WEEKLY CRYPTO ROUNDUP – REGULATIONS AND STABILITY 

Understanding the U.S. Crypto Legislative Landscape

Navigating the cryptoverse is not just about understanding blockchains and tokens but also about being aware of the regulatory landscape that governs them. Recent developments in the U.S. Congress highlight the complex and evolving landscape of crypto regulation. However, instead of comprehensive laws governing crypto assets, the trend of crypto rules being slipped into larger bills continues. Understanding these can help inform your crypto investment strategy.

A newly introduced Senate bill is focused on DeFi protocols. It proposes strict anti-money laundering (AML) requirements similar to those faced by banks. The compliance burden falls on those who build or provide access to these protocols, or, failing that, individuals who have invested more than $25MM.

In the House, a Republican-led joint bill from the Financial Services and Agriculture Committees has made progress. This bill incorporated several Democratic proposals and gained six Democratic votes in the Financial Services Committee. However, it has faced opposition from influential figures like Rep. Maxine Waters, indicating its journey to being passed might be arduous. Meanwhile, a stablecoin bill, previously stuck in the FSC, has advanced, albeit amidst partisan disagreement.

Interestingly, the $886B 2024 National Defence Authorisation Act passed by the Senate includes an amendment that imposes AML rules on cryptocurrencies and seeks to regulate anonymous transactions through mixers. This suggests a possible approach to crypto legislation, where instead of creating standalone laws, regulations are incorporated into unrelated larger bills.

Bitcoin and the $6 Trillion Gold Market

Despite its volatile nature, Bitcoin and other major cryptocurrencies have shown a capacity for explosive growth, as indicated by the recent upswing driven by BlackRock’s entry into crypto and Ripple’s surprising win over the U.S. Securities and Exchange Commission (SEC).

Mark Yusko, CEO of Morgan Creek Capital Management, projects that Bitcoin could reach a value of $300,000 by 2028, which would push it beyond gold’s $6 trillion market capitalisation. He believes that the upcoming Bitcoin halving event in April next year could be a significant catalyst. Halving events have traditionally been followed by a surge in Bitcoin’s price, and Yusko predicts this trend will continue.

Further supporting this bullish sentiment, the crypto market cap recently bounced back above $1.18 trillion, up 1.6% in 24 hours, thanks to the unexpected news of Fitch downgrading the U.S. long-term credit rating, leading to increased investment in Bitcoin and gold.

Navigating the Highs and Lows: An Insight into Recent Crypto Market Trends

This week, the crypto world witnessed a measured reaction to the Federal Reserve’s decision to increase the interest rate by a modest 25 basis points, escalating U.S. interest rates to -5.5%, a height not seen in over two decades.

Bitcoin (BTC) maintained a steady pace in response to this financial news, oscillating between US$29,000 to US$29,600 for the bulk of the week. This marks the fifth week in a row of somewhat muted price performance. Nevertheless, a minor weekend surge brought Bitcoin to a closing point of US$29,225.

As Ethereum (ETH) celebrated its eighth birthday, it demonstrated a slightly more volatile performance, bouncing within the US$1,850 to US$1,880 range for the majority of the week, eventually closing at US$1,855, an increase of 0.3%.

The week offered a rather subdued trading environment for the majority of market sectors. GameFi experienced the sharpest decline of 5.0%, while DeFi and Currencies managed to stay afloat, posting gains of 1.0% and 0.3%, respectively.

On the horizon, Litecoin’s (LTC) block reward halving is just around the corner, an event that could significantly impact its price and potentially other Proof-of-Work (PoW) coins. The stablecoin supply has seen a decrease of 12% year-to-date, influenced by various factors including the BUSD wind down, USDC de-pegging, and the cautious approach driven by the evolving regulatory environment.

 

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