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US regulators limiting Stablecoin, FCA issues warning to unregistered Crypto ATM operators in the UK, and more

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Morgan Stanley: Stablecoins Compete with Traditional Banking in Crypto Trading


Morgan Stanley has released a research report highlighting the importance of stablecoins in the crypto trading market, noting that stablecoin products potentially compete with traditional banking systems, and its falling market capitalization indicates a reduction in cryptocurrency liquidity and leverage. Stablecoins are a type of cryptocurrency whose value is pegged to another asset, such as the US dollar or gold. The bank further notes that US regulators have started to limit stablecoin products, and expects that regulatory efforts will focus on stablecoin regulation, with issuers likely required to register and prove they hold enough liquid assets to back the issued stablecoins. The report highlights that “all stablecoins rely on market trust in the system’s ability to keep a stable value.” Continue here.

UK Law enforcement targets unregistered cryptocurrency ATM operators

The UK Financial Conduct Authority (FCA) has conducted a series of intelligence-gathering operations, along with West Yorkshire Police’s Digital Intelligence and Investigation Unit, to uncover unregistered cryptocurrency ATMs operating illegally in the UK. These machines allow customers to purchase or convert funds into crypto assets. Crypto ATM operators, like other crypto asset exchange providers, must be registered with the FCA and comply with the UK Money Laundering Regulations, a requirement that several crypto ATM operators in the UK have failed to meet, according to officials. The FCA has previously issued warning letters to all crypto ATM operators, stating the legal consequences of failing to register with the agency. More here.

Crypto firms face tougher regulations on being qualified custodians under SEC proposal

The regulatory landscape around cryptocurrencies in the US is constantly evolving, with the latest proposal from the US Securities and Exchange Commission (SEC) set to have significant implications for hedge funds, private equity firms, and pension funds working with crypto firms. According to people familiar with the matter, the SEC is set to propose rule changes that would make it harder for crypto firms to be designated as “qualified custodians,” which would allow them to hold client assets for money managers. The proposed changes have not yet been released, but sources suggest that they could make it more difficult for institutional funds that have invested in cryptocurrency to comply with regulatory requirements for holding client assets. Details here.

NFT marketplace rival blur to close funding round at unicorn valuation: Report

Blur, a fast-rising rival to NFT marketplace heavyweight OpenSea, is reportedly set to close a massive funding round at a billion-dollar valuation. According to two sources familiar with the negotiations, the startup’s valuation soared to unicorn status during discussions with investors. One of the sources revealed that Blur initially sought to raise between $15 million and $30 million and had a $700 million price tag in mind, but the round became oversubscribed, pushing the startup’s valuation up to $1 billion. The exact details of the funding round and the investors involved are still unknown at this time. However, the news of the potential fundraising effort has caused quite a stir in the NFT market, with many speculating on who could be the big investors involved in the round. Continue here.

Cryptocurrency Exchange Collapse

FTX founder restricted from using VPNs

FTX founder Sam Bankman-Fried has been barred from using virtual private networks (VPNs) while out on bail after being charged with fraud following the collapse of a cryptocurrency exchange. US District Judge Lewis Kaplan expressed concerns that VPNs pose similar risks to Bankman-Fried’s use of encrypted messaging apps, according to a Bloomberg report. Federal prosecutors expressed concerns about Bankman-Fried’s use of VPNs, saying that they could potentially be used to access international crypto exchanges, allow data transfers without detection, and offer a covert method of accessing the dark web. In response, Bankman-Fried’s lawyer Christian Everdell claimed that his client had used VPNs just to watch NFL games via a subscription he had purchased while living in the Bahamas. Details here.

KeyFi founder and others barred from transferring property in Celsius bankruptcy case

A court has issued a temporary restraining order against KeyFi founder, Jason Stone and others associated with the staking firm, barring them from disposing or transferring most of the property linked to the Celsius bankruptcy case. The order stipulates that parties cannot use methods like Tornado Cash to conceal the location of any property that could satisfy a judgment in the case. However, the NFTs used in decentralized finance activities, including 13 Cryptopunk NFTs and one Bored Ape Yacht Club NFT, are exempt from the order. Stone and KeyFi can continue to use them but are required to make a request to Celsius and the Celsius Official Committee of Unsecured Creditors before performing any transactions unrelated to the listed NFTs if they believe they need to avoid liquidation or other financial problems. Continue here.

Cryptocurrencies Bitcoin and Ether Flat After SEC Crackdown on Kraken, Altcoins Continue to Fall

The cryptocurrency market bounced back after suffering a decline on the heels of regulatory concerns raised by the New York Department of Financial Services against stablecoin provider Paxos. According to TradingView data, Bitcoin rose 1.8% in the past day, trading around $22,190, after dipping following the announcement that Paxos had been ordered to cease issuance of the BUSD stablecoin. On Tuesday, it climbed to around $22,300. Meanwhile, Ether increased around 3.3%, XRP rose 2%, ADA surged 10%, and MATIC jumped 7.2%. However, BNB remained below $300, declining another 3%. Silvergate shares experienced a 17% surge to $17.16, according to Nasdaq data, after several investments were made in the beleaguered bank. Citadel Securities and Susquehanna Advisors Group revealed they owned 5.5% and 7.5%, respectively, of the bank. MicroStrategy also showed gains of 8.9% to $22.29, while Coinbase turned around and was up around 3.3% after a decline of more than 20% last week.



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