Exploring transformation of value in the digital age By Michael J. Casey, Chief Content Officer Was this newsletter forwarded to you? Sign up here. |
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Whether crypto technology can eventually foster a paradigm change, our system of money remains captured by big banks. And with some of them teetering right now, we’re getting a reminder of that system’s flaws. This week’s column looks into how the foundations of this instability are found in regulations that are supposed to keep banks in line but end up supporting their risk-taking. Speaking of regulators, have a listen to this week’s Money Reimagined podcast after you’ve read the newsletter. My co-host Sheila Warren and I talk with former Commodity Futures Trading Commission commissioner Dawn Stump about the potential for the CFTC to become Washington’s chief agency covering crypto. |
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Launched in September 2017, KuCoin is a global cryptocurrency exchange with its operational headquarters in Seychelles. As a user-oriented platform with focus on inclusiveness and community action reach, it offers over 700 digital assets, and currently provides spot trading, margin trading, P2P fiat trading, futures trading, staking, and lending to its 20 million users in 207 countries and regions. In 2022, KuCoin raised over $150 million in investments through a pre-Series B round, bringing total investments to $170 million with Round A combined, at a total valuation of $10 billion. KuCoin is currently one of the top 5 crypto exchanges according to CoinMarketCap. Forbes also named KuCoin one of the Best Crypto Exchanges in 2021. In 2022, The Ascent named KuCoin the Best Crypto App for enthusiasts. |
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Ugly Bargains Between Banks and Regulators Are Rearing Their Head Again |
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Billions (Jeff Neumann/Showtime) Season Five of the Showtime series “Billions” ends with a scene that exposes the ugly bargain governments strike with banks and how that deal works against society’s interest. It seems apt to reflect on those relationships now, when the “too-big-to-fail” financial system that’s built on that bargain is in its most fragile state in 13 years, and to ponder what, if anything, the crypto alternative offers. In the scene, swashbuckling hedge fund manager Bobby Axelrod discovers he has been lured into criminal vulnerability by his arch nemeses, New York Attorney General Chuck Rhoades Jr. and financier Mike Prince. After being baited into accepting deposits at his newly incorporated Axe Bank from a cannabis company, Axelrod is told he was in breach of fiduciary duty for not “knowing your customer.” It turns out that the weed supplier had been selling unauthorized product, a crime for which Axelrod and his bank would now also be culpable. It’s the “KYC” requirements that matter here. Along with anti-money laundering (AML) compliance rules, they comprise an all-encompassing surveillance system designed to prevent criminals from hiding their financial footprints. As we’ve frequently argued in this column, and on the Money Reimagined podcast, the KYC-AML system has evolved to become an excessive constraint on financial access and a dangerous imposition on liberty and privacy – even if the original security intent was reasonable. Read the full story here... |
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Off the Charts: When Capitulation?
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Setting aside a remarkably brief drop to $18,100 on Thursday following some unexpectedly ugly U.S. inflation data, bitcoin’s price has been uncharacteristically stable of late. Even as other markets have fallen sharply, the leading cryptocurrency has shown little of the extreme volatility it saw in the summer. It has held to a range, more or less between $19,000 and $20,000. Some are hopefully suggesting this is finally the decoupling from equities that bitcoin deserves and that it is reasserting its status as an uncorrelated asset. But it’s also possible – based on past history – that this is the calm before the storm. If something has to give, the question is, which way will the market flip? Up or down? This week, before that consumer price index report, the Glassnode team tried to answer that in their weekly data dive newsletter. He’s one of the many charts they created: |
The yellow line is a measure of “supply in profit,” which compares the full supply of bitcoin over time with the prices at which those coins are assumed to have been acquired by the largest players in the market and then determines how much of that supply is currently in the black. The blue line is that same measure, but with the supply denominator stripped of coins that have been inactive for seven years. The conclusion: Bitcoin investors are hurting, but they’re not hurting yet as much as in other down-cycles. Sadly, that might mean we haven’t yet seen full capitulation and that the next breakout from a range-bound market may be another selloff. |
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The Conversation: Musk Moderates Kanye
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Crypto investors don’t hang on Elon Musk’s every tweet as they did when Tesla Motors was buying bitcoin en masse. However, he still titillates Crypto Twitter, which is as interested as any group of users in how, if at all, he might moderate the social media platform if he wins his on-again-off-again-on-again bid to buy it. Naturally, Musk’s engagement with Kanye West, now known as Ye, was a hot topic this week. After the rapper celebrated his return from an earlier social media exile by offering up some blatantly antisemitic remarks that got him swiftly re-barred from Instagram and Facebook (and JP Morgan), Musk first tweet a reply, “welcome back to Twitter, my friend.” Shortly afterward Musk wrote in the same thread that he “talked to Ye today and expressed my concerns about his recent tweet, which I think he took to heart.”
E.J. Kalafarski from New Jersey’s Office of Innovation had a witty take on the limitations of Musk’s approach to moderating the comments of Twitter’s 400 million users. |
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Relevant Reads: A "Flash Crash?" |
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As mentioned above, Thursday’s release of a report showing that the CPI rose a bigger-than-expected 0.4% in September (up 8.2% from a year earlier), sent bitcoin plunging along with other markets before it quickly rebounded. CoinDesk reporters covered the fallout. |
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