Tag: binance

Cryptocurrency trading volumes slump 40% in June, data shows, BFSI News, ET BFSI

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LONDON: Trading volumes at major cryptocurrency exchanges fell by more than 40 per cent in June, research showed on Monday, with a regulatory crackdown in China and lower volatility among the factors depressing activity.

Spot trading volumes fell 42.7 per cent to $2.7 trillion, with derivative volumes down 40.7 per cent to $3.2 trillion, London-based researcher CryptoCompare’s data showed.

“Headwinds continued as China persisted with its crackdown on bitcoin mining,” CryptoCompare said. “As a result of both lower prices and volatility, spot volumes decreased.”

Bitcoin, the largest cryptocurrency, fell more than 6 per cent last month, touching its lowest since January, as authorities in China tightened restrictions launched a month earlier on bitcoin trading and mining.

It had tumbled 35 per cent in May, with its losses sparked by Beijing’s moves to rein in the fast-growing sector. Crypto trading volumes tend to spike during periods of extreme price swings.

Major cryptocurrency exchange Binance, which has faced scrutiny from regulators across the world, retained its position as biggest platform by spot trading volume, CryptoCompare said. Still, volumes at Binance fell 56 per cent in June to $668 billion.



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Britain bans Binance Markets in latest cryptocurrency crackdown, BFSI News, ET BFSI

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Bengaluru | London: Binance Markets Ltd., one of the world’s largest cryptocurrency exchanges, cannot conduct any regulated activity in the UK, Britain’s financial regulator said, and issued a warning to consumers about the platform, which is coming under growing scrutiny globally.

In a notice dated June 25, the Financial Conduct Authority (FCA) said Binance Markets, Binance’s only regulated UK entity, “must not, without the prior written consent of the FCA, carry out any regulated activities…with immediate effect”.

It also issued a warning to consumers about Binance Markets and the wider Binance group.

Binance in a statement said that Binance Markets, which it acquired in 2020, was not yet using its regulatory permissions, and that the FCA’s move would not impact services offered on its website. “We take a collaborative approach in working with regulators and we take our compliance obligations very seriously, a spokesperson said. “We are actively keeping abreast of changing policies, rules and laws in this new space.”

Binance announced in June last year that it had bought an FCA-regulated entity and would use it to offer cryptocurrency trading services using pounds and euros.

Authorisation

While trading of cryptocurrencies is not directly regulated in Britain, offering services such as trading in cryptocurrency derivatives does require authorisation.

The FCA has told Binance that by June 30 it must display a notice stating “BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE UK” on its website and social media channels. It must also secure and preserve all records relating to UK consumers and inform the FCA this has been done by July 2.

The regulator did not explain why it had taken these measures.

British citizens will still be able to access Binance’s services in other jurisdictions.

The FCA is stepping up its oversight of cryptocurrency trading, which has soared in popularity in Britain along with other countries around the globe. Since January, it has required all firms offering cryptocurrency-related services to register and show they comply with anti-money laundering rules. However, earlier this month, it said that just five firms had registered, and that the majority were not yet compliant.

Japan’s regulator said on June 25 that Binance was operating in the country illegally, a notice posted on Japan’s Financial Services Agency website showed.

Last month, Bloomberg reported that officials from the US Justice Department and Internal Revenue Service who probe money laundering and tax offences had sought information from individuals with insight into Binance’s business.

In April, Germany’s financial regulator BaFin said the exchange risked being fined for offering digital tokens without an investor prospectus.



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The tale of Cryptocurrency – still up in the air?, BFSI News, ET BFSI

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After being out of favour for the past few years, cryptocurrency has seen a resurgence over the last year. Bitcoin, the poster child for the crypto movement, saw its value rise six times to ~ $ 63,000 by March 2021. Although it has sharply corrected post that it is still at four times the May 2020 levels. The primary reason for this has been the high participation, especially from retail players. This has been driven by the emergence of crypto exchanges like Coinbase, which went public April 2021 at a $100 billion valuation. Another key reason for its high value has been the scarcity; this is primarily because there is a limit set at 21 million bitcoins, and about 19 million of them has already been mined. Basis the success of Bitcoin, which has a current market cap of above $600 Billion, many more cryptocurrencies have emerged. Some of them, like Ethereum, Binance coin and tether, have a current market cap of more than $50 billion. So, what lead to the emergence of cryptocurrencies?

The cryptocurrency movement was driven by the distrust of the current financial system post the financial crisis of 2008. It was envisioned as a democratised currency created and owned by the people. The key to creating such a currency was a decentralised system where ownership is with everyone who participates. The trust this system created meant two parties not knowing each other could transact without needing an intermediary. It is this anonymous and decentralised nature that had the governments and central agencies concerned. Various governments had to impose restrictions on the use of cryptocurrency, owing to their increasing usage in illegal activities like money laundering, ransom payment, etc. This led to the fall in the value, post the initial enthusiasm. But globally, given the ease of launching a cryptocurrency and the interest, especially in the young, lead to multiple currencies being launched. There are more than 4000 cryptocurrencies globally, and they are still growing. While they might differ in their construct, the underlying volatility has been a feature of most of the cryptocurrencies launched, and therein lies the problem.

For any currency to act as a medium of exchange, the currency needs to be easy to carry, transact and should have a stable value over time. In the modern era, the primary role of central banks has been to provide this stability. Any drastic variation in the underlying value can lead to inflation or deflation, depending on the movement. While cryptocurrencies have been easy to transact and carry but the variability in their value and inability of a central agency to control it makes it a poor candidate to replace the current currency system. Widespread use of cryptocurrency can make the financial system vulnerable; this is especially true in developing countries where central banks ability to control inflation using monetary policy interventions can get severely impacted. Hence, we believe there is a very low probability that cryptocurrencies with their current construct can be seen as an alternate to the existing monetary system.

While cryptocurrencies have their drawbacks, having a digital currency is beneficial and hence many countries are looking to implement it. China has launched its digital currency. RBI has also been looking at creating a central bank digital currency (CBDC). The critical difference between these and existing cryptocurrencies is that they are expected to have a component of central control to help the central banks intervene and keep the value stable.

So what next for cryptocurrencies? While cryptocurrencies like bitcoin have not been able to serve their intended purpose of being a medium of exchange, they have emerged as an alternate asset class over the last few years. Given the limited availability and interest, especially among the millennials, their value is expected to increase. This has attracted significant capital flows towards this asset class. Given this, we believe the more prominent cryptocurrencies like Bitcoin, Ethereum, etc. are here to stay. At what value? That seems to be a trillion-dollar question.

The blog has been authored by Nilaya Varma, CEO, Primus Partners and Shravan Shetty, MD, Primus Partners.

DISCLAIMER: The views expressed are solely of the author and ETBFSI.com does not necessarily subscribe to it. ETBFSI.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.



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Leading crypto exchanges scout entry into India despite potential ban

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Global digital currency exchanges are exploring ways to set up in India, following in the footsteps of market leader Binance, industry sources told Reuters, while the government in New Delhi dithers over introducing a law that could ban cryptocurrencies.

Opponents of the potential ban say it would stifle the economic power of a tech-savvy, young nation of 1.35 billion people. There is no official data, but industry analysts reckon there are 15 million crypto investors in India holding over ₹100 billion ($1.37 billion).

China blocks several cryptocurrency-related social media accounts amid crackdown

According to four sources, who declined to be identified as they were not authorised to comment on private discussions, US-based Kraken, Hong Kong-based Bitfinex and rival KuCoin are actively scouting the market, which analysts say would only get bigger if it was given a free rein. “These companies have already begun talks to understand the Indian market and the entry points better,” said one source directly involved with an exchange that had begun due diligence for an Indian firm it was considering acquiring.

The other two exchanges, he said, were in the initial stages of deciding whether to enter India and weighing their options, which effectively come down to a choice between setting up a subsidiary or buying an Indian firm, as Binance, the world’s biggest exchange, did two years ago.

Cybercriminals go after cryptocurrency: Report

Bitfinex declined to comment while Kraken and KuCoin did not respond to an email seeking comment.

All three exchanges are ranked in the world’s top ten by data platform CoinMarketCap, based on their traffic, liquidity and trustworthiness of their reported trading volumes.

“The Indian market is huge and it is only starting to grow, if there was more policy certainty by now Indian consumers would have been spoilt for choice in terms of exchanges, because everyone wants to be here,” said Kumar Gaurav, founder of digital bank Cashaa.

India must take a holistic view on cryptos

Proponents of cryptocurrencies say they would be the most cost-efficient way for Indians abroad to remit funds home.

But authorities worry that rich people and criminals could hide their wealth in the digital world, and speculative flows of funds through digital channels, ungoverned by India’s strict exchange controls, could destabilise the financial system.

Caution across globe

Hitherto, India has had no rules specifically for cryptocurrency exchanges wishing to set up in the country. Instead they could register themselves as tech companies to obtain a relatively easy entry path.

In 2019, Binance acquired WazirX, an Indian cryptocurrency start-up which has allowed users to buy and sell crypto with rupees on the Binance Fiat Gateway.

US based exchange Coinbase has announced plans for a back office in India.

But with the regulatory environment for cryptocurrencies taking a turn for worse globally, Indian authorities are exercising greater scrutiny.

In China, authorities have forbidden banks and online payment companies from providing services related to cryptocurrency transactions.

And the Indian government was set to present a Bill to Parliament by March that proposed a ban on cryptocurrencies, making trading and holding them illegal. But the government has held it back, and conflicting statements since have fuelled uncertainty over the Bill’s fate.

Meantime, major Indian banks have begun to sever ties with cryptocurrency exchanges and traders, amid Reserve Bank of India’s concerns about the financial stability risks posed by the volatile asset.

The RBI is looking at launching its own digital currency, but Governor Shaktikanta Das in February described those plans as a “work in progress”.

For all the uncertainty over what India will end up doing, some digital currency exchanges clearly reckon it would be better to gain entry rather than miss out.

“It’s clear that the rewards outweigh the perceived risks, which is luring these global firms to the Indian market,” said Darshan Bathija, chief executive officer of Vauld, a foreign crypto exchange with a presence in India.

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Investors lost a whopping $830 billion in crypto crash last week, BFSI News, ET BFSI

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NEW DELHI: Last week was very volatile for cryptocurrencies with Bitcoins plunging to $30,000 level before recovering slightly. In the process, it lost nearly half of its total value, bankrupting many of those who invested in it.

Other coins also followed suit, crashing as much as 63 per cent in the last seven days. In essence, crypto investors lost a whopping $830 billion in the blowout last week. The total market cap of all cryptocurrencies stands at $1.49 trillion as of now.

Many exchanges across the world faced problems due to heightened volumes and sell orders. These included Binance, WazirX (owned by Binance), Voyager and Coinbase, among others.

There were two major reasons behind the crash. The first was the vehicle maker Tesla’s sudden decision to stop car purchases using Bitcoins, a measure they announced a couple of months back.

The company cited environmental concerns over the computational ‘mining’ process behind its move. Mining basically refers to the process in which computers solve complex mathematical puzzles to enable transactions using Bitcoins and in return generate more Bitcoins. This is a high energy intensive process, requiring electricity often produced by burning coal.

Bitcoin enthusiasts had hoped for its wider adoption as a currency after Tesla’s decision in March. But, the recent U-turn dashed those hopes. Besides, Tesla has also trimmed its Bitcoin investments, as per its latest quarterly report.

Another reason behind the sell-off has been China’s crackdown on mining rigs across the country. China reiterated a warning last week that it intends to crack down on cryptocurrency mining as part of an effort to control financial risks.

According to some estimates, China is home to the largest concentration of world’s crypto miners. This results in high electricity consumption for a country which has been dealing with severe pollution.

Earlier in the week, Chinese authorities warned that financial institutions weren’t allowed to accept it for payment, curtailing hopes further.

Musk effect

Many investors and analysts have also blamed mercurial technocrat Elon Musk for the massive volatility in crypto assets. His tweets, sometimes in support and other times criticising the assets, are seen to have an immediate bearing on price movements.

Musk has been a fervent supporter of Bitcoin and Dogecoin (which actually started as an internet meme and has no fundamental basis like Bitcoin), but have also termed the mania around cryptocurrencies a “hustle”.

Many of Musk’s followers last week blamed him for their losses. In fact, some Twitter users claimed they became homeless after Dogecoin prices crashed following Musk’s advice.

As per the latest data, Bitcoin traded at $35,665, down 27 per cent in the last seven days. Ethereum was at $2,124 (down 45 per cent), Cardano $1.35 (down 43 per cent), Binance Coin at $269 (down 55 per cent), Dogecoin at $0.32 (down 40 per cent) and XRP at $0.84 (down 46 per cent).

Prices have recovered slightly in the last 24 hours but no one can comment on how they will behave next week. Volatility has been a characteristic property of the crypto assets and it will likely move in a wide range in the future as well, many commentators believe.



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