Monat: September 2023

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India embarks on crafting crypto regulations after ruling out ban

  • India was long thought to be planning a complete ban on cryptocurrencies.
  • However, in the just concluded G20 Summit, India joined other G20 nations to support IMF-FSB joint recommendations for cryptocurrency guidelines.
  • Crypto investors in India can now breathe a sigh of relief as they wait for the crypto framework.

Based on the combined recommendations of the International Monetary Fund (IMF) and the Financial Stability Board (FSB), India is developing a framework for regulating cryptocurrencies that, if approved, could become law in the next five to six months.

According to Siddharth Sogani, CEO of CREBACO, who has collaborated with governmental organizations and departments, the Indian government is developing a five-point crypto legislation with a global perspective.

India just concluded the G20 summit, which the Chinese president declined to attend, on a high note. The summit resulted in several key economic announcements including some that touched on the cryptocurrency industry. For Cryptocurrencies, the most notable decision came in the form of IMF-FSB joint recommendations for cryptocurrency guidelines that India and other G20 nations supported.

The IMF-FSB crypto recommendations

The IMF-FSB crypto proposals advocate for regulating the cryptocurrency market as opposed to a total ban.

The G20 nations can use the regulatory principles and ideas provided by the IMF and FSB to create their own independent yet cooperative crypto legal framework.

India’s 5-point crypto regulatory framework

According to Sogani, the CEO of CREBACO, a blockchain analytics company that provided consultancy services to a number of G20 committees and countries, based on CREBACO’s discussions with government representatives, India is now developing a five-point regulatory framework with an emphasis on international cooperation on specific issues like crypto taxes whose policy took effect in April 2022.

The five-point crypto regulatory framework includes:

  1. Establishing an advanced Know Your Customer (KYC) system for cryptocurrency enterprises that complies with FATCA and current anti-money laundering regulations.
  2. Crypto platforms would have to provide regulators with Proof-of-reserve audits in real time.
  3. A global taxation system that is uniform.
  4. Under the rules of the Reserve Bank of India (RBI), cryptocurrency exchanges could acquire the status of authorized dealers (like banks).
  5. For crypto platforms, important positions like the Money Laundering Reporting Officer (MLRO) may be required.

The post India embarks on crafting crypto regulations after ruling out ban appeared first on CoinJournal.

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Crypto.com launches new crypto earn programme Earn Plus

  • Earn Plus will allow users to allocate up to $1 million for every supported Earn token.
  • Crypto.com’s revamped Crypto Earn programme also offers a unified reward rate and supports a payout structure for PayPal USD (PYUSD) and USDC Coin (USDC).

Crypto exchange Crypto.com has a new product designed to change the crypto earn landscape. Announced recently is Earn Plus, the crypto platform’s new earn programme tailored to benefit more customers.

What’s new in Crypto.com’s Earn Plus?

The exchange said in its announcement that Earn Plus will offer a simpler reward structure and higher allocations. The new Earn programme that introduces generous yields on two key stablecoins is available via the Crypto.com App.

In terms of higher allocation limits, customers will enjoy up to $1 million for supported token. Raising the limit will allow clients to tap into the potential rewards that come with the ability to allocate more. Earn Plus’ simple rewards also greatly differs from the exchange’s current tiered program, with the same rate applicable to the principal amount rather than the discounted rates applied to amounts above the $3,000 threshold.

The single rate will apply to a customer’s entire allocation as per the terms of CRO deposit and lockup. In this way, Earn Plus users will find it easy to gauge total rewards.

According to Crypto.com, Earn now supports PayPal USD (PYUSD) and USD Coin (USDC) – the former a new stablecoin recently launched by payments platform PayPal. PYUSD and USDC have replaced the old USDC reward structure, with interest on the stablecoins pegged at up to 5% per annum.

Crypto.com’s move to unveil Earn Plus is a boost to the exchange, with its product coming at a time regulatory focus on the crypto market has included a crackdown by the US Securities and Exchange Commission (SEC) on products across the US. For example, crypto exchange Gemini recently criticised the SEC for its outlook on its Earn programme.

The post Crypto.com launches new crypto earn programme Earn Plus appeared first on CoinJournal.

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DeFi risk-reward remains out of whack, TVL continues to dip


Key Takeaways

  • The total value locked in DeFi is close to levels last seen in March 2021 
  • Ethereum is a commanding leader with 57% of the market share, but the overall market has shrunk drastically
  • Sky-high yields proved unsustainable, while trad-fi interest rates have risen sharply, with investors reallocating capital as a result
  • The reputational damage of crypto could also be hurting the sector

The total value locked in DeFi continues to sink, currently close to levels last seen in March 2021. From peaking in November 2021 at nearly $180 billion, it has fallen 80% to $37 billion. 

The stark dropoff last year comes as no surprise. Cryptocurrency as a whole was decimated – the Terra crisis alone in May 2022 is evident on the above chart as causing a massive drawdown. Beyond that, token prices collapsed, and hence TVL has come down drastically.

Yet, thus far in 2023, crypto prices have rebounded strongly. However, by repurposing the previous chart by now zooming on 2023, we can see that TVL has failed to rise.

Digging into the different blockchains, Ethereum remains the commanding market leader. It holds 57% of TVL across the space, with Tron a distant second with 13.9%. BNB Chain, launched by the embattled Binance, is third with 7.8%, with all other chains below 5%. 

Bearing in mind that Ethereum holds such a commanding lead in the space, we can dig into its TVL trend to see that the dropoff is not solely a result of falling token prices. 

For this, in the next chart we present the TVL both denominated in dollars and ETH. While dollar-denominated TVL is what we have focused on thus far in this piece, it is obviously affected by virtue of the fact that much of the TVL is held in crypto rather than fiat. Yet if we analyse the TVL in terms of ETH, which is down 55% since the start of 2022, we see that it is also down substantially. 

If we focus on 2023, we see that the TVL in terms of ETH has fallen less than in dollars, which makes sense given the converse has happened; the denominator has become larger (i.e. ETH has increased, up 35% this year). 

Therefore, the decline is not solely a result of falling prices. In reality, the entire crypto ecosystem is still seeing suppressed volume, liquidity and overall interest. DeFi’s momentum has also slowed, not helped by the fact that the sky-high yields which drew so many to the space during the pandemic have proved to be unsustainable (granted, this is mainly to do with elevated token prices).  

In conjunction with this last point, trad-fi yields have gone the opposite way – steeply up. T-bills are the safest investment in the world, guaranteed by the US government, and they now pay more than 5%. The decision about where to allocate one’s capital in this environment is vastly different to the same proposition when interest rates were at 0%. 

With a slew of ETF applications coming online in recent months, there is optimism that crypto could soon turn a corner. Exacerbating this is the expectation that, finally, we may be approaching the end of the tightening cycle. 

If/when the reversal comes, DeFi will be in a stronger position to persuade capital to return. The reality is that, right now, with interest rates above 5% and DeFi yields coming down so sharply, the risk-reward ratio is just not where it needs to be for prospective investors.

Moreover, the reputational damage sustained by crypto (even if that was unfair on DeFi, which some would even argue presented its true worth in comparison to CeFi firms like Celsius and BlockFi), may have dented its progress further again.

Times will change, but the capital outflow from DeFi is not surprising in this context. 

The post DeFi risk-reward remains out of whack, TVL continues to dip appeared first on CoinJournal.