments and regulators all around the world step in and enforce maximum leverage limits for investors. The FCA could resort to solutions like that instead of a blanket ban, according to Hao:

“It is incorrect to assume that all retail investors are unsophisticated. Many of them have been in the crypto space for a long time and have a very good understanding of digital assets. Rather than a blanket ban on crypto derivatives for retail traders, which adds an additional layer of gatekeeping to the crypto space, we believe that education is key.”

Another issue that a blanket ban brings up is that retail investors who are persistent in investing in these banned products will need to circumvent this rule and invest in markets that are not under the FCA’s protection. Hao further stated:


“These investors would be outside of the purview and protection of the FCA — which is obviously counterproductive.

”Xu alluded to another method to circumvent the ban using decentralized finance markets, which have seen 30% growth since the beginning of this year:

“Although not favored by regulators across the world, DeFi derivatives platforms are always an option for crypto derivatives since most of them can be accessed by anyone from anywhere with just a wallet.

”It seems evident that there might be a better solution than a blanket ban, as it could possibly do more harm than good at this point, leading U.K. investors to marketplaces with no regulations or to lowering Know Your Customer standards, which brings more risk to retail investors who don’t have the same safeguards as institutional ones.

Retail education and regulatory engagement

Even after announcing the blanket ban on crypto derivatives and exchange-traded note products, Bitcoin’s price drop to $33,000 on Jan. 11 led FCA to issue a public warning about the high risks underlying all crypto assets and assets linked to them. The agency has also stated:

“If consumers invest in these types of products, they should be prepared to lose all their money.

”Hao elaborated on how education would be a more effective method to protect retail investors than outright bans:

“Education is key, and giving investors the chance to demonstrate their level of knowledge and skill before accessing complex products is crucial.

” He further stated: “Unfortunately, if retail investors are forced onto exchanges with lower security standards in virtual asset storage, they could end up suffering more harm from this ban.

”The crypto community has been contributing to these initiatives on education by establishing points and platforms for retail investors to be educated of any risks that are involved in trading within leveraged derivatives markets. Various exchanges have education and blog sections on their website tailored for retail investors to educate them on all these aspects.

There are also exclusive blockchain and cryptocurrency education platforms, such as Blockchain Education Network, which was started by students at the Massachusetts Institute of Technology and the University of Michigan.

It’s also essential for the crypto community to engage with governments and regulatory bodies to establish frameworks that enable retail investors to navigate these markets with ease. Spiro stated:

“The regulators’ priorities lie in protecting the financial ecosystem and consumers. Working collaboratively is the best way to pacify regulatory concerns while avoiding onerous regulation.

”Due to the size and volumes of the U.K. retail market in comparison to the global crypto derivatives market, it is highly unlikely that this ban will have a significant impact on the accelerated growth of the crypto derivatives that continues into 2021. According to Hao:

“The directional growth of derivatives is clear, and it will surpass the spot market in the near future. Exchanges have clients based all over the world, and as interest in cryptocurrencies rises, the jurisdictions that are more open and understand how best to regulate will end up being the winners in this race.”

• Bitcoin surged as much as 7.5% on Thursday, to $40,094.81.
• The red-hot cryptocurrency has seen immense volatility in recent days, with thousands of dollars per coin added and wiped out across short periods.
• Thursday's surge comes after European Central Bank boss Christine Lagarde called for more regulation the prior day.
• Morgan Stanley analysts say bitcoin focus "unsurprising" given low bond yields
• Sign up here our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin rose sharply once again on Wednesday evening and Thursday morning, climbing past the $40,000 mark.It has been a volatile few weeks for bitcoin, with its price hitting an all-time high of close to $42,000 last week before paring.

The price has consistently swung around 10% a day as investors buy in and cash out of the cryptocurrency, which has surged more than 330% in a year.

Bitcoin climbed as much as 7.5%, to $40,094.81. Its smaller rival Ethereum rose 7.2% over 24 hours to $1,160.The dramatic rise in the price of bitcoin and other cryptocurrencies has sharply divided market opinion, pitting much - although not all - of the financial establishment against a new breed of online investor.


On Wednesday, European Central Bank boss Lagarde said Bitcoin needs to be regulated on a global level and linked it to "totally reprehensible money laundering.

"Read more: The CIO of a $500 million crypto asset manager breaks down 5 ways of valuing bitcoin and deciding whether to own it after the digital asset breached $40,000 for the first time

She said bitcoin is not a currency, as many of its proponents argue, but a "highly speculative asset which has conducted some funny business".Bambos Tsiattalou, a financial crime lawyer at London's Stokoe Partnership Solicitors, said tighter regulation would be a major problem for cryptocurrencies.

"Many people buy Bitcoin and other cryptocurrencies because they are worried about and don't trust fiat currencies," so greater regulation would demolish much of their appeal, he said.

Read more: Cathie Wood's ARK Invest runs 5 active ETFs that more than doubled in 2020. She and her analysts share their 2021 outlooks on the economy, bitcoin, and Tesla.

Yet despite raised eyebrows from regulators and central banks, the soaring price has caused some institutional investors to buy in.

Analysts at Morgan Stanley said in a note:

 "With the large decline in the dollar, deeply negative real yields and continued policy uncertainty, investors have been looking for alternatives to traditional cash holdings.

"They added: "Innovation in digital assets continues rapidly and will likely drive increased
institutional participation over time."Yet the analysts cautioned that "the perception of 'value' and demand can vary materially, for example due to changing regulations."

The former chief technology officer of a prominent blockchain company has forgotten the password to a fortune in bitcoin.

• Almost a decade ago, Stefan Thomas, the former CTO at blockchain company Ripple Labs, was given 7,002 bitcoins worth $2-$6 each for making a cryptocurrency explainer video, reports the New York Times.
• The bitcoin (BTC, +4.99%) had been stashed away in a digital wallet and Thomas has used eight of his most frequently used passwords in an attempt access his IronKey hard drive and his now multimillion-dollar fortune but has had no luck.
• Two attempts now remain before the device auto-encrypts its contents, leaving Thomas’ fortune in limbo. Just call it Schrödinger's bitcoin.
• “I would just lay in bed and think about it," Thomas told the New York Times. "Then I would go to the computer with some new strategy and it wouldn’t work, and I would be desperate again,” added Thomas.
• Bitcoin prices have climbed from  $10,000 to $41,000 over the past three months. The price of bitcoin was at $34,290 at the time of publication, making Thomas' inaccessible stash worth an estimated $240 million.
• It seems Thomas will have to HODL on for a little while longer until he finds a way to access the bitcoin.

European Central Bank (ECB) President Christine Lagarde says bitcoin has facilitated “funny business” and needs to be regulated at the international level.

• In an interview at a Reuters online event Wednesday, Lagarde said the “highly speculative asset” has led to "some reprehensible activity," including money laundering, and any loopholes need to be closed, according to a report from Reuters.
• “There has to be regulation. This has to be applied and agreed upon ... at a global level because if there is an escape that escape will be used,” she said.
• The European Union central bank chief added there will be a digital euro, hopefully in no more than five years, according to other reports.
• The ECB has been looking into the benefits and risks of a euro-based digital currency since the Facebook-backed diem (formerly libra) project was announced in June 2019.

UPDATE (12:40 UTC, Jan. 13 2021): Added further detail from Reuters report.Read more: Lagarde Seeks Public Comments About a Digital Euro, Implying a Broad Retail Offering Is Now on the Table

New York (CNN Business)Bitcoin prices surged to a new all-time high of nearly $42,000 on Friday, only to plunge all the way back to about $31,000 Monday morning. That's a more than 20% drop -- which means bitcoin is now in a bear market, as bizarre as it sounds.

Bitcoin is still up a lot over the past few months, not to mention from where it was trading just a few weeks ago. But the drop highlights how the stunning rise has raised alarm bells among some on Wall Street.

"It's scary when the price of bitcoin just goes straight up," said James Putra, vice president of product strategy for TradeStation Crypto. "This pullback was needed."

Just last week a strategist at Bank of America said bitcoin's surge may be the "mother of all bubbles," noting that the recent spike is larger than other notorious manias of the past few decades: gold in the 70s, dot-coms/tech in the late 1990s and housing in the mid-2000s.

So the drop of the past few days is a "healthy correction" that "was due a long time ago," according to Naeem Aslam, chief market analyst at AvaTrade.Bitcoin first surpassed the $20,000 level in mid-December and soared above $30,000 earlier this month -- a huge rebound from a low of just above $4,000 as the Covid-19 outbreak sent global financial assets plummeting last spring.





Bitcoin rally may be the 'mother of all bubbles' says BofA

Even with the drops over the weekend and Monday, bitcoin is still up more than 10% already in 2021 -- and it has soared about 300% in the past 12 months.close dialog

Aslam said in a report that bitcoin might fall to the $28,000 to $30,000 level before bottoming out.

"This is not the time to panic but to look at this opportunity from a more optimistic lens," Aslam said, "as the bull run is not over yet, and it is still likely to make its journey to the upside."

Many bitcoin bulls remain optimistic about the future of cryptocurrencies, citing the fact that digital payment giants Square (SQ) and PayPal (PYPL) let users buy and sell it, and many top institutional investors including Paul Tudor Jones, Stanley Druckenmiller and Anthony Scaramucci are investing in it.

A top executive at BlackRock (BLK), the world's largest asset manager, recently said bitcoin could supplant gold as the main asset that investors can use to hedge against inflation and a weaker dollar.

• Bitcoin and other digital coins tanked on Monday, wiping off some $200 billion from the entire cryptocurrency market.
• Bitcoin, the largest cryptocurrency, fell around 12% from a day earlier to $32,576.
• The sell-off in cryptocurrencies comes after a huge rally and perhaps signals some profit-taking from investors.

A visual representation of the cryptocurrency Bitcoin on November 20, 2018 in London, England.

Jordan Mansfield | Getty Images News | Getty Images

GUANGZHOU, China — Bitcoin and other digital coins tanked on Monday, wiping some $200 billion off the cryptocurrency market.

The market capitalization or value of the cryptocurrency market was $880 billion at 9:20 a.m. ET, down from $1.08 trillion a day earlier, according to Coinmarketcap.

Bitcoin, the largest cryptocurrency, fell over 12% from a day earlier to $32,576, according to Coin Metrics data. It earlier sank to an intraday low of $30,863. Ether, the second-largest cryptocurrency, was down 23% to $1,005. It briefly tumbled below $1,000, hitting an intraday low of $945.

Veteran investor explains why he likes cryptocurrencies and goldThe sell-off in cryptocurrencies comes after a huge rally and perhaps signals some profit-taking from investors.

Bitcoin is still up over 300% in the last 12 months and last week hit an all-time high just below $42,000.

“The correction we saw was expected as we believe the BTC price surge recently from under $20,000 to $40,000 in the past four weeks will induce sell pressure,” said Simons Chen, executive director of investment and trading at cryptocurrency financial services firm Babel Finance.

The $40,000 mark could have been a trigger for profit-taking, Chen said.Bitcoin’s resurgence has been attributed to a number of factors including more buying from large institutional investors.

And it has also been likened to “digital gold,” a potential safe-haven asset and a hedge against inflation. In a recent research note, JPMorgan said bitcoin could hit $146,000 in the long term as it competes with gold as an “alternative” currency. The investment bank’s strategists noted, however, that bitcoin would have to become substantially less volatile to reach this price. Bitcoin is known for wild price swings.

But some bitcoin critics — such as David Rosenberg, economist and strategist at Rosenberg Research — have called bitcoin a bubble.Long-term bullishness around bitcoin remains however.Jehan Chu, founder of cryptocurrency-focused venture capital and trading firm Kenetic Capital, said the pullback in bitcoin could be a buying opportunity for new investors.

“This short term correction is both natural and needed, and is a great entry point for long-term investors as we quickly reach $50k this quarter and $100k by year’s end,” Chu told CNBC.Last week, Social Capital’s Chamath Palihapitiya said bitcoin could go above six digits.

“It’s probably going to $100,000, then $150,000, then $200,000,” Palihapitiya told CNBC’s “Halftime Report.” “In what period? I don’t know. [Maybe] five or 10 years, but it’s going there.”

Investing.com - Bitcoin was trading at $36,804.7 by 15:15 (20:15 GMT) on the Investing.com Index on Sunday, down 10.52% on the day. It was the largest one-day percentage loss since September 3, 2020.

The move downwards pushed Bitcoin's market cap down to $695.4B, or 67.61% of the total cryptocurrency market cap. At its highest, Bitcoin's market cap was $758.5B.Bitcoin had traded in a range of $36,804.7 to $41,362.4 in the previous twenty-four hours.

Over the past seven days, Bitcoin has seen a rise in value, as it gained 14.35%. The volume of Bitcoin traded in the twenty-four hours to time of writing was $70.6B or 41.27% of the total volume of all cryptocurrencies. It has traded in a range of $28,204.4961 to $41,921.7188 in the past 7 days.

At its current price, Bitcoin is still down 12.21% from its all-time high of $41,921.72 set on January 8.

Elsewhere in cryptocurrency trading

Ethereum was last at $1,234.26 on the Investing.com Index, up 0.44% on the day.Tether was trading at $1.0002 on the Investing.com Index, a loss of 0.13%.

Ethereum's market cap was last at $143.5B or 13.95% of the total cryptocurrency market cap, while Tether's market cap totaled $24.2B or 2.35% of the total cryptocurrency market value.

Stocks dropped on Monday, the first trading day of 2021, amid concerns about global coronavirus cases and the Georgia runoff elections.

The Dow Jones Industrial Average traded 706 points lower, or 2.3%. The S&P 500 dipped 2.4%, and the Nasdaq Composite slid 2.5%. Both the Dow and S&P 500 hit record highs at the open. This would mark the first time since 2016 that the market closed lower on the first trading day of the year.

The Dow and S&P 500 were on pace for their biggest one-day sell-off since Oct. 28, while the Nasdaq was headed for its worst daily performance since Oct. 30.Coca-Cola and Boeing were the worst-performing Dow components, falling 4.9% and 4.8%, respectively.

Real estate fell 3% to lead the S&P 500 lower.Wall Street is keeping an eye on Georgia as the state prepared for Senate runoff elections on Tuesday, which could give Democrats a majority in the chamber.

“If the GOP wins just one seat, they will likely stonewall some of Biden’s more ambitious proposals, but a Democratic sweep of both elections might give the incoming administration free rein on their policy agenda,” wrote Jason Pride, CIO of private wealth at Glenmede.

John Stoltzfus, chief investment strategist at Oppeneheimer, said Monday the S&P 500 could fall by 10% if the Democratic candidates win the Georgia runoffs.

“It is thought by not just a few folks on Main Street as well as on Wall Street that if tomorrow’s run-off results in a sweep for the Democrats — providing them with control of the Senate as well as the House — that it would bode ill for business with the likelihood that corporate tax rates could rise substantially,” said Stoltzfus.

Monday’s decline also came as traders fretted over the growing number of coronavirus cases around the world.

Data compiled by Johns Hopkins University showed more than 20 million Covid-19 infections have been confirmed in the U.S. Several cases of a new coronavirus strain have also been confirmed across the country.

Globally, more than 85 million cases have been confirmed. In the UK, the BBC reported the country would impose Tier 4 restrictions across the country.The 30-stock Dow ended last year with an advance of 7.3%, and the S&P 500 rose 16.3% in that time.

At one point in 2020, the two market benchmarks were down more than 30% as the coronavirus pandemic ravaged the global economy.The real standout of 2020 was the Nasdaq Composite, which surged 43.6% for its biggest one-year gain since 2009.

The Nasdaq’s outperformance came as investors and traders flocked into tech stocks in the throes of the Covid-19 outbreak.Unprecedented fiscal and monetary support for the economy — coupled with the development and rollout of multiple Covid-19 vaccines — helped the market recover from its massive drop to trade back at all-time highs. 

“The stock market is positioned for further gains in 2021 based on the twin pillars of coordinated fiscal and monetary policy from the U.S. Treasury and the Federal Reserve Board and a successful COVID vaccine rollout,” siad Marc Chaikin, CEO of Chaikin Analytics. “However, we envision some bumps in the road on the way.”

The U.S. rollout of multiple Covid-19 vaccines has recently been slowed down due to supply constraints.

Moncef Slaoui, the head of Operation Warp Speed, said on Sunday that the U.S. could ramp up its vaccine rollout by giving a group of Americans half doses of the drug developed by Moderna.

“We know that for the Moderna vaccine giving half the dose for people between the ages of 18 to 55 … induces identical immune response to the 100-microgram dose,” Slaoui said.Moderna shares added 8.1%.

Tesla shares gained 3.9% on Monday, hitting an all-time high, after the electric carmaker said Saturday that it delivered 180,570 electric vehicles last quarter, beating expectations.Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

Nigel Green, CEO of U.K.-based financial advisory firm deVere Group, has said he sold 50% of his bitcoin holdings over Christmas as the cryptocurrency’s price surged to new highs.

• In a blog post late last week, Green said that as bitcoin (BTC, -2.47%) neared $25,000 per coin, he made the decision to sell half his holdings, explaining, "It's better to sell high and re-buy in the dips."
• "The steady gains in the price of bitcoin has made the digital currency the top-performing asset of 2020, up over 200%. As such, I felt the time was right for profit-taking," he said.
• The CEO stressed that his decision to sell was "not due to a lack of belief in bitcoin, or the concept of digital currencies."
• "I believe that the future of money is cryptocurrencies," he wrote, adding that the longer-term price trajectory for bitcoin is "undoubtedly upwards."
• DeVere Group estimates that nearly three-quarters of high-net-worth individuals will be invested in cryptocurrencies before the end of 2022, according to the post.

UPDATE (Jan. 4, 12:10 UTC): Corrected article to reflect that Green sold the bitcoin at around $25,000 at Christmas, not at the more recent all-time high above $34,000.

Read more: DeVere Group Targets Arbitrage With New Crypto Fund

Bitcoin has shed much of the weekend’s stellar gains, as relatively cheap alternative cryptocurrencies play catchup with the crypto market leader.

At the press-time price of around $29,000, bitcoin (BTC, -4.55%) is down over 13% on a 24-hour basis, according to CoinDesk 20 data. Prices have declined by well over $4,000 in the last two hours, having reached a record high of $34,347 on Sunday.

“Bitcoin is having a much-needed reset. After a period of increased leverage and high [perpetual] funding rates across derivatives platforms, a brief consolidation around these levels is required,” Matthew Dibb, co-founder, and COO of Stack Funds, told CoinDesk.





Bitcoin perpetuals funding rateSource: Glassnode

Bitcoin’s perpetual funding rate (the cost of holding long positions) jumped to an 11-month high of 0.137% early today, signaling excess bullish leverage and scope for a price drop similar to the one seen in late November. With the pullback, the funding rate has declined only slightly to 0.122%.

By signing up, you will receive emails about CoinDesk products and you agree to our terms & conditions and privacy policy.

Trader and analyst Michaël van de Poppe said a correction was overdue after the overextended vertical move.

The cryptocurrency surged by $5,000 to above $34,000 in the first three days of 2021, having rallied by over 165% in the final quarter of 2020. The breakout above $30,000 happened alongside large outflows from the Coinbase Pro exchange, a sign of institutions buying the cryptocurrency, according to some analysts.

“Most likely money is shifting from bitcoin towards altcoins or just temporary profit-taking is causing a price drop,” Poppe told CoinDesk. Investors may have rotated some money out of bitcoin and into relatively cheap prominent alternative cryptocurrencies such as ether (ETH, +9.17%), stellar (XLM, +11.37%), chainlink (LINK, +3.38%) and litecoin (LTC, -0.44%). These coins have outperformed bitcoin in the past 24 hours.

Ether, the second-largest cryptocurrency by market value, rose to 35-month highs above $1,150 early Monday and is currently trading near $920, representing an 11% gain on a 24-hour basis. At press time, litecoin is changing hands at its highest since April 2018, and bitcoin cash (BCH, -0.08%) is trading at 11-month highs.

Ether was was up 30% during the early European trading hours before it was dragged lower by bitcoin. Other coins have also trimmed gains, but are still outperforming bitcoin.

See also: DOGE’s Gone Wild! Meme Coin Soars After Adult Star Says She’s a HODLer

Dibb predicted a continued rotation of capital into ether and other altcoins as bitcoin slows down. However, options market data shows investors expect bitcoin to remain highly volatile in the short-run.

Bitcoin’s one-month implied volatility, which gauges investors’ expectation of how volatile an asset would be over the next four weeks, has risen to near 100%, the highest level since March 2020, according to data source Skew.




Bitcoin implied volatilitySource: Skew

“Bitcoin’s implied volatility has hit a ten-month high because options traders assume that the major moves in the price action over the past ten days – which has seen BTC increase to well over $34,000 – will continue,” Sui Chung, CEO of CF Benchmarks said.

Analysts, however, expect bitcoin dips to be short-lived. “Our thesis remains extremely bullish, with a target of $40,000 BTC by February,” Dibb said.

Bitcoin has continued to climb over the last week, adding to a more-than-50% gain through December.

The bitcoin price has brushed $30,000 per bitcoin during the last 24 hours, hitting $29,300 per bitcoin on the Luxembourg-based Bitstamp exchange, up four-fold from the beginning of 2020 and on track for its biggest monthly gain since May 2019.

Now, after the U.S. Treasury department proposed new "onerous" new bitcoin and crypto regulations, the chief executive of one of the world's biggest exchanges, Coinbase, has warned they pose "a substantial intrusion into your privacy without good reason"—and called on the bitcoin and crypto community to "voice your concerns directly" with the Treasury.

MORE FROM FORBESSecond Stimulus Check: How Bitcoin Could Have Made Your First Worth Almost $5,000By Billy Bambrough




The bitcoin price has come within touching distance of $30,000 per bitcoin this week, with the ... [+] SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES

"The bottom line is that exchanges will need to collect the name and address for anyone that you send crypto or receive crypto from for any transaction worth over $3,000," Coinbase CEO Brian Armstrong warned in a blog post.

"That is a substantial intrusion into your privacy without good reason—and a significantly more onerous regulation than traditional financial institutions are held to."

The proposed bitcoin and crypto regulations, put forward by the Treasury's Financial Crimes Enforcement Network on December 18, could make it significantly easier for the government to track crypto transactions, with exchanges required to store personal information records and turn them over to the government on request.

"This is a big change and Treasury is not considering the impact it will have on you, our customers," Armstrong wrote. "That worries us.

"The proposed regulation is currently subject to a 15-day comment period ending on January 4, however, this is shorter than the usual 60-day comment window.

"Even worse, as the comment period began on the Friday before Christmas, we really have fewer than nine days to weigh in on this important regulation that could have long-lasting consequences for anyone that interacts with crypto," Armstrong added.


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Forget The Moon-SpaceX And Tesla CEO Elon Musk Wants To Send Bitcoin To Mars


By Billy Bambrough







The bitcoin price has soared by over 300% this year, smashing through bitcoin's 2017 highs of around ... [+] COINBASE

As well as concerns over government scrutiny, bitcoin and cryptocurrency exchanges are a known point of weakness for crypto user privacy.

Earlier this month, the bitcoin and cryptocurrency community was rocked by a massive data breach that's seen the personal information of over 270,000 bitcoin and cryptocurrency users published online. The data, stolen from popular France-based bitcoin and cryptocurrency hardware wallet Ledger in a July hack, was published on RaidForums, a marketplace for buying, selling, and sharing hacked information.

Elsewhere, as the U.S. Securities and Exchange Commission prepares for a lawsuit against Ripple, the creator of the XRP digital token, bitcoin and crypto investors have been warned regulators will one day "come down hard on bitcoin.

""I'm waiting for the day that one of these regulators come down hard on bitcoin," Canadian investor and television personality Kevin O’Leary told CNBC’s Squawk Box last week. "Grown men are going to weep when that happens. You will never see a loss of capital like that ever in your life. It will be brutal."


Follow me on Twitter. 




Billy Bambrough


I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported… Read More

Bitcoin has exploded since October, climbing from its long-time $10,000 per bitcoin support level to never-before-seen highs of almost $35,000.

The bitcoin price added over 300% through 2020, a rally that included a 50% crash in March amid the coronavirus meltdown.

Meanwhile, ethereum, the world's second-largest cryptocurrency, has rallied even harder—soaring 600% over the last 12 months.

Now, as bitcoin and cryptocurrency investors try to call exactly how far this already-huge rally will run, ethereum cofounder Vitalik Buterin has revealed what he thinks is an "underrated" bull case for crypto.

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As The Bitcoin Price Surges, Coinbase CEO Brian Armstrong Issues 'Worrying' Bitcoin And Crypto Warning

By Billy Bambrough




Ethereum cofounder Vitalik Buterin is one of the most respected voices in the bitcoin and ... [+] © 2017 BLOOMBERG FINANCE LP

"One of the more underrated bull cases for cryptocurrency that I have always believed is simply the fact that gold is lame, the younger generations realize that it's lame, and that $9 trillion has to go somewhere," Buterin wrote in a recent 2020 summary blog post, referring to the total value of the world's mined gold.

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Bitcoin's reputation as "digital gold" has grown in recent months, bolstered by a flurry of big-name investors that have named bitcoin as an emerging inflation hedge.

"If the gold bet works the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it," billionaire investor Stanley Druckenmiller, who, along with fellow investor George Soros, famously bet against the British pound in 1992 and made massive profits, said in November.

Meanwhile, repeated surveys (as well as endless and often hilarious anecdotes) have found younger people are far more inclined to buy bitcoin, ethereum and other cryptocurrencies than older groups.

And most of those surveys are from before the coronavirus pandemic forced governments around the world to heap even more debt on the shoulders of young.

We're now in "a world where blockchains and cryptocurrencies are well poised to play an important part, though for reasons much more complex than many people think, and having as much to do with cultural forces as anything financial," Buterin wrote, arguing "public-blockchain-based solutions [will] just keep quietly moving forward and gaining actual adoption.

"MORE FROM FORBES

2021 Bitcoin Price Predictions: Is The Massive Bitcoin Bull Run About To Peak?By Billy Bambrough






The bitcoin price has soared far past its 2017 high, helping ethereum and the broader cryptocurrency ... [+] COINBASE

Elsewhere, other influential voices in the technology and cryptocurrency space have echoed Buterin's comments.

"I believe that governments will respond to all of these economic challenges by continuing to print fiat money without restraint and by taxing and regulating innovative new companies to protect old and dying companies," Fred Wilson, a venture capitalist, wrote in a blog post outlining his predictions for the coming year.

"This will lead investors to continue to allocate capital to new forms of money (crypto) and new ways of creating and financing innovation (decentralized projects and organizations).

"After an explosive start to the year that's seen the broad bitcoin and cryptocurrency market add a staggering $100 billion in just a few short days, 2021 looks set to be a big one for crypto.Follow me on Twitter. 




Billy Bambrough

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported… Read More

Bitcoin traded at $33,365 in Asia on Monday, after soaring to a record high of $34,800 on Sunday as investors continue to bet the digital currency is on its way to becoming a mainstream asset.

The latest milestone for the world’s most popular cryptocurrency came less than three weeks after it crossed $20,000 for the first time, on December 16, and Bitcoin has now surged some 800 percent since mid-March.

KEEP READING

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With Bitcoin’s supply capped at 21 million, some see it as a hedge against the risk of inflation as governments and central banks turn on the stimulus taps in response to the COVID-19 pandemic.

Some also view it as a safe-haven play during the COVID-19 pandemic, akin to gold.“Some of it is reflecting the fear of a weaker dollar,” Bank of Singapore currency analyst Moh Siong Sim said of the most recent rally.“It seems like people are preferring Bitcoin as an expression of concern over currency debasement, relative to gold.

”Bitcoin’s advance also reflects increasing expectations it will become a mainstream payment method, with PayPal opening its network to cryptocurrencies.

Insatiable investors

The potential for quick gains has also attracted demand from larger US investors, as well as from traders who normally stick to equities.“The rally gained even more momentum as insatiable investors continued trading from home” during the New Year holidays, said Dave Chapman, executive director at Hong Kong-based digital asset company BC Group.Institutional investors see the potential for greater risk-adjusted returns compared with traditional investments, he said.




The currency “will be on the road to $50,000 probably in the first quarter of 2021,” said Antoni Trenchev, managing partner and co-founder of Nexo in London, which bills itself as the world’s biggest crypto lender, Bloomberg reported. Institutional investors returning to their desks this week will likely boost prices further after retail buying over the holidays, he said.

Bitcoin has increasingly been “embraced in more global investment portfolios as holders expand beyond tech geeks and speculators,” Bloomberg Intelligence commodity strategist Mike McGlone wrote in a note last month.

Bitcoin trades on numerous exchanges, one of the largest of which is Coinbase, itself preparing to go public to become the first major US cryptocurrency exchange to list on Wall Street.

Multiple competitor cryptocurrencies use similar blockchain, or electronic ledger, technology. Ethereum, the second biggest, shot to a record $1,014 on Sunday.

On-chain data shows big money continues to chase bitcoin amid the frantic bull run. That’s a sign of institutions catching the “FOMO” bug, according to one analyst.

• Institution-focused Coinbase Pro exchange registered an outflow of over 35,000 bitcoin (BTC, +9.45%) worth more than $1 billion early Saturday, according to data source CryptoQuant.
• The large outflow comes a day after 12,063 coins left the exchange and represents institutional FOMO (Fear Of Missing Out) buying, according to Ki Young Ju, CEO of the Korea-based blockchain analytics firm CryptoQuant. 

• Massive outflows from Coinbase Pro usually end in Coinbase's cold wallets for custody, which is directly integrated with the exchange's over-the-counter (OTC) desk. Institutions typically transact over-the-counter in a bid to avoid influencing the spot market price, as discussed in December. 
• Bitcoin's rally from October lows near $10,000 has been mainly fueled by institutional demand. The ascent has gone ballistic over the past four weeks, with prices rising from $19,000 to over $30,000. 
• While Ju's claim that institutions are now buying on fear of missing out can be challenged, there is evidence that persistent demand from big players is creating a supply squeeze, allowing for a continued price rally.
• For instance, at least 47,000 bitcoins have left Coinbase Pro in the first two days of the year, while miners have minted just over 1,700 bitcoin. Bitcoin rose from $29,800 to new record highs over $33,000 early today and was last seen changing hands near $31,600.
• The cryptocurrency is already up 10% this year, having scored a 300% gain last year, according to CoinDesk 20 data.

Also read: On-Chain Data Suggests More Institutions Are Buying Bitcoin Over the Counter

Cryptocurrency exchange Binance US is suspending XRP trading for its customers effective next month.

The U.S. affiliate of the world’s top crypto exchange by volume announced Wednesday that customers will not be able to deposit or trade XRP (-6.75%) on the platform effective 10:00 a.m. ET on Jan. 13, 2021, though withdrawals remain unaffected at this time. The announcement does not apply to Binance as a whole.

Binance US is the latest crypto trading venue to suspend XRP support in the U.S. after the Securities and Exchange Commission (SEC) sued Ripple earlier this month on allegations it has been selling XRP as an unregistered security for over seven years. After the news broke, the price of XRP dipped 2.1% to a 24-hour low of $0.199910 but is slowly recovering.

Other exchanges to delist or suspend XRP trading or markets include:

• Coinbase
• Crypto.com
• Bitstamp
• OKCoin
• Ziglu
• Wirex
• Bittrex
• Swipe Wallet
• Crosstower
• Beaxy
• OSL
• Jump Trading
• Galaxy Digital
• Bitwise
• Genesis Global Trading

The Ripple Effect: Binance Joins Coinbase, Crypto.com to Suspend XRP Trading

Cryptocurrency exchange Binance is the latest crypto trading venue to suspend XRP support in the U.S. after the Securities and Exchange Commission (SEC) sued Ripple earlier this month. We explain how XRP ended up here.

Volume 90% Most of these platforms have only removed XRP from their U.S. markets or platforms, though a few have suspended support internationally.

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According to the SEC suit, which was filed in the U.S. District Court for the Southern District of New York, Ripple, CEO Brad Garlinghouse and Chairman Chris Larsen have sold some $1.3 billion in XRP since 2013. The SEC alleges that Ripple did not register XRP as a security or seek an exemption for the token, of which it holds nearly 50 billion in escrow.

For its part, Ripple has called the allegations “unproven,” and has promised to file a response in court in the coming weeks. The San Francisco-based firm has repeatedly called the SEC’s suit an “attack on crypto” in the U.S., with CEO Garlinghouse claiming the agency’s actions “directly benefit China.”

A pretrial conference has been scheduled for Feb. 22, 2021, according to public court records, with the parties required to submit a joint letter describing the case and the arguments each side plans to make, potential motions and any potential settlement details the week before.

The SEC and Ripple must also file a joint letter by Feb. 15 stating whether both parties are willing to consent to having a magistrate judge oversee proceedings (rather than a district judge).



Read our ongoing coverage of the SEC's case against Ripple and its impact on the industry.

Bittrex announced Friday it will be delisting monero (XMR), zcash (ZEC) and dash (DASH), continuing a trend of so-called privacy coins being delisted by cryptocurrency exchanges.

• In a release, the exchange said the coins' markets will be removed on Friday, Jan. 15, at 23:00 UTC.
• While Bittrex gave no reason for the removals, exchanges around the world have been moving to delist coins that seek to preserve the privacy of their users as a way to be compliant with know-your-customer (KYC) and anti-money laundering (AML) regulations that are spreading around the world.
• For instance, the U.S. Secret Service has urged Congress to create ways to limit the use of privacy-focused cryptocurrencies.
• Dash responded via Tweet, calling the label "privacy coin" a misnomer in its case, saying "From a technical standpoint, Dash's privacy functionality is no greater than Bitoin's." Dash said it's requesting a meeting with Bittrex's compliance team in an effort to be reinstated.
• Shares of all three coins fell on the news: XMR is down 14.44% to $133.75, ZEC fell 12.28% to $55.76.

UPDATE (Jan. 1, 20:16 UTC): Adds coin price reactions, Dash’s response.

See also: ShapeShift Delists Privacy Coin Zcash Over Regulatory Concerns

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The price of bitcoin (BTC) surged past $33,000 for the first time ever Saturday afternoon, hours after slicing through $30,000 like a light saber through gossamer, a torrid start to the year following a record-setting 2020.

• Once the price of the leading cryptocurrency crossed the $30,000 mark for the first time -- something it had struggled to do for the last couple of days -- it exploded upwards like a ball released under water, reaching a new all-time high of $33,136.92, before retreating to $30,827.92, still up 6.50% over the last 24 hours.
• "Bitcoin makes TSLA (Tesla) look like it is standing still," tweeted Jim Bianco, well-known macro strategist, shortly after the cryptocurrency broke $30,000.
• The latest gains come two days after bitcoin closed out a year in which the cryptocurrency rose more than 300%, with an almost 50% gain in December alone, sort of like a boulder gaining speed downhill, only in the opposite direction. On Nov. 30, bitcoin breeched a nearly three-year-old high of $19,793. By the close of Dec. 31, the cryptocurrency had risen about $10,000.
• Propelling the record-setting run is a growing narrative that bitcoin represents a form of "digital gold," along with a flood of institutional investors into the cryptocurrency: Among them: Anthony Scaramucci’s Skybridge Capital ($182 million in December); MassMutual ($100 million in December); and Guggenheim (up to 10% of its $5 billion macro fund).
• “Bitcoin price is being driven by institutional money and there is not enough supply," Laurent Kssis, managing director at 21Shares, told CoinDesk. "The number of family offices asking to invest in our ETP is just staggering. I’ve never seen this before. In 2017 it was just retail knocking at the door now it’s only institutional.” 
• Kssis' statements are borne out by the fact that the number of whale entities – clusters of crypto wallet addresses held by a single network participant holding at least 1,000 bitcoin – rose to a new record high of 1,994 this past Wednesday.
• The metric increased by over 16% in 2020 and 7.3% in Q4 alone.
• “The final land grab has started, and by this time next year, accumulating >1,000 Bitcoin will be nearly impossible for most people,” Jehan Chu, CEO at Hong Kong-based trading firm Keneti Capital, told CoinDesk.
• HODLers also have the U.S. Federal Reserve to thank for the cryptocurrency's rise, as it, along with other central banks, has been printing money with abandon, trying to stave off the worst economic effects of the pandemic. This is viewed by many as a potential catalyst for inflation and bad for the U.S. dollar, both of which could be positive for bitcoin.
• "Many corporations are parking USD in BTC because they are losing money in conventional banking so it makes total sense," 21Shares' Kssis said. 
• Growing global macro uncertainty may also be playing a factor in the recent surge. A peaceful transition of power in the U.S. is no longer the iron clad guarantee it used to be as 11 GOP Senators say they'll vote to reject the electors from certain states. While it's still almost certain President-elect Joe Biden will assume office later this month, the need for a qualifier is a new event.
• That plus a mutated strain of COVID 19, a lagging world economy, and concerns over the effects of the now-completed Brexit, may not be helping the zeitgeist, but could be aiding bitcoin which some see as insurance against global chaos.
• Bitcoin may also be benefiting from money being moved out of the XRP token and so-called privacy coins which are facing legal and regulatory challenges.
• With a market value now of over $570 billion, bitcoin is more valuable than all but nine publicly traded companies, sitting between Alibaba at $648.3 billion and Berkshire Hathaway at $543.7 billion.
• Bitcoin enthusiasts will likely find some joy in that last bit, an event that occurred last week, as the Berkshire's CEO, legendary investor Warren Buffett, once famously derided bitcoin as "probably rat poison squared."
• The cryptocurrency has also rose up the ranks of the world's most valuable currencies, overtaking the Saudi Riyal into 17th place, just behind the Mexican Peso.

Bitcoin price action through 2020 and into 2021Source: TradingView, CoinDesk Research

Bitcoin has been flirting with the $30,000 mark for weeks, and finally passed that record-setting level Saturday. The virtual currency is now valued at above $33,000, an all-time high.

Bitcoin (XBT) has tripled in value during 2020, growing steadily even as the stock market plunged in the early days of the pandemic. Investors have been drawn to it, as well as other cryptocurrencies, as the US dollar has weakened.

With the Federal Reserve expected to leave interest rates near zero for several more years, bitcoin may continue to win new fans.

Well-known names are adding to bitcoin's mainstream appeal. Rick Rieder, the chief investment officer of fixed income BlackRock (BLK), has said the digital currency could replace gold. Payment giant PayPal (PYPL) has embraced bitcoin, after showing reluctance to do so.

This isn't bitcoin's first price spike. It had a strong run in 2017 and hit a then-record high of more than $20,000. But its price plummeted to just over $3,000 by early 2019 as China continued its crackdown on cryptocurrency businesses. It then rebounded to $8,000 in May 2019. It soared past $20,000 in December, climbing rapidly in the past month.

Bitcoin experts remain bullish on the currency.

"When any asset climbs in price this fast for an extended period of time I become cautious, and I'd urge anyone trading BTC to not get caught up in the euphoria," said Nicholas Pelecanos, head of trading at cryptocurrency firm NEM, who nevertheless predicts bitcoin could rise to $50,000 by Valentine's Day.

"I believe we are just at the beginning of what will be an immense bull market."

Yet even as bitcoin is becoming mainstream, the currency is still commonly used by fraudsters, giving it negative attention. Last July, hackers took over Twitter accounts belonging to Elon Musk, Bill Gates and Barack Obama in an apparent effort to earn income by scamming people out of bitcoin.

Due to the currency's decentralized and nearly anonymous nature, it can be hard to get money returned after losing it in a scam, as there is no central authority -- such as a bank -- to intervene.

Decentralization has made cryptocurrency a favorite for scammers, even as it appeals to technologists and investors alike.

CNN's Paul R. La Monica contributed to this report.

What happened

The stock market closed at 2 p.m. EST on Dec. 24 and didn't reopen until 9:30 a.m. Dec. 28.

During that time, the balance sheet for technology company MicroStrategy (NASDAQ:MSTR) increased in value by almost $300 million, thanks to bitcoin's meteoric rise over the Christmas weekend.

No wonder MicroStrategy stock is soaring today. As of 2:30 p.m. EST, the stock was up 16%.Other bitcoin-related stocks are also soaring today, but not all of these moves are as logical as that of MicroStrategy. Indeed, hype seems to be growing around bitcoin, underlining the need for investors to be discerning and selective with their investments.




IMAGE SOURCE: GETTY IMAGES.

So what

MicroStrategy is a technology company, but CEO Michael J. Saylor recently decided to convert all excess cash (not needed for running the business right now) into bitcoin. The company even issued debt to have more investable cash.

So far it's used more than $1.1 billion and it now holds around 70,470 bitcoin tokens at an average price of $15,964. For perspective, bitcoin reached all-time highs over $28,000 during this past weekend. So far, Saylor's bold move is paying off big time.

The market capitalization for MicroStrategy is around $3.4 billion with today's upward move. Therefore, the stock's market cap gains today are roughly in line with the increased value on the balance sheet. With this perspective, MicroStrategy stock's move today appears completely rational. 




BITCOIN HAS BEEN HOT OVER THE LAST THREE MONTHS, GREATLY OUTPACING THE S&P 500. BITCOIN PRICE DATA BY YCHARTSThat's not the case for all bitcoin-related stocks.

Consider bitcoin-mining company Bit Digital (NASDAQ:BTBT). As of 2:30 p.m. EST, the stock was up almost 100% for the day. This move is a head-scratcher. Like MicroStrategy, Bit Digital benefits from the higher price of bitcoin. However, the size of Bit Digital stock's jump seems excessive.

Here's why: Miners essentially provide the computing power for the blockchain technology that makes bitcoin work, and they're compensated for their efforts in bitcoin. However, they accrue expenses in the real world for which they need cash, not bitcoin.

Therefore, miners earn bitcoin but have to sell it to pay the bills. Last week, Bit Digital provided fiscal 2020 results. As of Nov. 30, the company only held 122 bitcoins. Assuming the company still holds this many tokens, the company's value over the Christmas weekend increased by less than $0.5 million.

By contrast, it's added over $200 million in market cap today.Of course, that's not to say bitcoin miners shouldn't be going up at least some today. In theory, as the price of bitcoin rises, they'll be compensated more for doing the same work -- good for revenue and profit margins.

Accordingly, other bitcoin-mining stocks are increasing today by a more reasonable amount.

As of 2:30 p.m. EST, Marathon Patent Group (NASDAQ:MARA) stock was up 16%, Riot Blockchain (NASDAQ:RIOT) stock was up 22%, and CleanSpark (NASDAQ:CLSK) stock was up 15%. These moves are far more reasonable than Bit Digital's. 




IMAGE SOURCE: GETTY IMAGES.

Now what

In summary, it appears all stocks that have something to do with bitcoin went up today because the price of bitcoin continues to rise. However, not all the moves are proportional. Some, like MicroStrategy, make sense.

Others, like Bit Digital, seem overdone. Critics will no doubt point out that Bit Digital is undervalued relative to its peers. For example, one way to value stocks is the price-to-sales ratio.

 According to Yahoo! Finance, Marathon and Riot Blockchain are trading at 406 times sales and 135 times sales respectively. By contrast, Bit Digital trades at only 38 times sales. In my opinion, this merely points out how overvalued stocks like Marathon and Riot Blockchain are; it doesn't show how undervalued Bit Digital is. Don't get me wrong.

I believe the price of bitcoin could head higher in 2021. Bitcoin supply was cut in half earlier in 2020 during a periodic event called the "bitcoin halving." Furthermore, institutional demand from companies like MicroStrategy has surged. Low supply with high demand can lead to higher prices, and it's partly why I bought a little bitcoin. 

However, that doesn't mean bitcoin or any of these bitcoin-related stocks aren't risky -- they are. Predicting the future price of bitcoin is anything but certain, making all of these businesses hard to envision three to five years from now. That's a big deal, because investing implies a long-term time horizon. 

In conclusion, although there are plenty of flashy tickers out there and some (like Bit Digital) can even double in a single day, I remain resolute in my belief investors should identify quality businesses that can compound shareholder returns for years, buy their stocks, and hold until something changes.

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A municipality in the province of Sevilla, Spain, has launched its own cryptocurrency, which aims to encourage residents and merchants to arrange transactions with it in the midst of the coronavirus-driven economic impact.

Spain’s Sevilla Municipality Launches ‘Elio’ Cryptocurrency to Boost Local Economy

According to Europa Press, the City Council of Lebrija created “Elio,” a crypto asset pegged to euro price, which will act as a tunnel to send economic aids to stimulate local consumption, between 50 and 200 EUR ($61 to 244) to each one of the 593 selected beneficiaries.

The criteria of selection took into consideration their monthly income and number of children.Also, 393 local companies will receive a 400 EUR ($488) economic aid worth in Elio before the end of the year, as part of the “Municipal Reactive Plan.

”Pepe Barroso, the mayor of Lebrija, said that Elio’s creation would guarantee that economic aids “invest directly in local businesses.” In fact, Barroso refers to a mobile application that people should use to handle Elio transactions, available in the Google Play Store and App Store.

The report also explains further about the expectations of using Elio for boosting local consumption:

With this help, families will be able to purchase products or services in shops in the city, being able to exchange half of the purchase amount with a charge to this balance through a virtual currency, and conventionally paying the other half. This is intended to ‘achieve a multiplier effect on the incentive provided by the City Council.’

How Much Is an Elio?

So far, over 165 merchants accept Elio as a payment method, and if other companies would like to join, Barroso said they can still do it and at any time. He also clarified that one Elio equals one EUR.

Spain has been witnessing some year-end action in their local crypto industry. In October 2020, news.

Bitcoin.com reported that Spain’s government approved a bill that requires cryptocurrency owners to disclose their crypto holdings and any gains on their assets.

• XRP token fell as much as 31% after online platform Coinbase said it would suspend trading by mid-January.
• Last week, the US financial markets regulator filed a complaint against blockchain company Ripple over how it sells XRP.
• XRP has lost around three quarters of its value in six weeks.
• Visit Business Insider's homepage for more stories.
  
  

Cryptocurrency XRP fell by as much as 31% on Tuesday, after trading platform Coinbase said it would fully suspend the digital token from its marketplace by mid-January following the US financial markets regulator's complaint against developer Ripple Labs.

XRP was last down 28% on the day at around $0.2018, having fallen to a session low of $0.2011 earlier in the day. XRP has lost around 75% in value since hitting a two-year high in early November, when investors took advantage of a weaker US dollar to pile into cryptocurrencies.

The US Securities and Exchange Commission said on December 23 Ripple had effectively been running a $1.3 billion unregistered offering with its sales of XRP, which the regulator deems a security and not a cryptocurrency.

"In light of the SEC's lawsuit against Ripple Labs, Inc, we have made the decision to suspend the XRP trading pairs on our platform," Coinbase said in a statement late on Monday.

"Trading will move into limit only starting December 28, 2020 at 2:30 PM PST, and will be fully suspended on Tuesday, January 19, 2021 at 10 a.m. Pacific Standard Time*," the company said.

Read more: Tesla short-seller Rob Majteles says he was 'wrong early,' but markets are due an 'extraordinary reassessment'

Coinbase added that the trading suspension would not affect customers' access to XRP wallets and that these would remain available for deposits and withdrawals after the trading suspension. 

Ripple CEO and co-founder Bradley Garlinghouse, who is named in the SEC suit, said last week in the company's blog that the regulator had not given the firm "clarity" on whether its XRP token should be classified as a currency or a security. 

Ripple was not immediately available for comment when contacted by Business Insider.

Coinbase said it will suspend trading of XRP, the cryptocurrency the U.S. Securities and Exchange Commission sued Ripple Labs in regards to last week claiming it is really a security.

Coinbase first listed XRP on its retail-facing platforms in February 2019. Starting now, XRP trading “will move into limit only,” Coinbase wrote. It will be fully suspended on Tuesday, Jan. 19, 2021, at 1 p.m. ET.

“We will continue to monitor legal developments related to XRP and update our customers as more information becomes available,” Paul Grewal, Coinbase’s chief legal officer, wrote in a blog post shared in advance with CoinDesk.

Coinbase said users’ XRP wallets will “remain available for receive and withdraw functionality after the trading suspension.”

Notably, the exchange said it will still support an upcoming airdrop of Spark tokens to XRP holders. XRP will still be supported by Coinbase Custody and in the self-custodial Coinbase Wallet.

Coinbase declined to comment beyond its written statement.The price of XRP on Coinbase tanked from $0.28 to $0.24 within the first 20 minutes of the announcement. Since the announcement of the SEC’s lawsuit last week, the price of XRP has fallen by more than 50%.



XRP's price fell over 16% within an hour of Coinbase announcing it would suspend trading.

Source: CoinDesk

Ripple effect

For Coinbase, the reason for dropping XRP as a traded asset was simple: As the company seeks to go public, being a platform for something that’s potentially a security would mean adding more paperwork simply so it could be legally allowed to let retail customers buy and sell a single cryptocurrency.

The SEC claimed last week that XRP is a security, and that Ripple has been selling it without registering or seeking an exemption for seven years, raising $1.3 billion in the process. The legal battle itself is just beginning, and litigation might take years if Ripple fights the charge in court, as it has indicated it would.

Coinbase is now the biggest exchange to act on XRP and could serve as a bellwether for other platforms. On Friday, Bitstamp announced it would halt XRP trading and deposits for all U.S. customers on Jan. 8.

Similarly San Francisco-based OKCoin announced its XRP suspension earlier Monday, effective Jan. 4.

Read more: OKCoin to Suspend XRP Trading and Deposits on Jan. 4Exchanges that continue to list XRP without registering as a securities exchange with the SEC face potential consequences down the line, including possible enforcement actions. However, should Ripple prevail in its defense, Coinbase can likely re-list XRP fairly easily.

Alex Kruger, a trader and analyst, said, “Crypto exchanges are unregistered with the SEC (by choice, as registering carries on many burdens and increased costs) and thus it is in their best interest to not offer trading of securities. It is for their protection, not their customers’.”

Gabriel Shapiro, an attorney with Belcher, Smolen & Van Loo LLP, told CoinDesk last week that the question of whether exchanges should delist is a complicated one, with both business and legal considerations. 

The market for XRP could quickly dry up, causing prices to suffer, if the U.S. Securities and Exchange Commission (SEC) ultimately prevails in an expected lawsuit against Ripple Inc., analysts and traders said.

Ripple’s chief executive officer, Brad Garlinghouse, warned Monday the SEC could file a lawsuit in the near future against his company over its sales of XRP, the third-largest cryptocurrency by market cap.

Following the news, XRP’s price dropped sharply, losing as much as 14% before rebounding slightly.

While the case has yet to be filed, and could take years to resolve, some market experts warn that if the SEC proves in court that XRP is a security, the cryptocurrency could end up without an adequate market, all else being equal. That’s because as of now the majority of crypto trading venues are not licensed to deal in securities.

“Many cryptocurrency exchanges would be forced to delist it, so liquidity would dry up,” said Ryan Watkins, a research analyst at Messari. XRP’s price would “crash hard” in this scenario, he said.

Exchanges that continue listing XRP run the risk of being asked to register as securities exchanges by the SEC should the commission win its lawsuit. Otherwise, these exchanges might face penalties for allowing retail consumers to trade an unregistered security.

Already, two small exchanges, CrossTower and Beaxy, have delisted the cryptocurrency.

“CrossTower’s listing committee evaluates tokens along multiple dimensions,” said Kristin Boggiano, president of the firm, which opened this year. “One of the criteria is whether an asset is a security. Given the uncertainty regarding XRP’s status, CrossTower has decided to delist XRP.”

Chicago-based Beaxy similarly halted trading, but is allowing withdrawals of XRP until further notice.

“The SEC and Ripple Labs have been debating XRP’s legal status for years. So the news of SEC charges against Ripple are not unexpected. That being said, Beaxy Exchange has an obligation to operate with regulatory compliance as a priority,” said Beaxy’s head of operations, Naeem Master. The exchange said that if a court finds XRP is not a security, it would be open to resuming support for the asset.

While these two are small operations compared to Coinbase or Binance, its deliberations could foreshadow how these larger trading platforms view XRP.CrossTower is a member of the Coinbase-led Crypto Rating Council, an organization launched last year to provide some clarity on which digital assets might resemble securities.

The project assessed that XRP more closely resembles a security than a non-security, giving the asset a score of 4 out of 5 (5 being a clear security). The scores are not meant to serve as legal advice but represent member exchanges’ views on certain digital assets. In addition to CrossTower, Bittrex and Kraken are members of the group.

Coinbase, Bitstamp and Binance US declined to comment. Kraken did not respond to a request for comment by press time.

Short, intermediate and long term

To be clear: Delisting would be an intermediate-term risk for XRP, but it’s far from a fait accompli.

“Odds XRP gets delisted on the SEC developments are low. The news represents, in my opinion, short-term noise as far as price goes,” said trader and analyst Alex Kruger. “I do think it should underperform for a while longer. Market participants are very concerned about the XRP-SEC news and possible delisting, and we’ve seen lots of top buyers.”

But John Willock, CEO of Tritum, a diversified crypto services provider, said that if XRP ends up being designated a security, “it would very likely render the asset untradeable for most exchanges and industry participants.

That immediate disappearance of a massive portion of market liquidity and participants would cause the asset to dump heavily in price.”

Among the current crop of crypto investors, “very few people would want to hold and deal with the cost and complexity of owning and interacting with a security instrument,” Willock added.

Jay Hao, CEO of Malta-based crypto exchange OKEx, agreed with that assessment.

“It’s likely we would see a sharp sell-off of XRP, leading to a decline in its price,” he told CoinDesk. Hao did not respond by press time to a follow-up question about whether his exchange would delist XRP if it is designated a security.

While institutional investors have lately been dipping their toes into the crypto pond, those large players are generally focused on bitcoin and ether.

The part of the crypto market that includes XRP is still dominated by individual investors, according to experts who spoke to CoinDesk. If exchanges stop supporting XRP, retail investors would have no way to trade it.

Silver lining?

Nevertheless, the damage would not necessarily be fatal for XRP.“There are various ways the SEC could grant special operating conditions, or accept a payment of a settlement from Ripple that could dampen the blow,” Willock said.

Hao similarly said that declaring XRP a security could potentially have a positive impact on the cryptocurrency’s value down the line.

“This call could eventually allow Ripple to list on traditional stock exchanges and potentially open it up to a far wider market, which means that there could be extremely positive price action in the long term,” Hao said.

XRP was developed and launched in 2012 by Ripple Labs co-founders Arthur Britto and Jed McCaleb and tech whiz David Schwartz, who gifted a large portion of the token to the startup. The company has sold about $1.2 billion in XRP since then, according to Messari.

Ripple, which has long insisted it did not create and does not control XRP, did not respond to a request for comment by press time. In an appearance on CNBC Tuesday, Garlinghouse called the SEC’s position on XRP “one foot out the door.”

“Not a single other country anywhere has looked at XRP as a security,” he said. “You’ve had countries like the U.K. and Japan and Switzerland and Singapore all come out and say things that make it clear that XRP is a currency.”Garlinghouse also told viewers the token’s fate was independent of his company’s.

“If Ripple the company didn’t exist, XRP would still thrive around the globe with … a couple hundred exchanges around the world,” he said. “And there’s over 100 different projects, innovative entrepreneurs here in the U.S. and around the world building on top of XRP.”

Lawrence Lewittin, Nathan DiCamillo and Danny Nelson contributed reporting.

Famed economist Nouriel Roubini says that Bitcoin and other cryptocurrencies, which he’s dubbed as “sh-tcoins,” have no place in retail or institutional investor portfolios.

Roubini, a professor of economics at NYU’s Stern School of Business, slammed Bitcoin (BTC-USD) as it has hit recent highs and was last trading above $23,300.

“First of all, calling it a currency — it’s not a currency. It’s not a unit of account, it’s not a means of payment.…it’s not a stable store of value.

Secondly, it’s not even an asset,” Roubini said.According to Roubini, Bitcoin has no intrinsic value. He pointed out that assets — bonds, stocks, real estate, or precious metals — either provide income, capital gains or some form of utility.



Nouriel Roubini, Chairman of Roubini Macro Associates LLC and Professor of Economics, Stern School of Business, New York University, speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., May 3, 2017. REUTERS/Lucy Nicholson“While in the case of Bitcoin, there is no income,” he said.

“There is no use. There is no utility. The only thing is a speculative, self-fulfilling kind of rise, and that rise is driven totally by manipulation.

”Roubini noted that there’s academic research to suggest that “this pseudo stable coin Tether has been created by fiat” and is “used literally to manipulate the price of Bitcoin.

”“The price of Bitcoin is totally manipulated by a bunch of people, by a bunch of whales. It doesn’t have any fundamental value,” he said. “We’re close to the point where the hyperbolic bubble is going to go bust.”

The U.S. Securities and Exchange Commission (SEC) ordered Tierion to pay back investors in its TNT tokens after finding the data verification startup’s $25 million initial coin offering (ICO) violated securities laws.

TNT holders and ICO investors who sold their tokens at a loss have 60 days to ask Tierion for what is essentially a refund – at cost, plus interest. Node operators can sell their compensatory TNT back to Tierion for .01 cent plus interest.

Tierion must immediately disable trading of its ERC-20 token, which runs on the Ethereum blockchain, under the settlement disclosed Wednesday. It will pay the SEC $250,000 in penalties.

Tierion did not admit or deny wrongdoing, according to the SEC. The SEC also issued Tierion a Reg D waiver, meaning it won’t have to register future private placements of securities because it cooperated.


The order effectively blows up 1 billion TNT tokens. At the time of its 2017 ICO, Tierion pitched them as the “method of settlement” between users of its data verification network, the “Chainpoint protocol,” and an “incentive” to secure the network. The order said Tierion sold 350 million TNT to 4,800 investors. 

But Tierion, which at one point had buy-in from the likes of Microsoft, plans to continue without TNT.

Founder and CEO Wayne Vaughn told CoinDesk in a text message the settlement allows Tierion “to move forward without a heavy regulatory burden.” He framed TNT’s demise as the token going into “retirement.”

“This announcement does not impact the availability of Tierion’s current products or open-source software,” Tierion said in a Medium post.

Liquidations for XRP futures contracts have soared at year’s end as bullish signals in November followed by decidedly bearish news in December whipsawed the token’s price.

Over $1.5 billion worth of XRP (-15.09%) futures contracts have been liquidated since the start of November, per data from analytics provider Bybt. Barely $700 million in liquidated futures contracts were recorded between March and October. 

In November, the price of XRP skyrocketed over 220% to two-year highs just below $0.80 as traders anticipated a scheduled token airdrop event by the Flare Network to all XRP holders. In short, anyone holding XRP would automatically receive a portion of the new Spark token, spurring new buyers to accumulate XRP.

Adding fuel to the frenzy, leading U.S.-based cryptocurrency exchange Coinbase announced its plans to support the upcoming airdrop, per CoinDesk’s previous reporting. 

“XRP experienced massive upward price movements in November due to retail investors’ interest on the Spark airdrop scheduled for Dec. 12, 2020,” said Florent Moulin, a cryptocurrency researcher at data provider Messari. “The market also saw experienced investors accumulating XRP in anticipation of a retail-led bull market.”



XRP monthly liquidations since March 2020Source: Bybt, CoinDesk Research


The acute XRP bull trend quickly ended when the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple for allegedly violating federal securities laws in selling the cryptocurrency to retail consumers, which raised $1.3 billion over a seven-year period. 

Traders reacted negatively to the news as XRP instantly started giving back large chunks of its gains from the previous month. Institutional investors followed suit with cryptocurrency money manager Bitwise liquidating its index’s entire XRP position and prominent brokerages like OSL notifying clients it halted all XRP trading. 

Both events – the airdrop and the lawsuit – have pushed XRP price volatility to its highest level since July 2018, per Coin Metrics data, with a more than 130% increase in volatility since early November. 

Sharp downward price action for XRP is probably due to a combination of factors, Moulin told CoinDesk. But the most significant is likely the SEC’s lawsuit against Ripple. 

Also noteworthy is increased selling by Ripple co-founder Jed McCaleb, who sold over $120 million worth of XRP in December, Moulin said, an amount over three times larger than previous months. 


XRP price and daily liquidations since November 2020Source: Bybt, TradingView, CoinDesk Research


Some of December’s downward price movement was also caused by XRP holders selling after receiving tokens from the airdrop event, Moulin said. 

Regardless of the reason, since news of the SEC’s lawsuit broke XRP has dropped over 60% and fallen below its pre-airdrop frenzy levels in early November, hitting $0.21 on Wednesday. 

And with the price still dropping and over $350 million in futures contracts liquidated the two days before Christmas Eve, XRP investors are left to face a not-so-happy holiday season.

What happens when a cryptocurrency once positioned as a regulator-friendly alternative to bitcoin gets heat from regulators? Exchanges that trade XRP are about to find out.

U.S.-based cryptocurrency exchanges have to consider whether to delist XRP in light of a Securities and Exchange Commission (SEC) lawsuit alleging it is an unregistered security issued by Ripple Labs to raise funds. Chief among these exchanges is Coinbase, which, in addition to the normal considerations around listing XRP, is also seeking SEC approval to take its shares public and allow retail investors to trade them.

If the SEC prevails in its lawsuit, XRP may be classified as a security, meaning under U.S. law entities offering it for trading must register as securities exchanges. 

It’s also possible an SEC victory would destroy XRP’s value because the regulator wants to prevent Ripple from selling any more tokens, and for Ripple, CEO Brad Garlinghouse and Chairman Chris Larsen to disgorge their profits, pay prejudgement interest and pay civil penalties. 

While some exchanges, market makers and funds have already begun delisting XRP or exiting positions and transactions with the cryptocurrency, it may not be a black-and-white question for larger exchanges. 

Anthony Tu-Sekine, a partner at law firm Seward & Kissel LLP, told CoinDesk that trading platforms like Coinbase “are between a rock and a hard place.”

“They can continue to list XRP based on their previous analysis that XRP is not a security, with the hope that a court will find that XRP is not a security,” he said. “Or they can take ‘remedial’ actions such as restricting trading for wallets held by U.S. persons, or take it off their exchange altogether.”

These scenarios are likely already covered by the exchanges’ terms of service policies, he said.

Exchanges like Coinbase would “be crazy not to consider” delisting, said Gabriel Shapiro, an attorney with Belcher, Smolen & Van Loo LLP. Considering the question isn’t the same as actually delisting – or not delisting – the cryptocurrency, however. 

“They have to think – including just from a business perspective but also legal – what kind of precedent they’re setting,” he said.

“If they delist one [cryptocurrency] just because a regulator accuses it of being a security, what happens the next time that happens? Have you just given the SEC the right to delist anything from your platform just because [it makes] an accusation?”

Delisting digital assets on that basis may not be great for the exchange’s customers, said Shapiro. 

“It’s not an easy decision for [Coinbase] to just delist and, personally, if I were them I don’t think I would delist unless I had something more concrete to point to,” he said. 


A Coinbase spokesperson declined to comment for this article.



XRP price has tanked on news of the SEC case against RippleSource: CoinDesk

What might happen

Coinbase in particular is in a unique position due to its impending initial public offering (IPO) or direct listing. It has already confidentiality filed its S-1, a form companies use to register their shares as securities. The SEC can provide feedback to the company about how it views potential risk factors or other aspects of its operations. 

Last week, Shapiro told CoinDesk that this could include essentially forcing companies to take certain actions. While noting he does not believe the SEC would explicitly tell Coinbase to delist XRP, the agency could say that not delisting XRP might be a risk factor.

“You could say, ‘In your risk factors you haven’t properly explained to your investors in your IPO how it is you’ve let XRP and others trade on Coinbase … You need to be really really clear about that … including that we might come after you Coinbase, because you’ve been warned,’” he said.

Coinbase could then decide to delist XRP based on this feedback, or if the compliance burden is too much it could even scrap its IPO ambitions. What Coinbase cannot do is pretend ignorance of how the SEC views XRP, Tu-Sekine said. The agency’s position is clear.

The SEC appears confident about its chances, and has helpful precedents from its cases against Telegram and Kik, Shapiro said. 

“I think we all suspected there’d be a strong case but I don’t think we realized the extent to which Ripple entered into market-making agreements,” he said of the allegations in the SEC’s complaint.

The price of bitcoin (BTC) topped $25,000 for the first time ever, a mere week after breaking $24,000 for the first time.

• The price of the leading cryptocurrency continued its recent torrid run, setting a new all-time high of $25,005.53 before falling back to $24,971.23, up 6.28% on the day. Year-to-date BTC is up more than 240%.
• 
  
• Institutional investors are perceived to be driving this record-setting run. Among them: Anthony Scaramucci’s Skybridge Capital ($25 million in December); MassMutual ($100 million in December);  and Guggenheim (up to 10% of its $5 billion macro fund).

Read more: Over $20K? Why Is Bitcoin Worth Anything at All?

Bitcoin is irrelevant and investors 'are going to weep' if regulators come down hard on crypto, says Kevin O'Leary

Emily Graffeo Dec. 24, 2020, 04:45 PM



"Shark Tank"/ABC

• Kevin O'Leary told CNBC on Thursday bitcoin is irrelevant to financial markets and at risk of regulation. 
• His comments come as an increasing number of institutions like Guggenheim and SkyBridge capital invest millions into the cryptocurrency, driving a rally of over 200% in 2020. 
• "I'm waiting for the day that one of these regulators comes down hard on bitcoin. Grown men are going to weep when that happens. You'll never see a loss of capital like that ever in your life. It will be brutal," he said. 
• Treasury Secretary Steven Mnuchin is proposing new regulation that would require certain cryptocurrency traders to provide more information about their identities and cryptocurrency transactions.
• View Business Insider's homepage for more stories.

Kevin O'Leary told CNBC on Thursday that bitcoin is irrelevant to financial markets and too at risk of regulations to be taken seriously by institutional investors."Is this a nothing burger? It's not even a single cell amoeba," the O'Shares chairman said,

"I love to talk about it, it's fun to watch it go up and down, but during the day, when the bell rings, I don't talk to anybody that's worried about this. They do not put capital to work in bitcoin.

"His comments come as more institutional players are piling in, validating bitcoin's legitimacy as a store of value and hedge against inflation.

Earlier this week, SkyBridge Capital invested $25 million into a new bitcoin fund, while last month, Guggenheim filed to reserve the right for 10% of its $5.3 billion Macro Opportunities Fund to invest in the Grayscale Bitcoin Trust.

O'Leary said that the concept of a digital currency will likely come to fruition in the future, but investors should be careful glorifying bitcoin while it has yet to fulfill a defined role in financial markets and while it could still be regulated. This year, bitcoin has skyrocketed over 200%, and many crypto bulls are forecasting an explosion of growth in 2021. 

Read more:

A chief market strategist at a $5 billion firm lays out why she prefers growth stocks over pandemic-recovery favorites for a 2021 rally - and shares the 2 she added most recently

Though regulations could be coming for the popular token. Treasury Secretary Steven Mnuchin is proposing new rules that would require certain cryptocurrency traders to provide more information about their identities and cryptocurrency transactions.

This doesn't appear to have scared off various institutional investors, but O'Leary, who said he has $52.77 in a crypto wallet, is more worried."I'm waiting for the day that one of these regulators comes down hard on bitcoin. Grown men are going to weep when that happens.

You'll never see a loss of capital like that ever in your life. It will be brutal," he said. O'Leary added: "This whole market, even if Bitcoin were to go up, another 2000% is completely irrelevant to the institutional client."

SEE ALSO: 

Ripple's XRP token has fallen more than 30% after the SEC filed a lawsuit against the cryptocurrency firm »