The EU has moved to rein in the "wild west" of crypto assets by agreeing a groundbreaking set of rules for the sector, adding to pressure on the UK and US to introduce their own curbs. From a report: Representatives from the European parliament and EU states inked an agreement late on Thursday that contains measures to guard against market abuse and manipulation, as well as requiring that crypto firms provide details of the environmental impact of their assets. "Today, we put order in the wild west of crypto assets and set clear rules for a harmonised market," said Stefan Berger, the German MEP who led negotiations on behalf of the parliament. Referring to the recent slump in cryptocurrency prices -- the total value of the market has fallen from $3tn last year to less than $900bn -- Berger added: "The recent fall in the value of digital currencies shows us how highly risky and speculative they are and that it is fundamental to act." The markets in crypto assets (MiCA) law is expected to come into force at about the end of 2023. Globally, crypto assets are largely unregulated, with national operators in the EU required only to show controls for combating money laundering.

A Wednesday meeting secured a final deal on anti-money laundering legislation for crypto transfers and largely overturned a proposal from the EU Parliament to impose laundering checks on all payments to private wallets. CoinDesk reports: The final proposals will mean customer identity needs to be verified for even the smallest crypto transfers, if it's between two regulated digital wallet providers -- but payments to unhosted private wallets will largely be left out of laundering checks. EU lawmakers and government representatives have been meeting over the last three months to hash out a political deal on the bill, which was introduced in July 2021 by the European Commission. Two sources leaving the meeting, who asked not to be named, told CoinDesk a deal had been reached on the legislation after just over an hour of talks.

Just under an hour following the publication of this article, EU lawmaker Ondrej Kovarik confirmed the provisional deal in a tweet, saying that it "strikes the right balance in mitigating risks for fighting money laundering in the crypto sector without preventing innovation and overburdening businesses." Outside the meeting room, Kovarik told CoinDesk that negotiators had found a "good balance" that would not prevent innovation. "It will allow the further development of crypto in Europe," Kovarik said.

For the rules on transfers to unhosted wallets, Kovarik said the final result had "moved quite far from the initial proposal of the European Parliament" -- something likely to be met by a sigh of relief by many in the industry. Kovarik said those unhosted wallet rules would only apply when transfers were made to a person's own private wallet, and only when the value was over 1,000 euros ($1,052). [...] Lawmakers and governments overturned European Commission plans to exempt small transactions, arguing that price volatility and the ability to break up payments into smaller chunks would make it unworkable for crypto. Further reading: Crypto Rules To Make Europe a Global Leader As Prices Plunge (The Associated Press)

A British Virgin Islands court ordered the liquidation of Three Arrows Capital, the crypto hedge fund that bet big on everything from Bitcoin to the ill-fated Luna tokens and then succumbed to a $2 trillion wipeout of the digital-asset markets. From a report: The court, which made the order on Monday, has appointed two partners at consulting and advisory firm Teneo to handle the liquidation, according to a person familiar with the matter, who declined to be identified because the information is confidential. Teneo will oversee talks with potential buyers that may be interested in Three Arrows's remaining holdings, such as tokens or equity stakes in crypto startups, the person added. A website will be set up to locate creditors and determine who is owed what. Three Arrows has invested in a range of decentralized finance platforms such as Aave and dYdX, as well as crypto infrastructure firms such as StarkWare, according to its website. It's not immediately clear what or how much of these holdings will be subject to a sale.

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, said on CNBC's Squawk Box that the only token he would lump in with commodities was bitcoin. From a report: Gensler pointedly declined to name any cryptocurrency other than the original one, notable because the market has been operating under the assumption that there is a sort of wink-and-nod understanding that ether is also not a security. "Many of these financial assets, crypto assets, have the key attributes of a security... some like bitcoin, and that's the only one, Jim, I'm going to say, because I'm not going to talk about any of these tokens, my predecessors and others have said they're a commodity," Gensler said. He made the comment as he discussed the importance of collaborating with the Commodity Futures Trading Commission (CFTC).

Russian lawmakers on Tuesday approved a draft law that would potentially exempt issuers of digital assets and cryptocurrencies from value-added tax. Reuters reports: Unprecedented Western sanctions have hit the heart of Russia's financial system over events in Ukraine and lawmakers have scrabbled to bring in new legislation to soften the blow. The draft law, approved by State Duma members in the second and third readings on Tuesday, envisages exemptions on value-added tax for issuers of digital assets and information systems operators involved in their issue. It also establishes tax rates on income earned from the sale of digital assets.

The current rate on transactions is 20%, the same as for standard assets. Under the new law, the tax would be 13% for Russian companies and 15% for foreign ones. The draft must still be reviewed by the upper house and signed by President Vladimir Putin to become law.

An anonymous reader quotes a report from TechCrunch: The House Committee on Financial Services released a report late last week offering a harrowing glimpse inside Robinhood during the frenzy around Gamestop stock early last year. The stock trading and investing app was blindsided by the surge in interest from the first big "meme stock" after Redditors and other retail investors rallied around $GME and sent its price into the stratosphere. For Robinhood, which offers individual investors a relatively frictionless way to dive into the stock market, the saga was simultaneously a massive windfall of new users and brand interest and an existential threat that almost did the company in.

House Financial Services Committee Chairwoman Maxine Waters (D-CA) called for a deep dive into what happened behind closed doors, and the new report, "Game Stopped: How the Meme Stock Market Event Exposed Troubling Business Practices, Inadequate Risk Management, and the Need for Regulatory and Legislative Reform," collects the committee's findings. The report, embedded below, is culled from a number of hearings, 95,000 pages of documents and 50 interviews. "My Committee's investigation into the matter showed we need better market regulation to address the troubling business practices that were uncovered during our investigation," Waters said. "Payment for order flow and gamification make it profitable for a new generation of trading apps to push retail investors to make as many trades as possible, making the markets more volatile than ever."

The committee described Robinhood's business as "troubling," citing its preference for aggressive growth without adequate risk management. The report also found that the majority of financial firms the committee examined don't have any plans in place to prepare for another risky phase of "extreme" market volatility. According to the report: "On the morning of January 28, 2021, Robinhood had approximately $696 million in collateral already on deposit with the NSCC, leaving it with a collateral deficit of approximately $3 billion, which it was required to post to satisfy the NSCC's clearing fund requirement or risk being in violation of the NSCC's rules and potentially losing the ability to clear trades for their customers altogether. [President and Chief Operating Officer for Robinhood's clearing operation] Swartwout confirmed that this amount came as a surprise to Robinhood and explained to Committee staff that they had anticipated and prepared for the $1.4 billion of collateral deposit requirements that represent 'core' charges, but because they did not model for Excess Capital Premium charges, Robinhood therefore did not expect and had not arranged adequate funding for the additional $2.2 billion Excess Capital Premium charge. On the morning of January 28, 2021, Jim Swartwout texted Gretchen Howard at 6:29 a.m. EST, writing 'Huge liquidity issue.'" "Ultimately, the company secured a waiver for its collateral requirements, paused some trades and averted disaster but there's no guarantee that history won't repeat itself and shake out a different way," concludes the report. "In light of the report, Waters called for 'significant' legislative reforms to prevent another Robinhood-style near-meltdown."

Further reading: FTX Exploring a Deal To Buy Robinhood

According to Bloomberg, the cryptocurrency exchange FTX is reportedly considering a deal to acquire digital trading platform Robinhood. From a report: Robinhood has not yet received a formal notice from FTX of any such takeover, the report said, while adding that FTX could ultimately choose not to pursue a purchase. The report of a potential acquisition by FTX comes just over a month after Sam Bankman-Fried, the CEO and founder of FTX, disclosed a 7.6% stake in Robinhood, paying $648 million at the time. As of Monday's close, this position was worth closer to $513 million. In a statement to Yahoo Finance following this report, Bankman-Fried said: "We are excited about Robinhood's business prospects and potential ways we could partner with them, and I have always been impressed by the business that Vlad and his team have built. That being said there are no active M&A conversations with Robinhood."

In recent days, Bankman-Fried's companies -- FTX and Alameda Research -- have offered loans to crypto firms in rough financial straits, with some likening his actions to those of Warren Buffett's during the Financial Crisis. Bankman-Fried's crypto exchange FTX offered crypto lender BlockFi a $250 million line of credit. Meanwhile, the 30-year old billionaire's trading firm, Alameda Research, has given Canadian crypto exchange Voyager a total line of credit in cash and crypto equal to more than $500 million. Similar to what Binance's founder, Changpeng Zhao, told Yahoo Finance, Bankman-Fried's actions could be interpreted both as a profit-making opportunity and a way to squash contagion in a sector where firms remain deeply intertwined in their financial dealings.

Prominent crypto hedge fund Three Arrows Capital has defaulted on a loan worth more than $670 million. Digital asset brokerage Voyager Digital issued a notice on Monday morning, stating that the fund failed to repay a loan of $350 million in the U.S. dollar-pegged stablecoin, USDC, and 15,250 bitcoin, worth about $323 million at today's prices. From a report: 3AC's solvency crunch comes after weeks of turmoil in the crypto market, which has erased hundreds of billions of dollars in value. Bitcoin and ether are both trading slightly lower in the last 24 hours, though well off their all-time highs. Meanwhile, the overall crypto market cap sits at about $950 billion, down from around $3 trillion at its peak in Nov. 2021. Voyager said it intends to pursue recovery from 3AC (Three Arrows Capital). In the interim, the broker emphasized that the platform continues to operate and fulfill customer orders and withdrawals. That assurance is likely an attempt to contain fear of contagion through the wider crypto ecosystem. "We are working diligently and expeditiously to strengthen our balance sheet and pursuing options so we can continue to meet customer liquidity demands," said Voyager CEO Stephen Ehrlich.

Austria-based crypto trading platform Bitpanda is slashing its headcount to ensure sustainability, the company said in a Friday blog post. CoinDesk reports: Bitpanda's founders said the firm needs to let employees go as it scales down due to market conditions. The company said it is aiming for a target headcount of 730. It has just over 1,000 employees, according to LinkedIn.

"We reached a point where more people joining didn't make us more effective, but created coordination overheads instead, particularly in this new market reality," Bitpanda wrote. "Looking back now, we realize that our hiring speed was not sustainable. That was a mistake." In addition, recent offers will be retracted, and employees have been notified.

Goldman Sachs is looking to raise $2 billion from investors to buy up distressed assets from troubled crypto lender Celsius, according to two people familiar with the matter. CoinDesk reports: The proposed deal would allow investors to buy up Celsius' assets at potentially big discounts in the event of a bankruptcy filing, the people said. Goldman Sachs appears to be gauging interest and soliciting commitments from Web3 crypto funds, funds specializing in distressed assets and traditional financial institutions with ample cash on hand, according to a person familiar with the situation. The assets, most likely cryptocurrencies having to be sold on the cheap, would then likely be managed by participants in the fundraising push. Celsius has tapped restructuring advisory firm Alvarez & Marsal, the Wall Street Journal reported Friday afternoon. Earlier this month, Celsius abruptly paused withdrawals, swaps, and transfers between accounts, citing "extreme market conditions." The disclosure sent bitcoin's price below $20,000 and prompted the firm's token to take a 60% tumble.

As of Monday, the company said it's still working on "stabilizing [their] liquidity and operations."

On Wednesday, Sen. Cynthia Lummis (R-WY) posted her upcoming cryptocurrency regulation bill on GitHub. What she got in return were eight pull requests and lots of trolling. The Verge reports: As of press time, Github users have commented on 24 issues in the bill and made eight pull requests -- some of which have proposed meaningful additions to the bill. One user asked the senators to "increase the value of proof-of-work cryptocurrencies with a tax on mining." Another thread raised concerns about algorithmic backing of stablecoins.

However, the more common response has been trolling. One flagged issue is titled, "You Know You Can Find Someone To Do Findom Using Google, Right." Another is titled only with the eggplant emoji. In a related thread, a user commented, "Feds are not looking post floppa," accompanied by a picture of a popular Russian caracal who has gained an internet following under the name "Big Floppa." The trolling also extends to commit requests, where one user proposed replacing the bill with the source code of the popular first-person shooter Doom. "This bill would do far more to benefit everyday Americans if its text was replaced with the source code of Doom," reads a comment responding to the request. "Devs should merge asap."

An anonymous reader quotes a report from TechCrunch: The co-founder and CEO of Solana, Anatoly Yakovenko, had a Steve Jobs moment when he stood in front of an auditorium in New York City and announced the launch of Saga, an Android web3-focused smartphone. "This is something that I fundamentally believe the industry needs to do," Yakovenko said. "We didn't see a single crypto feature at the Apple developer conference 13 years after Bitcoin was alive." People will pull out their laptops in the middle of dates so they don't miss an NFT minting opportunity, Yakovenko joked. "So I think it's time for crypto to go mobile," Yakovenko added.

Saga aims to implement digital asset products and services, so users can easily transact with their cryptocurrency through the device, opposed to a laptop browser. In addition to the announcement of Saga, Yakovenko shared the launch of the Solana Mobile Stack, or SMS, which is a web3 layer for Solana built on the phone. SMS will consist of a number of products including a seed vault, a custody solution, a mobile wallet adapter, Solana Pay for Android and its decentralized application (dApp) store. It "provides a new set of libraries for wallets and apps, allowing developers to create rich mobile experiences on Solana," a press release said.

A number of crypto companies including FTX, Phantom and Magic Eden will partner with SMS and there is also a $10 million developer fund for people who build apps on it. "The builders are coming and they are higher quality than before," Raj Gokal, COO at Solana Labs said. "They're ready for the next leg of user growth." The $1,000 device will have 512 GB of storage with a 6.67-inch OLED display and is available for preorder with a $100 deposit and deliveries will occur in Q1 2023, Yakovenko said.

Physical futures crypto exchange CoinFLEX is pausing withdrawals citing "extreme market conditions" along with uncertainty around a certain counterparty, its CEO Mark Lamb said in a blog post Thursday. CoinDesk reports: Lamb said the counterparty is not Three Arrows Capital or "any lending firm." CoinFLEX expects to resume withdrawals "in a better position as soon as possible." Additionally, FLEX Coin trading is being halted for perpetual swaps and spot trading in the short term.

Coinbase shares fell almost 10% on Wednesday after rival crypto exchange Binance.US said it's dropping certain trading fees for customers. CNBC reports: Binance.US, the U.S. affiliate of the largest crypto exchange in the world by trading volume, said it will allow users to make spot bitcoin trades for the U.S. dollar and stablecoins tether, USD Coin and Binance USD without paying spot trading fees. Shares of Coinbase were down 9.7%. Robinhood slipped by less than 1%. In a separate report, Barron's Daren Fonda speculates that a price war could be next.

"It's the beginning of the end of Coinbase's high-fee business model," says Mizuho Securities analyst Dan Dolev. "We've said that the fees will eventually go close to zero. And it could be pretty rapid -- it may be months. The market is very competitive and getting tighter."

Crypto's structural flaws make it an unsuitable basis for a monetary system, according to the Bank for International settlements (BIS). Instead, monetary systems could be built around central bank digital currencies (CBDCs), which are digital representations of central bank money. CoinDesk reports: The BIS, an association of the world's major central banks, dedicates a 42-page chapter in its "2022 Annual Economic Report" to laying out a blueprint for the future of the global monetary system. In that vision, there is room for only some of crypto's underlying technical features, like programmability and tokenization, not for cryptocurrencies themselves. "Our broad conclusion is captured in the motto, "Anything that crypto can do, CBDCs can do better,'" said Hyun Song Shin, an economic adviser and head of research at the BIS, during a press briefing on Monday.

The chapter, which will be published Tuesday ahead of the full report, identifies a number of limitations of crypto, including the lack of a stable nominal anchor. In monetary policy that is a variable -- such as a currency peg -- that can be used to control price levels. Stablecoins, cryptocurrencies pegged to the value of assets like sovereign currencies, are the crypto world's search for such an anchor, Shin said. Stablecoins attempt to "piggyback on the stability of real money issued by central banks."

Shin said the recent crash of terraUSD, a dollar stablecoin with a market capitalization of $18 billion in early May that rapidly lost its peg, illustrated how stablecoins, despite their name, are unstable and don't make good units of account. Unlike other leading stablecoins, such as USDC and USDT, which are reportedly backed by dollar-denominated reserves, terraUSD is an algorithmic stablecoin backed by another cryptocurrency (in this case LUNA) with an algorithm in place to regulate supply and demand of the stablecoin and maintain its peg. "The second important finding is that crypto and stablecoins fail to achieve the full network effects that we normally expect of money," Shin said. Money, Shin said, is the perfect example of a virtuous circle of greater use and greater acceptance. Crypto's decentralized nature, on the other hand, achieves exactly the opposite, namely fragmentation.

A new report finds that blockchain systems might not be working as well as many crypto enthusiasts assume. From a report: The report was commissioned by the Defense Advanced Research Projects Agency, or DARPA, and the work was done by the software security research company Trail of Bits. Trail of Bits CEO Dan Guido says blockchain -- the public ledgers that keep track of cryptocurrencies, which are replicated on computers around the world -- isn't the egalitarian tech its advocates claim. "It's been taken for granted that the blockchain is immutable and decentralized, because the community says so," says Guido. But in practice, he says, these networks have evolved in ways that concentrate power in the hands of certain people or companies, including the large pools of "miners" whose computers earn virtual currency by maintaining the blockchains.

Guido's team calls these potential situations "unintended centralities" -- situations in which someone gains leverage over the decentralized system, creating opportunities for tampering with the record of who owns what. Another example in the report of this kind of concentration is the fact that 60% of Bitcoin traffic is handled by just three internet service providers. "Let's say somebody with great top-down control of the internet in their country starts to interfere with that network," Guido says. By slowing down or stopping legitimate blockchain traffic, an attacker could become the "majority" voice in the consensus of what's written to a blockchain at that moment. "They can rewrite history. They can censor transactions. They can make it so that you can't spend your Bitcoin," says Guido. "It's definitely something people would want to do if they want to 'grief' the network."

Crypto lending platform BlockFi announced that it has secured a $250 million revolving credit facility from FTX, BlockFi CEO Zac Prince said in a tweet on Tuesday, and the company subsequently announced in a press release. CoinDesk reports: Prince said the move "bolsters our balance sheet and platform strength." He added that "the proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed." This is not the first time FTX CEO Sam Bankman-Fried has stepped in to bail out a major crypto company impacted by the recent market downturn. Last week, crypto broker Voyager Digital (VOYG) secured a revolving line of credit with Bankman-Fried-founded quant trading shop Alameda Research.

Though it is now in the position of backstopping a broader market crash, FTX is reportedly one of the firms that liquidated Celsius -- the troubled decentralized crypto lending platform that was forced to halt all user withdraws last week. Celsius, one of BlockFi's competitors, reportedly ran out of funds to repay depositors due to a series of risky decentralized finance bets. In the press release, BlockFi said the credit facility is contingent on the execution of "definitive documents," which the two companies expect to be completed in "the coming days."

An anonymous reader quotes a report from CoinDesk: Investment product provider ProShares is set to list the U.S.'s first exchange-traded fund (ETF) allowing investors to bet against the price of bitcoin (BTC). The ProShares Short Bitcoin Strategy (BITI), which is designed to deliver the inverse of bitcoin's performance, will start trading on the New York Stock Exchange (NYSE) Tuesday, ProShares announced Monday. The ETF will allow investors to hedge their bitcoin exposure, which may prove particularly pertinent given the sharp downturn in crypto markets of late.

ProShares was the first firm to list a bitcoin futures ETF in October, a factor which saw the world's largest crypto hit an all-time high of around $68,900 in the subsequent weeks. Bitcoin investors will be hoping the listing of a short bitcoin futures ETF does not have a similar effect on the world's largest crypto in reverse. Bitcoin's price dropped below $20,000 for the first time since Dec. 20 on June 18, falling as low as $17,800 the following day.

CNN reports: "The price of bitcoin breached $19,000," reports CNN, "and ethereum fell below $1,000 Saturday morning, extending the brutal crypto bear market to new lows." Bitcoin plunged nearly 10% in less than 24 hours, adding to a series of sustained losses over the last several months. It now sits below $20,000 for the first time since November 2020, down more than 70% from an all-time high of $68,000 per coin in November 2021. Bitcoin has lost $900 billion in value since that peak. Ether is also experiencing a so-called crypto winter. The second-largest digital token plummeted 10% on Saturday to $975, its lowest level since January 2021. The coin has lost 80% of its value from its record high last November.... The crypto world is reeling from the $60 billion collapse last month of two other major tokens, Terra-Luna and Celsius. Those losses have increased doubts about the general stability of digital currency.... Still, even at $20,000, about half of all bitcoin wallets are still sitting on profits, according to an analysis by the Columbia Business School cited by The New York Times. The study also found that 61% of bitcoin addresses had not sold anything in the last 12 months, suggesting that a total run on crypto may be avoidable.
Bitcoin has now lost more than 70% of its value in about seven months. But CBS News notes that even then, "many in the industry had believed it would not fall under $20,000." The overall market value of cryptocurrency assets has fallen from $3 trillion to below $1 trillion, according to coinmarketcap.com, a company that tracks crypto prices. A spate of crypto meltdowns has erased tens of billions of dollars of value from the currencies and sparked urgent calls to regulate the freewheeling industry. Last week, bipartisan legislation was introduced in the U.S. Senate to regulate the digital assets.

For the first time since 2020, Ethereum mining has become unprofitable for many miners connected to a traditional energy grid. CryptoSlate reports: The price of Ethereum has dropped below $1,250 while energy prices are skyrocketing. The average cost of electricity in states such as New England, Connecticut, Maine, Massachusetts, New Hampshire, and Rhode Island is over $0.22 per kWh. Using a single Nvidia 3090 overclocked to generate 130mh/s will cost miners around $1.85-$2.13 per day in electricity. The Ethereum reward for the same GPU is just (0.001625 ETH) $2.03 at today's price. Therefore any miner paying more than $0.245 for electricity is now paying more for electricity than the value of Ethereum being mined. At this point, it becomes more cost-effective to turn off the mining rig and buy Ethereum spot using the money that would otherwise be used on electricity. [...]

There are plenty of alternative cryptocurrencies that can be mined with a GPU. However, the others are also down considerably. At $0.245kwh, Ergo yields -$0.06, RavenCoin -$0.58/day, Ethereum Classic -$0.66, and Firo -$0.70 using a single Nvidia 3090. These are the contenders for GPU hashrate when Ethereum finally goes to proof of stake. The issue is that an increase in miners on the network will dramatically increase the mining difficulty meaning that, to be remotely profitable, the price of the tokens will also have to increase considerably. For Ethereum to become profitable again, either the difficulty needs to decrease or the price needs to rise above $1,400. Alternatively, should energy prices drop below $0.24kwh to match average costs in other parts of the United States, Ethereum would also become profitable.