A busy week leaves behind a lot of events that are definitely worth learning and thinking about. This time was no exception, and last week in the world of cryptocurrencies happened: preparation of G7 countries to tighten cryptocurrency regulation, European Union idea of smart contracts shutdown and suspension, CFTC lawsuit against Binance and Bitcoin fall on its background, Binance exit from Canada, and USA against cryptocurrencies.
Sounds fascinating, let's get started!
G7 plans to tighten regulation and control of cryptocurrencies
Back in 2020, the G7 intended to postpone the regulation of digital currencies. At the time, the decision was made at the level of finance department heads.
In the near future, a new G7 meeting will be held, where the issue of regulation of the blockchain industry will also be raised. Currently, it is known that the initiative is aimed at strengthening control over the cryptosphere.
In order to implement this initiative, the United States, the United Kingdom, Germany, Italy, France, the European Union, Japan and Canada will develop a global regulatory framework to control digital currencies. All other countries will be able to rely on this document when legalizing cryptocurrencies in their territories.
Some countries already have their existing solutions, which will be used as an example when working on the document. The main purpose of the document is to minimize risks for the global financial system, consumer protection and transparency.
EU supports the idea to control smart contracts
Recently, the Council of Europe supported the idea of requiring smart contracts to include an on-off switch functionality on a legislative basis. With this functionality, the EU wants to disable or suspend smart contracts.
Such a requirement has seriously alarmed the crypto community, as smart contracts are based on the idea of their automation and immutability. If such a change is implemented, the very essence of smart contracts would be compromised. Furthermore, such a change would be difficult or impossible for many current projects. This means that developers will have to rebuild or redesign part of the system from scratch.
On the positive side, the requirement will only apply to smart appliances (refrigerators, vacuum cleaners, coffee makers, etc.) The EU wants to give users more control over what personal data is processed and transmitted by these devices.
However, it is not at all clear from the current definition of the law who should "turn off" smart contracts. The current wording does not answer this question, but merely outlines the need to add such a feature.
CFTC lawsuit against Binance
Binance has once again found itself under the scrutiny of US regulators. This time, the exchange is accused of violating federal laws. According to the text of the lawsuit, Binance continued to operate and serve US customers even after shutting down its operations. The regulator claims that Binance continued to provide services and expand its presence. The exchange intended to show US customers in its databases as UNKWN, thus hiding the fact of work. In particular, the lawsuit also includes a claim for providing services for trading unregistered digital commodities (BTC, ETH, LTC). Moreover, the SEC recently argued that ETH is a security and not a commodity.
Against the backdrop of lawsuit, a mass withdrawal of funds began. More than $170 million was withdrawn from the exchange in the first hours after the news appeared. According to crypto provider Nansen, the exchange currently has about $63.7 billion in cryptocurrencies. These funds are in Binance's public wallets, which it previously revealed.
Such a large outflow of funds not only affected the exchange itself, but also the price of BTC. Against the background of the findings, this cryptocurrency lost about $ 1,000 in value. However, after some time, bitcoin regained its position. BNB had a harder time, falling by 4.5% and has not recovered at the time of writing.
Around the same time, the media became aware that Binance would be leaving the Canadian market due to tighter regulations and new rules. As a result, Binance is leaving its second major market (the US and Canada), which may affect the performance of the exchange itself in the future.
US wars against cryptocurrencies
Last week, CoinDesk editors and the head of Galaxy Digital expressed their opinion that the US is currently trying not to regulate, but to destroy the cryptocurrency industry.
CoinDesk published an article with an analysis of all the recent actions of US regulators related to cryptocurrencies. In their article, they highlight:
- SEC suits against Kraken, Coinbase, Beaxy
- CFTC suit against Binance
- FDIC request to Signature Bank (pre-closing, March) to stop serving crypto customers
- Lack of movement towards global regulation
- Deliberately pushing all crypto companies out of the country
Mike Novogratz, Director of Galaxy Digital, uses similar arguments, but emphasizes more in his speech that regulators are acting and coordinating from above, and that cryptocurrencies are under pressure from the US anti-cryptocurrency conspiracy.
He notes that the recent closures of several banks look suspicious. They all worked with crypto companies and clients, and could have continued to exist with a little help. However, US regulators rushed to shut the banks down completely and liquidate them.
Novogratz also notes that other banks are under pressure to leave cryptocurrencies unsupported by the banking sector. Already, users are beginning to experience difficulties due to the inability to properly fund cryptocurrency platforms.
The conclusion that comes to mind is that the US top brass is deliberately trying to crush cryptocurrencies and is willing to spend a lot of money and effort to do so. This is being done deliberately and persistently because there are bigger problems in the US at the moment, such as inflation or rapidly developing AI. However, it is cryptocurrencies that are getting all the attention.
According to Novogratz, there is a reason for this. The US is wary of cryptocurrencies because it understands that the dollar is in danger because of them. Novogratz believes that in the next few years, bitcoin will increase tenfold in value against the dollar, while the dollar will fall in value.
Summary
Last week was very eventful. It also brought new topics for reflection and theory building. New lawsuits from US regulators as well as speculation from CoinDesk and Mike Novogratz are prompting a fresh look at the cryptocurrency situation in the US.
However, the G7 and the EU are also keeping up. The G7 intends to create a global regulatory framework for cryptocurrencies, and the EU continues to introduce new legislation to regulate the crypto sphere. The EU's latest target is smart contracts, which have been proposed to include the ability to shut down or suspend.
In the midst of the CFTC lawsuit, Binance lost a significant amount of funds that were withdrawn from the platform by users. Such a precipitous withdrawal even managed to temporarily reduce the value of bitcoin by $1,000 and BNB by 4.5%.
Unfortunately, there wasn't much positive news. However, we invite you to join us next week for the next edition of the PointPay Crypto Digest. We are sure that next time we will be able to please you with new positive events and simply interesting news.
See you next week!
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