Category: Crypto News

Over the last few years, the cryptocurrency industry has been a primary target for regulators in the United States. 

The legal battle between Ripple and the United States Securities and Exchange Commission (SEC), Nexo’s lawsuit with the securities regulators of eight states, and the scrutiny targeting Coinbase’s Lend program last year are only a few high-profile examples. This year, even Kim Kardashian had first-hand experience with regulatory scrutiny after agreeing to pay a $1.26 million fine for promoting the dubious crypto project EthereumMax.

While Ethereum developers intended to pave the way for key network upgrades in the future, it seems like the recent Merge has further complicated matters between crypto projects and U.S. regulators.

Ethereum: Too substantial for the crypto market?

On Sept. 15 – the same day Ethereum’s Merge took place – SEC Chairman Gary Gensler stated during a congressional hearing that proof-of-stake (PoS) digital assets could be considered securities. Gensler said his reasoning was that holders can earn revenue by staking PoS coins, which could mean that there is an “expectation of profit to be derived from the efforts of others.” The latter is one of the essential parts of the Howey test, used by the SEC and other U.S. authorities to determine whether an asset is an investment contract and falls under federal securities law since it was passed into law in 1946.

As you may already know, Ethereum has shifted from the mining-based proof-of-work (PoW) to PoS, requiring validators to stake Ether (ETH) to add new blocks to the network. In other words, this means that Ether could fall under the Securities Act of 1933, which would require the project to register with the SEC and comply with strict standards to safeguard investors.

Related: Federal regulators are preparing to pass judgment on Ethereum

Gensler argued that intermediaries like crypto exchanges and other providers offering staking services “look very similar” to lending. And, cryptocurrency lending is a sector that has been under heavy SEC scrutiny, especially if we consider the agency’s $100 million fines against BlockFi in February.

In fact, Gensler’s latter argument is highly relevant in the case of Ethereum, where one has to stake 32 ETH (worth $42,336 at the current price of $1,323 per coin) to become a validator. Since this is a considerable sum for many, most users are turning to staking providers to stake their digital assets on their behalf to avoid this capital requirement in exchange for a fee.

At the same time, this could mean that, at some point, large centralized providers will increase their control over the network. Thus, by falling under the SEC’s supervision, there’s a chance the agency could prohibit them from validating individual transactions (censorship), which will lead to the fact that such transactions will take more time to be confirmed. That said, confirmation speed should be the most significant issue here, as there will always be some validators that will subsequently confirm the transaction.

In this setting, Ethereum, as one of the major networks for decentralized finance (DeFi), would be the main lever for regulatory policy. Tokens such as USD Coin (USDC) and many others contain blacklisting and blocking mechanisms at the development level, as opposed to the DeFi market in general — so it makes sense that validators and the MEV market will play the role of leverage tools. In the short term, however, this is more of a scare since there are too many validators, and no one can control this process at a reasonable cost.

Regarding the above, U.S. regulators may intend to oblige those node validators under their jurisdiction to implement Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures for validating transactions.

Ethereum’s Merge gives opportunities for the SEC to act. How?

In addition to the Howey test argument, the SEC also claims that ETH transactions fall under U.S. jurisdiction due to the high concentration of the network’s nodes in the United States. If this statement turns out to be accurate and finds further development across the nation, this would mean that the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) will require all businesses operating on the Ethereum blockchain to comply with KYC and AML requirements.

In practice, this means that customers will have to verify their identities and residencies, as well as provide further information to service providers before they can start using a DeFi service. This significantly increases the burden for crypto projects (and one could argue that this process would go against the idea of decentralized finance). However, regulatory compliance will facilitate trust between investors and providers, which will help attract investment from institutional clients.

That said, it’s vital to mention the SEC’s controversy regarding its approach, communication and decisions about crypto regulation, which digital asset market players have heavily criticized. BlockFi’s case is an excellent example. The SEC announced actions against the company over its failure to register high-yield interest accounts that the commission classified as securities. According to the case’s documents, one of the agency’s requirements was to bring BlockFi’s business activity into compliance with the Investment Company Act of 1940.

As a result, BlockFi ended up on the auction block, and two other companies with similar businesses went belly up — these were Ripple general counsel Stu Alderoty’s words.

Thus, a situation has arisen where the SEC used the legislation of 1940 to regulate modern and not yet fully developed technology, which is absurd.

Related: Tax on income you never earned? It’s possible after Ethereum’s Merge

Furthermore, the SEC’s statement that all Ether falls under U.S. jurisdiction is, to put it mildly, untrue. (If it were, it would be convenient for the agency.) The SEC’s logic here is that the Ethereum blockchain’s node network is more densely clustered in the U.S. than anywhere else, so all ETH transactions worldwide could be viewed as if they were of American origin.

But, according to Etherscan, the U.S. is presently home to a little more than 46% of all Ethereum nodes — not even a simple majority. Based on the SEC’s statement, one could argue that only the European Union should regulate Bitcoin (BTC). Of course, the latter argument is just as absurd as the agency’s claim.

I believe these statements result from the SEC lawyers’ very rough understanding of cryptocurrencies. But, we cannot rule out the previous tendencies of the SEC to regulate through enforcement.

Regulatory compliance will come with a big sacrifice for Ethereum

U.S. regulators are increasingly expressing concerns about the huge sums circulating in DeFi without any control. As the Ethereum blockchain serves as the primary chain for most tokens, its recent shift from PoW to PoS may be used as an argument for their attempts to influence (at least a part of) the decentralized market.

If the SEC and other U.S. regulators succeed in the latter, it could restructure DeFi such that another evolutionary blockchain becomes the leader. But, what is certain in the case of full Ethereum regulation is that traditional banks and investment funds will boost ETH’s usage as an asset for investments and payment means.

Considering all this, providing any timeline is challenging as such statements from the SEC are quite recent and raw at the moment. Let’s wait and see what further actions U.S. regulators will take in the near future and whether they will impact the KYC and AML procedures of the crypto space as well.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

One of the foremost concerns regarding the Merge is that of centralization. Another potential concern is the risk of scams, as the general public may not be aware of how the Merge works.

A fundamental flaw in the Merge is that it will likely increase the concentration of power within the network. The more valuable a staker’s position is, the more they will be rewarded for validating blocks. This could lead to a situation where a small number of wealthy individuals or groups control the majority of the stake and have disproportionate influence over the network.

Five major organizations control 64% of the network’s stake. In the event of a contentious fork, these organizations could collude to choose which chain to support, potentially censoring transactions or double-spending funds. Already, critics are debating whether the Merge is a “rich get richer” scheme that will entrench the power of current stakeholders.

Since staking will be required to earn interest on one’s ETH holdings, those who cannot afford to stake may be priced out of the market. This could lead to increased centralization as only those with large amounts of money would be able to participate in staking.

It’s also not uncommon for scammers to take advantage of big transitions such as The Merge, pretending that users need to do something (usually involving giving up tokens) to upgrade. Wallet upgrades are also a potential source of scams, as users may be tricked into downloading malicious software masquerading as an official update.

Lastly, miners who have been mining in Ethereum’s mainnet for years may yet decide to continue on Ethereum’s old chain. After all, many of these miners have likely incurred huge electricity and hardware expenses and may feel that they have more to gain by sticking with the tried-and-true mainnet. 

This could lead to a split in the community, with two competing versions of Ethereum running concurrently. While this scenario is unlikely, it’s still a possibility that investors should be aware of.

Despite the turbulence that broke out in the crypto market this summer, there is an important long-term marker that should be considered in any complex assessment — the combination of adoption and regulation. The latest report by EUBlockchain Observatory, named “EU Blockchain Ecosystem Developments,” tries to measure this combination within the European Union, combining the data on each and every member country from Portugal to Slovakia. 

As the original report counts more than 200 pages, Cointelegraph prepared a summary with the intent to capture the most vital information about the state of crypto and blockchain in Europe. We started from a group of countries that are usually labeled as “Western European.” 

Austria

Numbers: 50 blockchain solution providers, $48.72 million (50 million euros) in total funds raised

Regulation and legislation: A registry for Virtual Asset Service Providers (VASPs) was established by the Financial Market Authority a year later, in 2020. Regulators have adopted an “overall non-restrictive approach” toward crypto and blockchain and crypto mining remains largely unregulated.

Taxes: As is the case in most European countries, digital currency exchange is VAT-exempt. Capital gains from the sale of crypto are subject to a progressive income tax that amounts to up to 55% for individuals and 25% for corporations, but digital taxation policies may apply if the digital currency generates interest income and thus qualifies as an investment asset.

Notable initiatives: In November 2019, the Austrian Blockchain Centre (ABC) was created to explore blockchain applications in the fields of finance, energy, logistics, public administration and the Internet of Things. ABC, currently involving more than 21 institutions and 54 companies in its public-private partnership model, aspires to become the world’s largest blockchain research center. Blockchain is also a key facilitator of the Smart City Vienna and Open Government Data initiatives.

Local players: Bitpanda, a Vienna-based trading platform, which market value exceeded $4 billion in 2021, Blockpit, a digital assets investment platform responsible for more than $500 million traded in 2017, and Conda, a crowd-investing platform for Austrian startups.

Belgium

Numbers: 47 blockchain solution providers, 992 blockchain professionals. 

Regulation and legislation: According to the report, there are currently “no specific laws or regulations” in Belgium. In 2017, Financial Services and Markets Authority (FSMA) published a communication on an overview of the legislation and regulations that may apply to Initial Coin Offerings (ICOs) and crypto assets.

At the same time, FSMA maintains a red list of fraudulent crypto companies. Nevertheless, utility token offerings are considered “a regular option” to raise capital. The FSMA characterizes crypto assets as investment instruments given that they may provide rights to revenues or returns, a means of storage and exchange given their convertibility into other assets or a utility token if they provide access to certain products or services.

From May 2022, registration for VASPs and custodial wallets is obligatory. The providers must fulfill certain conditions including status as a legal entity and maintaining minimum capital of 50,000 euros.

Taxes: Tax stands at 33% on any cryptocurrency income, depending on how the individual is investing. A mere increase of value over time escapes taxation, but the investor is obliged to prove their holding strategy. There is no specification on the required holding time.

Notable initiatives: “Blockchain for Europe” represents international blockchain industry players at the EU level, with a primary focus on participation in the regulatory debate. HIVE Blockchain Society is a nonprofit blockchain association whose aim is to promote the understanding of distributed ledger technology and to inform the Belgian and international community about its developments.

Local players: Keyrock, a company that develops crypto-asset financial infrastructure by means of scalable, self-adaptive algorithmic technologies, Credix, a decentralized credit marketplace powered by Solana blockchain technology, and Delta, a Bitcoin (BTC) and cryptocurrency portfolio tracker app.

France

Numbers: 160+ blockchain startups, $175.4 million (180 million euros) of fundraised revenue

Regulation and legislation: France established a friendly legal framework for ICOs in 2016, allowing issuers to register cash vouchers directly into the blockchain. In 2017, the Financial Market Authority (AMF) launched the digital-asset fundraising support and research program UNICORN. France also authorizes the registration and transfer of unlisted securities using blockchain technology.

Taxes: The country’s highest administrative court reduced the tax burden on profits coming from cryptocurrencies and set a flat rate tax of 30%.

Notable initiatives: The public Deposits and Consignments Fund makes direct investments in crypto projects. The fund has invested $292.3 million (300 million euros) in blockchain and AI in the European Commission’s Investment Programme for the Future.

Community self-organization: The French Digital Asset Association (ADAN) operates as a professional lobbying group on behalf of the industry.

Local players: Ledger, leading global cryptocurrency hardware wallet provider, Coinhouse, a crypto asset management and transaction services company, providing staking, saving and custody services, and Sorare, a fantasy football gaming platform that uses blockchain technology based on Ethereum.

Germany

Numbers: 343 blockchain startups 

Regulation and legislation: Since 2013, virtual currencies have been the “units of account.” In 2020, Germany introduced the concepts of “crypto asset” and “crypto custody.” The latter requires a license from the supervisory body BaFin. Virtual currencies are not considered legal tender in the country and are generally treated as investment assets or so-called “substitute currencies.”

Taxes: In May 2022, Germany’s Finance Ministry has released new cryptocurrency tax guidelines with no tax payable on gains from BTC and Ether (ETH) sold 12 months after acquisition.

Notable initiatives: In September 2020, the Deutsche Energie-Agentur announced the launch of the Future Energy Lab. It involves, among other things, the pilot projects related to the application of blockchain technology in the energy sector, such as the Blockchain Machine Identity Ledger (BMIL) and the Smart Contract Registry. The BMIL is a digital and decentralized directory for device identities.

The same year one of the four electricity transmission system operators in Germany announced a multi-year strategic partnership with Energy Web that will focus on testing and validating the technological promises of blockchain-based solutions.

Community self-organization: Established in 2017, the Blockchain Bundesverband is a non-profit association with more than 60 members. The association’s initiatives focus on education for decision-makers and the wider public. Based in Munich, the European Blockchain Association provides an independent, neutral platform for blockchain-related communities and organizations to discuss, develop and elaborate on shared work.

Local startups: Iota Foundation develops an open-source protocol that supports data and value transfer between devices and humans, and BitsCrunch, a crypto-analytics company.

The Netherlands

Numbers: 160+ blockchain startups, $360.5 million (370 million euros) of raised funds.

Regulation and legislation: The central bank and the Dutch Authority for the Financial Markets (AFM) maintain a one-stop shop for regulatory information for startups called InnovationHub. There is also a regulatory sandbox for emerging technologies with a principles-based (rather than a rules-based) approach. Compliance is determined based on the intent of laws and regulations rather than their letter. A practice of partial authorizations, when a startup does not need to meet all the banking license criteria to obtain a license, is rather common.

Notable initiatives: During the COVID-19 pandemic, Tymlez launched a project to support the government’s transparency in medical supply chains through blockchain technology. There are projects in agriculture such as Blockchain for Agri-food, financed by the Dutch Ministry of Agriculture, Nature and Food Quality to improve supply chains.

Community self-organization: The report mentions meetup groups such as Blockchain Talks, Blockchain Netherlands, Food Integrity Blockchained, Permissionless Society Blockchains and Bitcoin Wednesday Amsterdam, as well as Ethereum Dev NL and Hyperledger Netherlands.

Local players: Bitfury provides mobile Bitcoin mining data centers, Aurus, a gold-backed cryptocurrency on the Ethereum blockchain, and Finturi, a blockchain-powered trade finance platform.

Switzerland

Numbers: $247.48 billion (254 billion euros) of the total valuation of the top 50 companies in 2021, 877 blockchain solution providers.

Regulation and legislation: In 2019, the Federal Council updated the existing framework conditions in relation to blockchain and crypto. In 2020, the Swiss Parliament passed the DLT blanket act, which selectively adapts 10 existing federal laws. In 2021, a license for DLT trading facilities was introduced.

According to the Financial Market Supervisory Authority (FINMA), digital currencies are categorized based on their function and purpose as payment tokens, utility tokens and asset tokens.

Taxes: Tax rules vary between the individual cantons. Digital currencies are generally treated as foreign currencies for the purposes of wealth taxation. Their exchange value is determined by the Federal Tax administration at the end of the year. Capital gains on digital currencies are exempt from income tax for individuals. Purchases with digital currencies are VAT exempt.

Notable initiatives: Blockchain has been used for issuing digital self-sovereign identities and even voting on the regional level, while digital currencies are accepted for paying taxes and public services. The city of Zug, the capital of the so-called “Crypto Valley,” launched its blockchain-powered digital identity program in 2017. In 2021, the Swiss government started a public discussion on self-sovereign identities on the national level. In 2022, the city of Lugano acknowledged Bitcoin and Tether (USDT) as legal tender.

Community self-organization: The Crypto Valley Association and Blockchain Federation are the major public entities for blockchain enthusiasts and entrepreneurs. There are also popular communities like the Swiss Association of Crypto Investors and the Bitcoin Association.

Local players: Switzerland by far exceeds all the other nations in the list when it comes to globally acknowledged crypto companies. It’s enough to mention that such players as Cardano, Polkadot, Cardano, Solana, Cosmos and Tezos are based in this country.

Key takeaways

Discussing the report takeaways with Cointelegraph, Nikolaos Kostopoulos, senior blockchain consultant at Netcompany-Intrasoft and member of the EU Blockchain Observatory and Forum team, compared the European regulatory dialogue to the one that takes place in the United States, highlighting the role of France: 

“French regulators and policymakers are seemingly winning the course for a comprehensive, objective and holistic effort to establish the framework for a growing blockchain and digital assets industry. This effort is already validated by the decision of leading players such as Binance and Crypto.com which are heavily investing in their French HQ as their EU base, but also the fact that France is home to a few of the biggest EU blockchain startups.”

While France’s regulatory efforts stay in a larger EU context, Switzerland still leads the way in terms of attracting startups and creating the most welcoming legal environment for them. Kostopoulos believes that this unique position can’t simply be explained by the country’s century-old tradition as a safe haven for big money. 

“There are numerous reasons that constitute Switzerland more advanced and progressive in comparison to countries such as Belgium or France. The country has established procedures, progressive financial legislation, human resources and infrastructure to support a framework to accelerate financial innovation,” he said.

The finance minister of India, Nirmala Sitharaman, revealed India’s plan to develop standard operating procedures (SOPs) for cryptocurrencies during its G20 presidency, from Dec. 1, 2022, to Nov. 30, 2023.

Sitharaman has previously called for global collaboration to decide on crypto’s future and has been cautious against mainstream crypto adoption citing risks to financial stability. However, speaking to local Indian reporters on Oct. 15, she confirmed, “That (crypto) will also be part of India’s thing (agenda during G20 presidency).”

The G20, or Group of Twenty, is a global forum for addressing the major issues related to the global economy. According to Sitharaman, no country can alone effectively handle or regulate crypto, adding that:

“But if it’s a question of platforms, trading of assets which have been created, buying and selling making profits and, more importantly in all, these countries are in a position to understand the money trade, are we in a position to establish for what purpose it’s being used?”

Sitharaman further highlighted the use of crypto assets in money laundering as detected by India’s law enforcement agency, Enforcement Directorate.

She further added that members of the G20 have also acknowledged the same concerns while reiterating the need for the participation of all countries when it comes to effectively regulating crypto assets.

Related: Polygon powers India police complaint portal, battling corruption

On Oct. 7, the Reserve Bank of India released a list of proposed features and reasoning behind its in-development central bank digital currency (CBDC).

The 51-page document summarizes key motivations for the issuance of the digital rupee, which include trust, safety, liquidity, settlement finality and integrity. Some of the biggest motivations for India’s digital currency are reduced operational costs and improved financial inclusion.

• BTC’s price shows strength but has struggled to break past $19,500 as the price continues to move in circles. 

• BTC bounced from a low of $18,200 after the price rallied toward $19,800 but was rejected by sellers. 

• The price of BTC continues to trade below 50 and 200 Exponential Moving Averages (EMA) ahead of the weekly close. 

The price movement of Bitcoin (BTC) has shown some great price action lately as the price garnered momentum to bounce from a low of $18,200 to $19,800d against tether (USDT). Despite the strength shown by the price of Bitcoin (BTC), it has struggled to reclaim $19,500, which is key for a rally to the region of $20,000. Ahead of the weekly close, it is yet to be known if the price of BTC will rally to the upside or downside, as many traders are left in a dilemma. (Data from Binance)

Bitcoin (BTC) Price Analysis On The Weekly Chart

The week has been packed with so many events in the crypto space, but a notable one was the sharp decline in the crypto market after the release of the CPI news; the market appeared to be manipulated, with Bitcoin (BTC) dropping from $19,200 to $18,200 in hours and then back up to a range high of $19,800 before rejection back to $19,200. This price action seems more of manipulation with so much price volatility in a short time. With the possibility of Bitcoin Dominance (BTC.D) rising to a high of 45%, altcoins could suffer more if BTC retraces. 

The price of BTC has struggled in recent times to restore the strength it showed, rallying from a region of $18,700 to $25,000. BTC’s price declined from $25,000 to a weekly low of $18,800-$19,300. The has since struggled to breakout from this range.

BTC’s price needs to reclaim $19,500 with good volume for the price to restore a measure of relief for BTC price and altcoins. If the price of BTC fails to close above $19,500, we could see the price retesting the low of $18,800-$18,200.

Weekly resistance for the price of BTC – $19,500.

Weekly support for the price of BTC – $18,800-18,200.

Price Analysis Of BTC On The Daily (1D) Chart

The daily timeframe for the price of BTC has been more of a struggle to 

breakout from its descending triangle could spark some relief and bounce to the high of $20,500 and higher with strong buy volume. 

BTC’s price trades at $19,130 as the price continues its range movement 

as the price forms a descending wedge below the 50 Exponential Moving Average (EMA); the price of $20,200 corresponds to the 50 EMA, acting as resistance for the price to break higher. 

Daily resistance for the price of BTC – $20,200.

Daily support for the price of BTC – $18,800.

Featured Image From NBTC, Charts From Tradingview 

When Wintermute, a cryptocurrency market maker, lost $160 million due to a hack, concerns related to the repayment of debt worth $189.4 million surfaced. However, in an exciting turn of events, Wintermute paid back its largest debt due Oct. 15, involving a $92 million Tether (USDT) loan issued by TrueFi.

After repayment of TrueFi’s $92 million loan, Wintermute still owes $75 million to Maple Finance in USD Coin (USDC) and wrapped ether (WETH) and $22.4 million to Clearpool, a total of $97.4 million in debt.

Loan details show that Wintermute Trading had borrowed $92.5 million for a term period of 180 days. James Edwards from Libre Blockchain suspects that “some of the funds from their recent “hack” contributed to the payback.” He further claimed that BlockSec’s attempt to debunk the conspiracy theory around an inside job theory might be a miss.

Edwards stated that BlockSec was previously “dead wrong” in calling out another firm for using the “Vanity address” tool, adding that:

“To believe that a market maker handling billions of dollars (their words) worth of crypto assets per day would use such a tool to create an address ultimately responsible for managing hundreds of millions of dollars in value is preposterous.”

Supporting his claim, Edwards pointed out the GitHub URL to the vanity address tool Wintermute supposedly used to generate their vanity address, as shown below.

On Oct. 10, TrueFi issued a default notice to Blockwater Technologies for missing a scheduled payment related to a $3.4 million loan in Binance USD (BUSD).

Related: Cyber sleuth alleges $160M Wintermute hack was an inside job

Attempting remediation to a $117 million exploit, Mango Markets offered the hacker to keep $47 million as a bug bounty while requesting the return of $67 million of the stolen funds.

A majority, 98%, of the Mango Markets community approved the decision and also supported that no legal action would be taken against the hacker once the $67 million was returned.

However, some of the community members raised objections to the near $50 million bug bounty, which, in one voter’s words, “is ridiculous.”

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Starting in early 2023, Coinbase’s payment service, Coinbase Commerce, will facilitate crypto payments for customers purchasing Google’s cloud services thanks to a deal between the two companies. Google will only allow certain crypto assets for payment, including Bitcoin. Initially limited to certain participants, the option to pay with crypto will eventually be expanded to other customers, an executive at Google Cloud told CNBC. Google Cloud has taken several other steps toward crypto and blockchain industry involvement in 2022. 

BNY Mellon, America’s oldest bank, launches crypto services

Banking giant BNY Mellon has entered the crypto custody field, offering certain customers Bitcoin and Ether custody services via a new platform. The 238-year-old bank will provide bookkeeping for clients’ crypto in a similar fashion as it does for traditional assets, while also handling clients’ private keys. BNY Mellon’s CEO of securities services and digital, Roman Regelman, said: “With Digital Asset Custody, we continue our journey of trust and innovation into the evolving digital assets space, while embracing leading technology and collaborating with fintechs.”

SEC rejects WisdomTree’s application for a spot Bitcoin ETF… again

Following multiple delays, the United States Securities and Exchange Commission (SEC) has denied WisdomTree’s spot Bitcoin exchange-traded fund (ETF) proposal, which the firm filed in January. The SEC cited fears of market manipulation and fraud as the rationale for its decision, which is consistent with its previous rationale for denying spot Bitcoin ETFs. The SEC also denied a spot Bitcoin ETF proposal from WisdomTree in 2021.

PayPal says policy to punish users for misinformation was ‘in error’

PayPal’s Acceptable Use Policy was set to change in early November to include a $2,500 fine for any platform users that promote, post, send or publicize so-called “misinformation.” PayPal has since claimed that the policy provision was added in error. “PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy,” said PayPal. The fiasco has reignited concerns about centralized platforms among crypto users who view self-custody as an important pillar of self-sovereignty and financial inclusion.

Blockchain games and metaverse projects raised $1.3B in Q3: DappRadar

Data from DappRadar revealed that $1.3 billion worth of venture capital flowed into metaverse projects and blockchain games in Q3 — a bright spot amid crypto bear market darkness. While venture capital funding for these sectors was down 48% compared with Q2, the Q3 figure was still more than double the amount invested in all of 2021.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $19,665, Ether (ETH) at $1,329 and XRP at $0.50. The total market cap is at $938.70 billion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Huobi Token (HT) at 87.06%, TerraClassicUSD (USTC) at 63.33% and Quant (QNT) at 22.07%.  

The top three altcoin losers of the week are Klaytn (KLAY) at -20.36%, Internet Computer (ICP) at -15.04% and eCash (XEC) at -14.48%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“Ethereum is the ‘Hotel California’ of cryptocurrencies. You can check in, but you can’t check out.

Charles Hoskinson, founder of Cardano

“Elon Musk quotes posts about Dogecoin, you get seven times daily signups.

Alex Harper, co-CEO and co-founder of Swyftx

“If we [the crypto industry] want to achieve internet scale, we need a solution for AML/CTF compliance.

John Henderson, partner at Airtree Ventures

“A bear market is the best time to start working in crypto and find a job.

Raman Shalupau, founder of Crypto Jobs List

“There is protection in gold. But in my opinion, Bitcoin is far superior. It’s got math and code. It’s defended by a decentralized protocol. You don’t mess with math.

Greg Foss, executive director of strategic initiatives at Validus Power Corp

“It’s incredibly important not to ever forget that we have an immense responsibility that influencers do not. They have their own risks in terms of their followers’ trust, but we have our responsibility to keep our integrity as journalists.

Kristina Cornèr, editor-in-chief of Cointelegraph

Prediction of the Week 

BTC price hits 3-week lows on US CPI as Bitcoin liquidates $57M

For most of the week, Bitcoin traded sideways, slightly favoring the downside, according to Cointelegraph’s BTC price index. The asset sustained a fair bit of price volatility on Oct. 13, however, in line with the release of September’s U.S. inflation data. Bitcoin’s price dropped down near $18,200 following the news but subsequently rebounded above $19,000.  

In an Oct. 13 post, pseudonymous Twitter user il Capo of Crypto tweeted about the possibility of Bitcoin’s drop being a bear trap, noting a potential subsequent rally to $21,000, followed by a stark drop.

FUD of the Week

US Treasury’s OFAC and FinCEN announce $29M in enforcement actions against Bittrex

Crypto exchange Bittrex faces charges from two different United States regulators: the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN). The regulatory authorities have essentially alleged that Bittrex did not conduct proper due diligence on its customers and transactions between 2014 and 2018, which allowed users from sanctioned regions to use the platform. Bittrex confirmed it would settle with OFAC for around $24 million, which may also be applied as a credit toward its $29 million settlement owed to FinCEN. Looking to move forward from the situation, Bittrex stated that it has been up to date with expected standards since 2018.

$100M drained from Solana DeFi platform Mango Markets, token plunges 52%

Mango Markets, a decentralized finance platform running on the Solana blockchain, reportedly bled around $100 million from its treasury thanks to an exploit. Someone manipulated price data for the platform’s native MNGO asset, letting them borrow crypto worth far more than the value of the MNGO they put up as collateral. MNGO suffered a roughly 50% price drop following news of the event. Later reporting saw the hacker coming forward, demanding a $70 million bug reward and other terms to return exploited funds.

CNN to shut down its NFT marketplace and issue 20% refund

After about four months, media outlet CNN has decided to discontinue its nonfungible token (NFT) endeavor, seemingly another bear market casualty. The media company’s NFT project, known as Vault by CNN, essentially offered tokenized memories of historical news events spanning multiple decades through CNN’s history. The project’s roadmap projected six months of development, although the media outlet has since claimed the project was a “6-week experiment,” according to an announcement from the Vault by CNN Twitter account. NFT buyers will get a 20% reimbursement of the price they paid to mint their NFTs, according to a CNN staffer on Discord.

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A software program called a web service enables computer-to-computer communication over the internet. However, web services are nothing new and typically take the form of an application programming interface (API). The Web is a collection of related hypertext materials that may be accessed online. For example, a user examines web pages that may contain multimedia using a web browser and uses hyperlinks to move between them.

Tim Berners-Lee, who was employed by CERN, The European Organization for Nuclear Research, in Geneva, Switzerland, invented the Web in 1989. Since then, Berners-Lee has actively directed the development of web standards and has pushed for the creation of the Semantic Web, also called Web3. 

The phrase “Web3” is used to characterize multiple evolutions of web interaction and usage along various paths, including creating a geospatial web, utilizing artificial intelligence tools and making content available through numerous non-browser apps or Web3 browsers. A Web3 browser introduces users to a new world of decentralized apps (DApps) and digital economies. 

This article will discuss Web3 fundamentals, key features of a Web3 browser, how a Web3 browser works and how to use one.

What is a Web3 browser?

Web3 browsers help users interact with decentralized applications built on blockchain technology. Web3 technologies like distributed ledgers, artificial intelligence, Metaverse and others aim to create the next-generation internet, which is accessible to everyone and offers benefits.

Key features of a Web3 browser include:

• Immutable ecosystem, i.e., trust that people will download the digital product just as the original creator intended. 
• Enhanced transparency and security, 
• Quicker browsing performance,
• Complete user anonymity and confidentiality,
• Integrating cryptocurrency wallets with multiple blockchains,
• Complete control over the content due to decentralization.

Furthermore, search engines can find microcontent texts automatically tagged in Web3, calling for converting countless macro Web1 content into microcontent. Because tagging can somewhat eliminate the uncertainty that homonyms and synonyms introduce to the search process, the end result may be a more accurate search.

How does a Web3 browser work?

The world of DApps and digital economies is made available by Web3 internet browsers. By leveraging cryptography and public blockchains, the Web3 browser places control with users, wiping out centralized institutions. Additionally, consumers are rewarded financially for interacting with content or viewing carefully selected adverts on decentralized social media platforms and Web3 browsers.

But, how do Web3 browsers change the online experience? Web3 browsers enable users to use the standard functionality of browsers. They are essentially decentralized applications that allow users to retain ownership of their data and share its revenue. So, is Chrome a Web3 browser? No, Chrome is a Web2 browser like Firefox and Safari. However, users can access Web3 applications with Web2 browsers using a Web3 wallet like MetaMask.

How to use a Web3 browser?

The Web3 wallets can be incorporated into traditional web browsers, providing DApp browser functionality by allowing flexible access to decentralized applications without the assistance of other intermediaries while still maintaining full ownership of their assets. In addition, users can access the Web3 economy without going through any Know Your Customer (KYC) or Anti-Money Laundering (AML) procedures. 

Moreover, crypto assets can be stored and managed effectively using Web3 wallets. However, if one loses their seed phrase, they may lose funds, unlike centralized custodial wallets. So, which Web3 browser would be suitable for your requirements? Let’s learn about various Web3 internet browsers in the sections below.

Opera Web3 browser

Both crypto-curious and blockchain-savvy users may enjoy a seamless, private and secure Web3 experience with Opera Crypto Browser with features such as phishing protection, a secure clipboard, a malicious-address checker and the Wallet Selector, the industry’s first multi-wallet management tool. Ether (ETH), ERC-20 and ERC-721 tokens are supported by the built-in crypto wallet and several blockchains, including Ethereum Virtual Machine (EVM)-compatible chains, Bitcoin and layer-2 solutions. Additionally, Opera has a strong partner network with partners like Solana or Polygon across the crypto ecosystem.

Furthermore, users can quickly access WhatsApp, Telegram, Discord, Twitter and more social apps in the sidebar of the desktop Crypto Browser to stay connected to their communities at all times. In addition, users may access future airdrops, industry updates and event calendars, gas costs, instructional content and others through the integrated Crypto Corner. 

If you are interested in using the Opera Web3 browser, you must first download the Opera Crypto Browser for Android, Windows, or Mac (iOS coming soon). Then, if you already have a wallet, you can use it or create an Opera wallet to utilize the functionalities mentioned above.

Puma Web3 browser

Ukrainian-Canadian developer Yuriy Dybskiy founded Puma Browser in January 2019. It provides access to Ethereum Name Service (ENS) and Handshake (HNS) domains and InterPlanetaryFileSystem (IPFS), as well as seamless payments for content creators, app and game developers via Coil Content Network and Interledger Protocol. Using the Puma browser, web monetization works as follows:

• A monthly charge of $5 is paid by Coil Members to access the content created by the users.
• Interested users set up a digital wallet and make money from their content. Every hour a Coil Member spends viewing users’ content earns them $0.36 from Coil. 
• While Coil Members enjoy users’ content, Coil streams funds to their wallets.

Brave Web3 browser

Brave is open-source software that offers privacy-preserving features together with a free-to-use business model. It enhances users’ browser super app with cost-free video calls, fully autonomous search, offline playlists and even a personalized news feed. Brave, by default, bans trackers and obscene advertisements on all websites users visit. Moreover, Brave’s brand-new nonfungible token (NFT) gallery feature provides users with a streamlined interface for viewing and managing NFT collections.

Additionally, by watching ads, one can earn passive income in Basic Attention Tokens (BAT). Another notable feature of the Brave Web3 browser is the incorporation of IPFS functionality, which enables built-in decentralized file storage and reduces data concentration by distributing file storage across a worldwide network.

Beaker browser

Beaker browser allows peer-to-peer website hosting, referred to as Hyperdrives, in a private mode. Only those with the link to a Hyperdrive can access the website once it has been created. To create hostless applications, the Beaker browser offers new APIs while still being compatible with the rest of the Web.

Beaker displays the complete site’s structure in a GitHub-like format, in contrast to most browsers showing the page’s source code to the website visitors. Even better, one can host their own fork of the website.

Osiris browser

The first net-neutral browser in the world, Osiris hopes to release people from commercialism, the shackles of censorship and bias that have crept into the internet. Osiris asserts that it is a blockchain-based browser that, by default, bans all commercials and trackers and states baldly that it is self-sustaining without advertising money. 

With Osiris Armor, users can configure privacy settings and view the number of advertising and scripts that have already been banned. In addition, it offers a multi-wallet called Metawallet that embeds a wallet in the browser and supports several cryptocurrencies to enhance the Web3 experience for blockchain users.

The future of Web3 browsers

Web platforms have long been without the capability of money transfer, resulting in a deluge of internet advertising and dishonest business practices. As the Semantic Web (Web3) promises to arrange the world’s information in a way that Google’s search engine architecture cannot achieve, it enables web monetization opportunities for developers, gamers, and content creators. Web monetization offers an effective, free, native and automatic means of paying creators, funding essential web infrastructure and supporting API calls.

Although Google Chrome is the most used Web2 browser and DApps can be accessed via Web3 wallets, blockchain-friendly web browsers allow users to control their data, funds and assets without intermediaries. Therefore the shift towards decentralized web calls for novel and innovative solutions to enhance the user experience, and Web3 browsers acting as a gateway to DApps are essential to access the digital economy. 

Despite the fact that there are still many unexplored areas of the Semantic Web and a lot of research to be done, it is evident that Web3 technologies are becoming a significant force in the current Web landscape. And it is expected that Web3 browsers (both existing and upcoming ones) will continue to offer distinct services to serve the needs of blockchain users.

 

This month, the European Union (EU) agreed on the text for a unified licensing regime for cryptocurrency exchanges to operate across the EU bloc as part of its Markets in Crypto Assets Regulation (MiCA). The United States — despite being a traditional global leader in legal frameworks for technological innovation — has not provided that same regulatory clarity. 

National cryptocurrency exchanges in the U.S. are regulated at the state level through a patchwork of money transmission laws that overburden companies while under-protecting consumers. In our view, many digital tokens are properly characterized as digital commodities rather than securities. Yet, a unified federal regime for cryptocurrency exchanges listing digital commodities does not exist.

To create one, Congress must pass legislation that clearly defines “digital commodity” and creates jurisdiction for the Commodities Futures Trading Commission (CFTC) to supervise national digital commodities exchanges. Recent bipartisan bills addressing the topic suggest that this achievement may be within reach.

Don’t let a thousand flowers bloom at the state level

The individual states, rather than the federal government, are the primary regulators of cryptocurrency exchanges and other online payment providers under the rubric of money transmitters — a category of businesses that traditionally contemplate money wire providers with brick-and-mortar locations in the state.

These laws are aimed at ensuring that money transmitters do not lose, steal or misdirect a customer’s money and impose penalties on those who do.

Related: Biden‘s anemic crypto framework offered nothing new

Because cryptocurrency exchanges have customers across the country, they must understand and abide by the unique money transmission statute of every state.

Letting a thousand flowers bloom in “state laboratories of experimentation” may spur legal innovation in some contexts, but it is a poor fit with cross-border networked goods like money transmission. As a result, state-by-state licensing of modern money transmitters is inefficient, burdensome and under-protective.

More importantly, money transmission laws are not designed to protect consumers from market manipulation in spot trading of speculative digital assets among millions of people as occurs on cryptocurrency exchanges.

In that regard, the Securities and Exchange Commission has indicated that exchanges listing digital securities should be treated as national securities exchanges, which would bring them under the investor protection regime of the securities laws.

Related: Sen. Lummis: My proposal with Sen. Gillibrand empowers the SEC to protect consumers

However, the question of whether tokens currently listed on domestic exchanges are securities remains unanswered and is vigorously contested in the courts. Coinbase insists that it does not list securities — end of story.

Tokens that are not securities would appear to fall under the jurisdiction of the CFTC as commodities. However, the CFTC’s supervisory authority extends only to derivative markets for commodity tokens and not to spot markets, including exchanges, where it has only investigative and policing powers.

Using a comprehensive definition of “digital commodity,” Congress can create jurisdiction for the CFTC to supervise spot markets and address market concerns — such as investor disclosures, market transparency, fraud, manipulation and insider trading — present on exchanges. At the same time, it can establish unified licensing rules relating to the role of exchanges as custodians and payment providers.

A unified federal regime to rule them all

With legislators from both parties taking up federal crypto regulation, the time is ripe for Congress to act. We believe that a federal “digital commodity” regime that, among other things, governs domestic cryptocurrency exchanges should accomplish at least three major goals.

First, it must clearly disentangle a “digital commodity” from a security by making clear that while an investment scheme involving digital assets (usually the initial sale) triggers the application of the securities laws, the object of that scheme is more often a digital commodity rather than a security. That distinction underscores the novelty of blockchain technology: that tokens are intended to outlast their issuer and to be traded among the community of users of the blockchain outside any initial investment scheme.

Distinguishing digital commodities from securities in this way is not only correct as a matter of securities law but is also critical for maintaining a sustainable blockchain ecosystem in the United States. Treating parties engaged in standard commercial transactions involving tokens as broker-dealers transacting in securities would chill user growth and lead to the de-listing of many popular tokens like Axie Infinity (AXS) from Coinbase. The Gillibrand-Lummis bill is one draft proposal pending before Congress in which the text purports to disentangle “ancillary assets” from their investment schemes. This conceptual distinction is a step in the right direction.

Related: Federal regulators are preparing to pass judgment on Ethereum

Second, a CFTC-supervised regime of digital commodities exchanges should provide meaningful consumer protections appropriate for cryptocurrency exchanges. While treating tokens as securities and restricting them from flowing on the blockchain and trading on the secondary market in the United States would be fatal, failing to clearly and adequately address market abuses and manipulation in an industry that was valued at $3 trillion last year is similarly unacceptable. In this regard, the EU’s MiCA could be instructive.

Third and finally, any new digital commodities regime must not unduly burden industry actors and respect their constitutional rights. In August, Senate leaders introduced the bipartisan Digital Commodities Consumer Protection Act of 2022, which aims to regulate cryptocurrency exchanges as CFTC-supervised commodities brokers, dealers, custodians and trading facilities. While this renewed attention from lawmakers was welcome, it raised fresh concerns about overreach and unintended consequences on constitutionally protected activity (e.g., publishing software and relaying transaction messages) and on persons who are merely buying and selling cryptocurrencies on their own accounts.

The appearance of ambitious digital asset legislation, such as MiCA, gives the United States and its domestic industry the opportunity to learn from legal approaches in other countries before they become the standard globally. (MiCA will not take effect until 2024.) It is also a reminder that the maturing blockchain industry is driving legal innovation in other markets. On the critical topic of regulating digital commodities exchanges, the United States has not been left in the dust, at least not yet, but it is undeniably playing catch-up.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin (BTC) is showing textbook macro bottom signs in a “business as usual” bear market, data suggests.

In fresh findings published on Oct. 13, popular Twitter trader Alan revealed that BTC price action is closely mimicking prior cycles.

Trader on Stoch data: “Don’t be shaken out”

While some are concerned about the current state of Bitcoin and crypto markets, on-chain indicators have long suggested that the 2022 bear market is comfortingly similar to previous ones.

Eyeing the one-month stochastic chart for BTC/USD, Alan highlighted Bitcoin repeating a structure common to both the 2014 and 2018 bear markets.

Stochastic oscillators are classic tools for identifying price cycles and bullish and bearish interplay.

Bitcoin has proved to be no exception, with monthly low Stochastic readings perfectly matching bear market price floors, data from Cointelegraph Markets Pro and TradingView confirms.

Now, those low levels are back — numbers which have only appeared three times before.

Not only is Stoch calling for an imminent new macro BTC price low, but it can also be used to determine where Bitcoin might bottom in the future.

Inferring potential price points from existing data, Alan predicted the next cycle’s low could be $35,000.

“Bitcoin forms Flag over the previous Flag configuration. Yellow zone form Stochastic indicator shows (at least) second half of the flag, where we are right now,” he commented alongside the chart.

“Next pole low = $35k. Quick rebound always follows a dip. No emotion, don’t be shaken out.”

A much-needed silver lining

Phenomena such as Stoch behavior may well console traders who have watched as Bitcoin descends up to 75% from all-time highs just eleven months ago.

Related: Price analysis 10/14: SPX, DXY, BTC, ETH, BNB, XRP, ADA, SOL, DOGE, MATIC

With popular sources insisting that the bottom is not yet in, there appears to be little to be confident about while analyzing short-timeframe BTC price action.

Optimists are few and far between, among them well-known analyst Philip Swift, who this week predicted to Cointelegraph that the 2022 bear market should end up being just that — done and dusted by the end of the year.

Others are less hopeful. On the topic of financial asset values in general, Goldmoney senior analyst Alasdair Macleod this week told investors to forget about the good times until the United States Federal Reserve changes course on interest rate hikes.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.