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‘Historic’ regulation is coming for cryptocurrencies in Europe

Regional regulators are readying a pan-Europe framework to support the long-term growth of digital assets.

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The European Commission, the legislative body of the European Union, is in the final stages of a proposal for the region’s first cryptocurrency and digital finance framework, according to a report by financial news outlet IFC Review.

Successful passage of the law and its subsequent adoption would provide for an optimal legal environment for crypto firms to build their business and add to the European economy, the report noted.

The Commission has spent the last year holding consultations with experts and defining cryptocurrencies. Some of these include recognizing digital currencies—both crypto assets like Bitcoin and stablecoins—as financial instruments and introducing a framework for blockchain-based tech platforms.

Bruno Schneider–Le Saout, the chairman of the crypto advocacy body European Blocktech Federation, noted the qualification of crypto-assets as financial instruments placed the asset class within the extensive set of European and national legal instruments that regulate the region’s trillion-dollar financial market.

He further called the forthcoming legislation as “historic,” considering the vast opportunities it opens for businesses and entrepreneurs to build digital finance applications.

Many businesses in the crypto space have long called for clear regulations. (Image: Shutterstock)

“The new legislation will provide legal certainty, which is needed both for crypto-assets that are not covered by existing EU financial services legislation and for the application of DLT in financial services and the tokenization of traditional financial instruments,” said Schneider–Le Saout.

The legislation also detailed a plan to create a single market for cryptocurrencies so they can be sold across all European countries. This is similar to the introduction of the Euro in 1999, which created a unified currency for all Union members at the time.

Such an arrangement—for cryptocurrencies—would be made around five aspects: Overall scope, subject matter and definitions, requirements for crypto-asset service providers, requirements on issuers of stablecoins, and supervision of those issuers, the report said.

The legislation comes as Commission vice president Valdis Dombrovskis stated in June that the lack of legal certainty around cryptocurrencies impeded growth and business opportunities for the region.

He said at the time, “This is a good chance for Europe to strengthen its international standing and to become a global standard-setter, with European companies leading new technologies for digital finance.”

Meanwhile, the current proposal is targeting a rollout in the third quarter of this year. However, delays can be expected due to the ongoing coronavirus pandemic, the report noted.

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BTC Slips Below $17,000 As Bitcoin Whales Are Ready for the Dump

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Bitcoin bulls should take a moment of caution as this might not be the right time for accumulation. As per the latest reports, Bitcoin Whales have accelerated depositing of their BTC holdings to exchanges. Meaning, we can possibly see heaving selling, and dumping in the short term.

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Bitcoin is already facing selling pressure as the BTC price corrects another 5% slipping below $17,000. At press time, Bitcoin is trading at a price of $16,886 with a market cap of $313 billion. Cryptocurrency on-chain analyst and CryptoQuant CEO, Ki-Young Ju, has given a red alert.

As per the data from Glassnode, the number of Bitcoin Whales (investors holding over 1000 BTC) has reached an all-time high. The total number of Bitcoin whales worldwide is over 2000 as per the Glassnode data.

There’s been a steady rise in the number of Bitcoin Whales over the last few years, and more so in 2020. It looks like when the BTC price tanked during the March 2020 correction, whales accumulated in big numbers. Note that despite sizeable institutional participation this year, Bitcoin whales still dominate the BTC ownership and price movement as of date.

Bitcoin Heading for $14,000 And Possibly Even Lower

Just before Wednesday’s market crash, CNBC’s Brian Kelly had already warned of possible correction and Bitcoin going all the way to $12,000. Kelly noted that massive movement in the altcoin space has triggered the FOMO and attracted speculative investors.

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Kelly noted that the surge in newly created BTC addresses is also a sign of caution. He said: “Whenever you get that big of an address growth implied, that is a caution sign”. Another popular market analyst Peter Brandt said that a 37% correction from the top is on the cards.

One of the major factors preventing BTC to cross its all-time high of $20,000 is that post that level, Bitcoin will enter a price discovery mode. Above $20,000, there’s no historical data to suggest how BTC will show its movement. Analysts think that after crossing its ATH, Bitcoin can settle anywhere between $25,000 and $100K. Thus, BTC bears and sellers are aggressively defending their position and interest while not letting it move past $20,000.


To keep track of DeFi updates in real time, check out our DeFi news feed Here.

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Author: Bhushan Akolkar




Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

Source: https://coingape.com/btc-slips-17000-bitcoin-whales-ready-dump/

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To Chainlink? That’s the DeFi Question: Exploring the Recent Compound Liquidations

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On Thursday, November 26th, the price of the Dai stablecoin (ordinarily ~$1 USD) exploded up to $1.30 on Coinbase as traders tried to snag up funds en masse to pay back, and thus keep afloat, their DeFi lending positions.

Yet this Dai price spike, combined with an acutely falling ETH price, pushed some Dai positions on DeFi lending protocol Compound into being undercollateralized and thus capable of being liquidated.

This dynamic played out because Compound’s Dai markets centrally rely on Coinbase’s Dai price feed, which skewed upward compared to other exchanges during this episode because many of Coinbase’s users were uniquely piling into Dai all at once.

This sequence of events led to more than $100 million worth of liquidations on Compound, which in turn led to considerable debate around the Ethereum ecosystem as to whether Compound messed up by overly relying on a single oracle of if the whole incident was just an unfortunate possibility panning out in the young DeFi arena.

Manipulation or Not?

In the wake of the Compound liquidations, people quickly started started positing that the underlying Dai price spike on Coinbase was the result of manipulation, i.e. a price oracle manipulation attack.

However, it’s not clear at all that an attack was the culprit. Evidence suggests that organic trading and liquidation activity led to the Compound liquidations, as some Ethereum users pointed out on social media.

Strength in Numbers?

Much of the complains levelled at Compound over the last 24 hours have to do with the fact that the DeFi protocol was overly reliant on a singular price feed, Coinbase’s.

Yet this isn’t exactly the case: Compound’s price oracle also incorporates time-weighted average prices (TWAPs), i.e. price oracles, from leading decentralized exchange for further assurances. As Uniswap creator Hayden Adams commented on Thursday:

“From what I’ve heard, the compound liquidations would have been much worse without the addition of [Uniswap] TWAPs to the Compound oracle … While the Coinbase oracle price spiked, Uniswap TWAPs did not increase much, causing the most extreme prices to be rejected.”

This is certainly validating for Uniswap’s TWAPs, but it also highlights that Compound’s price oracle performance was further strengthened by such multi-dimensionality. And for the folks who critiqued Compound for its latest major liquidations, that was the crux of the matter: that Compound would have been even better served by using many price oracles rather than less than few.

Chainlink’s Nazarov Chimes In

Chainlink is the premier decentralized oracle solution in DeFi today, and its price feeds already power an impressive range of DeFi projects. That includes lending protocol to Aave, which generally works somewhat similarly to Compound but relies instead on Chainlink’s decentralized oracles.

Aave’s worth highlighting here, then, because its Chainlink-powered Dai markets didn’t experience a raft of liquidations like Compound’s did. That’s on account of Chainlink bundling a range of price feeds rather than just relying on one.

On the news, Blockonomi reached out to Chainlink co-founder Sergey Nazarov to see what he thought the latetst Compound liquidation episode represented for DeFi. In a statement shared with Blockonomi, Nazarov noted:

“We predicted this exact exploit more than a year ago, spoke publicly about this attack vector at multiple conferences, and issued a public advisory for the wider developer community. During this specific exploit, the Chainlink network performed as expected thanks to its extensive decentralization at both the node and data source levels, returning an accurate global price for these assets. Throughout this exploit, combined with high gas prices, DeFi smart contracts consuming data from the Chainlink network remained unaffected and accurate in the proper operation of their protocols.”

In the very least, then, this Compound incident should have more than a few DeFi projects doubling down on defense by exploring how to integrate with Chainlink’s oracle tech.

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Source: https://blockonomi.com/chainlink-compound-liquidations/

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Coinbase CEO Fears Rumored Regulations Proposed By The Trump Administration

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Coinbase’s CEO Brian Armstrong has sent a letter to the US Treasury Secretary Steven Mnuchin regarding new rumored regulations on self-hosted cryptocurrency wallets. Armstrong believes that if implemented, the new legislation could harm users and, ultimately, the role of the US in the cryptocurrency financial field.

New Regulations On Self-Hosted Crypto Wallets?

The CEO of the largest US-based digital asset exchange took it to Twitter to outline the potential importance of these regulations if indeed implemented. The rumors indicate that the current Treasury Secretary Mnuchin plans to make them official before the end of his term.

Armstrong explained that self-hosted cryptocurrency wallets (also referred to as non-custodial or self-custody wallets) are “a type of software that lets individuals store and use their own cryptocurrency, instead of needing to rely on a third-party financial institution.”

They enable users to access basic financial services through this technology – “just like anyone can use a computer or smartphone to access the open market.”

Should the proposed regulations become official, they would require financial institutions, including Coinbase, to verify the recipient (owner) of the self-hosted wallet. Meaning, it would collect identifying information on that party before completing the transaction.

According to Armstrong, such requirements would lead to several potential issues because “it is often impractical to collect identifying information on a recipient in the crypto-economy.”

Some of those issues could affect users that send cryptocurrencies to various merchants online or to other people in emerging markets, where “it is difficult or impossible to collect meaningful know-your-customer information.”

Even simpler transactions like upvoting some content on Reddit or transferring an item in a game would also require the verification of the recipient, which makes the process prolonged and complicated.

The US Will Suffer The Most

Armstrong believes that the impact of these “barriers” would prompt US-based users to initiate fewer transactions. This would “effectively create a walled garden for crypto financial services in the US, cutting us from innovation happening in the rest of the world.”

US customers would turn to foreign cryptocurrency companies to access such services, which could put the country’s status as a financial hub at risk in the long-run.

“If this crypto regulation comes out, it would be a terrible legacy and have long-standing negative impacts for the US. In the early days of the internet, there were people who called for it to be regulated like to phone companies. Thank goodness they didn’t.” – added Armstrong.

He also asserted that Coinbase and other cryptocurrency companies have sent a letter to the Treasury last week to articulate these concerns. However, he hasn’t specified if the Treasury has responded in any way yet.

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Source: https://cryptopotato.com/coinbase-ceo-fears-rumored-regulations-proposed-by-the-trump-administration/

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