Good morning. Here’s what’s happening:
Prices: Bitcoin may not reach $20,000, but it is still a strong investment.
Insights: The Securities and Exchange Commission’s action against Kraken’s stake program isn’t an attack on staking in general.
Prices:
Bitcoin is looking for support
Happy Monday
Asia began the work week with the CoinDesk Bitcoin Price Index (XBX), which fell to $21,750. Ethereum is now down 1.8% to $1.514.
BitBull Capital’s Joe DiPasquale stated that bitcoin is currently performing an “underside” test after it has already lost $23K and $22K. This will determine whether it will recover the $23K mark, or fall to $20K “rather rapidly.”
He said that the market relies on macroeconomic developments and that December consumer prices were higher than expected. CoinDesk may consider a larger rate hike at the next FOMC.
As bitcoin searches for support, it also takes in regulatory developments. The Securities and Exchange Commission (SEC), fined Kraken, but not Coinbase, $30 million last week for its stake program. The Wall Street Journal reports that Next is Paxos The Binance USD stablecoin is on the SEC’s list of targets.
DiPasquale stated that regulations are also a concern in the crypto space, particularly after the $30 million fine that the SEC imposed upon Kraken exchange. “We believe that it is better to have regulatory clarity in a slow-moving market than to make stricter decisions during a bull market.
DiPasquale stated that his firm is still bullish on Bitcoin, even though it breaches support levels.
“[We] If prices fall below $20,000, I would look to accumulate more.
The biggest gainers
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Solana | SOL | 2.7% | Smart Contract Platform |
| Shiba Inu | SHIB | 0.4% | Currency |
Biggest Losers
| Asset | Ticker | Returns | DACS Sector |
|---|---|---|---|
| Loopring | LRC | -5.3% | Smart Contract Platform |
| Decentraland | MANA | -5.0% | Entertainment |
| Gala | GALA | -4.3% | Entertainment |
Insights
Ether Liquid Staking platforms will benefit as SEC actions likely to fail to knock out DeFi
Over staking, the U.S. Securities and Exchange Commission has settled with crypto exchange Kraken
The Kraken exchange must pay a $30,000,000 penalty and cease all U.S. service immediately. However, staking is still being done in the United States. Staking is the act of locking tokens for a specified period in order to support the operation a blockchain. Liquid staking is the opposite. It issues a derivative token which represents the user’s amount of locked tokens. This allows them to access Decentralized Finance (DeFi) services like lending and borrowing.
Kraken’s unique way of offering staking was why the exchange was shut down. The SEC did not pursue Coinbase nor make any move regarding decentralized liquid staking protocols.
The central issue in the SEC’s statement concerns a lack transparency on Kraken’s part. Yes, on-chain data shows Kraken, one of the biggest validators, has a large staking pool. The SEC seems concerned about fund flow. Is the ether being deposited into Kraken really intended to be used for staking? Is it being lent?
Liquid staking protocols like Rocket Pool and Lido wouldn’t face the same problem. You could track your ether via a block-explorer or other monitoring tools from your wallet to the pool.
After the SEC announced its interest in staking via a tweet by Brian Armstrong, the market saw liquid staking tokens like Lido’s LDO surge and surge again after Kraken’s U.S.-based staking shop closed.
The SEC’s current “Yellow Light” towards stake-taking could be a more plausible explanation for the surge. While staking is not permitted as an investment strategy, staking as technical services is.
As crypto lawyer Gabriel Shapiro tweeted: “Validation-as-a-service is not like an ‘earn’ program, not like taking capital into a business or fund. It is a ministerial service in tech.
It is quite telling that the value of liquid staking protocols such as Lido and Rocket Pool did not increase in the aftermath.
Since the beginning of the year The total value of Lido Stability has been maintained: The year began at 4.9 million ether on January 1, with an average of 5.19 million. Rocket Pool staked Ethereum increased from approximately 472,000 to 608,000 in the same period.
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Important events.
10:50 p.m. HKT/SGT(14:50 UTC) Japan Gross Domestic Product (QoQ).
6:00 a.m. HKT/SGT(22:00 UTC) United Kingdom Claimant Count Change (Jan)
6:00 a.m. HKT/SGT(22:00 UTC) United Kingdom ILO Unemployment Ratio (Dec).
CoinDesk TV
If you haven’t seen it yet, here’s the latest episode of “First Mover” (CoinDesk TV):
After Kraken’s SEC Settlement, Bitcoin falls below $22K
Bitcoin (BTC), which is currently trading at $22,000, fell below after Kraken announced that it will end its crypto-staking-as a service platform for U.S customers and would pay $30 million to settle Securities and Exchange Commission charges regarding the sale of unregistered securities. Bilal Little, president of DFD Partners and Zachary Fallon, a Ketsal partner, also participated. Separately, a contentious Uniswap voting result highlighted the opaqueness and decentralized governance. Robert Leshner, founder of Compound Labs, joined the conversation. Adweek Senior Reporter Patrick Kulp also spoke out about the absence of crypto ads during the Super Bowl.
Headlines
Bloomberg: PayPal Puts Stablecoin Project On Hold The NYDFS was reported to be investigating Thursday’s report that Paxos, a PayPal crypto-partner, was being investigated
The US will be backregulated by Crypto Enforcement and Stealth: CoinDesk: Moves to ban staking and prevent banks from servicing crypto-company clients will damage the industry and send it abroad
New York Court Dismisses Tether’s Attempt To Block CoinDesk’s Request For Stablecoin Reserve Records Records CoinDesk requested documents on Tether’s reserves for 2021 under the Freedom of Information Law.
SEC Settlement by Kraken raises questions about Coinbase’s Staking Service On Thursday, Kraken, a crypto exchange, agreed to pay a $30m fine to the SEC and shut down its staking platform to U.S customers in settlement of charges related to the offering of unregistered securities.
Polygon Explores ZK Technology in Main Chain, co-founder Bjelic says: Interview with CoinDesk: Polygon’s Mihailo Bilic discussed the progress made by the blockchain in becoming a ZK secure ecosystem.