Weekly Crypto Wrap: 23rd November 2023

TLDR

• Binance fined US$4.3 billion, CEO pleads guilty to charges.
• Crypto ETP volumes surge 91%, outpacing underlying assets.
• SEC sues crypto exchange Kraken over failure to register.
• Fidelity Investments joins BlackRock in race for Ethereum ETF.
• Apple faces lawsuit over crypto payment tech restrictions.
• XRP funds see influx of institutional capital.

CEO’s corner: DOJ and Binance settlement.

Our CEO, Caroline Bowler, shares her thoughts on Binance's guilty plea, US$4.3 billion settlement, and what lessons we can learn as an industry:

Today's news serves as a reminder of the ongoing efforts to ensure the integrity of the crypto space. BTC Markets stands alongside regulators and responsible industry participants to promote transparency, compliance, and ethical practices that underpin the future growth and longevity of the blockchain industry.

While bad actors may seek to leverage the decentralised nature of cryptocurrencies for illicit purposes, true believers in blockchain technology are committed to cleaning up the space. The core principles of our industry are rooted in collaborating with regulators to ensure consumer protections, foster innovation, and ensure the long-term sustainability of the blockchain industry.

The commitment of BTC Markets persists in fostering a secure and compliant crypto environment that encourages responsible innovation, empowers individuals, and guards against illicit activities like money laundering. Such activities not only harm innocent individuals but also tarnish the industry's reputation.

Read Caroline’s words in full, here.

BTC Markets in the news

Yahoo Finance: Crypto firms eye Dubai expansion.

“We’ve always been an Australian only exchange, but with the difficulties and challenges around licensing and the time it’s taken for that to come through to fruition, we’re now actively looking to expand overseas,” said Caroline Bowler, CEO, BTC Markets.

“The benefit for Dubai is that they’ve gone for something very tailored, very specific. I think the way that they framed it, it looks as though they’re looking to build out this sector for the longer term.”

Read the full article, here.

State of crypto

• Binance pleads guilty to federal charges, US$4.3 billion settlement.
• SEC accuses Kraken of operating as an unregistered broker.
• Fidelity enters the ETH ETF race as Apple faces crypto tech lawsuit.
• XRP sees surge in institutional capital inflow.

In a historic turn of events on Wednesday, Binance, the world's largest cryptocurrency exchange, and its CEO, Changpeng Zhao (CZ), have pleaded guilty to federal charges and agreed to pay US$4.3 billion to settle the Justice Department's investigation into violations related to the Bank Secrecy Act (BSA), failure to register as a money transmitting business, and the International Emergency Economic Powers Act (IEEPA).

"We have taken the largest enforcement action in the Treasury's history," Treasury Secretary Janet Yellen said of the criminal charges the US Department of Justice brought against Binance.

The charges include engaging in anti-money laundering, unlicensed money transmitting, and sanctions violations. Binance's founder, Zhao, also admitted to failing to maintain an effective anti-money laundering program and has resigned as CEO.

In a parallel development, Kraken, a US crypto exchange, faces accusations from the Securities and Exchange Commission (SEC) of operating as an unregistered broker, clearing agency, and dealer, akin to recent actions against Coinbase and Binance.

In other news, the race for an Ethereum exchange-traded fund (ETF), Fidelity Investments has thrown its hat into the ring, following closely on the heels of BlackRock's application for regulatory approval for an Ethereum ETF.

Simultaneously, tech giant Apple is entangled in a lawsuit over alleged restrictions on cryptocurrency payment technology, with disgruntled consumers asserting that Apple's policies unjustly impede the development and use of crypto-related payment apps on its platform.

Shifting focus to Ripple's native cryptocurrency, XRP, it has witnessed a surge in investor interest and a notable increase in institutional capital entering the market. Recognized as the "bankers' coin," XRP holds a 2% exposure from 19 major banks globally, amounting to a significant US$205 million investment. A recent report from the Basel Committee on Banking Supervision positions XRP as the third-largest altcoin in reported bank commitments.

Meanwhile, the Crypto market sentiment has soared further into the Greed zone, currently sitting at 66 on the Crypto Fear & Greed index, up from 62 yesterday.

The weekly crypto close.

In the weekly crypto market recap, notable gainers include Avalanche (AVAX), soaring impressively by 20.39%, Solana (SOL) with a substantial gain of 8.56%, and Bitcoin (BTC) showing a modest increase of 0.80%.

On the downside, Chainlink (LINK) faced a decline of 6.97%, Polkadot (DOT) saw a decrease of 4.82%, Litecoin (LTC) dropped by 5.80%, XRP experienced a decline of 5.37%, and Ethereum (ETH) decreased by 1.62%.

Despite these fluctuations, Bitcoin's dominance strengthened with an increase of 0.49%, maintaining its dominant position at 52.60% for the week.

Simultaneously, the total cryptocurrency market capitalisation reached a peak of US$1.426 trillion, concluding its fifth consecutive week in positive territory with a 0.34% gain throughout the week and ultimately closing at US$1.389 trillion.

Year-to-date in the crypto space.

Over the past year, several popular cryptocurrencies have experienced significant growth in their values. Notably, Solana (SOL) skyrocketed by an impressive 476.93%, showcasing its strong market performance.

Chainlink (LINK) followed suit with a substantial increase of 155.48%, while Bitcoin (BTC) demonstrated resilience and growth, boasting a notable ascent of 126.21%.

Other noteworthy performers include Avalanche (AVAX) with a gain of 90.73%, XRP (XRP) showing a considerable increase of 80.20%, Compound (COMP) and Ethereum (ETH) both displaying solid performances with gains of 62.03% and 72.50%, respectively. Cardano (ADA) experienced growth at 54.60%, and Litecoin (LTC) recorded a slight -2.01% decrease in value over the evaluated fiscal year.

*The weekly trading stats as of Monday, November 20th at 11:00 am AEDT, based on data from Tradingview in USD.

**Year-to-date performance as of Thursday, November 23rd at 11:00 am AEDT, based on data from Tradingview in USD.

Crypto news

Binance fined US$4.3 billion, CEO pleads guilty to charges.

Binance, currently the world’s largest crypto exchange by volume, has been charged with violating sanctions law and failing to maintain a compliant anti-money laundering program by the US government.

The company faces one of the largest corporate penalties in history, amounting to US$4.3 billion. Binance will pay a US$1.8 billion fine and US$2.5 billion in forfeitures, as well as the compulsory appointment of an independent monitor for three years to ensure its compliance with federal law moving forward.

CEO and founder of Binance, Changpeng Zhao, has pleaded guilty to violating the Bank Secrecy Act and is removed from his role with immediate effect. As part of the plea deal, Zhao personally faces a fine of US$50 million, and is prohibited from any involvement operating or managing Binance for a minimum of three years.

Attorney General Merrick Garland said in a statement on Tuesday:

"Binance employees knew and discussed that the company was serving thousands of users in sanctioned countries, and they knew that facilitating transactions between U.S. users and users in sanctioned countries would be in violation of U.S. law. But they did it anyway."

Binance’s operations were repeatedly in breach of US laws, and evidence suggests that they provided illegal services to sanctioned countries and criminal organisations. According to the court filings, Zhao's staff warned him that the exchange was servicing users from sanctioned countries and facilitating money laundering.

Crypto ETP volumes surge 91%, outpacing underlying assets.

Crypto exchange-traded products (ETPs) inflows have seen an impressive surge of 91%, according to data from CoinShares' latest weekly report. For eight consecutive weeks, ETPs have experienced consistent inflows, reaching a total of US$176 million last week alone and contributing to an overall year-to-date flow of US$1.32 billion.

Fuelled by market optimism surrounding the potential approval of a spot Bitcoin ETF by the US Securities and Exchange Commission (SEC). Interestingly, this upswing in crypto ETPs has outpaced the growth of cryptocurrencies themselves, which saw a comparatively slower growth rate of around 70% over the same period.

Breaking down the recent surge in ETP inflows by asset class, Bitcoin continues to dominate, with BTC investment products attracting US$155 million in inflows last week. Other altcoins, including Solana, Ethereum, and Avalanche, also saw noteworthy inflows of US$13.6 million, US$3.3 million, and US$1.8 million, respectively.

Geographically, Canada, Germany, and Switzerland emerged as key contributors to the rise in ETP inflows, accounting for US$98 million, US$63 million, and US$35 million, respectively.

Despite this increase, it's essential to note that the overall inflow for ETPs this year remains significantly lower than the peak recorded during the bull markets of 2020 and 2021 when inflows to these products reached US$6.6 billion and US$10.7 billion, respectively.

As the crypto market continues to navigate regulatory landscapes and shifting investor sentiments, the potential approval of a spot crypto ETF remains a pivotal factor influencing the trajectory of crypto ETPs.

Buy Bitcoin on BTC Markets.

SEC sues crypto exchange Kraken over failure to register.

In a significant move, the US Securities and Exchange Commission (SEC) has filed another lawsuit against Kraken, one of the world's largest cryptocurrency exchanges, accusing it of unlawfully operating as a securities exchange without proper registration.

The SEC claims that Kraken, without registering with the SEC, has functioned as a broker, dealer, exchange, and clearing agency for crypto asset securities, exposing investors to risks while accumulating billions in fees and trading revenue.

"Without registering with the SEC in any capacity, Kraken has simultaneously acted as a broker, dealer, exchange, and clearing agency with respect to these crypto asset securities. In doing so, Kraken has created risk for investors and taken in billions of dollars in fees and trading revenue from investors without adhering to or even recognising the requirements of the US securities laws that are designed to protect investors," the lawsuit alleges.

Kraken, in response, asserts its intention to defend against the lawsuit, advocating for Congress to determine cryptocurrency exchange regulations. It dismisses the SEC's perspective on digital assets as legally incorrect and detrimental to policy. The SEC's enforcement chief, Gurbir Grewal, emphasised the alleged consequences of Kraken's failure to register, stating that it has led to a business model filled with conflicts of interest, jeopardising investor funds.

Fidelity joins BlackRock in race for Ethereum ETF.

Fidelity Investments has officially joined the competition for an Ethereum exchange-traded fund (ETF), a move which closely follows BlackRock's Ethereum ETF application filing for regulatory approval.

The proposed Fidelity Ethereum Fund would closely track the price movements of Ethereum, and if approved, the ETF's shares are set to trade on the Cboe BZX Exchange under the ticker symbol ETHF.

This development unfolds against the backdrop of mounting pressure on the US Securities and Exchange Commission (SEC) to greenlight a spot Bitcoin ETF, a move crypto advocates argue would provide a safer avenue for mainstream investors to enter the digital asset space.

Fidelity's foray into the Ethereum ETF domain underscores the firm's commitment to expanding its presence in the cryptocurrency landscape, building on its 2018 launch of institutional crypto trading and custody services. [Insert sentence on scale of fidelity investments, no.3 worldwide?]

Buy ETH on BTC Markets.

Apple faces lawsuit over crypto payment tech restrictions.

In a recent legal development, tech giant Apple is facing a lawsuit regarding its alleged restrictions on cryptocurrency payment technology. The class-action lawsuit filed by disgruntled consumers claims that Apple's policies unfairly block the development and use of crypto-related payment apps on its platform.

The lawsuit contends that Apple's anti-competitive practices stifle innovation and limit user choice in the rapidly evolving crypto payment landscape. Critics argue that by placing roadblocks for crypto payment applications, Apple is hindering the broader adoption of decentralised finance (DeFi) and cryptocurrency transactions.

This legal clash underscores the growing tension between tech giants and the expanding crypto industry in which stakeholders are increasingly pushing for fair access and equal opportunities in the digital payment space. The outcome of this lawsuit could have significant implications for the future of crypto payment integration within mainstream tech platforms.

XRP funds see influx of institutional capital.

Ripple’s native cryptocurrency has garnered increased investor attention as of late, alongside a noteworthy influx of institutional capital into the market.

Widely recognised as the “bankers' coin," XRP boasts 2% exposure from 19 major banks worldwide - according to a recent report from the Basel Committee on Banking Supervision - translating to a substantial US$205 million investment and positioning it as the third-largest altcoin in reported bank commitments.

As institutional capital continues to shape the trajectory of XRP, it is increasingly attractive for tradfi players exploring opportunities in crypto, alluring investors seeking stability and long-term growth.

CoinShares' recent digital asset fund flows report highlights institutional interest in XRP, with US$500,000 flowing into XRP-related products last week, totalling US$13 million for the year so far.

Buy XRP on BTC Markets.

The week ahead: upcoming economic events

November 23rd: Germany’s HCOB Manufacturing PMI.

November 24th: Japan’s Inflation Rate. Germany’s Business Climate.

November 28th: Germany’s GfK Consumer Confidence.

November 29th: US GDP Growth Rate Q3. Germany’s Inflation Rate.

November 30th: China’s NBS Manufacturing PMI.

Economic Calendar (tradingeconomics.com)

Market reflections

Australia

• RBA warns against wage increases without productivity growth.
• Mixed signals in the job market despite positive employment report.
• Concerns over youth unemployment and labour challenges ahead.

Reserve Bank of Australia (RBA) Governor Michele Bullock has raised concerns about the sustainability of the recent 4% wage increases in the absence of corresponding productivity growth, emphasising the challenge of controlling inflation. Despite wages hitting a 14-year high in the September quarter, driven by one-off increases for certain workers, the RBA is contemplating one more interest rate rise to curb inflation in the coming quarters. Bullock emphasises the need for productivity growth, highlighting a 3.6% decline in labour productivity over the past year and its impact on unit labour costs, posing challenges for managing inflation.

Citi chief economist Josh Williamson anticipates a 25-basis point increase in the cash rate target in February 2024, emphasising the risk of rates being even higher. The Australian job market presents a mixed picture, with positive employment growth in October but a rising jobless rate of 3.7%. Despite record-high workforce participation, conflicting signals regarding the interest rate outlook persist.

National Australia Bank expects one more interest rate increase to 4.6% in February, concerns arise over the potential challenges ahead for the labour market, including a shift towards part-time work and challenges for specific demographics, such as a rise in youth unemployment to 9.2%. The RBA foresees a gradual rise in the jobless rate, attributing it to population growth driven by migration, while forward indicators of labour demand soften, suggesting potential increases in the unemployment rate in early 2024. Overall, the October job data is viewed as relatively strong, demonstrating the labour market's resilience amid economic challenges.

Global

• FOMC maintains rates, US building permits rise.
• Japan's Trade Balance improves in October.
• UK retail sales decline unexpectedly.
• Canada's inflation eases to 3.1% in October.

In the United States, the Federal Open Market Committee (FOMC) opted to maintain interest rates during its November meeting. The decision was grounded in the acknowledgment of eased labour market conditions and the perception that the current monetary policy stance exerts a restrictive force on economic activity and inflation.

Participants stressed the importance of acquiring further evidence to confidently assess the trajectory of inflation towards the Committee's 2% objective. The recent tightening of financial conditions posed risks to inflation, and there was a discussion on the potential stalling of progress in disinflation. The Committee affirmed its commitment to a careful approach, with the possibility of considering further tightening if progress towards inflation goals proved insufficient.

Simultaneously, building permits in the United States experienced a 1.1% increase in October, reaching a seasonally adjusted annual rate of 1.487 million. This growth is attributed to the ongoing scarcity of available homes in the market, despite concurrent increases in borrowing costs.

Turning to Japan, the trade balance returned to a deficit in October, narrowing significantly to JPY 662.55 billion compared to the previous year's JPY 2,205.94 billion. The weakening yen contributed to more expensive energy imports. Exports saw a 1.6% year-on-year growth, supported by strong demand from the United States, while imports contracted by 12.5%, primarily influenced by reduced energy costs.

In the United Kingdom, there was an unexpected downturn in retail sales in October, falling short of market consensus with a 2.7% year-on-year decrease. This marks the 19th consecutive month of decline in retail sales.

In Canada, the annual inflation rate eased to 3.1% in October, offering reassurance to central bank policymakers. The slowdown is seen as a positive sign, likely influencing decisions on future rate hikes.

Compliance conversations

Ripple explains how to spot and report crypto scams.

Ripple, a decentralised blockchain aimed at providing faster payment services for global institutions, has garnered increased public adoption, drawing attention from scammers who target the Ripple and XRP community.

These scammers often pose as prominent figures like President Joe Biden or Elon Musk on social media, making promises of free cryptocurrency. Their deceptive posts mimic the branding and profile pictures used by legitimate companies, individuals, or government authorities.

It's crucial for users to discern between genuine accounts and scams to avoid falling victim to these fraudulent schemes. The scams exploit high-profile social media accounts to deceive followers, leading them to unwittingly contribute to the scammers' gains.

The deceptive practices can take various forms, including fraudulent investment opportunities, promises of crypto giveaways, fake job offers, blackmail emails, and even scams related to online dating. Staying vigilant and recognizing the signs of these scams is essential for protecting oneself in the crypto community.

Read more on the Ripple website.

ASIC provides a checklist of common scams and ways to avoid them. To learn more, visit ASIC’s website.

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Disclaimer: The information provided on this page is issued by BTC Markets Pty Ltd (BTC Markets, we, us, our). The information is general only and is not intended to constitute an opinion or recommendation with respect to its contents. Past performance is not a reliable indicator of future performance. Any reference to past performance is intended to be for general illustrative purposes only. The information cannot be relied upon for any purposes and is not intended to be a substitute for professional advice. The information does not purport to be complete, accurate or contain all of the information that a person may require to make a decision. It may also contain forward looking statements, which are subject to known and unknown risks, uncertainties and other factors. We recommend you obtain professional advice before making any decision with respect to the matters discussed in this document. To the maximum extent permitted by law, BTC Markets will have no liability for any loss or liability of any kind: (i) arising in respect of the information contained (or not contained) on this page; or (ii) arising from a person relying on any information or statement contained on this page. The information provided is only intended for recipients in Australia. This information cannot be reproduced without our prior written permission.

Prices are accurate as of 11:00 AM AEST, on 23/11/2023.