Known for pioneering cryptocurrency XRP, Ripple has been caught in a high-stakes legal tussle with the U.S. Securities and Exchange Commission since last year.
Ripple CEO Brad Garlinghouse doubled down on his frustration surrounding the lack of clarity in U.S. regulation of digital assets in an appearance on CNBC’s “Squawk Box” on Wednesday.
He says a big part of the problem with crypto regulation in the U.S. is not the cryptocurrency players, but the lack of action from the U.S. regulators compared to global peers. The SEC charged Ripple, co-founder Chris Larsen and Garlinghouse with conducting an illegal securities offering that allegedly raised more than $1.3 billion through sales of XRP.
XRP was trading up about 8 percent on Wednesday morning amid a crypto rebound, and it is up more than 300 percent year-to-date but has fallen far from its YTD high during the recent crash in cryptocurrencies. Bitcoin had bounced back from its massive, recent decline and was hovering around $40,000 on Wednesday.
“There’s a misunderstanding of how these technologies can be applied,” Garlinghouse said. “In the United States, there has been a lack of regulatory clarity. Other countries, G20 markets, they have invested the time and energy, either through legislation or rulemaking, to provide that clarity and certainty, which allows investors to participate, entrepreneurs to build.”
Fights between the crypto industry and regulators are ongoing — on Wednesday, the U.K. banned an advertisement advising people to buy bitcoin calling it “irresponsible.” An opinion article in the Wall Street Journal this week called for a ban on crypto and cited issues like hackers using cryptocurrencies to get paid for cyberattacks like the recent Colonial Pipeline ransomware incident.
Robinhood, says in the first quarter of 2021, 9.5 million customers traded crypto on Robinhood Crypto, compared to 1.7 million in the fourth quarter of 2020.
Ripple’s on-demand liquidity service uses XRP as a kind of “bridge” between currencies, which it says allows payment providers and banks to process cross-border transactions much faster than they would over legacy payment rails.
Despite this month’s return of crypto volatility — bitcoin is still down more than 32 percent this month for its worth monthly decline since 2018 — it and other tokens like XRP surged to new heights this year. Ripple owns most of the XRP tokens in circulation and sells a tiny fraction of its holdings each month.
“XRP is an open-source technology very analogous to bitcoin,” Garlinghouse explained. “But the SEC is making the assertion that these are investment contracts … that Ripple sales of XRP to our customers is actually an investment contract. That isn’t true. If you buy XRP, you don’t have ownership of Ripple and ironically you have XRP owners who have tried to sue the SEC for even bringing the case.”
Bitcoin, Energy Use and Elon Musk
Iran banned bitcoin mining operations on Wednesday amid power shortages. China has cracked down on miners in recent months too after concerns about energy consumption.
The Ripple CEO has been a critic of how much energy bitcoin mining uses but says he is far from the only figure who has raised the issue, with everyone from Elon Musk to Bill Gates and Jack Dorsey weighing in, and Ripple is not waging some secret war against bitcoin.
“If Ripple could control those people we probably wouldn’t have a lawsuit from the SEC,” he said.
Musk’s Monday tweet that he was talking to bitcoin miners about energy efficiency ideas that were “promising” helped boost bitcoin.
Earlier this month Ripple beefed up its board, appointing former U.S. treasurer Rosie Rios.
“I think at the end of the day, the industry should focus on utility. And are these technologies solving real problems for real customers,” Garlinghouse previously told CNBC, adding that Ripple will continue to leverage its XRP ledger and tokens to make payments efficient. Still, the company has threatened to relocate to other jurisdictions if XRP is deemed a security in the U.S.
Coinbase Cofounder Issues Serious Crypto Price Warning As Bitcoin ‘Death Cross’ Fear Spreads
Bitcoin and cryptocurrency prices have struggled last week with the crypto market’s combined value slipping under $1.5 trillion—down from $2.5 trillion in May.
The bitcoin price, after getting an unexpected boost from Tesla billionaire Elon Musk last weekend, has resumed its decline over the last few days, falling back toward $30,000 per bitcoin.
Now, as bitcoin charts show the price 50-day moving average has fallen below the 200-day moving average—a pattern known as the “death cross”—Coinbase cofounder Fred Ehrsam has warned “most” cryptocurrencies and crypto-assets “won’t work” and “90 percent of NFTs” will have “little to no value in three to five years.”
Bitcoin’s “death cross,” despite its ominous name, appears to be a lagging price indicator. The last time the trading pattern occurred in March 2020, it heralded a huge bitcoin bull run that helped even smaller cryptocurrencies surge to all-time highs.
“People are going to try all sorts of things,” Ehrsam, who has gone on to found the blockchain investment firm Paradigm since leaving Coinbase in 2017, told Bloomberg this week, warning many of those smaller cryptocurrencies won’t survive. “There’ll be millions and millions of cryptocurrencies and crypto-assets, just like there were millions and millions of websites. Most of them won’t work.”
Coinbase, the San Francisco-based bitcoin and cryptocurrency exchange, went public this year at a huge $100 billion valuation but has since seen its market cap plummet, falling by a third amid waning interest among retail traders and global regulatory pressure.
Since bitcoin was created in 2009, thousands of cryptocurrencies have been created with crypto data provider CoinMarketCap currently counting just over 10,000 different coins.
Some, such as ethereum, the second-largest cryptocurrency after bitcoin with a market capitalization of $250 billion compared to bitcoin’s $660 billion, have established themselves as cryptocurrency mainstays—while others including EOS and, more recently internet computer, have made splashy debuts only to fade away over time.
Internet computer’s ICP token is down over 90 percent from its all-time high price set shortly after its launch in May, while EOS, which made headlines when it raised $4.1 billion ahead of its launch in 2018, is trading 80 percent lower.
Ehrsam also warned against investors betting on NFTs (non-fungible tokens). The popularity of NFTs, that use cryptocurrency technology to allow all manner of digital real estate from artwork to tweets, memes and YouTube videos, to be tokenized and sold via a blockchain, has exploded over the last few months—though data suggests the market is already significantly down on its early-May peak.
Banking Giant BBVA Opens Bitcoin Trading and Custody Service in Switzerland
Spanish banking giant BBVA’s swiss entity, BBVA Switzerland, has started offering bitcoin trading and custody services.
Announcing the news on Friday, BBVA Switzerland said the services will be available to all of its private banking clients from Monday, June 21. The launch comes six months after the bank began trialing the services in Switzerland.
“This gradual roll-out has allowed BBVA Switzerland to test the service’s operations, strengthen security and, above all, detect that there is a significant desire among investors for crypto-assets or digital assets as a way of diversifying their portfolios, despite their volatility and high risk,” said Alfonso Gomez, CEO of BBVA Switzerland.
While the bank currently only supports bitcoin, it said the aim is to also offer other cryptocurrencies in the future. As for the launch of the services in other countries, BBVA Switzerland said that would depend on maturity, demand, and regulation in those markets.
BBVA said its bitcoin services are novel as clients can manage their investments alongside traditional assets in the same portfolio. Customers willing to convert their bitcoin into fiat and vice versa can do so “without delays and without the illiquidity that affects other digital wallets or independent brokers,” said BBVA. That’s because the bank operates with several sources for converting cryptocurrencies, it said, without disclosing those sources.
BBVA’s services come as more mega-banks open up to the crypto space. In recent weeks, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, and other financial institutions have moved to provide crypto services to their clients.
Goldman Sachs Partners Crypto Management Firm Galaxy Digital, Offers Bitcoin Futures
Galaxy Digital’s co-president Damien Vanderwilt announced today that his firm has partnered with Goldman Sachs to help provide bitcoin futures products. The partnership marks one of the first occasions where an American multinational investment bank has partnered with a crypto asset service provider.
Galaxy Digital is a financial services and investment management innovator founded by the company’s CEO Mike Novogratz. Vanderwilt explains that Goldman Sachs, the bank with $2.1 trillion assets under management (AUM), may entice other financial incumbents to follow its lead.
“There’s a whole dynamic with the major banks that I’ve seen time and time again: safety in numbers,” Vanderwilt explained during his discussion about the subject. “Once one bank is out there doing this, the other banks will have [fear of missing out] and they’ll get on-boarded because their clients have been asking for it.”
According to Vanderwilt, Goldman depends on Galaxy because regulatory policy stops the multinational investment bank from handling the leading crypto asset directly. Max Minton, head of digital assets for Goldman’s Asia-Pacific region said during the announcement that the bank procures clientele with the assets they demand.
“Our goal is to equip our clients with best-execution pricing and secure access to the assets they want to trade,” Minton remarked. “In 2021, this now includes crypto, and we are pleased to have found a partner with a broad range of liquidity venues and differentiated derivatives capabilities spanning the cryptocurrency ecosystem.”
The statements from Minton and Vanderwilt follow the report that said Goldman was prepping to offer ether futures and options swaps. At the time, Goldman said “institutional adoption will continue” in the crypto space.
In mid-April Galaxy Digital revealed it had entered the bitcoin exchange-traded fund (ETF) fray when it submitted its Form S-1 registration with the U.S. Securities Exchange Commission (SEC).
Vanderwilt also said that when more institutional players join the crypto ecosystem volatility will grow less and less.
“You’re moving the market participants from being north of 90% retail, a huge chunk of which have access to ridiculous amounts of leverage, into an institutional community, who have proper, tried-and-tested rules and regulations about leverage, asset-liability mismatch, and risk,” Vanderwilt concluded.
“The more activity that moves into the institutional community, the less volatility there will be.”
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