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 Swiss Financial Market Supervisory Authority (FINMA) proposes that staking service providers should require banking licenses in the future. Staking refers to the process where cryptocurrency owners lock their tokens in a blockchain network to support transaction validation and network security, receiving rewards in return. The proposed rule change could significantly challenge the current industry standards. The staking segment, with a market capitalization of around 350 billion US dollars, is currently responsibly operated by banks and service providers in Switzerland, complying with anti-money laundering regulations. The Swiss blockchain industry contests the regulators’ interpretation, deeming it incorrect, and raises alarms over potential adverse implications. Staking is in no way associated with transformational services and is therefore not comparable to the active operations of banks. The proposed practice change would jeopardize the legal certainty achieved by the DLT legislation unanimously passed by the parliament. This law, among other things, strengthened the protection of customers in the event of a bankruptcy of custody institutions.
The Swiss blockchain industry warns of potential negative consequences from FINMA’s change in practice on staking assets.
Analysts from JPMorgan suggest that, following a recent court ruling regarding Grayscale’s application to convert its Bitcoin Trust into an ETF, the SEC might now have to approve more Spot-Bitcoin-ETFs. The ruling questions the SEC’s prior tendency to favor Futures-ETFs over Spot-ETFs. While broadening market access seems possible, JPMorgan remains skeptical about the implications for the crypto sector, as Spot-ETFs have not garnered the same investor attention as Futures-ETFs have.
Experts from JPMorgan have commented positively on the current events regarding the approval of Bitcoin ETFs.
Stablecoins are designed to maintain a constant value. They achieve this by being pegged to a specific asset, often a fiat currency like the US dollar. They serve as an essential bridge between the volatile crypto world and traditional financial markets, providing users with a reliable trading instrument and simplifying daily digital transactions. However, “Bonding Losses” can occur. This bonding loss happens when a stablecoin trades at a lower value compared to the represented fiat currency. Although this concept is straightforward in theory, it’s not always easy in practice to determine exactly when such a loss occurs. Using various metrics, like global stablecoin volumes and a weighted system based on trading volumes between different pairs, one can gain deep insights into the stability of stablecoins and their relevant trading pairs.
A commitment loss on stablecoins occurs when they trade at a discount to their actual fiat value.
Recently, the crypto market was invigorated by a temporary Bitcoin rally following a positive court ruling for Grayscale. If the final decision approves a Bitcoin ETF, this could accelerate mainstream acceptance and channel considerable capital into the market. However, a sense of uncertainty currently lingers.
The complete overview of the day’s events in the (crypto) markets. Concisely summarized in the CVJ.CH market commentary.
In addition: Last month, the crypto market’s market capitalization decreased by 6%, influenced by events such as potential interest rate hikes, uncertainties in the Ripple case, and rumors of a Bitcoin sale by SpaceX. Liquidations, which refer to the forced sale of positions due to margin calls or contract requirements, added further pressure of $1.04 billion to the market. The spotlight of the month was on Visa with their introduction of a simplified ETH gas fee payment system and Friend.tech, an innovative social media app on the Base network.
A summarizing monthly review of what’s happening in the crypto markets in cooperation with the Swiss specialist 21Shares AG.
