This week various media reported that U.S. Treasury Secretary Steven Mnuchin was considering whether or not legislation governing self-custodied wallets should be implemented.
This led some analysts and crypto pundits to speculate whether or not this would impact Bitcoin, and the current bullish momentum that has been driving crypto prices higher.
The threat of new crypto sector-focused regulations is a credible event which has negatively impacted crypto prices in the past, but this time around there are a fewreasons why the proposed rule probably will not lead to a Bitcoin price crash.
The possibility of regulation is priced into the crypto market
Initially, industry executives expressed major concerns when Coinbase CEO Brian Armstrong shared what he had heard about the planned rule.
Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I’m concerned that this would have unintended side effects, and wanted to share those concerns.
— Brian Armstrong (@brian_armstrong) November 25, 2020
These worries were amplified when Circle CEO Jeremy Allaire told Ryan Selkis that the possible regulation could be detrimental to the entire cryptocurrency sector. The comments from the two industry heavyweights led the entire industry to become cautious about the planned rule proposal.
However, recent reports suggest that the rule might require multiple transactions that are equivalent to $10,000 a day to be reported by financial institutions. Compared with the initial rumors about the rule, it is arguably less rigorous than it appeared. In fact, some experts say the proposed rule is similar to the existing FATF travel rule.
Considering that the rule could be less restrictive than the initially planned regulation, and the fact that the market has had sufficient time to act on it, it’s possible that the market has priced it in at this point.
What path can Mnuchin take?
There are two main paths Mnuchin could take to introduce the self-custody wallet regulation. First, he could take the conventional route of rulemaking, which requires a hearing and a 30-day period.
If Mnuchin takes the conventional approach, the proposal would have to be released this week before the current Presidential term comes to an end.
Alternatively, Mnuchin could aim for a “good cause” way of passing the regulation. This would allow Mnuchin to speed up the process. Jason Civalleri, an attorney, said:
“Further, there’s an exception for if an agency articulates ‘good cause’ that the notice/public procedure requirements are ‘impracticable, unnecessary, or contrary to the public interest.’ For example, one possible use of this exception is if needed to stop a pandemic. So Treasury would have to articulate why it wants to skip this requirement for ‘good cause.’ For example, maybe it can show an extraordinary amount of criminal activity will be stymied by the new rule’s early implementation. Seems unlikely, but maybe?”
At this point, it is more likely for Mnuchin to take the conventional approach. To take the “good cause” method, he would need to find sufficient evidence to prove that crypto sees significant criminal activity.
Hence, the probability that the proposed rule would be introduced in the upcoming days remains the highest, which would be optimistic for Bitcoin. Matt Odell, a Bitcoin and privacy advocate, said:
“The Block speculating that US gov will simply require exchanges to report bitcoin withdrawals larger than $10k. I already assumed they did this tbh. The concerns Armstrong and Davidson voiced seemed to expect much worse. Maybe the public concern helped. Very bullish if true.”
Crypto lender Cred will still be in control of its business as it heads into bankruptcy.
In an omnibus preliminary hearing on Friday, Judge John Dorsey of the Delaware Bankruptcy Court rejected a motion to appoint a Chapter 11 trustee to oversee Cred’s restructuring.
The judge made the ruling with the caveat that if Cred equity holders Dan Schatt and Lu Hua attempt to fire Cred board member Grant Lyon, who’s in charge of Cred’s restructuring, then the court will step in and appoint a trustee to oversee the bankruptcy. Dorsey also appointed an examiner, who will provide an independent investigation into Cred’s business.
“There’s no evidence that anybody has done anything wrong since the [bankruptcy was filed],” said Paul Hastings LLP partner James Grogan, the attorney representing Cred in the case. “We’re not here to sprinkle holy water on what the debtors did pre-petition. Nobody thinks that this company was well-run or was a model for business schools.”
The motion to appoint a Chapter 11 trustee was filed by the U.S. Department of Justice (DOJ) unit that oversees the administration of bankruptcy cases. In denying the DOJ’s request, Dorsey offered his thoughts on Cred’s mismanagement.
“There’s no doubt in my mind that there were shenanigans going on [before the bankruptcy case was filed],” the judge said before deciding not to enlist a Chapter 11 trustee.
Dorsey decided to delay a motion to allow one creditor to retrieve its crypto before the rest. The motion was filed by UpgradeYa, an investment firm that participated in Cred’s borrowing program. The company wants the 478.17 BTC (now worth around $11 million) it used to secure a $2 million loan from Cred (in fiat) before other creditors get their assets back.
The company believes it’s entitled to the bitcoin now because it’s UpgradeYa’s property and not the estate’s. The judge may have to rule on whether the common bitcoin meme “not your keys, not your crypto” applies.
Chainlink has been underperforming Bitcoin and the aggregated crypto market as of late, with its price action largely mirroring that of the rest of the altcoin market.
While Bitcoin captures investors’ attention with its massive uptrend, major altcoins like Ethereum and LINK have been underperforming, facing inflows of selling pressure as traders chase the BTC uptrend.
During parabolic Bitcoin bull markets, it is quite common for BTC uptrends to occur primarily in isolation, with altcoins rallying once it finds some stability.
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This could mean that the next market-wide movement will occur amongst Bitcoin’s smaller peers, like Chainlink.
One trader is now watching for a break above $14.50 before he flips bullish on LINK, noting that this is where its daily confluence currently exists.
He notes that, until this level is firmly broken above, it is too early to say with any certainty whether or not it will be able to see any significant near-term momentum.
Where it trends in the mid-term will likely depend on Ethereum, as it has become a benchmark for the entire altcoin market. Until it can break above its local highs within the upper-$600 region, there’s a strong possibility that consolidation is imminent.
Chainlink Struggles to Gain Momentum as Altcoin Uptrend Stalls
At the time of writing, Chainlink is trading sideways at its current price of $13.44. This is around the price at which it has been trading throughout the past few days.
Although it is up significantly from its recent sub-$11.00 lows that were set earlier this week.
It is still far underperforming Bitcoin, and faced a strong rejection within the mid-$14.00 region yesterday. Where it trends in the mid-term may depend largely, or entirely, on its continued reaction to this key level.
Analyst Claims LINK Needs to Break Above $14.50
While sharing his thoughts on where Chainlink might trend in the mid-term, one analyst explained that $14.50 is a key level it needs to break to see further upside.
He notes that he will gain some long exposure to the cryptocurrency if this level is broken in the near-term.
“If LINK can reclaim some ground between the weekly and daily confluence level around 14.5 I will definitely look to get some long exposure.”
Image Courtesy of Cantering Clark. Source: LINKUSD on TradingView.
Whether or not Chainlink can break above this key level will likely depend primarily on Bitcoin, as a continued parabolic ascent may create some headwinds for altcoins.
Featured image from Unsplash.
Charts from TradingView.
The Treasury has released its long-awaited proposal to restrict money services businesses, including U.S.-registered crypto exchanges, from dealing with self-hosted wallets.
In a Friday evening announcement, the Treasury’s Financial Crimes Enforcement Network, or FinCEN, announced proposed rules requiring registered crypto exchanges to verify the “identity of their customers, if a counterparty uses an unhosted or otherwise covered wallet and the transaction is greater than $3,000.”
The rule is currently just a proposal. The Treasury has given stakeholders 15 days to respond with comments.
Rumors of the proposed rules have been circulating for the past month. With Treasury Secretary Steven Mnuchin on his way out the door as a new administration comes in, they have been viewed as a parting shot at crypto. Of the announcement, he said:
“This rule addresses substantial national security concerns in the CVC market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime.”
A number of leading lawmakers have already come out in opposition to the proposed rule, which many see as an assault on the nature of peer-to-peer transactions. However, in the absence of a formal law, the Treasury has considerable rulemaking power in this area.
That said, the current proposal is not as radical as some feared. It would, rather, apply existing requirements to keep reports on transactions — the $3,000 threshold of the Travel Rule — to registered entities interacting with self-hosted wallets. Among registered entities, that threshold would instead be $10,000.
This story is breaking and will be subject to updates.
After weeks of speculation that the Treasury Department was working on regulations that would affect crypto wallets, the Financial Crimes Enforcement Network (FinCEN) today issued proposed rules that would “require banks and money service businesses (‘MSBs’) to submit reports, keep records, and verify the identity of customers” who make crypto transactions into unhosted (read: private) wallets.
According to the proposed rules, FinCEN, a bureau of the US Treasury Department, is specifically concerned with stopping illicit finance involving convertible virtual currency or other digital assets.
The proposed rule has gone out for public comment; comments must be submitted by January 4, 2021.
Note: This news is breaking, and this article will be updated as information becomes available.
The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has released a notice of proposed rulemaking that would require money services business to submit reports, keep records and verify the identity of customers as they relate to digital currencies “held in unhosted wallets … or held in wallets hosted in a jurisdiction identified by FinCEN.”
FinCEN defined “unhosted wallets” as a “software program or written record” through which users store the private keys needed to access and exchange cryptocurrencies like bitcoin.
The proposed rule would, in effect, require bitcoin exchanges to collect, store and share personal information from users who transfer their bitcoin private keys from those exchanges to their own private wallets, as well as transaction information.
The public has until January 4, 2021 to provide written comments to this rule, which can be submitted through the online federal rulemaking portal.
Such rulemaking has been rumored for some time. For instance, Brian Armstrong, the CEO of major cryptocurrency exchange Coinbase, tweeting about its potential in late November.
Some feared that the rulemaking would be more strict than what appears in the proposed rule. Though it violates a bastion of privacy that many within the Bitcoin community cherish, the fact that FinCEN feels the need to propose such regulation indicates a realization of the growing importance and adoption of cryptocurrency.
2020 was unforgettable, especially for Bitcoin. To help memorialize this year for our readers, we asked our network of contributors to reflect on Bitcoin’s price action, technological development, community growth and more in 2020, and to reflect on what all of this might mean for 2021. These writers responded with a collection of thoughtful and thought-provoking articles.Click hereto read all of the stories from our 2020 End Of Year Series.
In previous years, traditional investors and businesses had been averse to opening their arms (and wallets) to bitcoin. For many, it had too many unknowns, too much risk and too much baggage. Not to mention the mountains of hit pieces drafted up by mainstream media outlets deriding Bitcoin for a myriad of reasons: Bitcoin is just a ponzi scheme backed by absolutely nothing, they said. Bitcoin will be banned. It’s for criminals. Bitcoin is too volatile to be a good store of value. It will just be copied by someone else. Even legendary investor Warren Buffet threw his hat into the ring, stating that Bitcoin is “probably rat poison squared” at Berkshire Hathaway’s 2018 annual shareholder meeting.
But not only has bitcoin not gone to zero by 2020. This year has been marked by bitcoin adoption from renowned investors, hedge funds, financial institutions and businesses.
Each of the above narratives declaring Bitcoin dead continue to be toppled over time and time again. The more time you spend researching and learning about each of these alleged flaws of Bitcoin, the more obvious it becomes that they are without merit. 2020 proved that times have certainly changed.
The risks associated with allocating to bitcoin have now been inverted. It is now more risky to not own any bitcoin and with each day that passes, seemingly more and more acclaimed investors, companies and institutions have decided to dip their toes into the water by taking up a position in bitcoin. Let’s take a look at some of the most notable recent examples.
What do Paul Tudor Jones, Stanley Druckenmiller and Bill Miller have in common? They are all part of the growing list of prolific investors who are bullish on bitcoin. Let’s take a look at what some of them have had to say about it.
Paul Tudor Jones
In a letter addressing investors, Jones prefaced readers by outlining the massive money printing that has taken place so far in 2020.
“We are witnessing the Great Monetary Inflation, an unprecedented expansion of every form of money unlike anything the developed world has ever seen.”
In his full letter, readable here, Jones went on to explain how he expects large amounts of capital to flow into safe haven assets to avoid this inflation. Bitcoin’s hard-capped, finite supply means it has extreme scarcity built in. It can offer an inflation-proof hedge against monetary and fiscal irresponsibility by central banks and governments.
“The best profit-maximizing strategy is to own the fastest horse. If I am forced to forecast, my bet is it will be Bitcoin.”
Paul Tudor Jones
The “bitcoin is digital gold” narrative has nabbed yet another convert. Druckenmiller is the latest high-net-worth investor to come out as a Bitcoin believer.
Druckenmiller ascribed this conversion to a similar investment thesis as Jones. He sees a bearish dollar scenario lining up for the next five to six years due to the massive stimulus measures taken by the federal reserve and congress.
“Bitcoin could be an asset class that has a lot of attraction as a store of value,” said Druckenmiller in an interview on CNBC.
“I own many, many more times gold than I own bitcoin. But frankly, if the gold bet works, the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it.” — Stanley Druckenmiller
Bill Miller formerly managed Legg Mason Capital Management Value Trust Fund, and had beat the S&P 500 for 15 years. He has recently emerged as a bitcoin bull as well.
Voicing similar sentiment to those of Druckenmiller and Jones, Miller has stated that the Federal Reserve is “gunning the money supply” in his reasoning for being long on bitcoin. It seems to be an ongoing trend for the outspoken converts of 2020. The expectation is that unprecedented money printing will cause inflation, and that the hardest assets will benefit most.
“The Bitcoin story is very easy. It’s supply and demand. Bitcoin’s supply is growing around 2.5 percent a year and the demand is growing faster than that.”— Bill Miller
In 2020, Bitcoin became the elephant in the boardroom. In some cases, bitcoin is even being held as a “treasury reserve asset” by several publicly-traded companies. The spreadsheet on BitcoinTreasuries.org lists the companies that have begun allocating to bitcoin.
Perhaps the most significant company on this list is financial services and payments company Square, with founder and CEO Jack Dorsey stating that Bitcoin is an “instrument of economic empowerment and provides a way for the world to participate in a global monetary system.”
While Square’s sentiment may sound bullish, it was still dwarfed by business intelligence company Microstrategy’s move in August 2020 to put a whopping $425 million (85 percent of its treasury) into bitcoin. Microstrategy followed up by releasing a statement:
“Bitcoin is digital gold — harder, stronger, faster, and smarter than any money that has preceded it. We expect its value to accrete with advances in technology, expanding adoption, and the network effect that has fueled the rise of so many category killers in the modern era.” — Michael Saylor, Microstrategy CEO
As we look toward a highly-uncertain future, where loose monetary and fiscal policy seems to be the continuing norm, it wouldn’t be surprising to see this become a trend. More companies will be looking for an inflation hedge to preserve their capital in an era of massive monetary inflation.
In October 2020, online payments giant PayPal announced that it would enable its 346 million users to buy, hold and sell bitcoin on its platform. After initially intending to go live in 2021, PayPal pushed up the launch date. It launched its bitcoin offering on October 21 and is already seeing significant demand.
Though PayPal joined the party in 2020, it isn’t the only financial institution to offer bitcoin to its users. Square’s Cash App is currently selling twice as much bitcoin than what is currently being produced by miners (with nearly three-times as many users, it’s likely that PayPal will be eating up the BTC supply at an astounding rate). And Grayscale has been a behemoth when it comes to gobbling up the newly-minted bitcoin supply as well, doubling its bitcoin holdings since the third quarter of 2019.
What About The Banks?
None of the information touches on the largest of financial institutions: the banks. Well, rest assured, because expectations are that traditional financial institutions could be getting involved soon enough.
The Office of the Comptroller of the Currency (OCC), which is a U.S. regulator of banks, recently offered regulatory clarity that could enable banks to get involved immediately, if they so desire.
“From safe-deposit boxes to virtual vaults, we must ensure banks can meet the financial services needs of their customers today,” per an OCC announcement from July 2020. “This opinion clarifies that banks can continue satisfying their customers’ needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency.”
What 2020’s Derisking Means For 2021
All of these recent events can help provide cover fire for any money managers looking to get involved with bitcoin. Publicly-traded companies, large institutions and big money investors getting involved in the game in 2020 helps remove the career risk associated with bitcoin that saturated in years past.
Bitcoin is no longer contrarian. In fact, as of 2020, it’s becoming the consensus. It is becoming less and less difficult to get exposure to the new asset class. At the end of the day, it may well completely flip the risk profile associated with Bitcoin. If these well-established and respected names are now involved and you are not, then you may begin to believe that it is more risky to not have any exposure to bitcoin than it is to have just some.
This is a guest post by Nick Ward. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This was the week the entire cryptocurrency community has been waiting for. Bitcoin finally broke $20,000, setting a fresh new all-time high. But it was far from being done yet.
After breaching the coveted $20,000 mark, BTC went on a rampage, taking down one target after another. Before the run was finally calmed down, the primary cryptocurrency had taken for the sky and reached its current all-time high at around $23,800.
However, this also drove a lot of fresh capital to the entire market. Its capitalization currently sits at around $654 billion, up more than $110 billion in the past seven days. Other altcoins also increased in value, and it seems that the most impressive performer was Litecoin (LTC), which is up around 45% for the week.
As it’s almost always the case, the surge in the price for bitcoin also drove further attention to it. The CIO of Guggenheim, an investment company that became amongst the latest to jump on the BTC bandwagon, said that the asset should be valued at $400,000. That’s roughly around 20x from here.
Elsewhere, interesting news came regarding Ross Ulbricht, the founder of the infamous Silk Road dark market who is serving two life sentences without parole for what is regarded as a nonviolent crime. Reportedly, the acting US President, Donald Trump, is considering pardoning him.
This would be massive development in the case as Ulbricht has seen one of the biggest campaigns in favor of him, supported by thousands of people, including billionaire investors, judges, and celebrities.
In any case, the week has been nothing but exciting, and it remains particularly interesting to see where the market will take from here. Bitcoin has a target, and that target is its current ATH, but we have to see if it’ll be able to charge yet another impressive leg up.
Bitcoin Price Touched $23,777: 560% ROI Since March Yearly Low. Bitcoin finally did what everybody expected and was waiting for it to do, breaching the coveted $20,000 level. The cryptocurrency surged all the way up to around $23,800, marking an expressive increase of around 560% since the crash from back in March.
American Express Invests In A Cryptocurrency Exchange Aimed At Institutions. The US-based financial services giant, American Express, has invested an undisclosed amount in a cryptocurrency exchange aimed at catering to institutional clients. Hence, the financial mogul has doubled-down on its endeavors in the field, following a pilot of a blockchain-based reward program.
Bitcoin Price Should Be $400K, Says Guggenheim’s CIO. The Chief Investment Officer of Guggenheim, Scott Minerd, said that bitcoin’s price should be $400,000. He also said that his company managed to buy the cryptocurrency when it was trading at around $10,000, meaning that they are already well into profits.
Fund Managers Long Bitcoin While Shorting the US Dollar, Survey Says. An interesting survey conducted by the Bank of America revealed that “long bitcoin” has been the third-most crowded trade. Interestingly enough, it follows the second trade, which is to short the US Dollar.
Research Suggests Coinbase IPO Could be Valued at $28 Billion. The US-based cryptocurrency exchange giant, Coinbase, has recently submitted a draft registration, which confirmed the rumors that it plans to go public with an IPO. Analysts estimate that it could be worth as much as $28 billion.
President Trump Reportedly Considers Pardoning Silk Road Founder Ross Ulbricht. The acting president of the United States, Donald Trump, is reportedly considering pardoning the founder of the infamous dark market Silk Road, Ross Ulbricht. The latter is serving two life sentences without parole for a nonviolent crime.
This week we have a chart analysis of Bitcoin, Ethereum, Ripple, Litecoin, and Bitcoin Cash – click here for the full price analysis.
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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.
One of the earliest and most influential Bitcoin investors on record is revealing his top crypto pick for the next 12 months.
Pantera Capital CEO Dan Morehead first recommended Bitcoin to investors back in August of 2013, when BTC was priced at just $104. At the time, he told investors that he believed it would soon “explode” through the $200 level.
Now, in an interview with Real Vision, Morehead says he remains extremely bullish on Bitcoin, but believes altcoins such as Ethereum and XRP will outperform the king of crypto in the year ahead.
When asked specifically which single coin he would pick moving into the next 12 months, Morehead says he’s most bullish on Polkadot (DOT), a multichain protocol founded by Ethereum co-creator Gavin Wood.
“If I have to pick one, I will actually pick Polkadot. It is about 10% of the value of Ethereum. It has more than 10% chance that it is [a] very viable competitor.
I think all cryptocurrencies can go up a ton, but if you want to pick or trade this and have a call a year from now and check in, I will go with Polkadot…
We are really excited about Polkadot because it takes all the advantages of Ethereum but does it with much more throughput. We are invested there.”
Morehead also points to the decentralized finance (DeFi) space as a segment of the crypto market that’s poised for big growth. Pantera recently led a $12 million investment round in the decentralized exchange aggregator 1inch.
“The DeFi explosion has been an important development. Decentralized exchanges as well, same deal. Why have a heavily collateralized middleman [that] holds everyone’s assets when you can hold them in code?
We have seen the exchange space explode there. Now, there [are] even things like 1inch, they are supplying the peripheral activities to exchanges. I am seeing a lot of activity in the DeFi space.”
Morehead says Pantera may hold early stage crypto assets for years as they become more liquid and established.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.