Day: April 1, 2024

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Tether, one of the leading stablecoin issuers, has announced the completion of a System and Organization Controls 2 (SOC 2) audit, marking the highest level of security compliance achievable for an organization. This independent audit, developed by the American Institute of Certified Public Accountants (AICPA), highlights Tether’s dedication to ensuring a secure user experience.

Paolo Ardoino, CEO of Tether, emphasized the significance of this compliance measure in assuring customers that their assets and data are managed in an environment adhering to the highest standards of data protection and information security. Ardoino highlighted Tether’s dedication to being the most trusted and compliant stablecoin in the world.

In line with its ongoing dedication to security, Tether has pledged to undergo annual SOC 2 audits to verify that its security practices consistently align with established standards. The firm aims to achieve SOC 2 Type II certification by the end of 2025, which evaluates the effectiveness of internal controls over 12 months.

Tether’s flagship stablecoin, USDT, boasts a market capitalization exceeding $104 billion, making it the third-largest cryptocurrency by market capitalization after Bitcoin and Ether. The recent milestone of reaching a $100 billion market cap on March 4 reflects a notable 9% year-to-date growth.

Beyond stablecoins, Tether is venturing into new territories. The company plans to invest approximately $500 million in constructing Bitcoin mining facilities in Uruguay, Paraguay, and El Salvador. With the goal of growing its computing power to represent 1% of the Bitcoin mining network, Tether aims to expand its direct mining operations to 450 MW by the end of 2025. The company’s approach involves setting up facilities within movable containers to adapt to changing electricity prices.

Ardoino emphasized that Tether’s mining endeavors are focused on gradual learning and growth, with no rush to become the largest miner globally. This strategic expansion aligns with Tether’s broader vision of innovation and resilience in the cryptocurrency ecosystem.

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Coinbase and Circle, two prominent players in the cryptocurrency industry, are contesting aspects of a proposal from the Basel Committee on Banking Supervision that aims to introduce stricter criteria for the regulatory treatment of stablecoins held by banks.

The committee’s consultation document, released in December, outlines requirements for stablecoins to qualify for preferential regulatory treatment under a “Group 1b category.” These requirements include maintaining low volatility and adequate liquidity. Comments on the proposal were due by March 28.

In response, Coinbase expressed disappointment with the committee’s approach in a letter submitted on March 28, criticizing many of the requirements as not being based on the actual risk these assets pose to banks. Coinbase argued that the proposed criteria seem to reflect broader policy objectives rather than strictly financial risk considerations.

Additionally, Coinbase accused the committee of aiming to significantly limit banks’ ability to hold and utilize stablecoins.

Circle, the issuer of a popular stablecoin, also raised concerns about the committee’s treatment of permissionless blockchains. The committee suggested that permissionless blockchains present unique risks and indicated they would not be allowed in Group 1 for the time being.

Circle argued that banks should be encouraged to leverage technologies like permissionless blockchains to enhance their digital transformation and cybersecurity efforts. They emphasized their successful partnerships with global banking institutions and advocated for a collaborative approach rather than stigmatizing blockchain-based financial services.

The Basel Committee on Banking Supervision, comprised of global standard setters, plays a crucial role in shaping regulatory frameworks for financial institutions worldwide.

Coinbase and Circle are pushing back against proposed stablecoin regulations from the Basel Committee on Banking Supervision. The proposed regulations aim to determine preferential treatment for stablecoins held by banks. Coinbase criticized the criteria as not being based on actual risk assessment, while Circle advocated for the use of permissionless blockchains in banking.

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Bitkub Capital Group Holdings, the parent company of Thailand’s leading cryptocurrency exchange, is ramping up its workforce as it prepares for its anticipated initial public offering (IPO) on the Stock Exchange of Thailand (SET) in 2025.

CEO Jirayut Srupsrisopa revealed to Bloomberg on April 1 that Bitkub is actively seeking financial advisors to support its IPO listing, aiming to secure new capital and enhance its market presence.

In a strategic move, Bitkub is embarking on a hiring spree despite previously reducing its headcount by 6% in 2022 and 2023. The exchange plans to recruit 1,000 new employees by 2025, effectively doubling its current workforce of 2,000 individuals.

Bitkub’s IPO plans were initially hinted at in a shareholder letter in 2023, with the company now solidifying its intentions.

Based in Bangkok, Bitkub dominates the Thai crypto market, commanding 77% of the market share as of December 2023, according to HashKey data. The exchange handles approximately $30 million in daily trading volumes.

Thailand’s burgeoning crypto landscape has attracted significant attention, with the country boasting over 13 million crypto users as of 2023, representing about 18% of its population. This figure is projected to rise to 17.7 million users by 2028.

Competitive pressures in Thailand’s crypto sector are intensifying, with industry giants like Binance establishing local subsidiaries and domestic banks, such as Kasikornbank, making strategic investments in crypto exchanges like Satang.

Bitkub’s IPO plans follow its sale of a 9.2% stake in its crypto exchange unit, Bitkub Online, to tech holding company Asphere Innovations in July 2023, signaling confidence in the platform’s growth potential.

Jirayut anticipates a surge in Bitkub Online’s valuation as trading volumes approach levels reminiscent of the 2021 crypto bull market. The platform currently contributes around 80% of Bitkub Capital’s earnings.

Despite regulatory challenges, including a failed acquisition attempt by SCB X in 2022, Bitkub remains optimistic about its prospects in Thailand’s evolving crypto landscape.

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XRP’s price is witnessing a decline today, following the broader trend in the crypto market. Currently, down by over 5.5% to $0.59, it continues its volatile trading pattern seen in recent days.

The current dip in XRP’s price reflects a retracement that commenced in March after reaching a peak of $0.74. Since then, it has decreased by approximately 18.5%, with several factors contributing to its decline.

U.S. Manufacturing Data Impact on XRP Price

The downward movement in XRP’s price aligns with similar drops across the cryptocurrency market. Investors are reassessing their expectations regarding the Federal Reserve’s interest rate cuts following robust U.S. manufacturing data.

The Institute for Supply Management’s manufacturing index rose by 2.5 points to 50.3 last month, signaling a halt to a 16-month decline in manufacturing activity. This data suggests that the Fed may opt for two rate cuts this year instead of the previously anticipated three.

Reduced Interest in XRP and Whale Activity

Lower interest rates typically favor cryptocurrencies like XRP, which do not offer interest. However, recent trends indicate a decline in the number of significant XRP holders, often referred to as “whales.” Conversely, the number of addresses holding smaller amounts of XRP is increasing.

Market Outflows and XRP Dominance

XRP has underperformed compared to its major competitors in 2024, with a year-to-date performance of approximately -4.5%. The XRP Dominance Index has dropped by 36.55% during the same period, indicating a capital outflow from XRP to other cryptocurrencies.

This outflow is partly attributed to ongoing legal issues, including the SEC’s lawsuit against Ripple. Last week, Ripple’s chief legal officer revealed that the SEC is seeking a $2 billion penalty against the company.

Technical Analysis and Future Outlook

Technically, XRP’s current price decline is part of its fluctuation within an ascending triangle pattern. The cryptocurrency’s next downside target is projected around the triangle’s lower trendline, which intersects with its 200-week exponential moving average near $0.52 by mid-April. Conversely, a breakout above the triangle’s upper trendline could propel XRP’s price to $0.74, its local peak from March 11.

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Chainage, a decentralized finance (DeFi) hub with approximately $100 million in total value locked, is pursuing a $13 million capital raise for protocol expansion, subject to approval from its tokenholders within its native decentralized autonomous organization (DAO).

In a snapshot proposal dated April 1, Chainage outlined plans for the $13 million raise, led by an undisclosed venture capital firm. This raise would involve the issuance of 50 million additional XCHNG protocol tokens, constituting roughly 10% of Chainage’s circulating supply. The issuance price of $0.26 aligns closely with XCHNG’s token price at the time of publication.

Tokenholders can participate in the proposal by staking their native XCHNG tokens to receive “vXCHNG,” granting them voting rights. Chainage aims to implement various strategies to enhance usage and profitability, committing to generating a minimum of $1 million in profit for Q2, with 80% of profits allocated to vXCHNG holders through a profit-sharing mechanism.

The primary objectives of the $13 million raise include global expansion, increased visibility, and the recruitment of top-tier talent to integrate AI with cutting-edge technology, positioning Chainage as a leader in AI-powered crypto innovation. The capital would also be utilized to incentivize liquidity, establish new partnerships, undertake marketing initiatives, and reward tokenholders.

As of the time of publication, the proposal has garnered 186 million XCHNG votes in favor and 7.2 million XCHNG votes against, with a circulating XCHNG balance of 474 million.

This move represents a departure from traditional venture capital fundraising methods, with Chainage opting for tokenholder approval within its DAO. This approach aligns with the growing trend among Web3 startups to leverage decentralized governance structures, particularly as the crypto industry experiences a surge in investment amid a bullish market.

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Telegram has rolled out a new feature allowing users to purchase channel advertisements using Toncoin, as announced over the weekend. This update is part of the messaging app’s latest initiative for user monetization, wherein 50% of the revenue generated from ads displayed in public Telegram channels will be distributed to their respective owners.

According to Telegram, users can now promote their channels by spending as little as “a handful” of Toncoins. Users will have the flexibility to select the specific channels for placing their TON-powered ads, as mentioned in the announcement.

Moreover, channel owners will have the capability to withdraw their earnings without incurring fees. The withdrawal service is expected to be available in the coming weeks on Telegram’s Fragment exchange, according to the announcement.

Telegram justified its choice of the TON Blockchain due to its low fees, high transaction speeds, and impressive processing capacity. The TON Blockchain reportedly achieved a remarkable 100,000 transactions per second during a test conducted last November.

Pavel Durov, CEO of Telegram, hinted at this update on his channel last month. Despite Telegram channels amassing over 1 trillion monthly views, Durov revealed that only 10% of channels have utilized Telegram ads for monetization thus far.

Durov emphasized the potential for a positive feedback loop, wherein content creators can either cash out their Toncoins or reinvest them in promoting and enhancing their channels.

As of the time of publication, the price of Toncoin has risen by 2.32% in the past 24 hours, reaching $5.24.

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According to a note from TD Cowen, House Republicans’ efforts to pass an anti-central bank digital currency (CBDC) bill could disrupt bipartisan backing for a stablecoin bill. The CBDC Anti-Surveillance State Act, introduced by House Majority Whip Tom Emmer, aims to prevent the Federal Reserve from directly issuing a CBDC to individuals. Despite the bill’s advancement from the House Financial Services Committee in September, it faced significant criticism from Democrats.

House conservatives are reportedly considering voting for the CBDC bill alongside a long-awaited stablecoin bill, although this strategy isn’t led by Rep. Emmer. TD Cowen’s Washington Research Group, led by Jaret Seiberg, expressed concerns that tying a ban on a digital dollar to stablecoin legislation could jeopardize bipartisan support. Democrats generally see value in exploring a central bank cryptocurrency.

Maxine Waters, the top Democrat on the House Financial Services Committee, and its chair, Patrick McHenry, have engaged in lengthy discussions to find common ground on regulating stablecoins. Although the bill cleared the committee, disagreements persist, particularly regarding the primary regulator for stablecoin issuers.

TD Cowen emphasized that while it’s premature to declare the stablecoin bill in jeopardy, passing any legislation remains challenging. Any developments complicating the stablecoin bill further narrow the path to enactment.

While the central bank has explored the idea of issuing a CBDC, Fed Chair Powell clarified that the Fed is far from making recommendations or adopting a CBDC without congressional approval.

Additionally, the Heritage Foundation has pressed for the passage of a CBDC bill, warning lawmakers that their score on the Heritage Action Scorecard could suffer if they don’t cosponsor the legislation. Sen. Ted Cruz has introduced a bill to ban CBDCs, supported by the Heritage Foundation and the Blockchain Association, among others.

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After experiencing record outflows of nearly $1 billion just a week prior, crypto-based investment products made a significant turnaround, with approximately $900 million in net inflows reported, according to data from CoinShares.

CoinShares analyst James Butterfill disclosed that crypto-based investment vehicles collectively saw a remarkable rebound last week, accumulating $862 million in net inflows. This resurgence follows a challenging period when funds managed by prominent asset managers like BlackRock, Fidelity, and Grayscale witnessed record outflows totaling $942 million.

Driven by bitcoin’s price surging above $70,000 for a significant portion of last week, the combined assets under management for all crypto funds tracked by CoinShares soared to $97.9 billion.

Bitcoin-Related Funds Remain Dominant

Bitcoin-related funds continue to attract the bulk of investor activity. Both BlackRock and Fidelity’s spot bitcoin ETFs recorded inflows exceeding $600 million each during the past week. However, Grayscale’s spot bitcoin ETF experienced outflows amounting to $960 million, reducing its assets under management to approximately $35 billion.

An Exceptional Performance by Ark Invest 21 Shares

One standout performer last week was the Ark Invest 21 Shares spot bitcoin fund, which witnessed over $300 million in net inflows. This marks a substantial increase compared to the previous week when the fund attracted only $30 million in capital inflow. With its assets under management now exceeding $3 billion, the fund demonstrated exceptional growth.

Overall, the rebound in net inflows suggests renewed investor confidence in crypto-based investment products, particularly amidst the backdrop of Bitcoin’s impressive price performance.

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Binance Holdings Ltd. has recently formed a board of directors, a significant move amidst a period marked by changes and challenges, as reported by Bloomberg News.

The board comprises seven members, including CEO Richard Teng and three other company executives: Heina Chen, Jinkai He, and Lilai Wang. Additionally, three external members join the board: Gabriel Abed, Arnaud Ventura, and Xin Wang, according to Bloomberg’s coverage.

Gabriel Abed, formerly the Ambassador of Barbados to the United Arab Emirates and Kuwait, resigned from his position two months ago. Arnaud Ventura is an entrepreneur who has founded multiple companies, including PlaNet Finance. Xin Wang serves as the CEO at Bayview Acquisition Corp. and offers advisory services to financial institutions regarding mergers and acquisitions, as detailed on her LinkedIn profile.

Although Binance did not provide immediate comment on this development, the company did publish the board of directors on its website. However, the timing of this release remains unclear.

This announcement comes after Binance faced legal issues late last year, pleading guilty to various charges, including money laundering, conducting an unlicensed money-transmitting business, and violating sanctions. Former CEO Changpeng Zhao, also known as CZ, pleaded guilty to anti-money laundering and sanctions violations, agreed to a $50 million fine, and stepped down from his position. CZ’s sentencing is scheduled for April 30th.

Following CZ’s resignation, Binance appointed Richard Teng as its new CEO. Teng previously served as Binance’s Global Head of Regional Markets, bringing his extensive experience to the forefront of the exchange’s leadership.

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Stablecoin issuer Tether has expanded its Bitcoin portfolio significantly in the first quarter of 2024, acquiring an additional 8,888 bitcoins. This brings Tether’s total Bitcoin holdings to approximately 75,354 BTC, valued at over $5.2 billion. This milestone coincides with Bitcoin’s recent surge to an all-time high, currently trading around $69,500.

While Tether has not publicly disclosed its Bitcoin addresses, it was confirmed by The Block last year that Tether holds one Bitcoin address, which has been consistently accumulating bitcoins since September 2022. With the latest purchase in Q1, Tether has ascended to the rank of the seventh-largest Bitcoin holder, up from its previous position of 11 earlier this year.

When reached for comment, Tether CEO Paolo Ardoino confirmed the acquisition of 8,888 bitcoins throughout the first quarter. Ardoino explained that the purchase was spread out over the quarter and settled by the end, with one significant purchase observed on March 31.

Tether’s Bitcoin Strategy

Tether first disclosed its Bitcoin holdings in May 2023, announcing plans to allocate up to 15% of its profits quarterly towards Bitcoin purchases, shifting away from U.S. government debt and towards cryptocurrencies.

In addition to direct investments in Bitcoin, Tether has ventured into Bitcoin mining and energy production. The company has also expanded into the AI sector, aiming to lead in the development of open-source, multimodal AI models to drive innovation and accessibility within AI technology.

Tether’s core business remains the operation of the USDT stablecoin, which has enabled the accumulation of $5.4 billion in excess reserves as of December 31, 2023, according to its fourth-quarter attestation report. With a total USDT supply exceeding 109 billion, Tether remains the largest stablecoin issuer in the market, as reported by The Block’s Data Dashboard.

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