1. Market Wrap: Cryptocurrencies Stabilize as Regulatory Concerns Rise
Bitcoin and other cryptocurrencies are rangebound as analysts monitor regulatory developments.
Cryptocurrencies were mostly lower on Friday after a volatile week. The sell-off appears to be stabilizing, although many alternative coins are underperforming bitcoin over the past seven days.
Bitcoin was trading around $45,000 at press time and is down about 8% over the past week. Some analysts expect BTC to consolidate with support nearby at the 200-day moving average, although resistance remains strong around the $50,000 price level.
“Tuesday’s liquidations were possibly exacerbated by the leverage embedded in the Ethereum market and the wider altcoin universe,” FundStrat, a global advisory firm, wrote in a newsletter published on Wednesday. “The macro and on-chain (blockchain) pictures remain consistent, and therefore we believe these mid-cycle liquidations are good opportunities to consolidate positions.”
Analysts and traders are also monitoring regulatory risk, which could damp sentiment in the crypto market.
Latest Prices
Bitcoin (BTC): $45,701, -1.2%
Ether (ETH): $3,326, -3.2%
S&P 500: -0.8%
Gold: $1,797, +0.3%
10-year Treasury yield closed at 1.339%
Regulatory concerns
Recent headlines suggest the global regulatory crackdown on cryptocurrencies is not over. On Thursday, the State Power Company of China announced that it is conducting inspections on bitcoin and other crypto mining facilities.
“The article stated that virtual currencies such as bitcoin waste energy and evade financial supervision, and have no clear legal status in China,” crypto newswire WuBlockchain tweeted.
Also on Thursday, Sweden’s Riksbank Governor Stefan Ingves warned that “private money usually collapses sooner than later” during a banking conference. Ingves also compared bitcoin to “trading in stamps” and expressed concerns about money laundering.
And last week, the European Securities and Markets Authority published a report stating that “crypto assets are highly volatile in price and operate outside of the existing EU (European Union) regulatory framework, which raises investor protection issues.”
Ether holds support
Ether, the world’s second-largest cryptocurrency by market capitalization, is holding support above the $3,000 breakout level that was achieved in August. ETH declined from the $4,000 resistance level as buyers were unable to match the all-time price high around $4,360 reached in May.
2. US Treasury Officials, Financial Industry Executives Met to Discuss Stablecoins
In meetings this week, the officials and executives discussed regulation and related topics.
Officials from the U.S. Department of the Treasury held meetings with financial services executives this week to discuss the risks and advantages of stablecoins, according to a Reuters article on Friday.
The report, which cited three unnamed sources, said the meetings with banks and other organizations, including a Friday meeting, considered potential regulation and related topics
According to two of the sources, the Treasury officials inquired if stablecoins would need direct oversight if demand for them increased markedly.
The officials also inquired how regulators might limit the risk potentially occurring if too many people tried to cash in their stablecoins at roughly the same time, and whether the most significant stablecoins should have traditional assets’ backing.
In addition, the meetings covered how stablecoins could be structured and used and whether there is sufficient regulatory structure in place to address security concerns.
The officials seemed to be collecting information and did not offer opinions on potential regulatory moves, according to one individual cited in the article.In a statement cited by Reuters, Treasury spokesman John Rizzo said that in examining “potential benefits and risks of stablecoins for users, markets, or the financial system,” the department was “meeting with a broad range of stakeholders.”
3. Andreessen Horowitz Seeks Token Delegate Applicants for Uniswap, Other DeFi Holdings
The venture capital giant is spearheading a new framework for decentralized governance.
Venture capital firm Andreessen Horowitz (a16z) is seeking token delegate applicants for its decentralized finance (DeFi) investments, which include the decentralized exchange Uniswap and lending protocol Compound.
Interested participants have been invited to fill out an application via Google Forms, according to a tweet by a16z’s Alex Kroeger.
According to the application, a16z is also seeking delegates for its stake in decentralized derivatives exchange dYdX and stablecoin platforms Maker and Fei.
The announcement comes weeks after a blog post on a16z’s website revealed that the firm would “open source” its delegation procedures, which some critics have said lacked transparency. A spokesperson for Andreessen Horowitz did not immediately respond to a request for additional comment.
Token delegation is a process in decentralized finance whereby the holder of a governance token outsources its corresponding vote to a third-party, reducing the voting power held by early investors and founders. The process also allows those more informed or more active in the protocol’s governance to have a stronger voice. However, the original holder would retain their ownership — and economic interest — in the token.
Applicants will be graded across nine metrics, which include commitment to the protocol, subject matter expertise, diversity of perspectives and other criteria. A16z will score prospective delegates on a scale of 0–2 for each category, with a maximum possible score of 18. Generally, candidates with a minimum score of 13/18 or higher (over 70%) advance, according to an example rubric of the current Uniswap delegates.
A16z’s existing token delegates for Uniswap and Compound include a mix of university organizations, non-profits, startups and community leaders, including Harvard Law School’s Blockchain and Fintech Initiative, Kiva, Gauntlet and Getty Hill.
A16z, which runs three cryptocurrency funds managing over $3 billion in assets, has increased its effort to address governance and regulatory issues associated with its cryptocurrency investments.
A new, four-person team led by a16z partner Jeff Amico will focus on protocol governance, as CoinDesk previously reported. Recently, the firm also hired former Latham & Watkins partner Miles Jennings as crypto general counsel and former CFTC regulator Brian Quintenz as a part-time advisor.
4. Pantera Capital’s Latest Crypto Fund Has Raised $369M Since July
The crypto investments firm had $4.7 billion in assets under management in August, new filings show.
Pantera has raised $369 million for its new blockchain fund, partially restocking a war chest for bets across the crypto ecosystem.
Disclosed in Friday regulatory filings, the raise, amassed from 107 investors, puts Pantera well short of a $600 million target projected in early May. Pantera began taking investments in July and is leaving the fund open “indefinitely,” meaning it could get there eventually.
The blockchain fund is meant to be Pantera’s omnibus crypto investment vehicle. It deploys into startup equity, early stage protocol tokens and more well-known digital assets, such as bitcoin, according to an investor deck.
Pantera held $4.7 billion in assets under management on Aug. 31, according to the deck.
The raise comes as other venture capital (VC) titans announce major funds for crypto investments. Top among them is Andreessen Horowitz’s (a16z) $2.2 billion fund, its third for crypto bets, that was announced in June.
Pantera did not reply to requests for comment by press time.
It’s been a banner year for crypto investments from the VC sector. A report by CB Insights in July said a record $4 billion in venture capital had been poured into crypto startups in the second quarter of 2021 alone.
5. UK Post Office to Offer Crypto Purchases to Some Customers Starting Next Week
Users of the Post Office’s EasyID identity-verification app will be able to buy crypto using a voucher system from Swarm Markets.
The U.K.’s Post Office will next week start offering users the ability to purchase crypto through its identity-verification service, EasyID.
People who use the EasyID app will be able to purchase crypto vouchers from decentralized exchange (DEX) Swarm Markets. The vouchers can be redeemed for bitcoin or ether on Swarm’s platform.
EasyID was introduced by the Post Office in August to help users securely verify their age, identity and other important details and gain access to services on other platforms.
As well as offering users another route to purchasing crypto, the integration may see more people exposed to decentralized finance (DeFi) through Swarm’s yield farming offering.
Swarm Markets users who put their assets into the platform’s liquidity pool are rewarded using its payment token SMT.
Claiming to be the world’s first regulated decentralized finance protocol, BaFin-licensed Swarm Markets said in July that it had onboarded $15 million worth of pledged liquidity. BaFin is Germany’s financial supervisory authority.
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