ProBit Bits — ProBit Global’s Weekly Blockchain Bits Vol. 12
In case you missed them, here are the top developments over the past week that we think would be of interest to you. It’s another edition of ProBit (Blockchain) Bits.
Bitcoin HODLers Holding the Line Thus Far
At the start of last week, a crypto analytics firm GlassNode declared June as the worst month for the price performance of Bitcoin since 2011.
Having traded down 37.9% in the course of the month, the firm points to a dull on-chain activity which it says indicates “a near complete purge of ‘fair weather’ investors” leaving only HODLers to hold the line. Stressing the crypto market’s firm bear state, digital asset investment firm Coinshares reports that Bitcoin saw little inflows over the previous week at just US$0.6m of the total US$64m recorded for digital asset investment products. Rather, a significant majority were into Short-Bitcoin investment products which saw record inflows totaling US$51m after launch in the US.
Tesla, Meitu HODLing, Too
From individual investors to institutions, the price slump has not been good on all fronts. As of last week, when Bitcoin’s price moved from the low of $19,000 to a high of about $21,800, Elon Musk’s Tesla says it faced a $440m writedown on its $1.5bn worth of Bitcoin bought in early 2021. Another company that also shared its impairment loss as a result of the continuing crypto market’s slow push is Meitu. The Chinese company, which makes a photo editing app, had bought about $100 million worth of crypto as of April 2021. However, as per its announcement last week, the values of the holdings as of June 30, 2022, were approximately US$50 million. Meitu’s board remains optimistic about growth in crypto adoption. Meanwhile, with the repayment of the 141,686 Bitcoins held by the bankruptcy trustee of the defunct Japanese crypto exchange Mt. Gox now around the corner, there are suggestions that it may add to the downward pressure on the price of the world’s top cryptocurrency.
Mt. Gox Creditors Set to Get Their BTC Claims
Yes, that’s right. Mt. Gox last week released an update on the repayment procedures for creditors who have waited for more than eight years to receive their claims. The Rehabilitation Trustee says it is currently preparing to make repayments and would like creditors to register online and indicate how they would like to receive their repayments. There are three options to choose from: to receive an Early Lump-Sum Repayment, repayments in cash, and repayments for a portion of the claims in Bitcoin and/or Bitcoin Cash.
The held 141,686 BTC as of September 2019 is worth about US$2.8 billion at BTC’s current price. Though their Bitcoin is now worth less than half its price about six months ago, it is still a far cry from its initial cost since they made their investment while Bitcoin was under US$1,000.
Singapore’s Regulator Plans More Crypto Restrictions
The Monetary Authority of Singapore (MAS) says it is considering introducing additional consumer protection safeguards. The further crypto-related restrictions are to protect unsophisticated persons from entering into trades that are considered highly risky, it says. These measures may include placing limits on retail participation, and rules on the use of leverage when transacting in cryptocurrencies. The borderless nature of cryptocurrency markets is a challenge though. The regulator recognizes that there has to be regulatory coordination and cooperation at the global level for restrictions to be quite effective. It says it has been participating with various international standard-setting bodies to succeed in this regard. MAS is one of the few government agencies that spoke out against 3AC. The regulator rebuked the troubled crypto firm for allegedly providing false information to exceed its allowable assets under management threshold as a registered fund management company in Singapore.
The UK Calls for Evidence on Taxing DeFi Loans and Staking
The UK government is considering improving taxation on crypto asset loans and staking within the DeFi context and would like to know the public’s views. The country’s revenue and customs department wants investors, professionals, and firms engaged in DeFi activities including technology and financial service firms; trade associations and representative bodies; academic institutions and think tanks; and legal, accountancy, and tax advisory firms to reach out in its call for evidence.
The HMRC says it wants more evidence about how DeFi activities are impacted by current tax law and to inform the government’s options for reducing friction, including the administrative complexity for some taxpayers. The call for evidence slated to run till 31 August 2022 only concerns the tax treatment for investors participating in DeFi lending and staking and not any other activities. The call for evidence falls in the first stage of five in the process of tax policy development in the UK.
Last week’s updates on troubled Celsius
Celsius Network is currently facing a severe liquidity crisis which has been worsened by the recent drop in the price of Bitcoin thus exposing the cryptocurrency loan company (which has now filed for bankruptcy) to a heightened risk of liquidation.
The past week saw Celsius repay $120 million of its debt to decentralized lending protocol Maker to reduce the liquidation on its WBTC collateral to less than $5,000.
The struggling lending platform also laid off about 150 employees including those in Israel, representing about a quarter of its total workforce — many of its businesses are run by third-party platforms. The company has since been a subject of an investigation with the Department of Financial Regulation in the state of Vermont, US, being the latest to join a multistate inquiry for promising customers high-interest rates of up to 17% on deposits of cryptocurrencies despite operating without regulatory oversight and not registering its interest accounts as securities.
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