As the International Energy Agency (IEA) forecasts, AI’s energy consumption is poised for an explosive increase, overshadowing even the substantial growth in crypto’s energy use. Despite AI’s burgeoning demand, the spotlight remains on cryptocurrency for its significant energy footprint.
The global electricity market is going through major changes.
This is mainly because the energy industry is at the forefront of reducing carbon emissions and adapting to new ways of using power.
Two areas that are expected to change how much energy we use are cryptocurrency mining and artificial intelligence (AI). The International Energy Agency (IEA), a big organization made up of many countries, believes these changes will happen in the next few years.
According to the IEA’s report for 2024, which offers a forecast until 2026, there’s some good news about energy use.
Right now, making electricity is the biggest reason for carbon dioxide (CO2) emissions worldwide. But, this sector is also leading the charge towards zero emissions.
By 2025, renewable sources like wind and solar are expected to be the main way we generate power.
Energy use increased at a slower rate, going from 2.4% in 2022 to 2.2% in 2023. However, it’s predicted to jump to 3.4% by 2026. This increase will mainly come from countries like China and India.
At the same time, the amount of energy used by data centers, artificial intelligence, and cryptocurrency is expected to more than double during this period, going over 1,000 terawatt-hours (TWh). Notably, a third of all types of data centers are found in the United States.
According to the IAE rapport, electricity consumption is expected to rise up to 1,000 TWh by 2026.
Artificial Intelligence (AI) is set to lead in energy consumption, with its usage predicted to increase by ten times from 2023 to 2026. For example, just ChatGPT is expected to use almost 10 terawatt-hours (TWh) each year during this period.
To put that in perspective, every time someone uses ChatGPT, it uses about ten times more energy than a single Google search.
Bitcoin energy consumption was measured to be about 120 TWh in 2023.
This was part of the 130 TWh used for all cryptocurrency mining that year, which increased from 110 TWh in 2022.
At that time, cryptocurrency mining made up 0.4% of the world’s total energy consumption. The International Energy Agency (IEA) forecasts that by 2026, cryptocurrency mining will consume 160 TWh.
Data centres are now the main drivers of electricity demand growth in many regions
And electricity consumption from the sector — along with AI & cryptocurrency — could double by 2026
Even though the situation with energy use is changing and cryptocurrency mining only uses a small part of the world’s energy, the report points out that crypto is still worrying:
The report notes that it’s hard to reduce electricity use because any energy saved might just be used up by other things that need a lot of power, like different types of cryptocurrencies besides Bitcoin, even though some are getting more efficient.
It’s said that Bitcoin mining uses 54.5% sustainable energy. There’s an increase in mining activity as the Bitcoin halving approaches, leading many miners to invest a lot in new equipment.
To put things into perspective, let’s see what 1 TWH means in terms of normal consumption.
One terawatt-hour has enough energy to supply electricity to 70,000 homes in the United States for a whole year.
When comparing this to the energy use of entire countries, it means that the combined energy consumption of cryptocurrency and related users is expected to reach the same level as Japan’s consumption.
How can energy consumption be more efficient?
To make energy consumption more efficient, especially in data centers, several strategies and regulations are crucial.
Regulatory and policy initiatives
Regulatory measures. The European Commission’s revised Energy Efficiency Directive imposes regulations on the European data center sector to enhance electricity demand management. Starting in 2024, data center operators are required to report their energy use and emissions. Large-scale data centers must also incorporate waste heat recovery applications, when feasible, and aim for climate neutrality by 2030.
Efficiency standards. An EU regulation effective since 2020 sets efficiency standards for data centers, helping to control their environmental impact. The Climate Neutral Data Centre Pact, a self-regulatory initiative, aims for climate neutrality in the sector by 2030.
U.S. energy policies. The Energy Act of 2020 in the United States mandates studies on energy and water use in data centers. It encourages the development of efficiency metrics and best practices. The Department of Energy (DOE) is also focusing on producing more efficient semiconductors, which can reduce cooling requirements.
Chinese regulations. China requires data centers acquired by public organizations to improve energy efficiency and be fully powered by renewable energy by 2032, starting with a renewable energy share mandate of 5% in 2023.
Technological and operational innovations
Advanced cooling systems. Adopting high-efficiency cooling systems can significantly reduce electricity demand. Innovations like direct-to-chip water cooling and the use of specific low viscous fluids are promising.
Machine learning and AI. Utilizing machine learning, as Google did with its DeepMind AI, can optimize data center operations, significantly reducing electricity demand.
Quantum computing. In the long term, replacing supercomputers with quantum computers, which require less energy, could reduce overall electricity demand. However, efficient cooling systems are necessary due to their low operating temperatures.
Hyperscale data centers. Transitioning to Hyperscale Data Centers, which can handle large-scale operations without significantly increasing electricity consumption, is both sustainable and financially attractive.
Carbon-aware models. Software that allows for time and location shifting of electricity demand to regions with lower carbon intensity can significantly reduce emissions and operational costs.
By combining these approaches, data centers can significantly increase their share of carbon-free energy in total electricity consumption, as demonstrated in Google’s 2023 Environmental Report.
Crypto hedge funds have emerged as a pivotal player, offering a unique blend of traditional investment strategies and the thrilling potential of cryptocurrencies.
The sector is rapidly expanding, attracting both seasoned traders and newcomers intrigued by the fusion of blockchain technology with hedge fund acumen.
Let’s dive into the intriguing world of crypto hedge funds, exploring the top players, their strategies, and what it means to start a fund in this cutting-edge field.
What is a crypto hedge fund?
A crypto hedge fund is a specialized investment fund that specifically focuses on cryptocurrencies, similar to traditional hedge funds that invest in assets like stocks or bonds.
These funds are managed by professionals who aim to increase their value through different investment strategies.
These hedge funds invest in a variety of cryptocurrencies, not just the well-known ones like Bitcoin or Ethereum. They might also include other digital assets related to blockchain technology.
Don’t confuse a crypto hedge fund with a crypto ETF. The ETF is a type of investment fund traded on stock exchanges, much like stocks. It tracks the value of one or more digital tokens and offers a more passive investment approach. ETFs provide an easier entry point for the average investor, allowing exposure to cryptocurrencies without the complexities of direct trading or the higher minimum investment often required by hedge funds.
The hedge fund is managed by experts who understand the crypto market’s complexities. They use their knowledge to make informed decisions, aiming to grow the fund’s value.
Just like traditional hedge funds, these crypto funds use strategies to “hedge up” or protect against potential losses. This might involve diversifying investments or using advanced trading methods.
Some funds may specifically focus on investing in blockchain technology projects, not just cryptocurrencies.
Funds like 3AC and those associated with figures like Anthony Scaramucci have gained attention in the crypto hedge fund space.
These funds attract investors interested in crypto but who might not have the expertise or time to manage their own crypto investments.
Like any investment, there’s risk involved, and the regulatory landscape for crypto hedge funds is still evolving.
Crypto hedge funds list
There are many crypto hedge funds out there, some of which are well-known and have significant investments. You may come across lists showcasing the top or largest funds in this sector.
It’s important to note that the landscape is constantly evolving, and the size can be measured in various ways, such as assets under management, influence, or performance. Here’s a list to include:
The largest crypto hedge funds are:
Pantera Capital. One of the first U.S. Bitcoin funds, Pantera Capital has a strong focus on Bitcoin and other digital currencies, with a significant amount of assets under management.
Galaxy Digital Assets Fund. Founded by Michael Novogratz, this fund is known for its sizable investments and extensive involvement in the cryptocurrency space.
Polychain Capital. A leader in the field, Polychain Capital focuses on blockchain technology and has garnered significant investments from prominent venture capital firms.
Grayscale Investments. Known for its Bitcoin Investment Trust, Grayscale offers a range of digital currency investment products.
Bitwise Asset Management. Famous for creating the world’s first cryptocurrency index fund, Bitwise is a leader in crypto-based investment services.
BlockTower Capital. A well-known player in the crypto hedge fund market, BlockTower Capital employs a mix of professional investment practices and deep crypto knowledge.
Andreessen Horowitz (a16z) Crypto Fund. While more of a venture capital fund, a16z has a significant focus on crypto startups and blockchain technology investments.
Digital Currency Group. This company is not a traditional hedge fund but has significant investments in the cryptocurrency market and blockchain industry through various subsidiaries.
Crypto hedge fund that went bankrupt
Although Bitcoin was only invented in 2009, we have already witnessed the bankruptcy of several crypto hedge funds.
The bankruptcy of a crypto hedge fund typically occurs when it fails to manage risks effectively, leading to significant financial losses. This could happen due to a variety of factors like poor investment choices, unexpected market downturns, regulatory issues, or operational mismanagement.
The downfall of a crypto hedge fund can have wide-reaching implications.
For instance, it might result in substantial financial losses for investors, affect market confidence, and potentially lead to a stricter regulatory environment.
The story of a bankrupt crypto hedge fund often serves as a cautionary tale in the world of cryptocurrency investments, highlighting the inherent risks and the need for careful, informed decision-making.
In the case of notable bankruptcies like Three Arrows Capital (3AC) or Alameda Research, these events have become significant moments in the history of cryptocurrency, often discussed and analyzed for insights and lessons learned.
Alameda Research
Co-founded in September 2017 by Sam Bankman-Fried and Tara Mac Aulay, Alameda Research was much acclaimed for its trading, investments, and market-making in the cryptocurrency space.
In November 2022, following a series of financial challenges, Alameda Research, along with FTX and more than 130 affiliated entities, filed for Chapter 11 bankruptcy protection.
The company’s website was taken down, and Sam Bankman-Fried, the founder of Alameda Research, announced that the firm was winding down its trading operations and would close.
The entire scandal started with the collapse of the FTX exchange (once valued at $32 billion), also founded by Sam Bankman-Fried. His crypto empire collapsed in a matter of days, also exposing his associates, who eventually ended up condemned for fraud.
Former FTX CEO Sam Bankman-Fried
Three Arrows Capital (3AC)
Three Arrows Capital (3AC), a Singapore-based cryptocurrency hedge fund, was established in 2012 by Kyle Davies and Su Zhu.
Initially, the company focused on arbitraging foreign exchange derivatives before shifting to cryptocurrencies in 2017.
3AC grew rapidly, becoming one of the most prominent crypto hedge funds. It engaged in significant investments in various blockchain projects and claimed a net asset value of $18 billion.
However, the fund faced challenges in 2022 due to the broad decline in cryptocurrencies, particularly its substantial investment in LUNA (on Terra blockchain created by the infamous Do Kwon), which collapsed to near zero.
In June 2022, the fund’s troubles intensified as it failed to meet its margin calls and repay loans, leading to a court-ordered liquidation in the British Virgin Islands. This failure had a ripple effect on the crypto market, contributing to the bankruptcy and difficulties of other crypto firms.
The founders, Davies and Zhu, faced legal issues, with Zhu being arrested in Singapore for failing to cooperate with the liquidation process. Their last known venture was starting Open Exchange, a new crypto-related project in Hong Kong.
Crypto hedge fund companies
Crypto hedge fund companies are specialized investment firms that concentrate on cryptocurrencies and blockchain-related assets. These companies employ a range of investment strategies to generate returns from the highly volatile and rapidly evolving crypto market.
Their approaches can vary widely, from conservative, long-term holdings of major cryptocurrencies like Bitcoin and Ethereum to more aggressive tactics like high-frequency trading or investing in initial coin offerings (ICOs) and emerging digital assets.
These firms are often characterized by their deep expertise in both finance and technology, enabling them to navigate the complex and often technically demanding landscape of cryptocurrency investments. They attract investors who are interested in gaining exposure to the crypto market but may lack the time or expertise to manage their investments directly.
However, you can always choose to do your own research before investing.
Organizations like PricewaterhouseCoopers (PwC), a prominent global network of audit and consultancy firms, frequently release reports on the crypto hedge fund industry. These reports provide valuable insights into the trends, performances, and overall health of the sector.
These insights are crucial for investors, fund managers, and other stakeholders in the crypto industry. They offer a comprehensive overview of the market, highlighting both opportunities and risks. Moreover, they serve as a barometer for the maturity and evolution of the crypto investment space, reflecting how traditional financial practices are adapting to the new digital asset class.
It’s also important to always research the company offering the hedge fund to avoid any future surprises. For instance, according to the 2023 PwC report, 12% of crypto hedge funds are considering relocating from the US to crypto-friendly jurisdictions. This might mean that potential investors should pay a closer look to the way existing regulations are applied by the hedge fund company.
Yes, you can start a crypto hedge fund. However, this is a complex process that requires thorough planning, legal compliance, and expertise in both finance and cryptocurrency markets.
Here’s a simplified guide on how to start a crypto hedge fund:
Define the fund’s focus. Decide on the specific cryptocurrencies and strategies your fund will target. Consider whether you’ll focus on major cryptocurrencies, a mix of assets, or specific geographic regions.
Legal structuring. Choose an appropriate legal structure for your fund, like a limited partnership or LLC, and consider the tax implications. Popular jurisdictions for registering crypto funds include the Cayman Islands, the USA, and Singapore.
Obtain licenses & ensure compliance. Depending on your location, obtain the necessary licenses and ensure compliance with regulatory bodies like the SEC in the USA or the Monetary Authority in Singapore. Implement strict KYC and AML procedures.
Raising capital. Develop a marketing strategy to attract investors, focusing on both crypto-native VCs and traditional investors. Prepare a compelling pitch and transparent terms.
Investor relations & reporting. Maintain clear communication with investors, providing regular performance statements and transparency in operations.
Assemble a skilled team. Hire professionals with expertise in trading, compliance, legal matters, and technology. The team should include portfolio managers, compliance officers, and legal experts.
Develop an investment strategy. Outline your approach to asset selection and portfolio construction. Implement risk management strategies and choose reliable trading platforms for executing trades.
Infrastructure setup. Establish a robust trading and storage infrastructure, focusing on security to protect against theft and hacking. Implement risk management systems and analytics tools for performance tracking.
Operational management. Set up efficient back-office functions for accounting, reporting, and administration. Choose a reputable asset custody solution.
Performance evaluation. Regularly evaluate the fund’s performance against set KPIs and adjust strategies as necessary.
Is it wise to invest in a crypto hedge fund?
In essence, a crypto hedge fund operates much like a traditional hedge fund but focuses on the dynamic and emerging world of cryptocurrencies and blockchain technology.
It’s a way for investors to engage with the crypto market through a managed, potentially more strategic approach.
Investing in a crypto hedge fund can offer exposure to the dynamic and potentially lucrative world of cryptocurrencies, leveraging the expertise of professional fund managers.
However, this investment carries significant risks due to the inherent volatility of the crypto market, the evolving regulatory landscape, and the technical complexities of digital assets. It’s crucial for potential investors to assess their risk tolerance, conduct thorough research, and consider the fund’s track record and management strategy before investing.
As with any investment, diversifying and not investing more than one can afford to lose is key to mitigating risks.
For a more detailed understanding and current insights, it’s advisable to consult financial experts and stay updated with the latest market trends.
Venezuela’s Petro cryptocurrency, set to cease operations on January 15 after six years. Launched as a countermeasure to U.S. sanctions, the Petro struggled with acceptance both domestically and internationally, ultimately failing amidst widespread scandal and operational challenges.
Venezuela’s Petro will stop working
Venezuela‘s government-made cryptocurrency, the Petro (oil-tied), will stop working on January 15, 2024.
The Petro started in 2018 to help Venezuela avoid U.S. sanctions, but it wasn’t used much.
The government’s Petro website (https://www.petro.gob.ve/) announced it’s closing, but that website isn’t working now. The Petro was only traded on a special part of the Venezuelan Patria website, which needs a password to get in.
The Petro was made because Venezuela’s regular money, the bolivar, lost a lot of value due to U.S. sanctions. Bitcoin was already popular in Venezuela when the Petro came out. President Nicolas Maduro wanted the Petro, but the parliament didn’t agree.
The Petro was fully working by 2020, but other countries didn’t use it, even though Maduro tried to promote it to the Bolivarian Alliance for the Peoples of Our America country members.
It was also not widely used in Venezuela. We should also note that Pedro was never made legal tender, so many didn’t see it as official money. Venezuela’s biggest bank didn’t take it unless forced by a presidential order.
The National Superintendency of Crypto Assets oversees Pedro and its ties to drug trafficking
In June 2020, U.S. authorities offered a $5 million reward for capturing Joselit Ramirez Camacho, who was in charge of the National Superintendency of Crypto Assets and, inherently, of the Petro.
Camacho is accused of being involved in drug trafficking.
They say he’s closely connected to suspected drug lords, including former vice president Tareck El Aissami.
Ramirez’s bounty is the lowest among the people the U.S. is after in this case. The U.S. is offering $15 million for Maduro and $10 million for others, including El Aissami.
Ramirez Camacho was arrested in Venezuela in March 2023 for financial issues in the oil industry. The agency he led was closed for changes and won’t reopen until March 2024. This led to the shutdown of some cryptocurrency exchanges and mining in Venezuela.
The Petro was different from a central bank digital currency, which is a type of official digital money. Venezuela’s Central Bank talked about making one in 2021, but it never happened.
Venezuela’s CBDC
In October 2021, the Central Bank of Venezuela announced that it will introduce a digital version of its currency, the bolivar, and will also remove six zeros from it because of high inflation.
This digital bolivar was to be used in the economy, and there will be a new 1-bolivar coin and banknotes from 5 to 100 bolivars.
The Central Bank also wanted to introduce a text message-based system for easy payments and transfers with this digital currency. They say this big change won’t affect the bolivar’s value; it’s just to make using the currency easier. The bank stated, “The bolivar’s value won’t change; we’re just simplifying it.”
— Banco Central de Venezuela (@BCV_ORG_VE) August 5, 2021
President Nicolás Maduro first mentioned a digital bolivar in February 2021. He was promoting this project as part of modernizing and fixing the economy.
Removing zeros from the bolivar, Venezuela’s actual legal tender is a common tactic of Maduro’s government. However, this doesn’t solve the issue of the economy.
By 2020, the yearly inflation rate was about 2,300%.
However, economists criticized this plan and pointed out that just changing the currency’s look doesn’t fix the real problems causing its loss of value.
Venezuela has been struggling with a long economic crisis, worsened by U.S. sanctions and very high inflation. Maduro’s solution to avoid these sanctions was to create digital currencies.
In a puzzling move, an unidentified individual has spent approximately $64,000 to record nearly 9 megabytes of encrypted data on the Bitcoin blockchain. Spanning over 332 transactions, with fees varying from $14 to $2,500 in Bitcoin’s smallest unit, satoshis, the purpose behind this enigmatic activity remains shrouded in mystery.
Recently, someone spent around $64,000 (about 1.5 BTC) to add almost 9 megabytes of complex computer data to the Bitcoin network.
The mystery of the 2024 Bitcoin data inscription
A report from Ord.io, a digital data tracker, revealed that over 1 Bitcoin was used to make 332 separate entries on January 6th.
BREAKING: Someone just spent >1 BTC to inscribe 8.93 MB of raw binary data into Bitcoin.
As you can imagine, there is a lot of curiosity about who actually added this data.
The Bitcoin address linked to these mysterious additions is listed as “Unnamed” on Ord.io. The data itself is a mix of English, Greek, and mathematical symbols.
Interestingly, among the 332 entries, two feature a digital image of a pepperoni pizza.
According to Ord.io, this signifies that the entries include some of the 10,000 Bitcoins once used by early Bitcoin enthusiast Laszlo Hanyecz to buy two Papa John’s pepperoni pizzas on May 22, 2010.
This puzzling event of inscribing data occurred just a day after a massive 26.9 Bitcoins, valued at $1.17 million, were transferred to the very first Bitcoin wallet, known as the Genesis wallet, on January 5.
What is Bitcoin blockchain inscription?
Imagine the Bitcoin blockchain as a digital ledger or a record book.
Normally, this ledger keeps track of Bitcoin transactions – who sends and who receives Bitcoins.
An inscription on the Bitcoin blockchain is like writing a note in the margins of this ledger. Instead of recording a transaction, you’re adding extra information.
How is it different from typical transactions?
A standard Bitcoin transaction is like saying, “I give 5 Bitcoins to Alice.”
An inscription adds more: “I give 5 Bitcoins to Alice. P.S. Here’s a recipe for apple pie.” This ‘recipe’ is the extra data you’re inscribing.
This extra data doesn’t affect the transaction’s main purpose (sending Bitcoins), but it permanently records additional information.
Why inscribe data on the blockchain?
Permanence. Once something is written on the Bitcoin blockchain, it can’t be changed or deleted. It’s like carving into stone.
Visibility. Everyone who can see the ledger can see your inscription. It’s a public display.
Proof of existence. Inscribing data can prove that a certain piece of information existed at a certain time. For instance, if you inscribe a unique digital artwork, you’re showing that it existed at the time of the inscription.
Security. The blockchain’s secure nature makes it a trustworthy place to store important data.
The process of a Bitcoin blockchain inscription
You create a Bitcoin transaction.
Along with the transaction details (like sender, receiver, and amount), you include your extra piece of information – your ‘note.’
You send this transaction to the blockchain.
Miners on the Bitcoin network confirm the transaction and add it to a block.
Once added to a block, your inscription is permanent and visible to anyone who looks at the blockchain.
26.917 BTC transaction to Genesis Wallet
On January 5, at 1:52 am Eastern Time, an anonymous Bitcoin user made a notable transaction, sending 26.917 Bitcoins, valued at $1.17 million, to Bitcoin’s first-ever wallet, the genesis wallet (1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa).
This wallet is historically significant, as it was set up by Satoshi Nakamoto, the elusive creator of Bitcoin.
The transaction was unique for several reasons.
Firstly, the amount was transferred from a wallet that had been emptied specifically for this purpose. The transaction fee was $100, which is considerably higher than the average fee.
Secondly, the funds were moved in a complex manner, involving three wallets initially and then dispersing to 12 others.
Notably, a large portion of these funds was traced back to a wallet associated with Binance, a major cryptocurrency exchange, as identified by Arkham Intelligence, a blockchain analytics platform.
Coinbase director Conor Grogan commented on the transaction, speculating on two possibilities: either this was an action taken by Nakamoto himself, moving Bitcoins from Binance, or it was someone else making a dramatic gesture by effectively ‘burning’ over $1 million. Grogan also raised the possibility of this being part of an unusual Bitcoin exchange-traded fund marketing campaign.
It’s important to note that there has been no movement of funds from wallets associated with Nakamoto, including the genesis wallet, since Nakamoto’s disappearance in December 2010.
However, it’s speculated that Nakamoto could still possess the private keys to these wallets and control the funds within.
The genesis wallet initially contained 50 Bitcoins mined by Nakamoto.
By the end of 2023, on the occasion of Bitcoin’s 14th birthday, the global Bitcoin community had added to this wallet’s balance, bringing it up to 72 Bitcoins through various celebratory contributions.
Bitcoin ETFs are the intersection where cryptocurrencies meet the structured universe of traditional investing.
Bitcoin ETFs, or ‘exchange-traded funds’ that focus on Bitcoin, offer a unique way to participate in the exciting growth potential of cryptocurrencies without diving headfirst into the often complex crypto markets.
These ‘crypto ETFs’ blend the familiarity of conventional stock trading with the adventurous spirit of digital currencies, providing a gateway for both seasoned investors and curious newcomers.
As we explore this innovative investment vehicle, you’ll discover how it simplifies the process of adding digital assets to your portfolio, all while maintaining the ease and accessibility of traditional stock market trading. Let’s dive in and unravel the essentials of Bitcoin ETFs.
What are exchange-traded funds (ETFs)?
Imagine you want to invest in the stock market, but instead of picking individual stocks (like shares of Apple or Google), you decide to buy a little bit of lots of different stocks all at once. That’s essentially what an Exchange-Traded Fund (ETF) is.
An ETF is like a basket that contains a mix of various stocks, bonds, or other assets. When you buy a share of an ETF, you’re buying a small piece of all the things inside that basket. This mix can include all sorts of investments – from tech companies to government bonds. The beauty of ETFs is that with just one purchase, you can invest in a whole range of assets, which can reduce the risk compared to buying just one company’s stock.
What makes ETFs special is that they are traded on the stock exchange, just like regular stocks. This means you can buy and sell shares of an ETF throughout the day at different prices, just like you would with stocks of individual companies.
So, in a nutshell, ETFs offer a simple way to diversify your investments, spreading out your risk while still allowing you the flexibility to buy and sell as you would with traditional stocks.
Why is everyone talking about a spot Bitcoin ETFs?
The sudden importance of spot Bitcoin ETFs in the crypto world stems from their potential regulatory approval, a significant step forward in legitimizing Bitcoin as a mainstream investment.
Unlike previous ETFs tied to Bitcoin futures, spot Bitcoin ETFs would be directly linked to the current price of Bitcoin, offering a more direct and potentially more accurate reflection of Bitcoin’s market value. This direct connection attracts investors looking for a more straightforward way to invest in Bitcoin through traditional financial structures.
The anticipation of these ETFs has been heightened by the involvement of major asset management firms like BlackRock, Fidelity, and VanEck, signalling strong institutional interest.
The approval of spot Bitcoin ETFs by the SEC would not only increase Bitcoin’s accessibility to a broader range of investors but also potentially provide more stability and liquidity in the crypto market.
This move is seen as a critical milestone for the cryptocurrency industry, as it represents a significant endorsement from regulatory authorities and could lead to increased adoption and integration of Bitcoin into the traditional financial system.
The benefits of Bitcoin ETFs
Bitcoin ETFs are an exciting option for those interested in the buzz of the cryptocurrency world but looking for something a bit more familiar and potentially less risky. Let’s break down why someone might lean towards a Bitcoin ETF instead of buying Bitcoin directly.
Familiarity and Ease of Trading
Investing in a Bitcoin ETF feels much like investing in any other stock. You don’t need to learn the ins and outs of cryptocurrency exchanges or how to securely store digital coins. It’s as straightforward as trading regular stocks, making it a comfortable option for many traditional investors.
Diversification
Bitcoin ETFs often track not just the price of Bitcoin but can include other cryptocurrencies or related assets. This means you’re not putting all your eggs in one basket (Bitcoin) but spreading your risk across a range of assets. It’s like choosing a mixed fruit basket over just apples. This diversification can be a safer bet, especially in the volatile world of cryptocurrencies.
Regulatory oversight
ETFs are subject to regulatory oversight, which means there’s an added layer of security and transparency. When you buy Bitcoin directly, you’re stepping into a largely unregulated space, which can be riskier. With a Bitcoin ETF, you have the peace of mind that comes with regulated financial products.
Lower entry point
Investing in Bitcoin directly can be expensive, as you often have to buy whole units of the cryptocurrency. But with a Bitcoin ETF, you can invest with much smaller amounts, making it more accessible for the average investor.
No digital wallets are needed
Holding Bitcoin directly means dealing with digital wallets and the security concerns that come with them.
With a Bitcoin ETF, you don’t have to worry about digital wallet security or remembering complex passwords. Your investment is as safe as any other stock in your portfolio.
Top Bitcoin ETFs to invest in
When it comes to dipping your toes into the world of Bitcoin through ETFs, there are several key players you might want to consider. Here’s a list of some of the top Bitcoin ETFs, each offering a unique crypto-investing approach.
ProShares Bitcoin ETF
ProShares is a big name in the ETF world, and their Bitcoin ETF is a popular choice. It’s known for its reliability and is a go-to option for many investors looking to get involved in Bitcoin through a more traditional investment vehicle.
Grayscale Bitcoin Trust
While not a traditional ETF, Grayscale’s Bitcoin Trust is another major player. It offers exposure to Bitcoin’s price movements without the need to directly buy and store the cryptocurrency.
Valkyrie Bitcoin Strategy ETF
This ETF is relatively new but has quickly gained attention. It focuses on Bitcoin futures contracts, offering a different angle on Bitcoin investment.
VanEck Bitcoin Trust
VanEck is known for its innovative investment products, and its Bitcoin Trust is no exception. It aims to reflect the performance of Bitcoin, offering investors direct exposure to the cryptocurrency’s price changes.
Bitwise 10 Crypto Index Fund
For those who want broader exposure, the Bitwise 10 Crypto Index Fund covers the top 10 cryptocurrencies by market cap, not just Bitcoin. It’s a good option if you’re looking to diversify within the crypto space.
Each of these options has its unique features and approaches to Bitcoin investment. Whether you’re looking for something straightforward like the ProShares Bitcoin ETF or something more diverse like the Bitwise 10 Crypto Index Fund, there’s likely an ETF that fits your investment style and risk tolerance.
Remember, investing in Bitcoin, whether directly or through ETFs, carries risk. It’s always wise to do your own research and consider seeking advice from a financial advisor to find the best fit for your investment goals.
How to trade Bitcoin ETFs
Trading Bitcoin ETFs is like playing a video game where you need to know a few key moves. Let’s make sense of terms like ‘bitcoin tracking’ and ‘bitcoin exchange-traded note,’ and also explain how different platforms work for trading these crypto ETFs.
Bitcoin Tracking
Imagine Bitcoin’s price is like a rollercoaster at an amusement park. ‘Bitcoin tracking’ is like having a model of that rollercoaster in your backyard. The ETF follows the ups and downs of Bitcoin’s price, just like your model coaster follows the same path as the real one.
Think of ETNs as a promise note from your school friend. They promise to pay you back your lunch money with a little extra. In the financial world, an ETN is a promise by a company to pay you based on Bitcoin’s price performance.
But remember, if your friend moves away, you might not get your money back. Similarly, if the company behind the ETN has problems, your investment could be at risk.
Trading platforms for Bitcoin ETFs
Now, let’s talk about where you can trade these ETFs. You’ve got two main options: brokerage platforms and crypto exchange platforms.
Brokerage platforms: These are like your regular supermarkets where you can buy all sorts of things (stocks, bonds, ETFs). Trading Bitcoin ETFs here is like buying cereal from a supermarket. You use the same cart (platform) you use for other shopping. These platforms are user-friendly and regulated, offering a familiar environment for regular stock traders.
Crypto Exchange. These are specialized stores, like a shop that only sells video games. They mainly deal with cryptocurrencies. While you can’t directly buy Bitcoin ETFs here, these platforms are where the action happens for Bitcoin and other cryptocurrencies. They offer more crypto-specific features and can be a bit more complex to use.
The main difference between these platforms is what you can buy on them. Brokerage platforms offer a variety of investment products, including Bitcoin ETFs, while crypto exchanges focus on cryptocurrencies.
Also, brokerages are often seen as more beginner-friendly and regulated, while crypto exchanges offer more in-depth features for crypto trading.
Crypto vs crypto ETFs: comparing investment options
Let’s talk about the difference between buying cryptocurrencies directly and investing in crypto ETFs, and how these stack up against other investment options like mutual funds.
1. Direct crypto investment
Imagine buying cryptocurrencies like Bitcoin or Ethereum directly is like owning a specific type of exotic fruit. You have full control over it; you can eat it, save it, or sell it. However, you need to know where to buy it, how to store it safely and be ready for its price to jump up and down wildly.
2. Crypto ETFs
Now, investing in a crypto ETF is like buying a fruit basket that includes a bit of this exotic fruit along with other types. You don’t own the fruit directly, but you own a share of the basket. It’s simpler and safer in some ways because you’re not responsible for taking care of the individual fruits, and you also get a variety, which can balance out the risk.
3. Crypto ETFs vs traditional mutual funds
Traditional mutual funds are like a pre-packed lunch – you know what you’re getting, and it’s usually a well-balanced meal.
Mutual funds pool money from many investors to invest in stocks, bonds, or other assets and are managed by professionals. They’re not as volatile as cryptocurrencies but may offer lower returns.
4. Platforms for trading
The difference in platforms is like shopping at different types of stores.
Crypto exchanges are like speciality stores where you buy and manage individual types of fruit (cryptocurrencies). Some of the most popular centralized exchanges (CEXs) are Binance, KuCoin, WhiteBit, Kraken and Coinbase.
In contrast, brokerage platforms where you trade ETFs are like big supermarkets where you can buy fruit baskets (ETFs), along with other groceries (stocks, bonds).
As you see, there is more than one way to invest in crypto. Investing directly in cryptocurrencies is for those who want full control and are comfortable with high risk and volatility.
Crypto ETFs, on the other hand, offer a simpler, more diversified way to get into the crypto market, much like traditional mutual funds, but with a focus on digital assets.
And where you shop (trade) depends on whether you want to manage individual assets or prefer a more diverse, managed portfolio.
In the rapidly evolving world of cryptocurrency, the emergence of new coin crypto and digital tokens is reshaping the landscape.
Asset tokenization and digital tokenization are becoming increasingly prominent, offering new opportunities for investment and innovation.
Particularly, the rise of non-fungible tokens (NFTs) has introduced a unique dimension to digital assets, challenging traditional notions of ownership and value.
As new digital coins and tokenized assets enter the market, understanding the nuances of NFTs and the meaning behind fungibility in these contexts is crucial.
For enthusiasts and developers, creating your own crypto coin or token offers an exciting frontier, with numerous platforms facilitating the launch of new crypto tokens.
Amidst this, the list of new crypto coins continues to grow, each offering distinct features and potential.
From security tokens in crypto to the latest NFT trends, staying informed about new crypto coin releases and the evolving definitions within this digital token board is essential for both seasoned investors and newcomers.
Since the crypto sphere is made out of all kinds of coins and tokens, let’s quickly review all the different kinds you may encounter.
Types of crypto coins:
Bitcoin (BTC): The first and most well-known cryptocurrency, used primarily as a digital form of money and a store of value.
Ethereum (ETH): Known for its smart contract functionality, it allows developers to build decentralized applications (dApps) on its blockchain.
Altcoins: A collective term for all cryptocurrencies other than Bitcoin, often with different features and use cases.
Stablecoins: Cryptocurrencies pegged to a stable asset, like the US dollar, to minimize price volatility (e.g., USDT, USDC).
Utility Tokens: Used within a specific ecosystem to access services or pay for network fees (e.g., Binance Coin, Chainlink).
Security Tokens: Digital tokens that represent ownership in real-world assets and are subject to regulatory oversight.
Privacy Coins: Designed to provide secure and anonymous transactions (e.g., Monero, Zcash).
Central Bank Digital Currencies (CBDCs): Digital currencies issued and regulated by a country’s central bank.
Non-Fungible Tokens (NFTs): Unique digital tokens that represent ownership of specific items, often used for digital art and collectibles. How to judge an NFT?
Governance Tokens: Provide holders with voting rights in decentralized organizations or protocols (e.g., MakerDAO’s MKR).
DeFi Tokens: Associated with decentralized finance projects, these tokens often facilitate financial services without traditional intermediaries.
Exchange Tokens: Issued by cryptocurrency exchanges, often offering benefits like trading fee discounts or participation in exchange decisions.
Tokenized Assets: Digital tokens representing a share in a real-world asset, like real estate or art.
Layer 1 Tokens: Native tokens of foundational blockchain networks (e.g., Ethereum, Solana) that provide the infrastructure for other tokens and applications.
Layer 2 Tokens: Operate on top of an existing blockchain to improve scalability and efficiency (e.g., Polygon).
Meme Coins: Often created as a joke or with no serious purpose, gaining popularity through social media and community support (e.g., Dogecoin).
Yield Farming Tokens: Associated with yield farming practices in DeFi, where users earn rewards for lending their assets.
Liquidity Pool Tokens: Issued to liquidity providers in decentralized exchanges as a proof-of-stake (PoS) and for earning transaction fees.
Play-to-Earn Tokens: Used in blockchain-based games, rewarding players for participating and achieving certain milestones (e.g., FootballCoin’s XFC or Axie Infinity’s AXS).
Fan Tokens: Offer fans a stake in the decision-making of sports teams or clubs, often providing voting rights and exclusive rewards.
Researching new coins
When assessing new crypto coins or digital tokens, it’s crucial to understand the problem the coin aims to solve.
Each new crypto coin today (from asset tokenization to NFT crypto currency) is designed with a specific purpose in mind.
For instance, a new coin in crypto might focus on improving transaction speed or offering enhanced privacy compared to existing cryptocurrencies like Bitcoin.
Understanding the underlying technology and innovation is equally important. Whether it’s a new digital coin leveraging blockchain advancements or a crypto security token offering new ways of asset representation, the technology behind a coin determines its potential and sustainability. This includes innovations in digital tokenization, such as the creation of new token crypto types or the use of CBDC tokens by central banks.
Analyze the development team
The credibility and expertise of the team behind a new crypto coin are critical factors in determining its potential success. When researching new crypto tokens or digital tokens, it’s essential to examine the backgrounds of the team members.
Look for their previous experiences in the crypto and tech industries, and consider their track record in creating or managing similar projects.
A strong team with a history of success in developing crypto currency tokens or digital tokenization projects can be a promising sign.
Pay attention to their transparency and communication.
Teams that are open about their goals, progress, and challenges, particularly those involved in making their own crypto coin or dealing with complex concepts like fungible meaning in NFT, tend to inspire more confidence.
Also, check if the team has been involved in any controversies or disputes in the past, as this might affect the future of the token.
Lastly, consider the team’s vision and long-term commitment.
Are they dedicated to the project’s future, or do they have a history of abandoning projects?
A committed team is more likely to navigate the challenges of launching and sustaining a new coin in crypto, ensuring longevity and stability.
Where can you find all this info? Look on the project’s website. Search for the “About Us” or “About Team” section. Also, check the project’s social media profiles, the profiles of the developers and any other info about each individual involved in that project. The more info you can find online about them, the better.
Market analysis and trends
Staying abreast of market trends is crucial in the dynamic world of cryptocurrency.
For new crypto coins, including recent entries like non-fungible tokens (NFTs) or security tokens, market sentiment and trends can greatly impact their value and potential for success.
It’s important to monitor overall market movements, regulatory changes, technological advancements, and investor behavior, as these factors can significantly influence the acceptance and growth of new digital tokens.
Look for patterns and trends in the market, such as increased interest in a certain type of coin, like CBDC tokens or tokenized assets.
This can signal where the market is heading and which new coin crypto might gain traction. Also, stay updated with news and developments in the blockchain and financial sectors, as they often hint at future trends.
Identifying signs of potential growth or risk
Identifying potential growth indicators for new crypto coins involves analyzing factors like trading volume, market capitalization, and community engagement.
A high trading volume and growing market cap can indicate strong investor interest and potential for growth.
Community strength, especially for new crypto coins to be released or those recently listed, is another positive sign. A vibrant, active community often suggests good market acceptance and long-term viability.
Conversely, be wary of red flags that might signal risk. These include limited or fake trading volumes (often seen in new crypto coin pump-and-dump schemes), lack of transparency from the development team, and negative sentiment in community discussions or forums.
Additionally, keep an eye out for any legal or regulatory issues that might affect new crypto tokens, as these can lead to significant volatility or even the demise of a coin.
Where can you check market analysis and trends for new crypto coins?
Here’s a list of crypto platforms that provide a range of tools and resources for tracking and analyzing market trends, helping you stay informed about the ever-evolving world of cryptocurrencies.
CoinMarketCap: Offers comprehensive data on cryptocurrencies, including price charts, market cap, trading volume, and historical data.
CoinGecko: Provides a broad overview of the cryptocurrency market, including price tracking, volume, market cap, and community growth.
CryptoCompare: Features detailed analyses and live price information for various cryptocurrencies, along with reviews and community ratings.
TradingView: Known for its advanced charting tools, TradingView is ideal for technical analysis and trend identification in the crypto market.
Messari: Offers in-depth research, analytics, and news updates on the crypto market, focusing on new and existing coins.
Blockchain Explorers (like Etherscan for Ethereum): Useful for tracking transactions, wallet addresses, and new tokens on specific blockchains.
Reddit & Cryptocurrency Forums: Subreddits like r/CryptoCurrency and other forums can be great for community sentiment analysis and trend spotting.
Binance Research: Provides institutional-grade analysis, in-depth insights, and comprehensive reports on new cryptocurrencies.
Glassnode: Offers blockchain data and intelligence, including insights into on-chain metrics and market indicators.
Twitter & Crypto Influencers: Following reputable crypto analysts and influencers on Twitter can provide real-time insights and trends.
Santiment: A platform for analyzing sentiment, network health, and other metrics for understanding crypto market trends.
Crypto News Websites (like CoinDesk, Cointelegraph): Regularly publish articles, analyses, and news updates on the crypto market.
LunarCRUSH: Specializes in social media analytics for cryptocurrencies, offering insights based on social engagement and sentiment.
Legal and regulatory considerations
Navigating the legal and regulatory landscape is crucial for anyone interested in new cryptocurrencies.
Understanding the legal framework means being aware of how different countries and jurisdictions regulate or view cryptocurrencies, including new crypto coins. Regulations can vary widely, from full support to complete bans.
The impact of these regulations on new coin investments is significant.
Regulatory changes can affect the legality, value, and stability of cryptocurrencies.
For investors, this means staying informed about current and upcoming regulations in their region and globally, as these can influence investment decisions and the potential risks and returns associated with new digital tokens.
Community and ecosystem
In the world of new crypto coins, the community plays a pivotal role.
A strong and active community can drive the success of new digital tokens, whether it’s a new coin crypto, an NFT non-fungible token, or a security token in crypto. Community support often translates to higher engagement, better trust, and increased visibility.
Assessing the strength and activity of a coin’s community involves looking at its presence on social media, forums, and discussion platforms.
For most crypto projects, the most used social platforms are X (formerly known as Twitter), Reddit, Discord, and Telegram. Most projects list their socials directly on their website’s homepage.
A vibrant community with active discussions, positive sentiment, and collaborative development indicates a healthy ecosystem for new crypto coins to be released or those already in the market. This can be a strong sign of the coin’s potential growth and sustainability.
Strategies for long-term success
For achieving long-term success with new coin crypto investments, adopting strategic approaches is essential.
This involves careful selection of new digital coins, focusing on those with solid fundamentals, like robust technology or strong community support.
Diversifying your portfolio with a mix of different types of digital tokens, including NFTs and security tokens, can also help mitigate risks.
Staying informed is key.
Regularly update yourself on market trends, technological advancements, and regulatory changes.
This knowledge allows you to adapt your investment strategies to new crypto coins and market dynamics, ensuring you are well-positioned to capitalize on opportunities and minimize potential losses.
Remember, the crypto market is fast-paced and ever-evolving, so flexibility and continuous learning are vital for long-term success.
The cryptocurrency world was shaken by a significant security breach involving Ledger, a leading wallet provider, on December 14.
This incident, as explained by Ledger CEO Pascal Gauthier, not only highlights the vulnerabilities in the crypto ecosystem but also the importance of advanced security measures.
Let’s delve into the details of this event, its implications, and the responses from Ledger and the wider community.
The Incident
Pascal Gauthier, in a post on Ledger’s blog and a tweet on his X (former Twitter) account, described the hack as an “isolated incident.”
My personal commitment: Ledger will dedicate as much internal and external resources as possible to help the affected individuals recover their assets.
The hack was swift but impactful, affecting third-party decentralised applications (DApps) for less than two hours and was promptly deactivated within 40 minutes of its detection.
The breach occurred due to a phishing attack on a former employee whose identity was unintentionally left in the hacked code.
This vulnerability did not impact Ledger’s hardware wallets or the Ledger Live platform.
Mechanics of the Ledger Exploit
As explained in various public statements, including one on Ledger’s X account, the attacker inserted malicious code into several app interfaces.
🚨We have identified and removed a malicious version of the Ledger Connect Kit. 🚨
A genuine version is being pushed to replace the malicious file now. Do not interact with any dApps for the moment. We will keep you informed as the situation evolves.
This code tricked users into making unauthorised transactions, leading to the theft of at least $484,000.
The hacker accessed a former Ledger employee’s node package manager JavaScript (NPMJS) account and then uploaded a malicious update to Ledger Connect’s GitHub repository.
This led to the unwitting distribution of the harmful code among users of Web3 apps like Zapper, SushiSwap, Phantom, Balancer, and Revoke.cash.
Extent of the Damage
Initially estimated at $484,000, the damage was later updated to $504,000, as reported by Web3 security service Blockaid.
Here is a list of dapps that may be affected by the @ledger hack! Do not interact at all with DEFI at all today! No app is safe regardless of whether you use a Ledger. pic.twitter.com/2ihbasF3R7
The hacker manipulated transaction data, misleading users into approving transactions that directed funds to their own accounts.
This technique affected a wide range of Ethereum Virtual Machine users who interacted with the compromised DApps.
Ledger’s Response and Future Measures
Gauthier committed to implementing stronger security controls and enhancing software supply chain security.
He stressed that Ledger’s standard practice involves thorough internal reviews and multi-signature requirements for code deployment.
Ledger Connect Kit 1.1.8 was announced as safe, and gratitude was extended to WalletConnect, Tether, Chainalysis, and ZachXBT for their support.
FINAL TIMELINE AND UPDATE TO CUSTOMERS:
4:49pm CET:
Ledger Connect Kit genuine version 1.1.8 is being propagated now automatically. We recommend waiting 24 hours until using the Ledger Connect Kit again.
The investigation continues, here is the timeline of what we know about…
The breach has potential implications for the entire Ethereum Virtual Machine ecosystem.
It demonstrates the sophisticated methods employed by cybercriminals in the crypto space and the need for heightened security awareness.
The core of the Ledger hack revolved around the manipulation of transaction data in users’ wallets.
The attacker employed malicious code to display confusing and misleading transaction information. This deceitful data led users to unknowingly approve transactions that were actually in favour of the attacker.
Ledger hack token approval. Source Etherscan
The Role of Connect Kits in Web3 Applications
In the realm of Web3 applications, developers commonly use open-source “connect kits.”
These kits serve as a bridge, allowing apps to interface with users’ wallets.
They are essentially pre-written code packages that developers can integrate into their apps, saving time and resources that would otherwise be spent on writing this connection code from scratch.
Ledger’s Connect Kit is one such tool used for this purpose.
When a developer builds a Web3 app, they typically incorporate a connect kit through a node package manager.
After creating the app and uploading it to their website, the connect kit becomes part of the app’s codebase. This means that whenever a user visits the app’s site, the connect kit code is downloaded into their browser.
In the Ledger hack, the malicious code was cunningly inserted into the Ledger Connect Kit.
This allowed the attacker to modify the transactions that were being sent to users’ wallets.
For instance, during the normal operation of a Web3 app, users might need to grant approvals for token contracts, thereby allowing the app to move tokens from their wallets.
However, with the malicious code in place, the users’ wallets would display requests for token approval, but these requests were altered to benefit the attacker.
The user might see a request to confirm a transaction, but due to the confusingly presented data, they might unwittingly approve a transaction that sends their tokens to the attacker’s address.
Real-World Impact on Users
As a result of this deceptive tactic, users ended up granting extensive token approvals to the malevolent contract controlled by the hacker.
In some cases, large amounts of funds were siphoned off in single transactions. For example, over $10,000 was drained from one Ethereum address in a particular instance.
This exploit underscores a significant challenge in the crypto world: users often face difficulty in understanding and interpreting transaction confirmations, especially when they are presented in a technical or confusing manner.
It emphasises the need for vigilance and a careful evaluation of each transaction confirmation message.
The exploit demonstrates a critical vulnerability in the Web3 ecosystem and underlines the importance of robust security practices.
While tools and platforms are evolving to detect and thwart such attacks preemptively, the industry is still grappling with these challenges.
Ledger incident: A Call for Increased Security Vigilance
It’s essential for users and developers alike to remain alert and informed to mitigate the risks associated with such sophisticated cyber threats.
The Ledger hack serves as a stark reminder of the persistent threats in the crypto world.
It emphasises the need for robust security measures, constant vigilance, and collaborative efforts to safeguard digital assets.
As the crypto industry evolves, the security of transactions and the protection of user data must remain paramount.
In a landmark development for Europe’s financial landscape, France’s third-largest bank, Société Générale, has made a bold entry into the digital currency domain.
A French bank is launching its euro-pegged stablecoin
The bank has unveiled its native euro-pegged stablecoin, named EUR CoinVertible (EURCV), marking a significant stride in the European banking sector’s adaptation to the evolving world of cryptocurrency.
This groundbreaking stablecoin, set to debut on the Luxembourg-based Bitstamp crypto exchange as reported by the Financial Times, is fully backed by the euro.
This move allows Société Générale’s customers to seamlessly engage with the digital asset market, opening up new avenues for trading and investment.
Jean-Marc Stenger, CEO of Société Générale Forge, has emphasized the EURCV’s pivotal role in the bank’s ongoing journey within the crypto sphere, highlighting its potential utility in settling trades involving digital bonds, funds, and various assets.
The EURCV extends beyond the confines of Société Générale, promising widespread applicability across different financial service providers.
Société Générale is also launching a crypto bond
In a parallel yet equally innovative venture, Société Générale has issued its first digital green bond as a security token on the Ethereum public blockchain.
This bond, valued at 10 million euros, carries a three-year maturity and is earmarked for financing environmentally sustainable activities. The bank stated, “This enables issuers and investors to measure the carbon emissions of their securities on the financial infrastructure.”
The bond’s digital infrastructure offers around-the-clock access to data on its carbon footprint through a smart contract, pioneering transparency in green financing.
The first licenced crypto provider in France
Société Générale’s subsidiary, Forge, has recently earned the distinction of becoming the first fully licensed crypto service provider in France.
Forge, a part of Société Générale, which is France’s third-largest bank, has become the first company in the country to get the top license for offering cryptocurrency services. This license, known as PSAN, allows Forge to hold digital assets for customers, buy and sell them for real money, and trade them against other digital assets.
On July 19, 2023, the French stock market regulator, the Autorité des Marchés Financiers (AMF), added this information to their register. According to Société Générale, this license is the highest regulatory approval possible for handling digital asset transactions.
Already, about 90 companies are licensed by the AMF.
For example, Crédit Agricole, a major rival of Société Générale, got permission for holding digital assets in June 2023.
But Forge is the first to receive this top-level approval for many different services. Business FM, a French radio station, pointed out that these tough requirements for the license favour big, established banks over smaller crypto companies.
This accreditation by the French stock market regulator, the Autorité des Marchés Financiers (AMF), signifies a high level of regulatory endorsement for digital asset transactions, setting a precedent in the French financial sector.
Société Générale has been very active in the crypto world.
It has issued euro bonds on the Ethereum blockchain, created security tokens on the Tezos blockchain, and offered Dai stablecoin loans for bond tokens.
In April 2023, Forge introduced EUR CoinVertible, a stablecoin tied to the euro, for big, institutional clients. This new digital asset is available only to investors who have gone through Societe Generale’s standard customer verification and anti-money laundering checks.
As Europe gears up for the Markets in Crypto-Assets Regulation in 2024, Société Générale’s ventures into the euro-pegged stablecoin market and the issuance of a green bond on Ethereum signify major milestones.
While France is generally open to crypto, the French branch of Binance, a global crypto company, is currently under investigation by the French finance investigation service, directed by a specialized court in Paris.
In just six years, Changpeng “CZ” Zhao transformed Binance from a startup funded by a $15 million ICO into a $60 billion titan of the crypto world. His recent resignation as CEO, part of a deal with the U.S. Department of Justice, marks a significant moment not only for Binance but for the broader crypto industry.
This event is part of a larger scrutiny faced by key players in the crypto space, with Kraken and Coinbase also facing legal challenges from U.S. authorities for various regulatory issues.
The crypto landscape is clearly in a state of flux, with regulatory actions signaling a shift towards more stringent oversight.
This period of change is evident in the diverse developments across the industry, from Grayscale and BlackRock’s dealings with the SEC to Circle’s new initiatives, Bittrex Global’s closure, and CoinGecko’s latest acquisition.
What happened to Binance?
Binance, under its CEO Changpeng “CZ” Zhao, agreed to a $4.3 billion settlement with U.S. officials for failing to implement adequate safeguards against illicit activities.
U.S. authorities accused Binance of allowing criminals to transfer stolen funds through the exchange.
We’re pleased to share we’ve reached resolution with several US agencies related to their investigations.
This allows us to turn the page on a challenging yet transformative chapter of learning that has helped us become stronger, safer, and an even more secure platform.
As part of the settlement, Binance will pay significant penalties to various U.S. departments, including over $3.4 billion to the Financial Crimes Enforcement Network and around $1 billion to the Treasury’s Office of Foreign Assets Control.
Additionally, Binance and CZ will face stringent monitoring and reporting requirements moving forward. This settlement resolves many civil and criminal investigations into Binance, but a civil case with the SEC remains pending.
Following the settlement with U.S. officials, Changpeng “CZ” Zhao has decided to step down from his role as chair of the board for Binance.US, distancing himself from the exchange’s governance.
This move aligns with his earlier resignation as Binance CEO after pleading guilty to a felony charge related to anti-money laundering deficiencies.
Binance.US, led by Norman Reed, remains separate from these legal issues but is still involved in an SEC lawsuit. CZ’s future involvement in the crypto industry and his legal status, particularly his travel permissions while awaiting sentencing, are currently under consideration by the court.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.
Binance’s mistakes may be reflected in the industry standards
The recent $4.3 billion settlement of a major cryptocurrency exchange with the U.S. Department of Justice is being viewed positively by industry experts.
This settlement is seen as a step towards reducing apprehensions about engaging with this global exchange, thereby potentially enhancing its trustworthiness in the eyes of investors and users.
Industry observers point out the significance of adhering to regulatory standards, emphasizing that even traditional financial institutions have faced similar challenges. The resolution of the exchange’s compliance issues, particularly around KYC protocols, is considered a positive move for its future operations and for the cryptocurrency industry at large.
Looking ahead, there is growing optimism about the future of Bitcoin.
Expectations are high for the approval of a Bitcoin exchange-traded fund (ETF) in the United States, and the anticipated Bitcoin halving in 2024 is also drawing attention.
These factors, combined with the potential for reduced interest rates by the Federal Reserve, are expected to positively influence Bitcoin’s value.
Furthermore, the forthcoming U.S. elections and ongoing fiscal challenges in major global economies are seen as factors that could increase Bitcoin’s attractiveness as an investment option.
Binance’s future plans
End support for BUSD
Binance has outlined its plan to phase out support for Binance USD (BUSD) products.
Beginning December 15, Binance will no longer support the minting of new BUSD coins, following a decision by Paxos to stop its production.
Users are advised to either withdraw or convert their BUSD into other assets on the exchange before this date.
After December 31, Binance will deactivate BUSD withdrawals, and any remaining BUSD balances will be automatically converted to First Digital USD (FDUSD) for certain users.
This decision is part of Binance’s broader strategy to gradually reduce its reliance on BUSD.
Initially, the exchange will discontinue borrowing and lending services for BUSD, with complete support cessation planned by February 2024.
This move follows regulatory challenges, including the U.S. Securities and Exchange Commission labeling BUSD as an unregistered security and the New York Department of Financial Services ordering a halt to its issuance.
The change in strategy coincides with significant shifts within Binance, including a $4.3 billion settlement with U.S. authorities and a leadership transition, with the former CEO stepping down and the head of regional markets assuming the role.
Once one of the largest stablecoins in terms of market capitalization, BUSD has seen a significant decrease in value over the past year.
Binance to end support for crypto card in Europe
Binance, facing increased regulatory scrutiny globally, is set to end its crypto card services in the European Economic Area (EEA).
The service, which allowed for the direct conversion of digital assets in Binance accounts to local fiat currency, will cease from midnight (UTC+0) on December 20, 2023, affecting all 27 EU member states and others like Iceland, Lichtenstein, and Norway.
Binance’s decision follows the discontinuation of the service by UAB “Finansines passages ‘Contis,’” the issuer of the Binance Visa Debit card.
This change will not affect the accounts of EEA residents but will end the Refugee Crypto Card service introduced for Ukrainian refugees.
The discontinuation in the EEA, alongside earlier service stoppages in Latin America and the Middle East, reflects the challenges Binance faces, including the loss of operating licenses in several countries and ongoing legal battles with regulatory bodies like the SEC.
Binance launches pilot program for bank custody of collateral
Binance has launched a pilot programallowing institutions to trade without depositing collateral directly on the exchange.
This innovative approach enables banks to keep trading collateral off-exchange, such as at a third-party bank, reducing counterparty risk.
The program, mirroring traditional financial market practices, offers flexibility for institutions to manage their crypto-asset allocation according to their risk tolerance. Institutions can hold collateral in cash or Treasury bonds, earning yields while trading.
This initiative, in development for over a year, aims to address institutional investors’ concerns about counterparty risk – the risk of a party defaulting on its contractual obligations.
By not requiring crypto or cash deposits on the exchange, the program lessens the risk of asset loss due to potential exchange issues.
Binance plans to expand this program, engaging with banking partners and institutional investors interested in participating. This move by Binance follows similar efforts by other exchanges to enhance security and trust in crypto trading.
Raiffeisen Bank’s Austrian branch and top Australian crypto exchanges, including Independent Reserve, BTC Markets, Swyftx, Kraken, and Binance Australia, are gearing up for an anticipated surge in the crypto market. The Austrian Bank is set to offer cryptocurrency trading, while Australian exchange leaders are bolstering their infrastructure and customer education initiatives.
Raiffeisen Bank’s Austrian branch is gearing up to introduce cryptocurrency trading for its customers. This means you will be able to trade Bitcoin directly on the bank’s platform. This move, first mentioned in April 2023, is now taking shape through a partnership with Austrian crypto company Bitpanda.
The plan is to launch these crypto trading services in Vienna, starting in the early months of 2024.
A bank spokesperson shared that they’ve teamed up with Bitpanda to create a user-friendly digital investment platform, responding to their clients’ growing interest in easy and accessible digital investments.
Raiffeisen wants to keep up with its customers’ investment desires
The bank is enthusiastic about this new venture, emphasizing its commitment to meeting customer needs and preferences.
“We have seen the demand from customers for easy, intuitive, digital investment platforms. Our main intention to take customer-centric decisions has triggered these efforts, which we are excited about bringing to market.”
As part of their new crypto initiative, customers of RLB NÖ-Wien, a branch of Raiffeisen Bank, will have access to a wide range of cryptocurrencies offered by Bitpanda, their partnering firm.
Bitpanda’s Deputy CEO, Lukas Enzersdorfer-Konrad, had mentioned that this collaboration would include Bitpanda’s extensive digital asset portfolio, which boasts over 2,500 cryptocurrencies, such as Bitcoin and Ether.
Furthermore, Enzersdorfer-Konrad highlighted that Raiffeisen aims to make these crypto trading services available to all types of clients, including those in retail, private banking, and the corporate sector.
“As we announced in April, the end goal is to make our offer available to all RLB NÖ-Wien customers. However, the rollout will begin with their customers in Vienna,” a spokesperson for Bitpanda noted.
Raiffeisen Bank’s venture into cryptocurrency trading is a further indication of the increasing acceptance of Bitcoin and other digital currencies.
Established as one of Europe’s oldest banks, Raiffeisen’s roots date back to its first branch opening in Mühldorf, Austria, in 1886.
As of June 30, 2023, the Raiffeisen Group managed assets totalling 247 billion Swiss francs (equivalent to about $280 billion) and had client loans amounting to 219 billion CHF (around $248 billion).
Banks are taking note of the increase in popularity of cryptocurrencies, just as the bull market is expected to start.
Australian Exchanges Anticipate Market Growth
Australia’s top crypto exchange leaders are preparing for an anticipated bull market, expecting a rapid increase in business. Adrian Przelozny of Independent Reserve is ensuring his exchange is ready with the necessary processes, people, and infrastructure to handle a potential tripling of business overnight. He optimistically predicts the next two years to be promising for the crypto market.
BTC Markets’ Caroline Bowler has observed more bullish market conditions since January, with notable growth in asset prices and technological applications in the industry. She cites the influx of new users and increased trading volumes as signs of an emerging bull market.
Tommy Honan from Swyftx reports a rise in buying activity and is enhancing direct debit functions, a recent challenge in Australia’s crypto sector. He attributes this increase to improved market fundamentals, not just investor FOMO, noting a return of customers who were inactive during the bear market.
Jonathon Miller of Kraken Australia urges caution, pointing out the grey area between bull and bear markets. However, he acknowledges reasons for optimism, such as the upcoming Bitcoin halving and Ethereum’s Dencun upgrade, which are attracting both institutional and retail investors. He highlights the growing institutional interest in crypto assets.
Ben Rose from Binance Australia observes an increase in new registrations and trading activity but refrains from confirming a bull market. Focusing on educating users, Rose aims to avoid FOMO-driven buying, emphasizing sustainable and responsible engagement with crypto as part of financial management rather than just price-driven interest.
