Financial Regulators Propose a Rule that Could Shatter Bank’s Interest in Crypto

The financial situation for Banks that have their eye on crypto may have just taken a sharp turn, as the Swiss financial committee says banks should set aside money to protect investors from losses incurred in cryptocurrency holdings.

Banks ‘Under Siege’

A committee centered in Basel, made up of a group of financial watchdogs globally, has formulated an interesting set of regulations. The group says banks should be ready to cover any loss related to holding cryptocurrency.

A spokesperson for the Basel committee said that Banks are at a higher risk than any other institution holding crypto. The spokesperson shed light on the ‘red flags’ that holding BTC comes with, including money laundering. They further explained their views saying, 

“The growth of crypto-assets and related services has the potential to raise financial stability concerns and increase risks faced by banks………… The capital will be sufficient to absorb a full write-off of the crypto-asset exposures without exposing depositors and other senior creditors of the banks to a loss.”

Institutions Adopting Cryptocurrencies

El Salvador’s move to take up BTC as a legal tender has caused ripples across the global financial scene. The country’s passed bill has instructed the Development Bank of El Salvador to convert bitcoin to USD services instantly. Since people are allowed to use BTC in payments, it’s only reasonable for banks to start holding bitcoin.

The Swiss-based committee acknowledges that Banks have limited exposure to digital currencies, but they suggest their growing population could raise financial risks beyond containment.

Plausible Risks

The group of financial regulators proposes banks should weigh risks and enact capital requirements for holding cryptocurrencies. According to their suggested numbers, these ‘risk weights’ should linger around 1.250%, in that the capital of banks should exceed what they have to pay if anything takes a turn for the worse by the percentage mentioned earlier.

They also suggested Tokenized assets and stablecoins’ regulations should match those of loans, equities, bonds, and traditional financial commodities.

Turmoil Among Financial Regulators

Financial institutions are having a difficult time classifying cryptos as an asset class, which is why the Basel committee views them as risks. Assets, according to them, do not necessarily require the exact capital requirements as cryptocurrencies do. 

Earlier this week, one of the commissioners at the US Securities and Exchanges Commission, shared her opinion on crypto regulation in the country, saying strict rules will give investors a run for their money. 

Hester Pierce is urging financial regulators to find a way to embrace crypto rather than trying to limit its use. Her remarks suggest financial watchdogs have different opinions on cryptocurrency adoption. 

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Why The SEC Issued A Warning To Bitcoin Futures Investors

The U.S. Securities and Exchange Commission (SEC) has issued yet another cautionary bulletin for Bitcoin investors. Specifically, the Commission has warned about the dangers for BTC futures traders and has asked them to “weigh carefully the potential risks and benefits of the investment”.

The bulletin called “Funds Trading in Bitcoin Futures” is part of a long list of these articles dedicated to cryptocurrencies and digital assets.

The first one was published on July 23, 2013, and was titled “Investor Alert: Ponzi Schemes Using Virtual Currencies”. In this article, the Commission warns investors about Bitcoin and explains in detail the characteristics of a Ponzi Scheme, a type of scam where existing participants received payments from new contributors.

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The SEC classified these schemes as non-legitimate investments and claimed to be concern about fraudsters utilizing Bitcoin to commit or facilitate this scam. In addition, the SEC claimed exchange platform could also be part of the illegal scheme.

Despite the date of publication, apparently not much has changed for the Commission as their latest bulleting on BTC claims the following:

investors should consider the volatility of Bitcoin and the Bitcoin futures market, as well as the lack of regulation and potential for fraud or manipulation in the underlying Bitcoin market.

Bitcoin Attack By More FUD

The SEC clarifies that BTC has been classified as a commodity in the U.S. Therefore, futures contracts must be traded with a “regulated and supervised” entity by the Commodities and Futures Trading Commission (CFTC).

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The regulator claims that all platforms offering this product to U.S. citizens must comply with certain legal requirements. Caitlin Long, part of the state of Wyoming Blockchain Select Committee, said:

SEC is issuing this investor warning re onshore exchanges, which offer only about 2.5x leverage–just imagine how it views offshore exchanges offering >100x leverage.

At the time of writing, BTC trades at $36,872 with sideways movement in the 1-hour and 24-hour charts. In the derivatives sector, funding rates across exchange platforms have flipped from positive to negative and vice versa during the past few days.


Thus, the general sentiment in the market seems to be following the price action; there is no clear direction. In the short term, BTC must reclaim the higher area around current levels and make a push towards the $40,000 price mark.

The SEC and other U.S. government officials and federal entities have been hitting the market with many negative announcements. From the SEC bulletin to the Department of State’s statements on a BTC ransom recovered from hackers. The market has been susceptible to this news but seems more impervious to their effects.


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AARP Senior Policy Expert Warns Bitcoin Is ‘Not Appropriate For Retirement’ As Coinbase Offers Crypto To 401(k)s

Leading cryptocurrency exchange Coinbase has partnered with small-time 401(k) plan provider ForUsAll to offer employees crypto exposure through their retirement plans. Employees of participating companies will be allowed to use a “crypto window” — similar to the brokerage window offered in many conventional 401(k)s — to invest up to 5% of their retirement funds in over 50 cryptocurrencies including bitcoin, ethereum, and litecoin.

However, the announcement that cryptocurrencies will be included in some retirement plans has not been received warmly by many, including David John, a senior policy advisor at AARP Policy Institute and the deputy director of the retirement security project at Brookings. Though John is one of a rising number of traditional investors taking crypto seriously, he doesn’t think it has any place near workers’ retirement portfolios — at least not yet.

“Crypto itself is fascinating, and intriguing as it starts to develop, but it’s still in its early phases. And it is definitely not appropriate for retirement investing,” John says. “The fact is that for retirement investing, you want growth, and you want a limited amount of volatility. The older you get, the less you want your portfolio to gyrate up and down, because it makes it very hard to plan your retirement income.” 

The goal of retirement accounts, for people of any age, he says, is to have earnings compound (tax deferred) over time and then to ramp down risk as one gets older — that’s essentially what target date funds, the default investment in a growing number of 401(k)s, do. While alternative investments such as commodities are sometimes a part of target date funds, they are typically counter-cyclical, meaning that they go up when the market goes down and vice versa. John says there is not yet enough data to determine if any crypto asset fits that bill. 

“Yes, we can point out that there are points in time, where it’s correlated with this, that and the other index or asset or something along that line,” says John. “But we don’t know why at this point. And we don’t have a firm record that shows that this is a consistent pattern of behavior.”

Founded in 2012, San Francisco-based ForUsAll administers $1.7 billion in retirement fund assets for 70,000 employees — a tiny portion of the $21.8 trillion in defined contribution (meaning 401-Ks and IRA) retirement assets in the U.S. at the end of 2020. ForUsAll chief investment officer David Ramirez, says that more than 60% of the provider’s 400 employer clients have, over the past three months, expressed interest in the plans. The move also represents a new source of customers for Coinbase, which went public in April 2021 and is now valued at $46.29 billion. 

Already investment opportunities featuring the original cryptocurrency bitcoin are growing popular through products like bitcoin IRAs offered by companies like CoinIRA or Bitcoin IRA. Even larger firms have started offering bitcoin as investment opportunities, if less directly. For example, Boston-based Fidelity investments, lets customers gain exposure to cryptocurrencies through products like the Grayscale Bitcoin Trust and Osprey. Fidelity launched a new Digital Assets platform in October of last year and recently filed with the Securities and Exchange Commission for a Bitcoin ETF. 

“Relatively small allocations to cryptocurrencies may add material expected return benefits without materially increasing risk,” Rameriz says. “That is the magic of diversification.  However, given the volatility of cryptocurrencies it is critical that we don’t just provide access, but also education, guidance and guardrails to help ensure investors use cryptocurrencies appropriately.”

While retirement expert John doesn’t think bitcoin is ready for 401(k)s, ForUsAll argues that not offering crypto exposure exacerbates structural inequality by not providing everyday investors with access to a source of investment gains for the wealthy.  “Over 60% of professional investors now say that cryptocurrency has a role to play in their portfolios,” Ramirez wrote.“Leading institutions like Harvard, Yale and Brown already have exposure to cryptocurrencies. To exclude average retirement investors from this asset class will put them at a structural disadvantage.”


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Interview: The Epic Of Bitcoin With Allen Farrington

Allen Farrington joined the “Bitcoin Magazine Podcast” to discuss his articles and Bitcoin’s cultural alignments.

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Prior to the Bitcoin 2021 conference, “Bitcoin Magazine Podcast” host Christian Keroles sat down with keynote speaker and incredible Bitcoin thinker Allen Farrington for one of his very first podcasts appearances. This interview covered two of Farrington’s seminal works and why Farrington prefers to investigate Bitcoin’s cultural and literature alignments over the typical framing of economics, trading and technology.

First, Keroles and Farrington dove into the latter’s article, “The Capital Strip Mine.” The article is a roughly 30-minute read and it dives into why the current fiat system is effectively strip mining the U.S. and current financial system of its resources. Farrington compares what is going on in capital markets to the strip mining techniques that have become popular in the modern day. Farrington laments that, because of fiat money’s poor incentives, civilization has taken on a growth-at-all-costs mentality and has thrown away all regard for long-term thinking and preservation.

Second, they got into Farrington’s blockbuster article” Bitcoin Is Venice, Bitcoin Is.” In this article, Farrington educates the reader about the anomaly that is Venice, Italy at its peak. Venice was a magical mixture of sound money, capitalism and free society when many of its neighbors were still operating in futility. Venice, in contrast to other large cities, was a bastion for the arts, wealth and thought. Farrington details how Bitcoin’s sounds and fair monetary properties provide a framework for humanity to return back to Venice-like conditions and hopefully prosperity.

Lastly, Keroles and Farrington discussed Farrington’s plan’s for his now live Bitcoin 2021 keynote presentation titled, “The Milk Of Paradise: Bitcoin And The Western Canon.” The speech discussed how Western literature, culture and historical lessons can all be fit into the values and properties that Bitcoin codifies into a physical network on nodes that maintain consensus in a decentralized way. Please enjoy this fascinating conversation with Allen Farrington. 


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Is Cardano a Flash in the Pan? Crypto Analyst Benjamin Cowen Looks at Top Altcoin’s Staying Power

Popular crypto analyst Benjamin Cowen is looking at whether the blockchain network Cardano (ADA) has what it takes to become a major smart contract competitor in the long run.

Cowen says he believes Cardano has a lot going for it, highlighting his experience with running a validator node on the platform, which confirms transactions on the blockchain.



He says the process is easy and seamless to set up on Cardano, giving the asset a big advantage over other smart contract platforms.

“I think this will stand the test of time. I’ve looked into validators on a lot of different networks – Cardano, Polkadot, Avalanche, MATIC, Solana, Cosmos – I can tell you that the one that I like the most is Cardano.”

Cowen adds that ADA has been trading above either the 20-week SMA (simple moving average) or the 21-week EMA (exponential moving average) since October of 2020, the longest-ever stretch the asset has been above at least one of those metrics.

Though Cardano’s charts appear strong against Bitcoin, the analyst warns investors that ADA can be volatile even in a bull market.

“Remember with ADA, we’ve said many, many times that even in a bull market, you can get 60% corrections at the very least… As we continue to navigate the market cycle, always be open to the idea of corrections. We have to recognize that just because institutional money is in Bitcoin – it’s not going to keep Bitcoin from dumping 50%. And if Bitcoin can dump 50% than we know ADA can dump 50% or more.

With that said, ADA is holding up extremely well against Bitcoin right now. Now, if Bitcoin continues to dump and goes below $30,000, then I would be skeptical as to the ability for ADA to continue this move. However, it does not change the fact that I am still very bullish on ADA for this market cycle. I think it’s going to go a lot higher than where it currently has gone.”



In the short term, notes Cowen, ADA’s price action rests primarily in the hands of Bitcoin, though the asset’s ability to remain afloat amid turbulent BTC price action is a sign of Cardano’s strength.

“I think ultimately we will come out the other side, but rest assured, if Bitcoin continues to remain bearish in the short term, it’s going to make it somewhat challenging for projects like Cardano to put in new all-time highs. The fact that valuation of ADA is standing as strong as it is to me is somewh1at of a testament to how strong the network is.” 

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Elon Musk Will Have ‘No Role’ in Bitcoin Mining Council

In brief

  • Elon Musk will not play a formal role in the Bitcoin Mining Council, the group clarified today.
  • Musk initially teased the group’s formation in a tweet last month.
  • The Council aims to promote Bitcoin “energy usage transparency.”

Elon Musk likes to keep himself busy—he cofounded PayPal, runs the multibillion dollar car company Tesla, and wants to “protect the future of consciousness by making life multi-planetary” through aerospace company SpaceX.

But galvanizing Bitcoin miners toward a cleaner, more energy-efficient future won’t be on his to-do list—not formally, anyway.

The Bitcoin Mining Council, a group of energy-conscious North American Bitcoin mining companies first revealed by Musk in a tweet in late May, debuted today and clarified that Musk will have “no role” at the Council.

Musk’s involvement with the group appears to have begun and ended with the “educational call” that the Tesla CEO held with the group on May 24, which he described as “potentially promising.”

The man who orchestrated that meeting, MicroStrategy CEO Michael Saylor, announced the Council’s launch today in a tweet, describing the group as “a voluntary and open forum of Bitcoin miners committed to the network and its core principles.” Saylor added: “We promote transparency, share best practices, and educate the public on the benefits of Bitcoin and Bitcoin mining.”

Bitcoin mining is an energy-intensive process the requires large amounts of computational power. It’s how new Bitcoins are created and the network is sustained. Critics decry it as wasteful, while proponents say the benefits of decentralized, state-less money are worth it.

Musk, whose car company Tesla had purchased $1.5 billion worth of Bitcoin in February, appeared to have been swayed by those critics when on May 12 he announced Tesla would no longer accept Bitcoin as payment, citing environmental concerns. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” he said at the time.

The move shook the market. The price of Bitcoin fell from $56,000 to $49,000 by that evening, a drop of 12.5%. Bitcoin hasn’t traded above $50,000 since. Today, 1 Bitcoin is worth around $35,000.

Inviting Musk to join the initial call with miners appears to have been Saylor’s way of extending an olive branch. Saylor’s MicroStrategy is heavily invested in Bitcoin—it holds roughly $3.3 billion in Bitcoin on its balance sheet, according to Bitcoin Treasuries, and recently announced plans to buy a half billion more. Meanwhile, Musk’s tweets routinely move the Bitcoin market—up or down—and he knows it.

Meanwhile, the Bitcoin Mining Council, in its current form, may not do much to assuage Bitcoin’s staunchest critics. The group, which some Bitcoin adherents initially chastised as a centralized attempt to control the mining industry, won’t actually impose energy standards for its members: “The BMC is not designed to have ‘teeth’ or tell anyone what to do,” its website explains.

Rather, the Council encourages its members to share their “energy mix” and power consumption data for “research and educational purposes.” For now, Saylor’s mining group is hoping that alone is enough to reshape the public’s perception of Bitcoin’s environmental impact.

Or, perhaps at the very least, Elon Musk’s.


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IMF plans to meet with El Salvador’s president, potentially discussing move to adopt Bitcoin

The International Monetary Fund has said El Salvador’s recent decision to make Bitcoin legal tender in the country may raise legal and financial concerns.

In a Thursday press briefing from the International Monetary Fund, or IMF, spokesperson Gerry Rice said the group was already in discussions with lawmakers in El Salvador over a loan to support the country’s economy, having approved emergency funds related to the pandemic last year. However, Rice said an IMF team would be meeting with President Nayib Bukele today and implied crypto would be a likely topic for discussion.

“Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis,” said Rice. “We are following developments closely, and we’ll continue our consultations with the authorities.”

Spokespeople for the IMF have often voiced concerns about countries adopting digital currency. In March, the group issued a similar warning against the Marshall Islands’ recognizing its digital sovereign currency, called SOV, as legal tender, as it may pose similar legal and financial risks. In that case, a spokesman said the islands’ local economy had been strained by the economic fallout of the pandemic and likely wouldn’t be corrected with the SOV.

Related: Marshall Islands digital currency would ‘raise risks,’ says IMF

In the case of El Salvador, the time between the introduction of ideas and action is seemingly short. President Bukele first announced he would propose a bill making Bitcoin (BTC) legal tender in El Salvador at a pre-recorded video message at the Bitcoin 2021 conference this weekend. The legislation passed with a supermajority in the nation’s Legislative Assembly yesterday.

Though the country is still seeking support from the IMF related to the pandemic this year, it has already begun to consider the energy needs of Bitcoin miners. Bukele said he would be instructing state-owned electrical company LaGeo, to make certain facilities available to miners to utilize geothermal power from the country’s volcanoes — El Salvador currently operates the two geothermal plants in Ahuachapán and Berlín.

“Crypto assets can pose significant risks,” said Rice. “Effective regulatory measures are very important when dealing with them.”