The general sentiment of the crypto-asset industry remains in a state of shock from the market correction that occurred over the past few weeks. The macro factors moving the markets are a byproduct of Russia’s invasion of Ukraine and China’s policy on COVID Zero combined, with the Federal Reserve’s recent interest rate hike adding fuel to the fire. Food prices are up 37% year-on-year, sparking protests in Sri Lanka and Iran. However, panic selling appears to be about to end; Large investors, such as MicroStrategy, are still holding their cryptocurrency holdings. Bitcoin is down 13%, trading between $33,000 and $29,000 over the past week, reducing its market dominance to 42.4% as shown in Figure 1. Ethereum is down 20%, trading between $2,423 and 2013 dollars. On the upside, the biggest gainers from last week’s rally were Cosmos, Solana and Cardano.
Figure 1: Major Crypto Assets by Percentage of Total Market Cap
Regulations and Accreditation
Treasury Secretary Janet Yellen has urged the Senate Banking, Housing, and Urban Affairs Committee to pass a bill this year to regulate stablecoins. It believes that the current framework does not provide consistent or comprehensive criteria for stablecoin risk as a new type of payment product. The pending Stablecoin Trust law does not affect stablecoins for non-payment, which includes algorithmic stablecoins. It remains unclear whether Congress will adopt the stable algorithms or impose an outright ban.
Germany released a document on Tuesday outlining clear income tax rules for crypto-asset groups. people who sell Bitcoin or Ethereum More than 12 months after acquisition, you will not be liable for sale taxes if you make a profit. This is a huge gain for the crypto-asset market, especially at the time of the downtrend.
On the other hand, Portugal allegedly will start taxing crypto assets in the “near future.” Until this announcement was made in the country’s parliament, Portugal was considered a tax haven for investors who own and trade crypto assets, mainly due to an effective capital gains rate of zero.
With bitcoin entering its seventh week of decline, bitcoin miners in Norway breathed a sigh of relief. The Norwegian parliament has rejected a bill banning bitcoin mining, which was proposed back in March. Norway contributes up to 1% to the global Bitcoin hash rate, benefiting from the country’s renewable energy generated by hydropower.
In El Salvador, representatives of 44 countries met on Monday to discuss financial inclusion, the digital economy, unbanked banking, and the introduction of bitcoin and its benefits in the country.
Against the backdrop of the plight of Terra Luna, being a Singapore-registered company, the country’s regulators are expected to focus their audit focus on Terraform Labs, which has no material ties to the state. There is a tendency for crypto companies that are registering in Singapore to do business abroad without having a physical office in the country. Last month, Parliament passed a bill requiring these companies to obtain a license primarily for anti-money laundering reasons. The operation of Terra Luna Bank may inspire regulators to extend provisions.
DeFi and NFTs
Several crypto exchanges, including Binance and OKX, have delisted LUNA and UST. Terraform Labs founder Do Kwon revealed a “revival plan” that would essentially restart the network as “Terra Classic” with Luna Classic (LUNC) as its new token, and redistribute entire network ownership to UST and LUNA holders with 1 billion new tokens. The Luna Foundation Guards also disclosed its Bitcoin reserves and spending of 80,000 BTC, and after the crash, 313 BTC were left, which it will use to compensate terrestrial holders, starting with the smallest.
Figure 2: TerraUSD (UST) performance last week
Aurora, an Ethereum virtual machine, has launched a $90 million fund, in partnership with Proximity Labs, to scale decentralized applications on Near Protocol. PancakeSwap, a decentralized crypto exchange (DEX) built on the Binance Smart Chain, announced in a new light paper that it is switching from an unlimited supply model to one with a 750M CAKE cap.
Bancor, a DEX built on Ethereum and EOSIO, has released the third upgrade of its protocol, which contains new features aimed at providing an easier storage process; Which includes instant protection against non-permanent losses, double bonuses and automatic doubling.
On the NFT front, Avalanche’s largest GameFi app, Crabada, will be migrated to the Swimmer Network, the avalanche subnet, easing congestion on the network and thus reducing gas charges. Dapper Labs, the company behind CryptoKitties, the NBA Top Shot and Flow blockchain, has unveiled a $725 million ecosystem fund to support the latter. With the participation of venture capital firm a16z, Coatue, and others, the mega fund will support current and future developers building applications on the Flow blockchain through investments and the granting of FLOW tokens. It will focus on supporting games, infrastructure, DeFi, content, and creators. The capital can also be used for team expansion, user acquisition, and operating overheads.
The returns of the five largest cryptocurrency groups over the past week were as follows – BTC (-3.55%), ETH (-13.6%), BNB (-6.5%), ADA (-11.47%), XRP (-17.86%).
Net Flows Per 21 Shares of ETP
Our ETPs netted $3.4 million last week. Find below the details of the inflows and outflows for each ETP.
We are pleased to share that we are launching two DeFi tracking ETPs; One of them was already listed on the SIX Swiss Exchange on May 12, which is 21Shares Crypto Layer 1 (LAY1). Meanwhile, 21Shares DeFi 10 Infrastructure ETP (DEFI) will be listed on the same exchange on May 18, both with total expenditure ratios (TER) of 2.50%.
“Our financial system is at the beginning of a paradigm shift. A large number of new blockchain-based applications around DeFi and Web3 are already in development and making tremendous progress,” 21Shares President and Co-founder Ophelia Snyder told ETF Stream on the occasion. They are components of an inclusive democratic financial system. Brand New. With our new objective crypto ETPs, we are providing investors with two broadly diversified investment vehicles at the perfect time to participate in this revolution.”
If you’re at the Permissionless Conference in Florida, meet our team at booth 611. Also, our Head of Currency James Wang will be on a panel discussing investing in a connected world. James’s fellow committee members are from Dragonfly Capital, Wintermute, Nansen, and Volt Capital. The discussion will be moderated by Michael Ippolito, co-founder of Blockworks.
Coinbase CEO Reassures Traders That Funds Are Safe, After Losing $430 Million in the First Quarter
Cryptocurrency exchange Coinbase disclosed to the Securities and Exchange Commission its first net loss as a public company of $430 million in the first quarter of 2022. Coinbase revealed that revenue fell 27% to $1.17 billion, down from $1.6 billion at the same time from Last year, and dropped a lot below it. Fourth-quarter 2021 earnings were $2.5 billion. The number of monthly active users also decreased by more than 19% to 9.2 million compared to 11.4 million in the previous quarter. This created some uncertainty in the ecosystem, and in response, Coinbase co-founder and CEO Brian Armstrong reassured investors on Twitter, saying that the money is safe in Coinbase, just as it has always been.
why does it matter?
In the back of this news, we’ve had some questions from customers and investors given that Coinbase is 21Shares’ custodian partner. We contract and own the ETP assets with the Coinbase Trust Company. This is fiduciary under Section 100 of the New York Banking Act and is authorized to hold the digital assets of its clients on their behalf. As a New York State chartered trust that maintains the same credit standards as national banks, Coinbase Custody is a qualified trustee for purposes of Section 206(4)-2(d)(6) of the Counselors Act, commonly known as Custody Houses.
This is the same standard that custodians of traditional US stock ETFs must meet and are accepted as far from bankrupt. The assets are held as collateral for 21Shares and not as an asset on the company’s balance sheet. This is also reflected in our agreement with the Coinbase Trust Company which states that the assets are separate and do not form part of Coinbase’s assets.
Each week, the 21Shares Research team will publish our data-driven insight into the world of crypto assets through this newsletter. Please direct any comments, questions and words of feedback to [email protected]
Not giving an opinion
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or the solicitation of any offer to purchase securities in any jurisdiction. Certain information published here may contain forward-looking statements. Readers are cautioned that any forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those expressed in the forward-looking statements due to various factors. The information contained herein may not be construed as economic, legal, tax or other advice, and users are cautioned to base investment or other decisions solely on the content contained herein.