Cryptocurrency prices dipped on Monday as investors reacted to regulatory efforts in both the US and Europe.
Bitcoin, the most popular cryptocurrency, was down 1.8% at $46,688.69, according to CoinGecko, while Ethereum fell 2.2% to $3,434.11. Meanwhile, Dogecoin dipped slightly to $0.145628.
‘Worth a close look’
Winston Ma, managing partner of CloudTree Companiesauthor of the digital war – How China’s Tech Might Shapes the Future of Artificial Intelligence, Blockchain, and Cyberspace,” he said “upcoming European Union crypto regulation is likely to have a significant impact on crypto trading and worth It’s worth watching closely.”
Ma said that the EU last week moved forward with measures to ban anonymous cryptocurrency transactions and possibly ban cryptocurrency exchanges between the EU and tax havens.
He said the adopted text represents the preliminary mandate for members of the European Parliament to negotiate the final form of the legislation with EU governments.
“Currently there are no rules in the EU that allow crypto asset transfers to be traced and provide information on the originator/beneficiary of such crypto asset transfers,” he said.
The EP as a whole is expected to vote on the measure during the plenary session in April.
Ma noted that the legislation is part of the EU’s new anti-money laundering (AML) package, “and the sanctions issues that arose from the Russia-Ukraine war likely served as a catalyst for this AML-related crypto regulation, as did the recent Biden executive order calling for similar crypto regulation.”
Meanwhile, in the United States, Ryan Grace, chief market strategist at Tastysaid the deleveraging and liquidity-draining impact of the Fed’s policy change will likely limit any serious rise in crypto prices, but long-term investors may be excited about Biden’s executive order and “continued signs of growth.” throughout the Bitcoin network.”
‘Long-term bulls should take comfort’
“The President’s order related to crypto regulation is a significant step in providing the industry with much-needed clarity and should be viewed as a positive development for crypto,” Grace said.
He said this “will inevitably result in a framework for crypto-focused companies to operate in.”
“It will also encourage the participation of firms that have previously walked away from the space due to lack of regulation,” he added.
Grace said bitcoin is likely to struggle in the short term, due to Q2 market conditions, but “long-term bulls should take comfort in the positive developments regarding the bitcoin network, especially the regulatory clarity offered by the recent US Executive Order.”
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David Lesperance, Immigration Managing Partner and Tax Advisor at Lesperance & Associatesthe cryptocurrency exchange community is pushing hard for regulatory obligations to be handled by the US Commodity Futures Trading Commission (“CFTC”), rather than the Securities and Exchange Commission.
He noted that crypto exchange FTX.com founder Sam Bankman-Fried was recently spotted hosting a “networking party for congressional aides, financial lobbyists, and former regulators” in Washington.
“The SEC is led by crypto expert Gary Gensler,” Lesperance said. “Although he has a fascination with the underlying blockchain technology of cryptocurrencies, he has not been a driving force behind the industry.”
Instead, he added, Gensler has spooked a number of exchanges by warning them that they are breaking the law by selling coins that he considers to be unregistered securities.
“Failure to register means heavy fines if he is ultimately right,” Lesperance said.
‘Defi takes another credibility hit’
Last week, a federal judge dismissed a lawsuit accusing Binance, the world’s largest cryptocurrency exchange by trading volume, of violating US securities laws by selling unregistered tokens and failing to register as an exchange or broker. Reuters reported.
Lesperance said that close observers note that the Manhattan Federal Court’s decision to dismiss a civil action against Binance has not answered the regulatory question.
“Rather, the case was dismissed because the plaintiffs waited too long to sue and were unable to prove that the cryptocurrency involved was bought and sold in the US,” he said.
Separately, Lesperance said that DeFi “has taken another credibility hit” during its development phase with the Ronin crypto “bridge” heist of approximately $625 million in digital currencies.
Ronin is the blockchain that underlies the play-to-win online game Axie Infinity. The bridge is where assets are locked onto one blockchain and then replicated onto another blockchain.
“In blockchain, the code that underlies smart contracts is the true final authority,” Lesperance said. “It determines how DeFi operates and is seen as ‘the law.'”
He said smart contracts are seen as the “rules of the road,” but with the amount of wealth stolen from high-profile hackers amassing, this “code is law” ethos is being put to the test.
“Will this ‘code is law’ stick after lawmakers finish their regulatory push?” lesperance said
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