Nigeria’s Economic and Financial Crimes Commission (EFCC) has frozen bank accounts totalling over $330,000, accusing cryptocurrency traders of manipulating the naira. Traders using global platforms like Kucoin and Bybit are suspected of contributing to the local currency’s depreciation through illegal foreign exchange trading. EFCC claims these platforms have failed to comply with anti-money laundering regulations, worsening the situation.
EFCC investigator Okoro Philip directly blamed these traders for the naira’s sharp decline, which has dropped by around 70% since the start of the year. He criticised Kucoin and Bybit for allowing USDT, a digital dollar, to be exchanged for naira at rates that artificially lower the currency’s value. The EFCC has expressed concerns that such platforms are being used to trade proceeds from criminal activities.
These actions follow recent intervention by the Central Bank of Nigeria, which sold US dollars at a lower rate to bureaux de change in a bid to stabilise the naira. Despite these efforts, the currency continues to struggle, and experts warn that further depreciation is likely unless demand for US dollars is curbed.
Australia’s Federal Court has ruled that Bit Trade Pty, the operator of the Kraken cryptocurrency exchange in Australia, failed to meet design and distribution obligations for its margin trading product. The case, initiated by the Australian Securities and Investments Commission (ASIC) in September 2023, centred on Bit Trade’s failure to determine an appropriate target market before offering the product, despite prior warnings.
The court’s ruling highlights the legal requirement for financial products to be appropriately distributed to consumers. ASIC argued that the obligation to repay digital assets or national currency classified the margin trading product as a credit facility, which required stricter compliance. ASIC’s Deputy Chair, Sarah Court, emphasised the significance of this outcome as a reminder to the crypto industry about the importance of adhering to regulations.
Bit Trade, a subsidiary of US company Payward Incorporated, expressed disappointment with the decision but stated its readiness to comply with the court’s ruling. The company has seven days to negotiate declarations and injunctions with ASIC, which plans to pursue financial penalties against Bit Trade at a later date.
In addition to this case, Kraken’s parent company is also under scrutiny in the US, where the Securities and Exchange Commission filed a lawsuit in November 2023, accusing Kraken of operating as a securities exchange without proper registration.
US-based State Street Corporation, a global financial and banking service provider and Swiss crypto company Taurus have announced their partnership to expand their offerings of digital assets through new services. As per the joint statement, under the partnership, Taurus will provide State Street with crypto custody and asset tokenisation services to institutional clients like banks and asset management firms.
State Street’s chief product officer and head of digital asset solutions, Donna Milrod, stated, ‘We need to provide our clients the ability to deal with both traditional finance as well as (digital assets) side by side.’ The following move will help the company meet the market demand for safe banking partners that protect investors’ crypto assets, offering an alternative to exchanges and wallet providers with weaker security measures. Milord added that plans to offer crypto custody for customers are contingent upon the US Securities and Exchange Commission updating its 2022 accounting guidelines, making it highly costly for publicly traded banks to hold crypto.
Why does this matter?
There has been an increase in the spread of cryptocurrencies in the traditional financial system through regulated products like futures and exchange-traded funds. As financial institutions look for ways to hedge inflation and diversify their portfolios, they turn to crypto. Thus, with the significant rise of digital asset’s impact on traditional finance, there’s a gradual blurring of the distinction between these two previously distinct financial systems.
Apart from the cryptocurrency-focused media, not many US news outlets have been providing this newsworthy coverage. The United States is home to more than 100 top cryptocurrency companies. In particular, the USA is home to the world’s second largest cryptocurrency exchange, Coinbase, which is a publicly traded company. Coinbase reported a USD 273 million profit in the fourth quarter of 2023. For the full year of 2023, it earned USD 95 million on USD 3.1 billion in revenue, while in 2022, it posted a loss of USD 2.6 billion. Apart from Coinbase, Marathon Mining, the largest US cryptocurrency mining operation, reported a staggering revenue increase of 229% to a record USD 387.5 million in 2023 from USD 117.8 million in 2022. Several policy proposals are before policymakers in the USA, trying to tackle issues related to the industry.
In late July 2024, Nashville, Tennessee (USA) was the stage of the largest annual bitcoin gathering. The Bitcoin Conference 2024 had one speaker that everyone awaited with anticipation. Republican Party candidate and the former US President Donald J Trump is the first high-end political figure in the USA who agreed to address the bitcoin crowd. Trump’s appearance was announced a couple of weeks before, and at that very moment the issue of cryptocurrency and the surrounding industry slipped into the main discussion among the candidates for the November US elections.
Back on the green
So, the industry is back on the green, regulation is discussed in the US Senate and Congress and the mining industry is growing. How come that industry is not discussed that much on the main political stage?
In Nashville, everything was ready for Trump’s appearance. The former president’s campaign trail advertised his appearance as one of the highlights of his July campaign. Anyhow, the crowd gathered at the Bitcoin Conference is not politically homogeneous. There are people on the complete opposite side of Trump’s proposed political spectrum. In the past, US cryptocurrency companies were one of the top contributors to the US Democratic Party (most prominently, Sam Bankman-Fried, now convicted, former CEO of the failed cryptocurrency exchange FTX).
Crypto vs bitcoin
Before I continue, let me give you a brief explanation. It is important, trust me.
In short, the cryptocurrency industry is divided into two strongly opinionated teams standing on opposite sides. Bitcoin adopters would almost never call themselves crypto enthusiasts. They consider other cryptocurrencies, cryptocurrency exchanges, and the entire idea of ‘blockchain technology changing the world’ to be false. For (true) bitcoiners, NFTs, meme coins, microtransactions, enormous overnight profits, and other ‘miraculous’ stories were considered nothing more than elaborate schemes for tricksters and scammers willing to sell innocent investors a story of the world-changing technology. And to be fair, that narrative kind of proved to be true. For years, US financial regulators have been waging war on cryptocurrencies and online cryptocurrency exchanges as ‘unregulated securities’ businesses. The US SEC has already won many cryptocurrency-related court cases for scam and fraud charges. On the other hand, the same regulatory agency has made a clear distinction between bitcoin and others. The SEC has officially stated that bitcoin cannot be considered a security but rather a commodity and that they will not pursue any bitcoin holders or bitcoin-only companies (in a court case back in 2019). This is thought to be due the decentralised nature of bitcoin. Unlike other cryptocurrencies, bitcoin does not have a CEO, headquarters, or hire anyone to work on its update. Bitcoin is simply an open-source protocol that handles digital value as unique information. Therefore, it cannot be defined as ‘a promise of profits’ to investors, which is the main argument of the famous Howey Test, a metric that has been used by the SEC to determine the scope of its work since the 1946 Supreme Court case.
This is the first point of difference recognised by regulators and one of the main arguments for Bitcoin as digital gold. Bitcoin can be used at a settlement level to create a future ‘digital gold standard’ mimicking the now abandoned ‘gold standard’ for the global economy. Bitcoiners argue that other cryptocurrencies and the industry as a whole have achieved a huge value transfer but fail to see any value creation (thus far). Court decisions worldwide have confirmed quite similar things.
Energy consumption in cryptocurrency
The second point of major disagreement between the two sides (crypto and bitcoin) is the way the industry is spending energy. Energy is the most frequently mentioned issue in the media coverage of cryptocurrency developments. You have heard and read numerous reports on the massive amount of energy used to mine (create) cryptocurrency and 99.5% of that energy is spent in bitcoin mining. The proof-of-work (PoW) algorithm, used in the bitcoin network for security reasons, requires miners to spend energy creating new bitcoins. Specialised mining equipment is often located near big power plants, and the pursuit of cheap electricity is the major driver of the industry. In contrast, the crypto industry, apart from bitcoin, has created a solution for such energy demand with the non-energy consuming Proof-of-Stake (PoS) algorithm for network security. Therefore, the crypto industry is now pointing to bitcoin as the sole reason why regulators are thinking about cryptocurrencies, as the green agenda worldwide becomes dominant. A couple of US legislators from the Democratic Party have filed several motions for a statewide ban on bitcoin mining as an energy demanding industry. As a counter-argument, bitcoiners say that the actual amount of energy spent for bitcoin creation gives it its power. In other words, energy spent in creation gives bitcoin an intrinsic value similar to physical gold.
It is important that these distinctions have been clarified in order to understand the scope of Trump’s address. With that, back to Nashville.
One of my friends who was in the audience told me that people who normally are not interested in politics were ecstatic and wanted to hear the first address of the US president to the bitcoin crowd. President Trump took the stage at the Bitcoin Conference 2024 and gave the crowd all they wanted to hear, and a bit more. He said that the AI and bitcoin industries are similar as they need the same thing: electricity. He made a promise to the United States to ramp up electricity production by a couple of folds, clearly setting his agenda on the opposite side of Democrat’s calls for mining bans. We want all bitcoins in the world to be created in the USA, he said. ‘We will be creating so much electricity that you’ll be saying: Please, please president, we don’t want any more electricity…’
He immediately followed with the promise to relieve Mr Gary Gensler, the current chairman of the US SEC. Actually, he would do it on his first day in the office. He promised that the bitcoin and crypto industry would stay in the USA. But one of the most dazzling promises for all bitcoiners attending was his announcement that the USA might start accumulating bitcoins as for future global trade. The crowd was overwhelmed, as he confirmed that the idea of bitcoin as digital gold had finally received approval from the top policymaker, let alone the former (and possibly future) president of the United States. Later during the conference, plans were elaborated on how such a thing can be done. If true, this could indeed play a significant role in the worldwide adoption of bitcoin as a global store of digital value. Having in mind that the future global economy will certainly be digital, such a thing is actually quite possible and logical. Ultimately, it is a matter of political will to create such a strong global independent currency not related to the reigning central banking system. ‘Bitcoin will probably overtake gold (market), there was never anything like it… it’s not only a marvel of technology but the miracle of (human) corporation.’ To back that up, Trump reiterated that he would halt the development of the US Central Bank Digital Currency (CBDC).
Trump finished with the best wishes for all: ‘We will make America and bitcoin bigger, better, stronger, richer, freer, and greater than ever before… Have a good time with your bitcoin and your crypto and everything else you’re playing with.’
The moment he said it, the crowd suddenly became colder. They realised that he was not aware of the distinction between bitcoin and crypto. Actually, he might just populistically say what crowds want to hear, and the moment the script was taken off the teleprompter, he could not tell the difference between the two.
This was for sure the event that launched issues surrounding bitcoin and cryptocurrency in the US elections race, as more and more young voters are getting to the polling stations and the idea of the independent global currency becomes not so utopian and high-end tech issue. In any case, we will have to wait and see which of those promises are actual future policies and which part plays the role of enchanting the masses. Open-source software, energy consumption, and consumer protection will be discussed in detail in the future.
The next US administration is expected to adopt a ‘constructive’ stance on cryptocurrency regardless of the election outcome, according to Brian Armstrong. The CEO of Coinbase has highlighted the industry’s growing political influence as the November election approaches. Both Republican and Democratic parties have acknowledged the increasing significance of the crypto sector, with major political action committees raising over $230 million to support pro-crypto candidates.
Coinbase, the largest United States crypto exchange, is currently engaged in a legal battle with the SEC over allegations of failing to register as an exchange. The support from Wall Street and corporate figures like Elon Musk has boosted the sector’s mainstream appeal. Recently, Republican candidate Donald Trump pledged to create a ‘stockpile’ of bitcoin, while advisors to Democratic Vice President Kamala Harris have engaged with top crypto companies to improve relations.
A recent Supreme Court ruling overturning the ‘Chevron deference’ doctrine, which limited judicial interpretation of laws, is seen as a positive development for the crypto industry. Coinbase has strengthened its board by adding former US Solicitor General Paul Clement, a key figure in the Chevron ruling case. The shifting political landscape and favourable court rulings are expected to attract new institutional capital to the crypto market. Coinbase’s recent surpassing of Q2 revenue expectations and strategic board expansions further highlight its proactive stance amid these changes.
Coinbase’s second-quarter revenue surpassed Wall Street predictions, fuelled by a revival in trading volumes and positive market sentiment due to regulatory relaxation. That resulted in a 3% rise in the company’s shares. The US Securities and Exchange Commission (SEC) approved an exchange-traded fund (ETF) to track bitcoin and ether prices, resolving a prolonged regulatory conflict and boosting market confidence. CEO Brian Armstrong expressed hope for constructive future regulatory measures.
Despite ongoing disagreements with the SEC over crypto token classifications, the approval of spot bitcoin ETFs by major financial players like BlackRock and Fidelity has bolstered the sector’s credibility. As a result, the total market capitalisation has increased to around $2.36 trillion. Revenue from Coinbase’s subscription and services segment jumped 79% to $599 million, with total revenue doubling to $1.45 billion, exceeding analyst forecasts. The company reported a profit of 14 cents per share, compared to a loss in the previous year.
Why does this matter?
Coinbase’s strong Q2 performance signals a significant recovery and growth in the cryptocurrency market, driven by positive regulatory developments. The SEC’s approval of bitcoin and ether ETFs marks a pivotal moment, potentially attracting more institutional investors and increasing mainstream acceptance of digital assets.
Coinbase has added three new members to its board of directors, including an executive from OpenAI, as part of its strategy to influence US crypto policy. The new board members are Chris Lehane from OpenAI, former US Solicitor General Paul Clement, and Christa Davies, CFO of Aon and a board member for Stripe and Workday. This expansion brings the board from seven to ten members.
The additions come as Coinbase and the cryptocurrency industry aim to strengthen their political influence in the upcoming presidential election. Clement will guide Coinbase’s efforts to counter the SEC and advocate for clear digital asset regulations. Lehane, a former Airbnb policy chief, will provide strategic counsel, while Davies will focus on enhancing Coinbase’s financial and operational excellence globally.
Stand With Crypto, a non-profit organisation funded by Coinbase, now boasts 1.3 million members, and three major pro-crypto super political action committees have raised over $230 million to support favorable candidates.
Former US President Donald Trump, who once called cryptocurrency a ‘scam,’ is now headlining the Bitcoin 2024 convention in Nashville. He will speak on the final day of the three-day event, joining other prominent figures such as Republican former candidate Vivek Ramaswamy, Senator Bill Hagerty, and Senator Cynthia Lummis. The convention also includes Democratic Representative Ro Khanna of California.
The cryptocurrency industry is bouncing back after significant setbacks in 2022, including the collapse of FTX. Proponents argue that crypto users are becoming a significant political force, with the Republican Party courting their votes by promising lighter regulation. The shift has seen major pro-crypto political action committees raise over $230 million to support favourable candidates.
Trump’s appearance at the convention marks a notable shift in his stance on crypto. He has recently criticised Democratic regulatory efforts and expressed support for increased bitcoin mining in the US. That support has been well-received by the crypto industry, which has faced increased scrutiny from the Biden administration. As the crypto community rallies around supportive politicians, Trump’s new embrace of the industry is seen as a strategic move to align with emerging political forces.
Ferrari announced on Wednesday that it will expand its cryptocurrency payment option for luxury sports cars to its European dealers starting at the end of this month. The Italian automaker introduced this payment method in the United States last year to cater to its wealthy clientele’s requests.
The company plans to extend this scheme to other international markets by the end of 2024, where cryptocurrencies are legally accepted. While many major companies have avoided cryptocurrencies due to their volatility, Ferrari’s move aims to meet its customers’ evolving needs.
In the US, Ferrari partnered with BitPay to facilitate bitcoin, ether, and USDC transactions, converting crypto payments into traditional currency to shield dealers from price fluctuations. Ferrari has not disclosed whether it will use the same payment processors in Europe or other regions.
The Bahamas, the first country to issue a central bank digital currency (CBDC) with its ‘Sand Dollar’ in 2020, is now preparing regulations to mandate commercial banks to provide access to the digital currency to boost its adoption. Central Bank Governor John Rolle emphasised the need for commercial banks to distribute the Sand Dollar, as current uptake remains limited. He indicated that regulations should be in place within two years to ensure all commercial banks offer their clients access to the CBDC.
Despite being a pioneer, the Sand Dollar accounts for less than 1% of the Bahamas’ currency in circulation, with a significant drop in wallet top-ups from $49.8 million to $12 million in a year. The low adoption mirrors the experiences of countries like Nigeria and Jamaica, which have also seen minimal usage of their CBDCs. Critics argue that CBDCs still need to offer clear advantages over existing payment methods and raise concerns about potential government surveillance.
Rolle believes that mandating banks to integrate the Sand Dollar into their systems will enhance its usage but recognises that the real challenge is encouraging more businesses to accept it as a payment method. Unlike India, which offers financial incentives for using its e-rupee, or Israel, which is considering interest rates on CBDC wallets, the Bahamas does not plan to offer such incentives for the Sand Dollar.
