FreeCryptoCurrency.Me

Nirmala Sitharaman, finance minister of current G20 president India, said the group of major economies is exploring whether it can coordinate on crypto regulation.

Sitharaman — whose government, under Prime Minister Narendra Modi, and central bank have long debated laws potentially banning cryptocurrencies — cited the sophisticated technology underpinning virtual assets as requiring discussion on regulatory actions, Reuters reported. “We are talking to all nations, that if it requires regulation, then one country alone cannot do anything,” Sitharaman said.

“We are talking with all nations, if we can make some standard operating procedure which is followed by everyone to make a regulatory framework, and if it can be effective,” Sitharaman added.

Though the Indian government and the Reserve Bank of India have historically been opposed to decentralized cryptocurrencies, the central bank has shown a keen interest in central bank digital currencies. Late last year, it began a pilot for a wholesale digital rupee to reduce transaction costs and the need for collateral when trading government securities.

© 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 added a massive 139,105 Coinbase shares (worth $7,941,504.45) to its portfolio on Friday, alongside a substantial purchase of 263,504 Robinhood shares (worth $2,629,769.92).

News of the purchases comes by way of a trade notification email.

A well-documented buyer (and sometimes seller) of Coinbase stock, Cathie Wood-led Ark Invest has been relatively quiet in recent weeks. Still, it would seem that Friday’s collapse in the crypto exchange’s stock price — driven by worries that U.S. regulators will restrict crypto staking — proved too attractive to pass up.

A darling of the pandemic-era investment surge, Ark Invest has struggled in post-Covid times. Many of the stocks it owns have hit lows in recent months, as investments in both Coinbase and the embattled Grayscale Bitcoin Trust have weighed heavy on its portfolio.

© 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.

Ethereum cofounder Vitalik Buterin donated about $150,000 in ether to Ahbap Earthquake Support to help with the recent disaster in Turkey and Syria.

The news comes from Etherscan transaction data, which show a movement of 99 ether from wallet address vitalik.eth to a wallet labeled “Ahbap Yardım / Earthquake Support” (0xe1935271D1993434A1a59fE08f24891Dc5F398Cd).

The recipient wallet currently holds about 393 ether, worth almost $600,000 at current prices. The combined value of its holdings is greater than $1.55 million.

Ahbap’s official website says $4,207,562 in crypto donations has been collected.

© 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 International Monetary Fund said the risks of El Salvador’s bitcoin adoption “have not materialized” — primarily thanks to its “limited” use — but caution is warranted.

“Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to bitcoin,” the IMF said in a statement on Friday.

The words follow an annual visit to El Salvador from the United Nations’ financial agency, which followed last month’s $600 million bond payment by the Central American nation.

Much to the IMF’s chagrin, El Salvador made bitcoin legal tender in September 2021, and its president, Nayib Bukele, has been a vocal bitcoin proponent on Twitter. Still, his bullishness hasn’t exactly paid off, with paper losses on the nation’s bitcoin investments currently estimated at a minimum of 50%.

Because of El Salvador’s opaque purchases and holdings, exact investment figures are unknown. “Greater transparency over the government’s transactions in bitcoin and the financial situation of the state-owned bitcoin-wallet (Chivo) remains essential,” the IMF said.

Though its bitcoin investments have yet to pay off, El Salvador’s economy has experienced a “full recovery” to pre-pandemic levels, the IMF said, thanks to “the effective government response to the health crisis.”

© 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.

Missteps in regulating the technology underlying staking ecosystems may have serious — and negative — consequences, including forcing U.S. consumers to less-regulated foreign platforms,  Coinbase Chief Legal Officer Paul Grewal argued in a blog post.

Grewal was adamant that Coinbase’s staking services are not securities. The post came one day after the Kraken exchange shut down its staking services in the U.S. in response to a Securities and Exchange Commission enforcement action. 

“Given the importance of this technology, getting regulation wrong could do serious harm to the development of the crypto industry in the U.S.,” Grewal wrote. By presenting “aggressive mandates” and superimposing securities laws onto the staking ecosystem, regulators may “prevent U.S. consumers from accessing basic crypto services and push users to offshore, unregulated platforms,” he added.

Applying the Howey Test

“Staking is not a security under the U.S. Securities Act, nor under the Howey Test, which the SEC uses to determine whether an investment contract is a security,” said Grewal, adding that the topic of whether it should even be applied to crypto at all merits a separate discussion.

Since staking customers “retain full ownership of their assets at all times, as well as the right to ‘unstake’ those assets consistent with the underlying protocol,” the related services “do not constitute an investment of money, even under an expanded definition,” Grewal said.

Staking also fails to meet Howey’s criteria for common enterprise “because assets are staked on decentralized networks” and transactions are validated “through a community of users, not a common enterprise,” Grewal said. Nor do staking services meet the Howey Test’s “reasonable expectation of profits,” he added. 

Staking rewards are determined via protocol, not Coinbase. “Therefore, this does not meet the case law definition of common enterprise,” said Grewal.

“Finally, staking services do not pay rewards based on the ‘efforts of others,'” Grewal said. “Service providers’ staking services are not entrepreneurial, managerial, or a significant factor in whether customers receive staking rewards or the amount of rewards received.”

“These are IT services, not investment services,” he said. 

© 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.

U.S. regulators set their sights on crypto-staking services this week, and Coinbase shares tumbled 22%.

Shares in the exchange began to trade lower following comments from CEO Brian Armstrong, who said Wednesday that it would be a “terrible path” for U.S. regulators to restrict crypto staking. Coinbase shares traded lower throughout Thursday, extending losses into Friday’s session. 

Shares in the crypto exchange were trading at $57 at the close, down about 22% since Monday, according to Nasdaq data. 

COIN chart by TradingView

Staking wars

Rival exchange Kraken settled charges brought by the Securities and Exchange Commission on Thursday that related to the exchange failing to register the offer and sale of its “crypto asset staking-as-a-service program.” It agreed to pay a $30 million fine, and SEC Chair Gary Gensler said the action against Kraken should put people “on notice.” 

Coinbase’s program was not affected by the news, Coinbase Chief Legal Officer Paul Grewal said, adding that Coinbase’s staking services are “fundamentally different” than Kraken’s. Staking is not a security under the U.S. Securities Act, nor under the Howey Test, he then argued in a blog post on Friday evening.

“Trying to superimpose securities law onto a process like staking doesn’t help consumers at all and instead imposes unnecessarily aggressive mandates that will prevent U.S. consumers from accessing basic crypto services and push users to offshore, unregulated platforms,” he said. 

Staking-as-a-revenue line

Coinbase noted in financial statements that staking revenue makes up a large portion of what it calls “blockchain rewards.” As the company considers itself the principal in transactions with blockchain networks, it presents blockchain rewards earned on a gross basis.

Those blockchain rewards were $63 million in the third quarter of 2022, about 11% of total net revenue. Analysts covering the firm believe it could be a significant revenue line in the future.  

“While staking is still a small portion of COIN’s overall revenue today, it is an important piece to diversify revenue away from trading and is seen as a potentially high-growth vertical,” John Todaro of Needham Co. wrote. 

Needham estimates staking revenue could top $135 million in the fourth quarter of this year and reach $414 million for the entire year.

KBW estimates 13.4% of the company’s net revenues for 2023 will come from staking, with a large majority driven by retail — which also is crucial to understanding the firm’s staking revenues.

Earnings watch

The crypto exchange is set to deliver earnings on Feb. 21, with trading volumes and monthly transacting users expected to be down significantly, year-on-year, according to FactSet estimates. 

Blockchain rewards are expected to come to $63 million for fourth quarter, in line with the third quarter. FactSet estimates show this to rise to $197 million by the fourth quarter of this year, slightly above Needham estimates of $135 million.

The exchange’s expenses were down in the third quarter, falling to $1.1 billion from $1.8 billion in the previous period. Trading volumes were lower, in line with industry competitors. 

© 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.

Eddy Alexandre, the CEO of a purported cryptocurrency and currency trading platform called EminiFX, pleaded guilty to one count of commodities fraud and agreed to forfeit $248.8 million in addition to restitution, the U.S. Attorney’s Office for the Southern District of New York said Friday. 

Alexandre was alleged to have solicited investments from tens of thousands of investors and fabricated weekly returns of at least five percent, U.S. Attorney Damian Williams said in a statement.

“Alexandre’s scam caused investors to lose millions of dollars, and this case should serve as yet another warning to cryptocurrency executives that the Southern District of New York is closely watching and ready to prosecute any and all misconduct in the crypto markets,” he said.

Alexandre is alleged to have transferred at least $14.7 million to his personal bank account, and he used investor funds to purchase a BMW for himself. The offense to which he pleaded guilty carries a maximum sentence of 10 years in prisons. 

© 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.

Bitcoin mining stocks tracked by The Block were mostly lower on Friday, with three gaining and the other 16 declining.

Bitcoin fell 1.3% to $21,748 by market close.

Here’s a look at how the individual miners performed today:

© 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.

PayPal’s putting work on its stablecoin on ice amid increasing regulatory scrutiny, Bloomberg News reported, citing a source.

The news came a day after a report that the New York Department of Financial Services was investigating Paxos, which PayPal had been working with on its stablecoin effort, Bloomberg said, adding that the coin was to have been launched in the coming weeks.

“We are exploring a stablecoin,” Bloomberg cited PayPay spokesperson Amanda Miller as saying. “If and when we seek to move forward, we will, of course, work closely with relevant regulators.”

PayPal confirmed early last year that it was working on the stablecoin, which would be backed one-to-one with the U.S. dollar. Paxos holds a virtual currency license that was issued by the New York regulator, which issued stablecoin guidance in June following the Terra collapse and told issuers that stablecoins must be backed by assets that are kept separate from the issuers’ funds.

PayPal and Paxos didn’t immediately respond to requests for comment from The Block.

© 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.

Unstoppable Domains and hi, a web3 platform with offerings from banking to metaverse social networking, are hosting an “exclusive drop of love-themed premium web3 domains” — just in time for Valentine’s Day.

You too can gift your loved one, for a limited time only, the easy-to-remember and catchy handles such as romeo.hi, xoxo.hi, sexy.hi, love.hi, and diamond.hi. The sale is the first time .hi domains are being made available for purchase.

The .hi domain acts as a unified identity for web3 and can be used to replace complicated wallet addresses for easy crypto payments, websites and seamless logins. Unstoppable and hi’s integration enables people to use their domain to send and receive assets in the hi app or from their crypto wallet of choice.

While a domain name might seem less romantic than a candlelit dinner, it could actually end up being an investment (this is not investment advice by any means). The 250 domains available range in price from $20 to $100,000 and will be on sale for 48 hours ending Feb. 15.

© 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.