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The FOMC will announce its next interest rate decision on Wednesday with markets betting squarely on a 25 basis point rate increase.

Congress needs to get its “act together” to regulate cryptocurrencies, said Rep. French Hill, chair of a newly formed digital asset-focused House Financial Services subcommittee.  

“We all have a front row seat to what happens in Congress if we don’t get our act together,” Hill, R-Ark., said in pre-recorded remarks on Tuesday at the DC Blockchain Summit. “Businesses will leave the U.S. to go elsewhere while the agencies are taking major steps to crack down on the crypto blockchain digital asset industry.” 

Hill said Congress should first pursue legislation instead of being “replaced by enforcement actions or regulatory guidance from the regulatory agencies.” Though he didn’t name names, the Commodity Futures Trading Commission and particularly the Securities and Exchange Commission have been busy this year bringing enforcement actions against crypto firms and individuals.  

The SEC brought a record number of crypto related enforcement actions in 2022, and it doesn’t seem to be slowing down this year. The SEC moved against crypto exchange Kraken over its staking services and also brought charges against Terraform Labs and its CEO Do Kwon last month. Decentralized company Sushi was also recently reported it was hit with a subpoena from the SEC.

First steps

Congress is at a crossroads, and the first step is to pick up on stablecoin legislation, Hill said.  

In the last Congress, now-House Financial Services Committee Chair Patrick McHenry, R-N.C., along with former Chair Maxine Waters, D-Calif., worked behind the scenes to figure out a deal on how to regulate stablecoins. That draft legislation included creating a federal framework around stablecoins and temporarily banning the types of payment coins that are not backed by outside assets. But McHenry blamed the Treasury Department for holding up the talks. 

Now, Hill said he wants the Treasury and the Federal Reserve to be “constructive partners” in continued work on stablecoins.  

The Treasury Department, along with other agencies, released a stablecoin report in 2021. While Treasury Secretary Yellen said then that stablecoins have the potential to “support beneficial payment options,” she argued that a lack of oversight presents risks to people and the larger system.

“We need House and Senate Democrats to work with us because that in turn will perhaps have a good stable working relationship with the Biden administration,” Hill said. “The Treasury and the Fed were constructive partners in our stablecoin work last year and we want that to continue.”  

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Okcoin exchange has halted the trading of two proof-of-work tokens, the mining of which respectively supported the cities of New York and Miami, due to lack of liquidity, Bloomberg first reported.

Miami’s CityCoin got the city a $5.25 million dollar disbursement in February last year. New York City Mayor Eric Adams gave his blessing to a similar cryptocurrency, NYCCoin, in November 2021.

However, liquidity support for the CityCoins on Okcoin exchange fell below what the market could tolerate.

The CityCoins halted trading on Okcoin March 16, “until we are able to safely restore trading, but we don’t know when that will be possible,” the exchange said in a statement.

Neither of the coins is officially partnered with the cities, as noted by CityCoins website. However, Miami Mayor Francisco Suarez and Adams both previously touted the token’s virtues, and 30% of the money spent on mining each coin was to be donated to the city the coin represented, according to Okcoin.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Animoca Brands chairman said at the Outer Edge conference in Los Angeles, California, that among major international game publishers, those located across Asia are more active in Web3 development.

Is the U.S. Federal Reserve ready to slam the brakes on its rate hike agenda? With less than 24 hours to go, no one’s sure. 

Just two weeks ago, it seemed likely the Fed might increase rates by 50 basis points on Wednesday. Fed Chair Jerome Powell told Congress the central bank wasn’t afraid to increase the pace of hikes if needed. Then the second biggest U.S. banking failure ever happened, and now the landscape seems entirely different.  

Here’s what Wednesday’s decision means for crypto, why the dot plot is so important and where the Fed might go this year. 

The dot plot 

The Federal Open Market Committee is the central bank’s policy-setting committee and overseen by Powell. It’s made up of 12 rotating members including seven from the Board of Governors, the president of the Federal Reserve Bank of New York, and four members from the 11 other Reserve Bank presidents.

One of the committee’s most watched charts is the dot plot, which summarizes where these 12 members see the Fed Funds rate going. It’s released quarterly.

IDX Digital Assets CIO and founder Ben McMillan told The Block that the dot plot is likely to drop from the current end-of-year forecast of 5.4%. The current rate is 4.5%-4.75%.

Word on the street

Goldman Sachs expects the FOMC will pause hikes on Wednesday. Despite an aggressive response to “shore up the financial systems,” markets aren’t convinced this will be enough, analysts led by Jan Hatzius wrote. 

While the central bank has been raising rates to tame inflation, Goldman thinks it looks “less urgent now than last summer because near-term inflation expectations have fallen sharply, and long-term inflation expectations have remained anchored.” 

The link between a single 25-basis point interest rate hike and future inflation is tenuous, analysts at the investment bank said before adding that “the FOMC can get back on track quickly if appropriate, and the banking stress could have disinflationary effects.” 

Not everyone agrees with Goldman. The CME’s FedWatch tool, which analyzes 30-day Fed Funds futures pricing data, is predicting an 86% probability of a 25-basis point increase.

For context, it was about 73% just a week ago.

Bitcoin safe haven? 

IDX Digital Assets’s McMillan agrees with the prevailing sentiment, saying a hike of 25 basis points is “probably likely despite the recent banking turmoil.”

“Bitcoin has seen a surprisingly strong bid, which interestingly has correlated with an increase in its dominance ratio, suggesting that bitcoin has been something of a ‘flight to quality‘ asset within the crypto ecosystem,” he added.

Bitcoin dominance, which refers to the market capitalization of bitcoin relative to the total market capitalization of all crypto assets, has increased to near two-year highs.

With the recent expansion of the Fed’s balance sheet, there has also been a return of the “bitcoin as an inflation hedge” narrative, McMillan said.

Galaxy Digital’s head of firmwide research, Alex Thorn, said there are two supply events on the horizon for bitcoin beyond the macro outlook — Mt. Gox payouts and the fourth halving expected to occur on March 25, 2024. Halving occurs when the reward for mining cuts is cut in half.

The Mt. Gox payouts are expected to begin sometime in the next six months. Based on reports, the largest holders are expected to take their funds in bitcoin rather than a cash payout. In that scenario, there would be less of a market impact. 

Thorn said there is a good base a year out from halving, with the last three halvings proceeding bull markets. 

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The trading platform is built for the current market situation and is now reaping those benefits, Stephan Lutz, says.

Crypto exchange Okcoin has suspended the trading of two Citycoins, MiamiCoin and NYCCoin, as of March 16, citing limited liquidity as the reason for the decision.

Bitcoin mining stocks tracked by The Block were higher on Tuesday, with 17 gaining and the other two declining.

Bitcoin rose 1.1% to $28,152 by market close.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ark Invest CEO Cathie Wood believes bitcoin’s price rally through the bank crisis will bring more institutional investors into the space.

“The fact that bitcoin moved in a very different way from the equity markets, in particular, was quite instructive,” Wood told Bloomberg on Tuesday. Corporate treasuries had previously been pulling away from having bitcoin in their balance sheets because regulators themselves were pushing them to divest, she said.

Wood believes investors should diversify their portfolios further into digital assets. In a report targeting institutional investors, Ark recommended they should allocate between 2.5% to 6.5% of their portfolios to crypto “if they care about this new asset class diversifying their portfolios.” This allocation would be similar to the size institutional investors historically have allocated to emerging asset classes, Wood said.

Bitcoin is up about 40% compared to 10 days ago, trading at around $28,200.

Ark Invest wrote in a note this week that Bitcoin and other cryptocurrencies were behaving like “safe havens.”

The company has recently furthered its investment into crypto or crypto-related companies, such as Coinbase, Robinhood and Block. It also raised more than $16 million for a new crypto fund.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.