What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
The cryptocurrency industry has been eagerly awaiting approval for a spot-based Bitcoin ETF for years. Such a product would open up the market to a broader investor base. The entry of the world’s largest asset manager, BlackRock, added to the anticipation. Then, this Monday, the long-awaited headline appeared: “SEC Approves BlackRock iShares Bitcoin Fund.” It was first reported by the cryptocurrency news site Cointelegraph, followed by the financial publication Reuters. The price of Bitcoin accordingly responded with an increase of nearly 10%. However, a few minutes later, the news turned out to be false. The headline originated from a Telegram message by an anonymous user and was not verified from a reliable source. The market gave back its gains. Regardless of the false report, according to BlackRock CEO Larry Fink, the incident demonstrated the high level of pent-up interest in digital assets. In an interview with FOX, the head of the financial giant stated that a significant portion of the recent rally could be interpreted as a “flight to quality.” Amid an escalating conflict in Israel, Bitcoin had established itself as a hedge against a volatile world. Thus, the industry secured a significant endorsement from the world’s largest asset manager.
Over the 14 years since the inception of Bitcoin, a significant ecosystem has developed around digital assets. This development has not been without its challenges. In 2013, the overwhelmingly dominant crypto exchange Mt. Gox suffered a hack that forced the trading platform into bankruptcy. More than 140,000 Bitcoin (now worth 3.9 billion USD) ended up in the hands of the appointed trustee. Repayments to former customers have been pushed out for ten years. Other hacking incidents within a similar timeframe also filled the wallets of the US government. In various incidents since 2012, law enforcement authorities have confiscated almost 1% of the total Bitcoin supply: 194,188 BTC (worth 5.3 billion USD). A small portion of these holdings was sold this year. However, the timeline for the liquidation of the majority of the Bitcoin remains unclear. Lastly, the liquidator of the FTX/Alameda construct also holds 3.4 billion USD in cryptocurrencies. An overview of the key details concerning this potential selling pressure of over 10 billion USD.
In light of the ongoing digitization of money, the European Central Bank (ECB) has been considering a digital euro for several years. This would be a digital central bank currency for the general population (“retail CBDC”). This week, the European monetary authority announced the completion of the “exploration phase.” Starting from November 1st, the ECB will commence concrete preparations for the digital euro. At this stage, the framework for a CBDC will be finalized, and discussions will take place with potential providers. The groundwork for the introduction of the digital euro is expected to be laid within the next two years.
In December 2020, the Securities and Exchange Commission (SEC) initiated legal proceedings against Ripple, CEO Brad Garlinghouse, and co-founder Chris Larsen. In their lawsuit, the regulatory agency alleged that the company had distributed unregistered securities to investors. Ripple had been contesting the SEC’s lawsuit for two and a half years until a U.S. court issued its initial verdict in July 2023. The XRP token itself could not be classified as a security; only the offering to institutional customers had violated federal laws. The roles of the two executives in these transactions were scheduled to be discussed in the spring of 2024. The SEC has now dropped the lawsuit against Garlinghouse and Larsen, possibly indicating a desire to expedite the timeline for an appeal in this landmark case.
In addition: About a month ago, Huobi made the decision to rebrand itself as HTX. This rebranding aimed to establish a closer connection with the new owner of the exchange, Tron founder Justin Sun. However, since the acquisition of the “Huobi Tron Exchange,” unusual activities have been observed on the exchange. Strange trading volume patterns, according to market data provider Kaiko, suggest the presence of artificial volumes (wash trading). Furthermore, concerning stablecoin transactions related to the offered interest product “stUSDT,” have been discovered.