Cryptocurrency roundup: EU introduces crypto-regulation
Bitcoin halted its decline this week as the EU moves to regulate the sector. Saloni Sardana rounds up the week’s cryptocurrency news.
Cryptocurrency lender Voyager Digital became the latest player to file for Chapter 11 bankruptcy this week after hedge fund Three Arrows Capital defaulted on a loan worth $650m issued by Voyager Digital.
But cryptocurrencies still recovered and rose this week as the market has faced a number of setbacks in the last few weeks
So is the outlook for cryptos more positive now?
Cryptocurrencies are recovering slowly but surely
Bloomberg’s senior commodity analyst Mike McGlone definitely thinks so. He is expecting bitcoin to stage a comeback in the second half of 2022.
“With the Bloomberg Galaxy Crypto Index nearing a similar drawdown as the 2018 bottom and #Bitcoin’'s discount to its 50- and 100-week moving averages similar to past foundations, risk vs reward is tilting toward responsive investors in 2H,” McGlone tweeted.
McGlone says bitcoin crashing in 2018 was followed by a significant comeback in the first half of 2019 and thinks the same may happen in the second half of this year.
After explosive growth in digital currencies propelled bitcoin to almost $69,000 late last year, it is now trading almost 70% lower than its all-time high, leading many market watchers to question how viable digital currencies are.
Boris Johnson’s departure may delay plans to create a crypto-friendly environment
It may not seem obvious but the UK’s political turmoil this week in which prime minister Boris Johnson said he would resign, after a wave of ministers quit, may also affect the cryptocurrency market.
According to CoinDesk, it is likely to lead to delays in cryptocurrency legislation in the UK.
Jon Cunliffe, the Bank of England’s deputy governor, already said this week that plans to introduce legislation for stablecoins has already been delayed due to the political crisis.
Among those MPs to depart were the chancellor, Rishi Sunak, and City minister John Glen, both of who are said to be “crypto friendly” politicians and had announced plans for crypto legislation packages earlier in April this year.
EU reaches deal on cryptocurrencies
Europe introduced new regulation on cryptocurrencies last week, in a move that is widely seen as the “GDPR moment of crypto”, a set of rules that triggered other countries to introduce the same.
“EU member states and the European parliament late on Thursday settled the terms of rules that aim to protect consumers while allowing the nascent market to flourish,” says the Financial Times.
The law – the Regulation on Markets in Crypto-assets (MiCA) – is the bloc’s first harmonised rules governing cryptocurrencies. Until now, cryptocurrency rules were just a “patchwork of national rules,” says the FT.
Some of the MiCA’S rules include:
- Crypto asset service providers need approval from an EU national regulator
- Regulated companies may be liable if investors lose money
- The industry has to share information about its environmental impact, with firms forced to disclose energy consumption.
- Stablecoin issuers must operate in the EU and most hold a “sufficiently liquid reserve”.
Stefan Beger, who was in charge of negotiations for the European Parliament, said: “Today, we put order in the Wild West of crypto assets and set clear rules for a harmonised market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors.”
Here’s what happened to five of some of the largest cryptocurrencies by market cap in the last seven days:
- Bitcoin rose 12% to $21,285.
- Ether rose 20.1% to $1,231.
- Binance Coin rose 13.8% to $242.
- Ripple rose to $0.34.
- Cardano rose 6.7% to $0.47.
What you need to watch out for
The US has urged Japan to pressure Japanese cryptocurrency miners and exchanges to cut ties with Russia, says the FT. This comes as 31 of Japan’s licensed cryptocurrency exchanges are still operational in Russia. This could further add pressure to the market.