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Bitcoin’s hash rate — the computing power used to mine new blocks — has dropped 50% from its peak its May.

According to The Block’s Data Dashboard, the hash rate has decreased from 180 EH/s on May 14, to its current value of 90 EH/s.

Due to this reduction, bitcoin’s hash rate is back to levels last seen in May 2020. It also significantly counters the long-term upward trend and is the largest drop in history.

As The Block has reported, the main cause for the falling hash rate is the crackdown on bitcoin mining in China. After a high-level comment was made during the China State Council meeting last month, regions across China started issuing notices for miners to cease their operations. This has led to a huge decline in China’s contribution to the hash rate.

Another impact has been the falling price of bitcoin, which has dropped from a peak price of $63,500 in April to its current price of $35,300. This has made it less profitable to mine bitcoin (although the declining hash rate will counteract that).

Falling on-chain metrics

Bitcoin’s hash rate is not the only on-chain metric in decline.

The number of daily transactions on the bitcoin network has fallen to levels not seen since July 2018. According to the dashboard, just 200,000 transactions are being made per day (on average over the last seven days).

There has also been a decline in the number of active addresses on the network, although it only returns to April 2020 levels. The number of daily active addresses has gone down from 1.23 million to 765,000 per day — and far fewer new addresses are being created every day.

Bitcoin transaction fees are also much lower now, although this makes the network cheaper to use. They have fallen to around $7 on average per day, down from a peak of $54 per transaction in April.

The one metric defying the trend is the amount of capacity in the Bitcoin Lightning network. Since starting the year at about 1,000 bitcoin ($35.3 million at current prices), the amount of bitcoin locked up in the network has rapidly increased, rising to 1,640 million ($57.9 million) today.

© 2021 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.

Quick Take

• We are witnessing an increasing usage of oracles in decentralized spot exchanges and perpetual derivatives exchanges
• Funding rates on perpetual futures exchanges require input from oracles to make the contract price close to the spot price
• The update frequency of existing price oracles is not sufficient for operating a decentralized spot exchange that continually tracks external prices

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Senator Cynthia Lummis wants Americans to consider cryptocurrency as a way to diversify their retirement and long term savings — and she is already doing the same. 

In a new interview with CNBC, the so-called “bitcoin-friendly” U.S. senator said she holds about five BTC today, first purchasing when the cryptocurrency was at $330. Lummis said she encourages people to “buy and hold” as a way to save for their future.

“I worry about having all of our retirement monies denominated in U.S. dollars. As part of diversification, having a very diverse asset allocation, you don’t have all your eggs in one basket,” she said. “I think one of the strongest stores of value for the long run is bitcoin.”

For now, bitcoin is the only cryptocurrency in her portfolio since it’s the only one she feels she “really understands.” Still, she acknowledged that her endorsement doesn’t mean bitcoin is the only useful crypto, saying Ethereum could have benefits as well.

Through efforts like her recently formed Financial Innovation Caucus, she hopes to help regulation progress to a place where cryptocurrencies like Bitcoin can be used as assets to diversify long-term portfolios as well as use it as a medium of exchange.

“So whether you’re an employee that has a retirement fund – I’d like to see those retirement funds invested in bitcoin and other cryptocurrencies that are good stores of value – but I’d also like to see individuals be able to use bitcoin and cryptocurrencies of their preference that are safe, that have met the hurdles of anti-money laundering and Bank Secrecy Act, but that allow people to use their cell phones to send stores of value, bitcoin, to each other.”

But that could be a tough balancing act, according to Lummis.

It will require complying with current anti-money laundering laws as well as the Bank Secrecy Act without stifling crypto’s fast-paced innovation, according to Lummis. It’ll also require creating public infrastructure related to crypto, like a digital dollar, while tackling privacy concerns, she said in the CNBC interview.

“We don’t want to over-regulate or differently regulate traditional banking and non-fiat currency banking because we want them to have a level playing field,” she said.

© 2021 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.

Coinbase has announced a new product offering that could set it apart from its fintech rivals in a world of low interest rates.

The publicly traded cryptocurrency exchange unveiled Tuesday a new savings account-like product that allows users to earn 4% annual percentage yield (APY) by lending out USDC. 

“Coinbase’s high-yield alternative to traditional savings accounts offers 4% APY⁴ on your USD Coin, a stablecoin that can always be redeemed one-to-one for USD $1.00,” the firm said in a press statement. “This means that by lending your USDC to Coinbase, you can earn 8x the national average of high-yield savings accounts.”

It’s no secret that savers find themselves in a low-yield environment. Wall Street’s largest banks offer paltry returns on savings accounts — Chase offers 0.02% APY whereas Bank of America offers 0.05% APY. Even the world’s fintechs, which have long drawn in clients with better returns, have slashed rates. 

Wealthfront — which at one point offered a return of 2.5% APY for cash accounts — currently offers 0.10% APY. Robinhood offers 0.030. Such high-yield savings account have been a big source of growth for fintech firms, which could bode well for Coinbase. 

To be sure, Coinbase’s users’ USDC is not insured in the same way as, say, a Chase savings account. Such accounts are insured by the FDIC up to $250,000. Still, Coinbase thinks the higher rewards don’t come with higher risk. 

“We want to offer our customers the opportunity to earn more interest than banks while also providing peace of mind and a safe, secure way to earn,” Coinbase said. “That’s why we are proud to offer a principal guarantee for the USDC in your Coinbase account.”

In the DeFi world, Compound is trying to offer a similar savings scheme. With help from Circle and Fireblocks, the project is letting users park their USDC to earn a 4% yield. 

© 2021 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.

Mark Hopkins, a Texas resident who uses the moniker “Doctor Bitcoin,” pleaded guilty to operating an unlicensed crypto-based money transmitter business on Tuesday. 

According to a release from the Department of Justice, Hopkins allegedly converted U.S. cash into bitcoin for a fee — without checking the source of the cash or enacting proper know-your-customer (KYC) protocols. He supposedly admitted to the courts that he did not acquire proper licensure for a money transmitting business in the U.S. and failed to register the business with the Department of Treasury.

Money transmitter businesses, which fall under the “money services business” umbrella, are regulated by the Financial Crimes Enforcement Network (FinCEN), a federal agency within the Department of Treasury. Money services businesses must develop a robust anti-money laundering program, and submit Suspicious Activity Reports for financial transactions above $2,000 if the cash’s source is suspected to be illegal.  

Hopkins was also said to be involved in a 2019 incident in which one of his customers, identified as “M.H.,” converted funds gained from a Nigerian lottery scam through Hopkins’ business, according to the DOJ. He allegedly instructed M.H. on how to avoid scrutiny from financial regulators, such as making deposits under $9,500 and misrepresenting the dealings with Hopkins as a marketing campaign payment. In all, Hopkins helped M.H. convert “between $550,000 and $1.5 million” through 37 transactions, according to the U.S. government.

Hopkins faces up to five years in federal prison.

© 2021 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.

Quick Take

• Choice by Kingdom Trust is packaging up bitcoin investments in retirement accounts, allowing customers to delay tax payments linked with crypto trades. 

• The company recently crossed $2 billion in assets under management, but crypto heavyweights like Coinbase are now expanding into the market.

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Anthony Scaramucci — the New York financier and former White House official — first jumped into the crypto fray at the end of last year. 

Now, Scaramucci is going all in. 

During the latest episode of The Scoop, the Skybridge Capital founder walks listeners through his journey to bitcoin. Skybridge first began investing in BTC at the end of last year. 

“We have a full commitment to crypto,” he remarked.

Since then, Skybridge has thrown its hat in the bitcoin exchange-traded product ring and also plans to launch an ETF that has exposure to publicly traded cryptocurrency companies.

Indeed, Skybridge is one of a number of U.S. companies vying to go to market with a bitcoin ETF. But the Securities and Exchange Commission has yet to give the nod to such a product, and the proposed ETF that’s furthest along in the process — put forward by asset management company VanEck — is now the subject of an additional comment period. Other companies, like NYDIG, Fidelity and Cathie Wood’s ARK Invest, are among those pursuing bitcoin ETF launches.

Skybridge also has plans to launch a private Ethereum fund.

“July 1st, we’re launching a private Ethereum fund. We’ll then file for an ETF for Ethereum. Again, it is anybody’s guess when those things will be going,” he said.

Scaramucci went on to say:

“I can say — which is public information — that we did file for an ETF related to Bitcoin. We also have a UIT with a company out of Wheaton, Illinois, called First Trust… as we’re speaking, we’re making an announcement on an ETF for a digital innovation fund that has some great publicly traded assets that we think are geared related to [Ethereum], related to Bitcoin, but also the other coins.”

Scaramucci believes he can lean on his Wall Street chops for product adoption. He cited Morgan Stanley’s buy-in to SkyBridge’s digital asset portfolio as another example of Wall Street’s appetite for Bitcoin. “Morgan Stanley is a very big part of our business.”

Remaining firm on his bullish stance on Bitcoin’s valuation, Scaramucci told The Scoop:

“Here’s what I think. I think that we’ll be sitting here a year from now, there’ll still be skeptics, still be people that are fence-sitters, but there will be slightly more people in the pool with us and, as a result of which, the prices will be higher. And I just think this is one of those weird assets where the higher the prices go, the more people are going to be drawn into the pool.”

© 2021 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.

Gurbir Grewal, New Jersey’s attorney general, is taking the reins as the Securities and Exchange Commission’s director of enforcement.

Grewal is resigning his position today, according to the New Jersey Globe. The enforcement division has been led on an acting basis since the previous director, Alex Oh, stepped down in April. The SEC confirmed the news in a press release after the initial reports of Grewal’s appointment.

“The Enforcement Division has a critical role to play in finding and punishing violations of the law,” Grewal said in a statement. “I’m excited to get to work with the talented team of public servants to uncover and prosecute misconduct and protect investors.”

During his time in office in New Jersey, Grewal pursued a range of crypto-related actions. These include enforcements as part of the wider so-called “Operation Cryptosweep,” which targeted fraudulent activities. 

“I’m honored and delighted to welcome Attorney General Grewal to the SEC,” SEC Chair Gary Gensler commented in a press statement. “He has had a distinguished career as New Jersey’s chief law enforcement officer and as a prosecutor at both the local and federal levels. He has the ideal combination of experience, values, and leadership ability to helm the Enforcement Division at this critical time.

© 2021 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.

Representative Bill Foster (D-IL) sees the ransomware issue as potentially deadly for crypto’s reputation before Congress. 

Speaking at a virtual event hosted by Axios, warned of growing anti-crypto sentiment among lawmakers.

“I’m not there yet, but there’s significant sentiment in congress that if you’re participating in an anonymous crypto transaction that you are a de facto participant in a criminal conspiracy,” said Foster.

A member of the Financial Services Committee, Blockchain Caucus and the new working group on crypto, Foster is certainly in a position to know the prevailing wind. 

In a response to a question from interviewer Dan Primack as to whether the recovery of the Colonial Pipeline ransom suggested that the Department of Justice had already solved that issue, Foster said: 

“I have to speak very carefully here because our capabilities here are very classified. For a long time, we have had the ability to track bitcoin in a way that the bad guys didn’t fully appreciate. Obviously, that’s all changing.”

Huge government investment into cryptocurrency forensics and analytics, in other words, are still part of a race against increasingly savvy cybercriminals. 

For these reasons, the extent to which a blockchain transaction can remain private or anonymous remains contentious among lawmakers, especially when it comes to the United States’ considerations for issuing a digital dollar. Foster noted his consistent concerns with both fully decentralized digital assets and total government surveillance: 

“There’s a middle ground that we have to strive for, somewhere before the chaotic criminal ransomware environment that we’re seeing in some crypto assets and a completely surveilled environment. And I think that middle ground is third-party anonymity, where 90% of the time the blockchain will determine who gets paid what, but in those rare instances where something fraudulent, criminal or mistaken has happened that you have to be able to unmask and potentially reverse those transactions.” 

© 2021 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 Binance-owned crypto market data aggregator CoinMarketCap has launched a new token swap feature on its website.

The feature initially supports the leading non-custodial crypto exchange Uniswap and the Ethereum blockchain, meaning CoinMarketCap users can swap Ethereum-based tokens via Uniswap. Some of the supported tokens include ether (ETH),  Unsiwap (UNI), Tether (USDT), DAI, Aave, and more. 

The feature is enabled on CoinMarketCap’s website itself, which is one of the highest visited portals in the world in the finance category. CoinMarketCap saw more than 270 million visitors on its website last month, according to SimilarWeb.

The token swap feature is available on supported coin pages, said CoinMarketCap, adding that users will have to connect a supported wallet and sign a blockchain transaction to complete a swap.

“With the rise of altcoins in the DeFi [decentralized finance] boom, the need for seamless ways to exchange tokens in order to participate in different crypto products and ecosystems has become essential,” said CoinMarketCap.

Binance acquired CoinMarketCap last year, as The Block reported at the time.

© 2021 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.