Category: Cryptocurrency

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MicroStrategy, known as the largest corporate holder of bitcoin, has announced its intention to develop a decentralized identity service utilizing Ordinals inscriptions.

Earlier this year, the software consulting firm rebranded itself as a “bitcoin development company,” emphasizing its commitment to advancing the Bitcoin network through various means such as financial markets, advocacy, and innovation. The unveiling of “MicroStrategy Orange” signifies the company’s dedication to realizing this objective.

MicroStrategy Orange aims to offer decentralized identities that are “trustless, tamper-proof, and long-lived,” according to founder Michael Saylor. The service will enable users to issue decentralized identifiers (DIDs), ensuring pseudonymity similar to bitcoin transactions, which are not directly linked to real-world identities.

Leveraging Bitcoin’s Ordinals Protocol, MicroStrategy Orange enables the storage and communication of information on individual satoshis, the smallest unit of bitcoin.

MicroStrategy has already developed an application called “Orange For Outlook” using its decentralized identity service. This application integrates digital signatures into emails, allowing recipients to verify the identity of the sender securely.

Currently, MicroStrategy holds a substantial amount of bitcoin, totaling 214,400 BTC, which amounts to approximately $10 billion. This constitutes more than 1% of the total bitcoin supply that will ever exist.

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MoonPay, a popular cryptocurrency purchasing app, has forged a partnership with financial services behemoth PayPal to offer American users a streamlined method for buying cryptocurrencies using their PayPal accounts.

This collaboration aims to streamline the process of purchasing cryptocurrencies for millions of Americans. It enables users to conduct wallet transfers, bank transfers, and debit card transactions directly within the MoonPay app, as reported by Coindesk.

The integration represents a strategic expansion for PayPal, which currently provides a limited range of major cryptocurrencies. Through MoonPay’s infrastructure, PayPal users gain access to a broader array of popular tokens.

Ivan Soto-Wright, the co-founder and CEO of MoonPay, described the partnership as “symbiotic,” emphasizing its benefits for both MoonPay users and PayPal’s cryptocurrency offerings.

“This is not merely an integration; it involves embedding PayPal within MoonPay’s framework,” Soto-Wright explained.

He underscored the significance of this collaboration, highlighting the extensive process required to align with PayPal’s operational standards.

“We are the first company to achieve this with PayPal, and it involved a lengthy process to gain their confidence,” he added.

MoonPay, which handles billions of dollars in cryptocurrency transactions via debit and credit cards, views this partnership as a crucial advancement in reaching a broader customer base. It particularly benefits users who may have encountered banking restrictions or card declines when attempting to purchase cryptocurrencies.

As digital assets gain momentum, such collaborations become increasingly pivotal. They not only enhance the user experience by offering more flexible payment options but also signify the growing acceptance of cryptocurrencies within mainstream financial services.

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JPMorgan, a prominent financial institution on Wall Street, maintains a cautious outlook on cryptocurrency markets in the short term due to several factors, including the fading retail impulse and the absence of positive catalysts.

According to the bank’s analysis, retail investors were significant contributors to the recent sell-off in both crypto and equity assets during April. Moreover, spot bitcoin exchange-traded funds (ETFs) experienced outflows, indicating a decline in retail interest. The bank identifies three main challenges persisting in the market: high positioning levels, elevated bitcoin prices compared to gold and production costs, and subdued crypto venture capital (VC) funding.

The recent profit-taking in cryptocurrency markets has been notably driven by retail investors, overshadowing the involvement of institutional investors. Bitcoin, for instance, witnessed a 16% decline in April, marking its largest monthly drop since June 2022.

In a notable development, U.S.-based spot bitcoin ETFs recorded their highest-ever net outflows on Wednesday, totaling $563.7 million across 11 ETFs. This significant withdrawal occurred despite these funds only commencing trading on January 11.

JPMorgan’s analysis suggests that institutional investors, particularly momentum traders like commodity trading advisors (CTAs), have been capitalizing on previous extensive positions in bitcoin and gold. However, the reduction in positions by other institutional investors outside of quantitative funds and CTAs appears to be more limited, as indicated by futures market data.

In summary, while retail investors have played a prominent role in the recent crypto market sell-off, institutional investors, particularly momentum traders, have also been active in adjusting their positions. JPMorgan’s cautious stance reflects the ongoing challenges and uncertainties prevailing in the cryptocurrency landscape.

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Two bipartisan lawmakers, Reps. Wiley Nickel, D-N.C., and Drew Ferguson, R-Ga., have introduced the Providing Tax Clarity for Digital Assets Act. The bill aims to clarify that staking rewards should only be taxed at the time of their sale to prevent double taxation.

Rep. Ferguson emphasized the need for clarity in the treatment of digital asset rewards, citing confusion among investors and businesses, as well as the risk of American businesses relocating overseas due to tax complexities. He highlighted that the bill would provide much-needed clarity, establish US leadership in digital asset tax treatment, and foster innovation and business within the country.

The bill comes in response to a ruling by the Internal Revenue Service last year, which stated that crypto investors earning rewards from staking services must include the value of those rewards in their gross income.

According to Coin Center, the bill proposes that taxes on block rewards from proof-of-work or proof-of-stake networks should only be applied when they are spent or sold, rather than when they are acquired. This approach aims to resolve major issues with current cryptocurrency taxation and ensure fair treatment of the technology.

The Proof of Stake Alliance echoed similar sentiments, describing the bill as a “common-sense clarification of existing law” that promotes tax fairness and compliance. The alliance emphasized that the bill would prevent double taxation by taxing block rewards only at the time of their sale or exchange.

Rep. Nickel, a supporter of crypto, has previously advocated for digital asset legislation and pushed for the advancement of the Financial Innovation and Technology Act. Both Rep. Nickel and Rep. Ferguson have announced their retirement and will not seek reelection.

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Securitize, a leading player in RWA tokenization, has closed a significant $47 million funding round, with BlackRock spearheading the investment. This collaboration underscores the growing momentum and promise within the RWA tokenization landscape.

The investment round, announced on May 1, saw participation from key financial institutions including Hamilton Lane, ParaFi Capital, and Tradeweb Markets. The infusion of capital will enable Securitize to further its mission of harnessing blockchain technology to digitize capital markets, thereby simplifying processes and expanding accessibility.

Carlos Domingo, Co-Founder and CEO of Securitize, expressed gratitude for the support from esteemed investors, emphasizing the transformative potential of blockchain in reshaping finance and tokenization specifically.

BlackRock’s involvement marks a strategic move, particularly following their collaboration with Securitize on the BlackRock USD Institutional Digital Liquidity Fund. This partnership underscores BlackRock’s commitment to RWA tokenization, a process involving the digitization of real-world assets like equities and bonds for trading on a blockchain.

Joseph Chalom, BlackRock’s Global Head of Strategic Ecosystem Partnerships, has been appointed to Securitize’s Board of Directors, signaling deeper collaboration and strategic alignment.

According to Chalom, BlackRock sees tokenization as a catalyst for significant transformation in capital markets infrastructure. The investment in Securitize reflects BlackRock’s commitment to driving innovation to meet the evolving needs of its clients.

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Spot-Bitcoin exchange-traded funds (ETFs) are exhibiting signs of stress as the cryptocurrency market endures a downturn, with prices of major ETFs tracking Bitcoin witnessing significant discounts to their underlying asset values.

Following a roughly 5% decline in Bitcoin’s price, several leading ETFs recorded their largest discounts on the value of underlying assets in their short trading history on Tuesday. The trend persisted on Wednesday as Bitcoin continued to drop, experiencing a decline of up to 5.6%.

The $16 billion iShares Bitcoin Trust (IBIT) closed approximately 1.7% below its net asset value on Tuesday, marking the largest dislocation since its inception in January. Similarly, the $9 billion Fidelity Wise Origin Bitcoin Fund (FBTC) and the $2.5 billion ARK 21Shares Bitcoin ETF (ARKB) both saw discounts exceeding 1.4%, the highest on record for each ETF. The $2 billion Bitwise Bitcoin ETF (BITB) also closed with a notable discount.

James Seyffart, an ETF analyst at Bloomberg Intelligence, noted that while the discounts are significant, they are not unprecedented in the context of ETF trading dynamics. However, the deviations underscore the challenges of integrating the traditional market with Bitcoin, where shares in ETFs can only be created and redeemed for cash rather than Bitcoin itself.

Although price discrepancies in ETFs tend to be temporary due to the creation-redemption mechanism, Bitcoin’s volatility presents greater risks for ETF investors compared to traditional financial assets. Despite this, specialized trading firms, known as authorized participants, capitalize on such volatility to profitably maintain ETF prices in line with their net asset values.

Virtu Financial Inc. CEO Douglas A. Cifu expressed confidence in sustained opportunities in crypto ETFs, citing the inherent volatility of the asset class. However, the uncertain macroeconomic environment, potentially influenced by Federal Reserve policy decisions, poses challenges for speculative assets like digital tokens.

While hopes persist for increased institutional adoption of spot-bitcoin ETFs, the performance of Bitcoin remains intertwined with broader economic factors. As the Federal Reserve concludes its policy meeting, the outlook for rate cuts may further impact Bitcoin’s price trajectory and ETF discounts.

Mohit Bajaj, director of ETFs at WallachBeth Capital, acknowledged the possibility of ETF discounts persisting if Bitcoin’s downward trend continues, highlighting the uncertainty surrounding the cryptocurrency market.

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On April 23, three days after the Bitcoin halving event, an impressive 1.6 million unique Bitcoin transactions were recorded, according to data from Blockchain.com and Glassnode. This notable increase in transactions indicates a growing interest in using Bitcoin for everyday transactions, expanding its conventional role beyond being merely a store of value.

Bitcoin Runes Lead Daily Transactions

According to Blockchain.com data, the launch of Bitcoin Runes, an alternative to Bitcoin Ordinals, directly correlates with the surge in daily Bitcoin payments. On April 23, Runes accounted for 68% of all Bitcoin transactions, showcasing rapid adoption within the community.

By April 29, BTC had reclaimed its dominance, representing 77.8% of Bitcoin transactions, while Runes maintained a strong second position with an 18.8% share. Other protocols, including Ordinals and BRC-20 tokens, also contributed to the network activity.

Impact on Miners and Market Opportunities

The ascent of Bitcoin Runes has resulted in over 1,200 BTC in transaction fees for miners since the Bitcoin halving event, offering a substantial incentive for miners and highlighting the economic feasibility of this emerging protocol.

However, some experts caution against excessive optimism. On April 17, pseudonymous DeFi researcher Ignas, cautioned on X (formerly Twitter), suggesting that while Runes appear promising, they could face a similar fate to NFTs.

The Rise of Bitcoin DeFi (BTCFi)

BRC-20 and Runes tokens symbolize the emergence of a new standard known as Bitcoin DeFi (BTCFi). These fungible token standards aim to enhance Bitcoin’s utility beyond its existing capabilities, paving the way for DeFi applications built on the Bitcoin blockchain.

This evolution is poised to unlock fresh opportunities for Bitcoin holders and stimulate the growth of the BTCFi ecosystem. As developers delve into BTCFi’s potential, investors can anticipate further innovation and diversification in Bitcoin payments and applications.

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Major U.S. crypto stocks, including bitcoin stockpiler MicroStrategy and leading exchange Coinbase, experienced significant losses in Tuesday’s trading session. MicroStrategy reported a 5% year-over-year decrease in first-quarter revenue, contributing to a sharp decline in its share price.

MicroStrategy’s shares plummeted by as much as 17% on Tuesday following news of its missed earnings and the downturn in the price of bitcoin. Although the shares recovered slightly, they were still down by 15.8% at $1,086 as of 1:45 p.m. ET. Last month, the company’s shares also experienced a notable decline of up to 16%.

Similarly, fellow U.S. crypto stocks such as Coinbase, Marathon Digital, and Riot Platforms faced losses in midday trading. Coinbase saw a drop of as much as 6%, while Marathon Digital and Riot Platforms experienced declines of 9% and 7%, respectively.

These mining stocks have witnessed fluctuations throughout the year, influenced by changes in bitcoin’s price. CleanSpark, Bitfarms, and Hut 8 also shed value, falling by 9%, 6%, and 5%, respectively.

MicroStrategy’s first-quarter revenue of $115.2 million, representing a 5% decrease year-over-year, contributed to the negative sentiment surrounding the stock. As MicroStrategy’s primary strategy for creating long-term value involves accumulating bitcoin, its shares often act as a proxy for the cryptocurrency’s performance.

Bitcoin itself experienced a 4.5% decline, trading at $60,093 at the time of publication. The downturn in bitcoin’s price has led to corresponding drops in other crypto-related stocks, reflecting the interconnectedness of the cryptocurrency market.

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Roger Ver, an early investor in Bitcoin, has been arrested and charged with mail fraud, tax evasion, and filing false tax returns. The U.S. Department of Justice announced the charges, revealing that Ver allegedly concealed Bitcoin ownership from the U.S. Internal Revenue Service (IRS), leading to an estimated loss of $48 million.

The indictment, recently unsealed, outlines three charges against Ver, who was arrested in Spain over the weekend with potential extradition to the United States. According to the DOJ statement, Ver’s alleged actions include concealing Bitcoin ownership and profiting from the sale of tens of thousands of Bitcoins on cryptocurrency exchanges for approximately $240 million in cash in November 2017.

Despite not being a U.S. citizen at the time, Ver was legally obligated to report certain distributions, such as dividends from U.S. corporations MemoryDealers and Agilestar, where he held ownership interests. However, he allegedly failed to disclose these distributions to the IRS, resulting in his 2017 tax return not reporting any gain or paying tax related to the distributions.

Furthermore, Ver is accused of using legal services to prepare and file false tax returns, undervaluing the two companies, concealing their Bitcoin holdings of 73,000 BTC, and omitting his personal Bitcoin ownership.

Ver, who renounced his U.S. citizenship in 2014 after reportedly gaining citizenship in St. Kitts and Nevis, had previously been a resident of Santa Clara, California. Known online as “Bitcoin Jesus,” Ver was the former CEO of Bitcoin.com, a digital wallet developer.

The arrest and charges against Roger Ver underscore the increasing scrutiny faced by individuals in the cryptocurrency space regarding tax compliance and financial transparency.

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Coinbase, the largest crypto exchange in the United States by trading volume, has initiated support for the Lightning Network starting today, marking a significant step towards enabling faster and more cost-effective bitcoin transactions for its users. The integration follows seven months after Coinbase confirmed its decision to incorporate the Lightning Network protocol, aligning with competitors like Bitfinex, Kraken, and Binance.

Previously, bitcoin transfers on Coinbase were processed on-chain, leading to transaction times ranging from 10 minutes to two hours and incurring high fees during network congestion periods. The Lightning Network, introduced in 2017, operates as a Layer 2 protocol built atop the Bitcoin blockchain. It addresses scalability concerns through bi-directional payment channels, facilitating near-instant and low-fee transactions off-chain without immediate settlement on the base layer.

Viktor Bunin, the protocol specialist and Lightning integration lead at Coinbase, conveyed his excitement about the launch, noting that the increasing adoption of Bitcoin contributes to economic freedom globally. He expressed his satisfaction with the live implementation of the Lightning integration, emphasizing its role in enhancing the utility and accessibility of Bitcoin on a global scale.

Fees on the Lightning Network comprise a flat rate base fee as low as one satoshi (the smallest unit of bitcoin, equivalent to less than $0.01) and a liquidity provider fee or fee rate as a percentage charged on the payment value. Coinbase applies a 0.1% processing fee for Lightning transactions on sends only, with transactions expected to be processed within seconds. Initially, users will be limited to withdrawing a maximum of $2,000, resulting in a maximum withdrawal fee of $2, a conservative measure aimed at enhancing user experience.

In a statement, Coinbase asserted that its Lightning Network integration reduces the cost for users to send bitcoin globally, claiming it is 20 times lower than the average 2% charged on credit card transactions and a fraction of the $30 incurred for wire transfers.

The collaboration with Lightspark, a Lightning Network infrastructure firm led by CEO David Marcus, underscores Coinbase’s commitment to offering innovative solutions for internet payments. Marcus hailed the partnership as a pivotal milestone, enabling millions worldwide to access fast and affordable Bitcoin transactions.

While the Lightning Network integration initially targets specific regions, Coinbase plans to expand support based on user feedback and network liquidity. Although Lightning support for Coinbase Wallet and other services is not currently planned, the team remains open to future integration opportunities as Lightning adoption grows.

Coinbase’s decision to incorporate Lightning Network support follows a thorough evaluation of the protocol’s growth and maturity, emphasizing the company’s dedication to enhancing economic freedom through Bitcoin adoption. With Lightning Network adoption on the rise, the collaboration between Coinbase and Lightspark signals a significant advancement in the scalability and accessibility of Bitcoin transactions globally.

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