<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="553" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107152567-1668602820538-GettyImages-1244424369-820x553.jpg" alt="" class="wp-image-425276" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107152567-1668602820538-GettyImages-1244424369-820x553.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107152567-1668602820538-GettyImages-1244424369-300x202.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107152567-1668602820538-GettyImages-1244424369-133x90.jpg 133w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107152567-1668602820538-GettyImages-1244424369-768x518.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107152567-1668602820538-GettyImages-1244424369-1536x1036.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/06/107152567-1668602820538-GettyImages-1244424369-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The CEO of the largest online exchange for trading cryptocurrency, Binance, said he is establishing a recovery fund to help people in the industry, while saying the sector “will be fine.” Ben McShane / Contributor / Getty Images</figcaption></figure>



The Securities and Exchange Commission filed 13 charges against Binance, the world’s largest crypto exchange, and its founder, Changpeng Zhao, alleging both comingled billions of dollars worth of user funds and sent them to a European company controlled by Zhao.



The U.S. regulator alleged on Monday that Zhao and his exchange worked to subvert “their own controls” to allow high net worth U.S. investors and customers to continue trading on Binance’s unregulated international exchange.



One senior executive allegedly told a compliance officer that the company was operating as a ”[f&#8212;ing] unlicensed securities exchange in the USA bro.”



The complaint alleges Binance created Binance.US as a shield for the main company and Zhao, to “reveal, retard, and resolve” law enforcement targets and insulate Binance.



Two successive Binance.US CEOs expressed deep concern over Zhao’s level of control, according to the SEC. Both testified before federal regulators: Neither were named, but its first and second chief executives were Catherine Coley and Brian Brooks.



“I’m not actually the one running this company, and the mission that I believe I signed up for isn’t the mission. And as soon as I realized that, I left,” a former Binance.US CEO identified as “BAM CEO B” testified to the SEC.



Binance earned $11.6 billion in revenue, most of which came from transaction fees, from June 2018 through July 2021, the complaint said. Since its inception, the exchange has “at first overtly and later furtively” worked to entice U.S. customers, at the direction and control of its founder Zhao, the SEC alleged.



Binance knew that tens of thousands of customers were in the U.S. but chose not to act, the SEC alleged, despite federal law barring the unregistered offer and sale of securities. Binance’s ultimate compliance, in 2019, was largely a public show, the SEC complaint continues.



The SEC alleges Zhao ordered the creation of an evasion plan for high net worth customers, using a VPN service to hide their U.S. location and submitting compliance documents to obscure their country of origin.



CNBC previously reported on how Binance employees encouraged users to evade the exchange’s “know your customer” systems through VPNs.



“We do need to let users know that they can change their KYC on&nbsp;Binance.com&nbsp;and continue to use it. But the message, the message needs to be finessed very carefully because whatever we send will be public. We cannot be held accountable for it,” Zhao allegedly told his top team in 2019.



The SEC also alleged that Binance and Zhao used market-making companies that they controlled to inflate trading prices and profit off their customers.



Merit Peak and Sigma Chain allegedly acted as “market makers” for Binance’s two platforms, meaning they were always available to fill a customer order to buy or sell a crypto asset. But the SEC complaint highlighted multiple issues with the two companies’ roles: They were both beneficially owned by Zhao and collected “tens of billions of dollars” of customer money. The firms also mixed customer funds with Binance’s money, similar to allegations against bankrupt crypto exchange FTX.



Most damaging to investors, they allegedly engaged in “wash trading,” trading with themselves to artificially prop up the price of crypto assets.



Sigma Chain collected $190 million for its beneficial owner Zhao, the SEC alleged. The “proprietary trading firm” then spent $11 million to purchase a “yacht,” the complaint said.



Zhao dismissed the charges on Twitter by saying “4,” a popular refrain in Binance’s community urging users to ignore fear, uncertainty and doubt, or “FUD.”



The complaint comes after the Commodity Futures Trading Commission filed similar charges against the crypto exchange, alleging it failed to prevent U.S. customers from accessing it.



“We will issue a response once we see the complaint,” Zhao said on Twitter. “Media gets the info before we do.”



In a blog post that followed, Binance wrote, “We are disappointed that the U.S. Securities and Exchange Commission chose to file a complaint today against Binance seeking, among other remedies, purported emergency relief.” The company added that it has “actively cooperated with the SEC’s investigations” and “engaged in extensive good-faith discussions to reach a negotiated settlement to resolve their investigations.”



The defendants showed a “blatant disregard” for federal law, the SEC alleged. The complaint included a “high-level” breakdown of Binance’s ownership structure, with Zhao and his holding vehicles allegedly controlling 100% of Binance and Binance.US’ various entities.

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SEC sues Binance and CEO Changpeng Zhao for U.S. securities violations

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="555" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-820x555.jpg" alt="" class="wp-image-420644" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-820x555.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-300x203.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-133x90.jpg 133w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-768x519.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-1536x1039.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: Representations of cryptocurrencies are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration</figcaption></figure>



Cryptocurrency companies are playing a game of poker with the Securities and Exchange Commission, making bold threats to leave the U.S. as the regulator steps up pressure on the industry to toe the line.



Major players are hoping that the SEC and Washington takes, what crypto watchers see as bluffs, seriously and soften the hard line that regulators have taken on the industry.



Executives at firms including crypto exchange Coinbase and blockchain services company Ripple have piled on with comments laying into the SEC and signaling plans to shift business overseas, in a bid to rally support and send a message to U.S. politicians concerned that the country may miss out on a key technological innovation.



Coinbase CEO Brian Armstrong said last week that the SEC was on a “lone crusade” with its tough actions against certain crypto companies. He added that Chair Gary Gensler had taken an “anti-crypto view,” despite earlier being a supporter of the industry during his time as an economics professor at the MIT Sloan School of Management.



“The SEC is a bit of an outlier here,” Armstrong told CNBC’s Dan Murphy in an interview in Dubai. “I don’t think [Gensler is] necessarily trying to regulate the industry as much as maybe curtail it. But he’s created some lawsuits, and I think it’s quite unhelpful for the industry in the U.S. writ large.”



Brad Garlinghouse, CEO of Ripple, also tore into the SEC this week. When asked for his message to Gensler as the company announced an expansion into Dubai, he quipped, “Who?” before later saying Ripple will have spent $200 million defending itself against a lawsuit initiated by the regulator by the time it is over.



“I find it as a company that started in the United States and as somebody who is a U.S. citizen, it’s sad. I have sadness about this. The U.S. is getting passed not just by a little bit but by a lot,” Garlinghouse said.



“The tough thing about this is you have a country that I think has put politics ahead of policy and that’s not a good decision if you’re trying to invest in the economy.”



Dubai and Europe have proven to be much more favorable markets with their virtual asset regulatory frameworks, Garlinghouse said, adding: “The United States is definitely stuck.”



Garlinghouse, Armstrong and other crypto bosses have made threats to leave the U.S., highlighting concern from the industry that the SEC’s crackdown is becoming too harsh. The regulator has taken strong enforcement actions against companies including Ripple, Coinbase, Kraken and Paxos, accusing each of flouting securities laws.



The SEC’s contention is that most tokens in the market may qualify as securities, which would subject them to much stricter requirements around registration and disclosure. Crypto firms, naturally, have denied assets they issue or list on their platforms should be treated as securities.



Will they stay or will they go?



 The question is: could they actually leave? It looks pretty unlikely.



“The U.S. is one of the largest markets for crypto, and hence it is highly unlikely that they will leave,” Larisa Yarovaya, associate professor of finance at Southampton University, told CNBC via email.



“The biggest fear of crypto companies is that regulation will cause panic among crypto investors and prices will go down. To look confident (even arrogant) is a common tactic of crypto company CEOs. They think this will translate into investors’ confidence, overconfidence in some cases, and will encourage further irrational behaviour among investors, e.g. HODL [hold on for dear life] even when markets are falling.”



Ripple’s Garlinghouse has been threatening to move his company’s headquarters overseas since 2020. In October that year, he said the U.K., Switzerland, Singapore, Japan and the United Arab Emirates were under consideration for Ripple’s potential move abroad.



That hasn’t happened yet.



Coinbase’s chief, meanwhile, suggested at a London fintech conference in April that the firm would consider options of investing more abroad, including relocating from the U.S. to elsewhere, if the exchange doesn’t get regulatory clarity in the U.S.



A month later, Armstrong said Coinbase “is not going to relocate overseas.”



“We’re always going to have a U.S. presence … But the U.S. is a little bit behind right now,” he told CNBC.



The U.S. is a huge market for the industry, with over 50 million Americans saying they own some crypto, according to a survey conducted by Morning Consult for Coinbase.



“There’s a much greater focus on the international markets for those firms. But at the top end of the market, personally I just can’t see that ever happening that you leave the United States market completely,” Jonathan Levin, co-founder of Chainalysis, told CNBC in an interview in London.



“It’s more about how much do you invest in new international expansion where maybe that wasn’t as high up on the agenda, but now it’s let’s look at France, let’s look at the U.K.”



On top of this, the practicalities of moving these already large companies out of the U.S. would be tough.



“Although these industries are virtual by their nature, they still need people, and people have families, mortgages, and preferences on where they live. Replacing them with local talent in the new place may be easier said than done,” George Weston, a partner at global offshore law firm Harneys, told CNBC via email.



Regulatory certainty outside the U.S.



 Crypto bosses are playing up to some officials’ concerns that the U.S. has become shrouded in regulatory uncertainty while other jurisdictions, like the European Union and U.K., have charged forward with proposed regulatory frameworks for digital assets.



Hester Peirce, a commissioner at the SEC, said at a Financial Times conference last week that the U.S. was “shooting ourselves in the foot by not having a regulatory regime in the U.S.”



She praised the EU on its progress with waving through laws for the crypto industry.



The EU is expected to bring in the first comprehensive set of regulations for digital assets, known as Markets in Crypto Assets (MiCA), sometime in 2024.



“It’s really commendable that Europe was able to get that done so quickly,” Peirce said, according to Reuters. “If we built a good regulatory regime, people would come. I think you will see that with MiCA.”



Diego Ballo Ossio, a partner at law firm Clifford Chance, said other jurisdictions including the U.K. and EU are changing their legislative frameworks to create clear regulatory regimes for exchanges.



“This means that other countries are effectively providing US based exchanges an option – a place to move to. It is not unthinkable that a U.S. exchange decided to create operational hubs in non-U.S. jurisdictions where the product can be safely innovated and enhanced,” he told CNBC.



Binance, the world’s largest crypto exchange, recently said it has become more difficult for the company to operate into the U.S. and that it was minded to establish a regulated operation in the U.K.



Patrick Hillman, the company’s chief strategy officer, said the U.S. “has been very confusing over the past six months,” pointing to the SEC’s actions against Coinbase as a sign of how the country is in a “weird place.”



While the U.S. crypto industry might currently be throwing out empty threats right now, there could be a real issue if regulators in America don’t move forward with thoughtful regulation.



“My conclusion is that I think it is more sabre rattling than a genuine desire to up and leave the U.S., but if the SEC continues down the path it is on, many firms will have no choice but to try another way of doing business. It is existential,” Daniel Csefalvay, a partner at BCLP law firm, told CNBC via email.

Illustration shows representations of cryptocurrencies

Crypto companies are playing poker with the SEC as agency cracks down on the industry

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="458" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u-820x458.jpeg" alt="" class="wp-image-424278" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u-820x458.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u-300x168.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u-768x429.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u-1536x858.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Standard Chartered predicts that bitcoin could fall to $5,000 in 2023 as part of their research on potential market surprises next year. Nurphoto | Getty Images</figcaption></figure>



Cryptocurrencies fell on Monday as investors put excitement from Ethereum’s “Shapella” upgrade behind them and refocused on upcoming bank earnings and recession concerns.



Bitcoin fell 3% to $29,515.35, according to Coin Metrics, falling below the key $30,000 it hit last week for the first time since June. Meanwhile, ether was lower by 2.8% but maintained the $2,000 it broke through last week.



Crypto is coming off a winning week in which prices were boosted by optimism around Ethereum’s latest tech upgrade, dubbed “Shapella” (also known as “Shanghai”). The update is meant to bring greater liquidity to the network by allowing “locked up” ether to be withdrawn and ultimately draw in more institutional interest in the long term. Bitcoin and ether advanced 8% and 12%, respectively, for the week.



This week, it wouldn’t be surprising to see a small correction in prices, according to Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank, and there could be some selling pressure as some investors may want to take profits from the previous week.



While crypto was rallying, “Friday’s U.S. stock market showed unstable movements as stronger-than-expected consumer sentiment and Fed’s Waller’s speech strengthened the possibility of another rate hike in May,” Hasegawa said. “Nevertheless, the Fed Funds futures market has already priced in more than 80% chance of a 25bp hike in May, so pressures from macro factors on the price of bitcoin is expected to be limited.”



Crypto investors are watching bank earnings this week for more insight about the health of the sector and possibility of a coming recession. Several Fed officials are scheduled to speak this week too.



“We haven’t seen crypto perform in a high-rate, slowing growth environment until now,” said Callie Cox, analyst at investing company eToro. “It’s anyone’s guess how crypto acts during a recession.”



For this week, any downside potential “should not be severe” or keep bitcoin from continuing on its uptrend, Hasegawa said.

107074597-1655103399286-gettyimages-1241039329-porzycki-bitcoinp220601_npP5u

Bitcoin dips below $30,000 to start the week as crypto investors refocus on economic concerns

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061-820x547.jpeg" alt="" class="wp-image-424188" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061-768x513.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061-1536x1025.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">The bitcoin halving is an event that happens roughly every four years where rewards to miners are cut in halve, effectively limiting supply of the token. S3studio | Getty Images</figcaption></figure>



Bitcoin is nearly a year away from a key technical event — which might be the catalyst for a prolonged climb in the cryptocurrency’s value.



In April or May 2024, bitcoin is expected to undergo its next so-called “halving,” though the exact date is not yet known.



Bitcoin has been rising in the past few weeks in anticipation of the halving, as a potential U.S. Federal Reserve interest rate cut contends with the prospect of sluggish growth and tightening credit conditions resulting from woes in the banking sector.



One bitcoin was worth roughly $30,000 as of Wednesday morning, according to data from CoinGecko. The world’s largest cryptocurrency is up by more than 80% since the start of the year.



Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that the bitcoin jump above $30,000 at a time of bank failures and economic uncertainty suggests the cyclical “bottom” for bitcoin is forming.



“This tends to happen a year or so prior to the Bitcoin’s halving event, which is slated next for around April 2024,” Ayyar told CNBC via email.



<h2 class="wp-block-heading" id="h-what-is-the-bitcoin-halving"><a></a>What is the bitcoin halving?</h2>



Bitcoin halvings take place roughly every four years, or every time another 210,000 “blocks” are added to the blockchain. The event cuts the rewards to bitcoin miners — volunteers running specialized equipment to validate transactions on the network and mint new tokens — by 50%. The aim is to reduce the number of new bitcoin unit released into the market.



Currently, bitcoin miners receive 6.25 bitcoin for each block they successfully mine. This means their computer had the right amount of computing power needed to solve the cryptographic puzzles that secure the bitcoin network and prevent it from being compromised by malicious actors.



Once the next bitcoin halving occurs, this reward will be reduced to 3.125 bitcoin.



Backers of the cryptocurrency say this can help push up the price by enhancing bitcoin scarcity.



The maximum number of bitcoins that will ever exist in circulation is capped at 21 million. This is ensured by the halving mechanism, whereby rewards for mining bitcoin will eventually be slashed to $0.



Before the last halving, which took place on May 11, 2020, the price of bitcoin increased by 19% in the preceding 12 months, from $7,191.36 to $8,568.88, according to figures from CCData.



During the halving before that — which occurred on Jul. 9, 2016 — bitcoin rallied 142% compared with the 12 months prior, moving from $269.14 to $651.83.



The first ever halving of Nov. 28, 2012 saw the price of bitcoin balloon by 384% to $12.35 from $2.55, CCData’s figures show.



“Analysing historical Bitcoin halving patterns, it appears that investors often accumulate Bitcoin in the run-up to the halving event, although the exact timing and extent of returns post-halving can differ,” Jamie Sly, analyst at CryptoCompare, told CNBC.



“The accumulation period from the market bottom after the breakout to the halving date has historically spanned at least 500 days.”



Sly added: “This would mean, if we were to assume that the market bottom for this cycle was in November last year (when Bitcoin hit a yearly low of $15,760), then we are only 142 days into the current cycle. This would correlate with the next expected Bitcoin halving date, which is another 378 days ahead.”



<h2 class="wp-block-heading"><a></a>Bitcoin’s post-halving gains</h2>



The bitcoin price tends to spike even higher, in the months that follow halving.



After the halving of May 11, 2020, the cryptocurrency rallied 688.31% in the following 546 days, reaching a then record high of $67,549.14 on Nov. 8, 2021, according to CCData.



The halving before that, which took place on Jul. 9, 2016, saw bitcoin skyrocket 2,824% to a then all-time high of $19,065.71 by mid-December 2017.



Bitcoin had a torrid 2022, defined by the collapses of major companies and projects, from stablecoin terraUSD to crypto exchange FTX.



Rising inflation led to higher interest rates in the U.S. and in other major economies, which in turn caused investors to flee bitcoin and other risky assets.



That has seen prices of several top digital currencies slump sharply from their all-time highs.



Despite its recent ascent to $30,000, bitcoin is still down more than 50% from the highs of November 2021.

107223050-1681209527842-gettyimages-911964384-set04375-29january2018kw0061

Bitcoin is one year away from a major technical event. History suggests the start of another bull run

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/105964618-1560376221bitcoin-1170x463-1-820x461.jpg" alt="" class="wp-image-424146" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/04/105964618-1560376221bitcoin-1170x463-1-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/105964618-1560376221bitcoin-1170x463-1-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/105964618-1560376221bitcoin-1170x463-1-160x90.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/105964618-1560376221bitcoin-1170x463-1-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/105964618-1560376221bitcoin-1170x463-1-1536x864.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/04/105964618-1560376221bitcoin-1170x463-1.jpg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Photo: via CNBC</figcaption></figure>



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> climbed on Monday evening, topping the key psychological level of $30,000 as investors awaited key inflation data later in the week that could steer crypto prices.



The largest cryptocurrency by market cap rose 7% to $30,193.25 for the first time since June, according to Coin Metrics. <a href="https://www.cnbcafrica.com/quotes/eth=x/">Ether</a> advanced more than 3.5% to $1,925.11 for the first time since August as investors awaited the Ethereum network’s latest tech upgrade, scheduled for Wednesday.



Now that bitcoin has touched $30,000, a move into the mid- to high-30s will be “likely” if it pushes through with conviction and would “force short speculators to cover and buy instead,” said James Lavish, managing partner at the Bitcoin Opportunity Fund. “Some investors are trying to get positioned ahead of that,” he said.



Traders are likely speculating that Wednesday’s consumer price index number “could come in at a level that gives the Fed reason to think about pausing raising rates in the next meeting, thereby giving a boost to assets like bitcoin,” Lavish added.



Investors are also watching the latest reading on the producer price index, due out Thursday.



Cryptocurrencies have been rallying this year. Monday night’s action brings bitcoin’s year-to-date gains to more than 80%, while ether has now added 60% for the year so far. Price moves for the two crypto assets have historically tracked relatively in line on a percentage basis, but the top two crypto assets “decoupled” in March, thanks to a “flight to quality” in bitcoin following bank closures.



Nevertheless, the two cryptocurrencies remain somewhat correlated for the time being and macro drivers continue to influence both assets. The upcoming inflation data will be key in determining if or when the Fed will pause or put an end to its rate hiking campaign.



Meanwhile, ether has been climbing ahead of its planned “Shanghai” tech upgrade, which is expected to bring a wave of negative sell pressure on the market as previously locked funds on Ethereum are released over the next few weeks.

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Bitcoin tops $30,000 for the first time since June ahead of key inflation data; ether nears $2,000

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208912-1678874096868-gettyimages-1236743873-FR_20211118_011-820x461.jpeg" alt="" class="wp-image-423927" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208912-1678874096868-gettyimages-1236743873-FR_20211118_011-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208912-1678874096868-gettyimages-1236743873-FR_20211118_011-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208912-1678874096868-gettyimages-1236743873-FR_20211118_011-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208912-1678874096868-gettyimages-1236743873-FR_20211118_011-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208912-1678874096868-gettyimages-1236743873-FR_20211118_011-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107208912-1678874096868-gettyimages-1236743873-FR_20211118_011.jpeg 1920w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Bitcoin is up 50% so far in 2023, beating major commodities and stock indexes. Industry insiders said the bank collapses have sent investors looking for alternatives to the traditional banking system and there is also anticipation of a slowdown in interest rate rises, which is helping bitcoin. Filip Radwanski | Sopa Images | Lightrocket | Getty Images</figcaption></figure>



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> climbed sharply Wednesday as investors shrugged off initial fears surrounding U.S. regulators’ crackdowns on industry giants and became willing to take some risk.



The world’s largest cryptocurrency surged 5% in the past 24 hours to as high as $28,474, according to CoinGecko data. Bitcoin has retaken the $28,000 level after dipping below it on Monday following news of the U.S. Commodity Futures Trading Commission FTC’s lawsuit against Binance.



Ether, the second-biggest digital coin, rose nearly 6% to $1,816.10.



Bitcoin has been steadily rising this year after a brutal 2022 that saw collapses of major crypto exchanges and a sharp slump in prices. Investors have taken some comfort from the thought of a reversal in the U.S. Federal Reserve’s interest rate hiking moves, which put pressure on risk assets like stocks.



The reason for the jump Wednesday was not immediately clear. However, it comes amid a broad rise in U.S. stocks. Bitcoin has been known to follow movements in equity markets, with investors treating it like more of a traditional risk asset.



Nasdaq futures were up 100 points, or 0.9%, Wednesday morning.



U.S. regulators have sharpened their crackdown on crypto firms of late, with the CFTC suing Binance and its co-founder Changpeng Zhao for allegedly breaking trading rules by courting clients in the U.S. without authorization.



The Securities and Exchange Commission has also threatened to take legal action against Coinbase for alleged violations of securities rules.



“Broadly we are looking quite bullish here with Bitcoin reclaiming $28K and looking to target $30K next,” Vijay Ayyar, head of international at crypto exchange Luno, told CNBC via email Wednesday.



“In general, when price action starts to absorb negative news this quickly, it indicates that the market is bullish and trending upward. The CFTC case against Binance, while quite important, doesn’t seem to have affected the market that much.”



Bitcoin had earlier gotten a boost from woes in the global banking system. Swiss banking giant Credit Suisse was recently rescued by its peer UBS in a government-backed, cut-price deal.



U.S. tech-focused lender Silicon Valley Bank and crypto-oriented banks Silvergate and Signature have also failed.



The Federal Reserve has sought to cushion the blow of the banking crisis with a lending program known as the Bank Term Funding Program, or BTFP, which aims to help banks meet their obligations to depositors.



Proponents of bitcoin say it can serve as a store of value in times of economic distress and a form of money people can access without the need for a bank account.



However, it is incredibly volatile and has been known to swing up or down 10% in a matter of hours.



“The market seems to be placing greater importance on macroeconomic factors and that the Fed has already begun a form of QE, now known as BTFP, but also that the interest rate pivot might happen sooner than later,” Ayyar told CNBC.



“Against the bank failure backdrop over the past month or so and Bitcoin’s rise, this provides the perfect context for Bitcoin to continue remaining bullish and move higher.”

107208912-1678874096868-gettyimages-1236743873-FR_20211118_011

Bitcoin climbs 5% above $28,000 as investors shrug off regulatory crackdowns

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107215223-1679839185536-signal-2023-03-22-092958_006-820x461.jpeg" alt="" class="wp-image-423888" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107215223-1679839185536-signal-2023-03-22-092958_006-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107215223-1679839185536-signal-2023-03-22-092958_006-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107215223-1679839185536-signal-2023-03-22-092958_006-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107215223-1679839185536-signal-2023-03-22-092958_006-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107215223-1679839185536-signal-2023-03-22-092958_006-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107215223-1679839185536-signal-2023-03-22-092958_006.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Bitnob CEO Bernard Parah and Cash App’s crypto product lead, Miles Suter, at the Africa Bitcoin Conference in Accra, Ghana. Bernard Parah</figcaption></figure>



ACCRA, Ghana — Block CEO Jack Dorsey and his top brass descended on Accra for the inaugural Africa Bitcoin Conference in December to talk about one of the most potentially disruptive and transformative alternatives to the continent’s existing financial system: bitcoin.



Since its inception in 2008, this unfamiliar form of money has alternatively been disdained as an absurdly complex toy for libertarian techies, a legalized form of gambling, a speculative bet to get rich quick, and a vehicle for criminals and fraudsters to obscure the origins of their ill-begotten gains.&nbsp;



But this parallel financial system can also serve a tangible social good, offering an onramp to the financial system for people who would otherwise be left out. In countries where the vast majority of the population is unbanked, national currencies are no longer a safe store of value, remittances comprise a hefty portion of GDP, and international sanctions complicate connections to the global economy, a virtual currency that doesn’t require an intermediary to approve transactions can be a vital lifeline for survival.&nbsp;



As cryptocurrency continues to rise in prominence and becomes a growing flashpoint for regulators, Dorsey and his deputies are providing an essential counternarrative: Bitcoin brings financial power to people who would otherwise have none.&nbsp;



“It doesn’t matter to me if the price goes down or up, because I can still use bitcoin as a vehicle to move money around the world instantaneously,” said Mike Brock, the CEO of TBD at Block, a unit which focuses on cryptocurrency and decentralized finance.



“I can exchange dollars for bitcoin and then bitcoin for Brazilian rial. There is a market for bitcoin in every corner of the world today,” continued Brock.



<h2 class="wp-block-heading" id="h-a-broken-financial-system"><a></a>A broken financial system</h2>



Moving money in Africa is an expensive and complicated process.



Commercial bank branch access is limited, especially for people living in remote and rural areas. Digital banking options are also limited. Tack on rampant hyperinflation, widespread government corruption, and capital controls trapping domestic cash in banks, and money can stop making sense altogether.



“If someone wants to move money to the country next door, normally, you’d have to fill up a suitcase full of cash and move it over the border,” explains Ray Youssef, CEO of Paxful.



Part of the problem stems from the continent’s quasi-colonial payment framework, in which roughly 80% of cross-border payments originating from African banks are processed offshore, mostly in the U.S. or Europe. That translates to higher costs and processing times that are sometimes measured in weeks.



Then there’s mobile money, which has been around since the early 2000s. Think of it like an electronic wallet tied to a phone number that does not require a smartphone or data to operate. Users can pay bills and shop with their phone through SMS texting, instead of having to rely on traditional banking options.



Africa’s mobile money transactions rose 39% to more than $700 billion in 2021, according to data from the GSM Association, a non-profit representing mobile network operators worldwide. World Bank data shows that account ownership at a financial institution — or via a mobile money service provider — has more than doubled in the last decade, rising to 55% of adults in Sub-Saharan Africa.



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="720" height="405" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107213101-1679490554162-gettyimages-166894459-AFRICA_M-PESA.jpeg" alt="" class="wp-image-423889" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107213101-1679490554162-gettyimages-166894459-AFRICA_M-PESA.jpeg 720w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107213101-1679490554162-gettyimages-166894459-AFRICA_M-PESA-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/107213101-1679490554162-gettyimages-166894459-AFRICA_M-PESA-160x90.jpeg 160w" sizes="auto, (max-width: 720px) 100vw, 720px" /><figcaption class="wp-element-caption">An employee uses a Nokia 1200 mobile phone inside an M-Pesa store in Nairobi, Kenya, on Sunday, April 14, 2013. Trevor Snap | Bloomberg | Getty Images</figcaption></figure>



But even as adoption proliferates, mobile money users don’t get the perks of legacy banking, including earning interest on banked savings and building up a credit score based on a history of spending. Interoperability on the continent also remains a major issue with this alternative way of banking.



“The entire banking system in Africa is completely and utterly broken, even amongst the mobile money providers, the telcos,” said Youssef from Paxful, a peer-to-peer crypto marketplace where users can directly buy and sell tokens with one another.



“Two thousand payment networks and only 2% of them talk to each other. That number continues to grow. It’s not getting better, it’s actually getting worse,” continued Youssef.



Companies like Western Union and MoneyGram offer an expansive physical network of storefronts around the world designed to move money for those who are unbanked. That cash network was extraordinarily difficult and expensive to build, which is why there aren’t a lot of direct competitors. It is also why those cash transfers often incur substantial fees.



Bitcoin could eliminate all these intermediaries, allowing citizens to send digital payments directly to one another, without relying on credit and without incurring multiple settlement fees along the way.



“We’re going to move to a model where we can make payments without IOUs, or credit, or promises, or fiat,” said Alex Gladstein, chief strategy officer for the Human Rights Foundation, an organization that works with activists from authoritarian regimes around the world. “It’s literally like sending a piece of gold or a $20 bill instantly somewhere else.”



“If you can get access to the internet, you can settle bitcoin payments,” said Brock. “And the government can’t do anything about it.”



Dorsey points to the example of what happened in Nigeria during the protests against the brutality of the country’s Special Anti-Robbery Squad — a movement referred to as #EndSARS.



“The Nigerian government went to various bank corps to stop protesters from receiving money — which bitcoin made up for,” Dorsey said in Accra. “So our whole reason for being as a company is solving the same problem that bitcoin will ultimately solve for everyone in the world.”



Moving money on the bitcoin blockchain at its base layer has its own challenges. At times of peak demand, fees will often spike higher, and if a user is unwilling to pay a premium for the transaction, they may have to wait for more blocks of transactions to get confirmed before their transfer goes through.



Bitcoin’s Lightning Network helps alleviate both of those problems by slashing the cost of transactions to virtually zero and enabling nearly instantaneous cash payments around the planet – making bitcoin a more effective payment rail. This so-called “layer two” technology is built on top of bitcoin’s main chain, in part because bitcoiners are conservative about introducing changes to the base layer, for fear of opening it up to hacks or other mischief.



Yellow Card — Africa’s largest centralized cryptocurrency exchange run by CEO Chris Maurice — is also looking to embed this layer two technology into the platform, in order to drive down the price of transactions to virtually zero. Currently, the exchange doesn’t charge a commission for transactions, but network fees can be pretty steep when a lot of trades are happening at once.



“It’ll have a pretty big impact to our customers, because a lot of them are very price sensitive,” says Justin Poiroux, the co-founder and CTO of <a href="https://www.cnbc.com/2023/03/25/how-this-26-year-old-created-yellow-card-top-crypto-exchange-in-africa.html">Yellow </a>C<a href="https://www.cnbc.com/2023/03/25/how-this-26-year-old-created-yellow-card-top-crypto-exchange-in-africa.html">ard.</a>



Yellow Card’s plan is still in its infancy, but Poiroux tells CNBC that he thinks the Lightning Network could ultimately provide a lot of value for its retail customers.



Because Lightning offers a universal monetary language, money can travel around the world between any Lightning-enabled bitcoin wallet. Someone who uses a platform like Block’s Cash App — a regulated, American financial product with 51 million monthly transacting users which integrated with the Lightning Network in Feb. 2022 — can pay any Lightning invoice in the world instantly.



“It’s a new way of doing business. It’s a different paradigm entirely,” said Gladstein.



The crypto product lead at Cash App, Miles Suter, believes that a big part of bitcoin’s utility is how it gets around broken and convoluted payment systems that don’t talk to each other.



“At Cash App in particular, we’ve always been really interested in taking bitcoin beyond just being seen an investment and bringing day-to-day utility to it,” Suter told CNBC on the sidelines of the Africa Bitcoin Conference.



“In many ways, the people on the African continent are already doing that with the tools they have,” continued Suter.



<h2 class="wp-block-heading"><a></a>Sending cash with Lightning</h2>



Bernard Parah is a 30-year-old entrepreneur living in Jos, Nigeria, about a five hour drive from the capital city of Abuja. He’s the CEO of Bitnob, an app that lets users across Africa buy, save, and invest in bitcoin. Bitnob is SMS-based and piggybacks on the mobile money system, making it easier for people to send money directly into bank accounts and mobile money wallets in African countries.



Parah recently teamed up with Strike, a Lightning Network payments platform, to launch a feature called “Send Globally” that allows Americans to transfer money to people living in Nigeria, Ghana, and Kenya.



It uses local fiat cash on either side of the transaction, but bitcoin is used under the hood as the pipeline to jump money over the border. The end user never touches the cryptocurrency themselves.



“We’re able to settle into bank accounts or mobile money accounts, without the recipients having to interact with bitcoin themselves,” Parah tells CNBC.



“Over time, we’ve seen that there are still people who really don’t understand how to use bitcoin; who don’t care about bitcoin. What they do care about is their problems getting solved,” continued Parah.



It feels like a wire transfer or a Venmo payment, according to Strike CEO Jack Mallers.



“It’s instant. There’s no debt. There’s no credit. There’s no delays,” explains Mallers.



The model works because Parah and Mallers are willing to take on the liability associated with the transfer by holding cash in escrow on either end of the exchange.&nbsp;



Once the money is received in Nigeria, Bitnob — which is a regulated entity with connections to the local banks — will take that bitcoin and turn it into their local currency.



“It’s just two regulated entities communicating over the language of bitcoin and cutting out excess fees,” said Suter. “I think that’s revolutionary.”



Mallers says that they offer more competitive foreign exchange rates by using bitcoin as a price-setting intermediary, a sort of new world reserve currency.



“The rate that we got was actually 60% better than the traditional forex market rate,” said Mallers. “The way to actually think about how we’re achieving forex if we clear through bitcoin is, ‘I have dollars. How many bitcoin can I get for my dollars? And then how many naira can I get for my bitcoin?’” said Mallers.



“It’s acting as the most liquid, accessible, global instrument for us to clear and settle value amongst each other,” he said.



The arrangement also offers a few big ancillary benefits, including interoperability with payment apps around the world that have tens of millions of users.



Block’s Suter explained that Cash App could theoretically interoperate with Bitnob.



“We’re only live in the U.S. right now, but that doesn’t mean we can’t speak to Bitnob in Nigeria and transfer value instantly and for free across these borders,” Suter said of Cash App.



<h2 class="wp-block-heading">Meeting customers where they are</h2>



South African developer Kgothatso Ngako, who goes by KG, has integrated the Lightning Network into the GSM network, combining the best of a few worlds, in a larger effort to meet customers where they are.



“My focus is giving people without an internet connection the ability to send or receive bitcoin,” Ngako said.



KG calls his custodial Lightning wallet “Machankura” — South African slang for money. Whereas most Lightning transactions today require a smartphone and data, Ngako’s service integrates lightning via Unstructured Supplementary Service Data, or USSD, which is the protocol that mobile money runs on. (It is similar to HTTP, or HyperText Transport Protocol, the protocol on which the web was built.)



Ngako tells CNBC that he currently has around 3,000 users spread across eight countries, with a concentration in South Africa, Uganda, Kenya, and Nigeria. In his home market of South Africa, there are strict rules around currency exchange, which make his product even more appealing to some users looking to move their money abroad.



“The South African Reserve Bank regulates the cross-border flow of capital — including the exchange of currency — to and from South Africa. You need some form of approval to convert ZAR into foreign currency,” said Ernest Marais, partner at Johannesburg law firm, Tabacks.



KG’s Machankura is compatible with any Lightning wallet on the planet. In practice, this means that someone with the Cash App in San Francisco, for example, could instantly send bitcoin via Lightning to the phone number of someone with a data-less, basic phone living in a remote part of Uganda.



Ngako’s project does face some risks, including regulatory blowback.



Marais tells CNBC that because the South African Reserve Bank cannot regulate the cross-border flow of cryptocurrency, it is considered to be illegal and a criminal offense — though crypto regulation largely remains nebulous across most of the continent.



“All African central banks, except for Central African Republic, have made notices stating that they don’t issue bitcoin and hence they don’t regulate it,” counters Ngako, adding that a bitcoin transaction cannot be considered a cross-border exchange as bitcoin transactions aren’t regulated within the central bank’s institution.



But the rules are confusing for everyone involved.



“The actual location of crypto assets is an anomaly. At what point does it leave the country?” continued Marais.



Ultimately, Ngako believes that once Machankura begins to scale, it will be a major driver of bitcoin adoption across the continent. To that end, Ngako is raising money and building — a common refrain among the entrepreneurs on the ground in Accra.



As Dorsey said in Africa, “More and more mass adoption will, in my belief, take away all the oxygen” from governments attempting to control behavior through financial oppression.



“So what do we do? We build, we build, we build, we build, we build, they can’t stop us. And that’s what’s important.”

107215223-1679839185536-signal-2023-03-22-092958_006

Bitcoin is poised to blow up Africa’s $86 billion banking system

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GettyImages-1241890923-820x547.jpg" alt="" class="wp-image-423624" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GettyImages-1241890923-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GettyImages-1241890923-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GettyImages-1241890923-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GettyImages-1241890923-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GettyImages-1241890923-1536x1025.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/03/GettyImages-1241890923-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">NEW YORK, UNITED STATES &#8211; 2022/07/13: Attorney General Letitia James makes an announcement regarding the investigation of sexual harassment in Sweet and Vicious at the Attorney General&#8217;s Office. The owner of the restaurant agreed to a settlement of $500,000 to be paid for more than a dozen current and former employees. AG stated that the office of the Attorney General will continue to investigate the hospitality industry for unlawful practices. (Photo by Lev Radin/Pacific Press/LightRocket via Getty Images)</figcaption></figure>



NEW YORK, March 9 (Reuters)&nbsp;&#8211;&nbsp;New York&#8217;s attorney general on Thursday sued KuCoin for failing to register with the state before letting investors buy and sell cryptocurrencies on its platform, as part of her effort to rein in what she calls &#8220;shadowy&#8221; cryptocurrency companies.



Attorney General Letitia James said the fourth-largest cryptocurrency platform violated the Martin Act, a powerful state securities law, by transacting in cryptocurrencies, selling the product &#8220;KuCoin Earn&#8221; to generate income for itself and investors, and wrongfully calling itself an &#8220;exchange.&#8221;



In papers filed with a state court in Manhattan, James is seeking a permanent injunction to stop KuCoin from operating in New York until it complies with the law.



KuCoin did not immediately respond to requests for comment.



Launched in September 2017, KuCoin describes itself on its website as the &#8220;People&#8217;s Exchange,&#8221; with more than 27 million users across 207 countries and regions.



KuCoin trails Binance, Coinbase and Kraken in trading volume among cryptocurrency spot exchanges, according to the data company CoinMarketCap. It raised $150 million in a funding round&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL3N2X12RT&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">last May</a>, giving it a $10 billion valuation.



James said KuCoin has let investors trade popular virtual currencies such as ETH, LUNA and TerraUSD, and that her case is among the first by a regulator calling ETH a security.



&#8220;One by one my office is taking action against cryptocurrency companies that are brazenly disregarding our laws and putting investors at risk,&#8221; James said in a statement.



Last month, James&nbsp;<a href="https://www.yahoo.com/now/1-york-sues-coinex-says-223712347.html" target="_blank" rel="noreferrer noopener">sued</a>&nbsp;the CoinEx cryptocurrency platform for failing to register with the state.



In January, 10 states including New York secured&nbsp;<a href="https://ag.ny.gov/press-release/2023/attorney-general-james-and-multistate-coalition-secure-24-million-cryptocurrency" target="_blank" rel="noreferrer noopener">up to $24 million</a>&nbsp;from the cryptocurrency company Nexo Inc, which they also accused of operating illegally.



KuCoin is headquartered in the Seychelles. James said its owners are Mek Global Ltd, also based in the Seychelles, and PhoenixFin PTE Ltd, based in Singapore.



(Reporting by Jonathan Stempel in New York; Editing by Diane Craft and Daniel Wallis)

Attorney General Letitia James makes an announcement

New York sues KuCoin, expands cryptocurrency crackdown

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-820x547.jpg" alt="" class="wp-image-423316" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-135x90.jpg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/F4TO3YKQWNK6NCNXZJUQ2UEGC4-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">FILE PHOTO: A man walks past the International Monetary Fund (IMF) logo at its headquarters in Washington, U.S., May 10, 2018. REUTERS/Yuri Gripas/</figcaption></figure>



LONDON, Feb 23 (Reuters)&nbsp;&#8211;&nbsp;The International Monetary Fund has laid out a nine-point action plan for how countries should treat crypto assets, with point number one a plea not to give cryptocurrencies such as bitcoin legal tender status.



The global lender of last resort said its Executive Board had discussed a&nbsp;<a href="https://www.imf.org/en/News/Articles/2023/02/23/pr2351-imf-executive-board-discusses-elements-of-effective-policies-for-crypto-assets" target="_blank" rel="noreferrer noopener">paper</a>, &#8220;Elements of Effective Policies for Crypto Assets,&#8221; that provided &#8220;guidance to IMF member countries on key elements of an appropriate policy response to crypto assets.&#8221;



Such efforts have become a priority for authorities, the fund said, after the collapse of a number of crypto exchanges and assets over the last couple of years, adding that doing nothing was now &#8220;untenable&#8221;.



The top recommendation was to &#8220;safeguard monetary sovereignty and stability by strengthening monetary policy frameworks and do not grant crypto assets official currency or legal tender status.&#8221;



The IMF had hit out at El Salvador in late 2021 when the central American country became the first to&nbsp;<a href="https://www.reutersconnect.com/reuters.com/markets/us/imf-recommends-el-salvador-not-use-bitcoin-legal-tender-2021-11-22/" target="_blank" rel="noreferrer noopener">adopt</a>&nbsp;bitcoin as legal tender, a move that has since been&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL2N2WP253&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">copied</a>&nbsp;by Central African Republic.



Other advice on Thursday&#8217;s list, which comes as G20 decision makers meet in India, included guarding against excessive capital flows, adopting unambiguous tax rules and laws around crypto assets, and developing and enforcing oversight requirements for all crypto market actors.



Countries should also establish international arrangements to enhance supervision and enforce regulations, the IMF added, as well as set up ways to monitor crypto&#8217;s impact on the stability of the global monetary system.



Outlining its Executive Board&#8217;s assessment, the IMF said directors welcomed the proposals and agreed the widespread adoption of crypto assets &#8220;could undermine the effectiveness of monetary policy, circumvent capital flow management measures, and exacerbate fiscal risks.&#8221;



They &#8220;generally agreed,&#8221; too, that crypto assets should not be granted official currency or legal tender status, and though strict bans of assets are &#8220;not the first-best option,&#8221; a few directors thought they should not be ruled out.



(Reporting by Marc Jones; Editing by Leslie Adler)

FILE PHOTO: Man walks past the IMF logo at HQ in Washington

IMF lays out crypto action plan, recommends against legal tender status

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2023/02/107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ-820x547.jpeg" alt="" class="wp-image-423116" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2023/02/107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ-820x547.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ-300x200.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ-135x90.jpeg 135w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ-768x512.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ-1536x1024.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2023/02/107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption class="wp-element-caption">Paxos has been ordered by New York regulators to stop issuing the Binance USD (BUSD) stablecoin. Jakub Porzycki | Nurphoto | Getty Images</figcaption></figure>



Digital currency markets are on edge after a flurry of aggressive regulatory actions from U.S. authorities over the past few days.



Bitcoin was slightly higher at $21,826.68 at around 05:31a.m. ET, according to CoinDesk data.



Investors are digesting a number of major regulatory actions in the U.S., as authorities look to rein in the once free-wheeling cryptocurrency industry.



On Monday, the New York State Department of Financial Services told Paxos to stop minting new Binance USD, or BUSD, stablecoins. A stablecoin is a type of digital currency that is pegged to a real-world asset. BUSD is pegged one-to-one with the U.S. dollar. Paxos issues BUSD, the third-largest dollar-pegged cryptocurrency.



Stablecoins are often backed by real-world reserve assets, such as bonds and cash. They are used to trade in and out of different cryptocurrencies, as a trader does not need to convert money back to fiat currencies.



BUSD remained relatively stable and close to its $1 peg after the New York regulator’s orders. Paxos said that BUSD will continue to be redeemable through at least Feb. 2024. People can redeem funds in U.S. dollars or convert BUSD to Paxos’ own stablecoin called Pax Dollar (USDP).



Paxos confirmed that the Securities and Exchange Commission has notified it that the agency could recommend an action that alleges BUSD is a security, and that Paxos should have registered the token offering under federal securities law.



The market is waiting to see what the exact SEC charges are toward Paxos, and whether that might have implications for other stablecoins such as USD Coin (USDC) and tether (USDT). There is no official SEC action against Paxos currently.



Last week, cryptocurrency exchange Kraken settled with the SEC over allegations that it sold unregistered securities.



U.S. regulatory action has picked up on parts of the cryptocurrency industry, following a year of turmoil that saw nearly $1.4 trillion wiped off the market, along with bankruptcies, failures of projects and companies topped off by the collapse of major exchange FTX.



Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said that there might not be a major collapse in coin prices after the huge sell-off last year.



“The market seems to be taking the news quite well and that sentiment remains cautiously optimistic given we might have seen most of the selling in the market occur over the last year,” Ayyar told CNBC on Tuesday.



Investors are waiting to see what happens next on the regulatory front.



“We’re seeing a lot of scrutiny across various sectors in crypto in the U.S., with the two most recent areas being staking and stablecoins. This is an obvious repercussion of the fallout from FTX, Luna, and the general contagion in crypto over the last year,” Ayyar said.



“The markets might take some time to consolidate here and wait and watch whether there are further events that play out in terms of regulatory crackdown, hence we could see a couple of weeks of sideways action.”



&#8211;&nbsp;CNBC’s Rohan Goswami contributed to this report.

107194087-1676371176205-gettyimages-1247107012-porzycki-busdbina230213_npvhJ

Crypto markets on edge as U.S. regulatory crackdown on industry intensifies

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="462" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107105674-1660812664654-gettyimages-1292707878-yn_crypto_ethereum_002-1-820x462.jpeg" alt="" class="wp-image-420480" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107105674-1660812664654-gettyimages-1292707878-yn_crypto_ethereum_002-1-820x462.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107105674-1660812664654-gettyimages-1292707878-yn_crypto_ethereum_002-1-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107105674-1660812664654-gettyimages-1292707878-yn_crypto_ethereum_002-1-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107105674-1660812664654-gettyimages-1292707878-yn_crypto_ethereum_002-1-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/107105674-1660812664654-gettyimages-1292707878-yn_crypto_ethereum_002-1.jpeg 929w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Ether has hugely outperformed bitcoin since both cryptocurrencies formed a bottom in June 2022. Ether’s superior gains have come as investors anticipate a major upgrade to the ethereum blockchain called “the merge.”
Yuriko Nakao | Getty Images</figcaption></figure>



2022 marked the start of a new “crypto winter,” with high-profile companies collapsing across the board and prices of digital currencies crashing spectacularly. The events of the year took many investors by surprise and made the task of predicting bitcoin’s price that much harder.



The crypto market was awash with pundits making feverish calls about where bitcoin was heading next. They were often positive, though a few correctly forecast the cryptocurrency sinking below $20,000 a coin.



But many market watchers were caught off guard in what has been a&nbsp;tumultuous year for crypto, with high-profile company and project failures sending shock waves across the industry.



It began in May with the collapse of terraUSD, or UST, an algorithmic stablecoin that was supposed to be pegged one-to-one with the&nbsp;U.S. dollar. Its failure brought down terraUSD’s sister token luna and hit companies with exposure to both cryptocurrencies.



Three Arrows Capital, a hedge fund with bullish views on crypto,&nbsp;plunged into liquidation&nbsp;and&nbsp;filed for bankruptcy&nbsp;because of its exposure to terraUSD.



Then came the&nbsp;November collapse of FTX, one of the world’s largest cryptocurrency exchanges which was run by Sam Bankman-Fried, an executive who was often in the spotlight. The fallout from FTX continues to ripple across the cryptocurrency industry.



On top of crypto-specific failures, investors have also had to contend with rising interest rates, which have put pressure on risk assets, including stocks and crypto.



Bitcoin has sunk around 75% since reaching its all-time high of nearly $69,000 in November 2021 and more than $2 trillion has been wiped off the value of the entire cryptocurrency market. On Friday, bitcoin was trading at just under $17,000.



CNBC reached out to the people behind some of the boldest price calls on bitcoin in 2022, asking them how they got it wrong and whether the year’s events have changed their outlook for the world’s largest digital currency.&nbsp;



<h2 class="wp-block-heading" id="h-tim-draper-250-000"><a></a>Tim Draper: $250,000&nbsp;</h2>



In 2018, at a tech conference in Amsterdam, Tim Draper predicted bitcoin reaching $250,000 a coin by the end of 2022. The famed Silicon Valley investor wore a purple tie with bitcoin logos, and even&nbsp;performed a rap&nbsp;about the digital currency onstage.&nbsp;



Four years later, it’s looking pretty unlikely Draper’s call will materialize. When asked about his $250,000 target earlier this month, the Draper Associates founder told CNBC $250,000 “is still my number” — but he’s extending his prediction by six months.



“I expect a flight to quality and decentralized crypto like bitcoin, and for some of the weaker coins to become relics,” he told CNBC via email.



Bitcoin would need to rally nearly 1,400% from its current price of just under $17,000 for Draper’s prediction to come true. His rationale is that despite the liquidation of notable players in the market like FTX, there’s still a huge untapped demographic for bitcoin: women.



“My assumption is that, since women control 80% of retail spending and only 1 in 7 bitcoin wallets are currently held by women, the dam is about to break,” Draper said.



<h2 class="wp-block-heading"><a></a>Nexo: $100,000&nbsp;</h2>



In April, Antoni Trenchev, the CEO of crypto lender Nexo, told CNBC he thought the world’s biggest cryptocurrency could&nbsp;surge above $100,000&nbsp;“within 12 months.” Though he still has four months to go, Trenchev acknowledges it is improbable that bitcoin will rally that high anytime soon.&nbsp;



Bitcoin “was on a very positive path” with institutional adoption growing, Trenchev says, but “a few major forces interfered,” including an accumulation of leverage, borrowing without collateral or against low-quality collateral, and fraudulent activity.&nbsp;



“I am pleasantly surprised by the stability of crypto prices, but I do not think we are out of the woods yet and that the second and third-order effects are still to play out, so I am somewhat skeptical as to a V-shape recovery,” Trenchev said.&nbsp;



The entrepreneur says he’s also done making bitcoin price predictions. “My advice to everyone, however, remains unchanged,” he added. “Get a single digit percentage point of your investable assets in bitcoin and do not look at it for 5-10 years. Thank me later.”&nbsp;



<h2 class="wp-block-heading"><a></a>Guido Buehler: $75,000&nbsp;</h2>



On Jan. 12, Guido Buehler, the former CEO of regulated Swiss bank Seba, which is focused on cryptocurrencies, said his company had an “internal valuation model” of between $50,000 and $75,000 for bitcoin in 2022.



Buehler’s reasoning was that institutional investors would help drive the price higher.



The executive, who now runs his own advisory and investment firm, said 2022 has been an “annus horribilis,” in response to CNBC questions about what went wrong with the call.



“The war in Ukraine in February triggered a shock to the paradigm of world order&nbsp;and the financial markets,” Buehler said, citing the consequences of raised market volatility and rising inflation in light of the disruption of commodities like oil.



Another major factor was “the&nbsp;realization that interest rates are still the driver of most asset classes,” including crypto, which “was hard blow for the crypto community,&nbsp;where&nbsp;there has been the belief that this asset class is not correlated to&nbsp;traditional assets.”



Buehler said lack of risk management in the crypto industry, missing regulation and fraud have also been major factors affecting prices.



The executive remains bullish on bitcoin, however, saying it will reach $75,000 “sometime in the future,” but that it is “all a matter of timing.”



“I believe that BTC has proven its robustness throughout all the crisis since&nbsp;2008 and will continue to do so.”



<h2 class="wp-block-heading"><a></a>Paolo Ardoino: $50,000&nbsp;</h2>



Paolo Ardoino, chief technology officer of Bitfinex and Tether, told CNBC in April that he expected bitcoin to fall sharply below $40,000 but end the year “well above” $50,000.



“I’m a bullish person on bitcoin … I see so much happening in this industry and so many countries interested in bitcoin adoption that I’m really positive,” he said at the time.



On the day of the interview, bitcoin was trading above $41,000. The first part of Ardoino’s call was correct — bitcoin did fall well below $40,000. But it never recovered.



In a follow-up email this month, Ardoino said he believes in bitcoin’s resilience and the blockchain technology underlying it.



“As mentioned, predictions are hard to make. No one could have predicted or foreseen the number of companies, well regarded by the global community, failing in such a spectacular fashion,” he told CNBC.



“Some legitimate concerns and questions remain around the future of crypto. It might be a volatile industry, but the technologies developed behind it are incredible.”



<h2 class="wp-block-heading"><a></a>Deutsche Bank: $28,000&nbsp;</h2>



A key theme in 2022 has been bitcoin’s correlation to U.S. stock indexes, especially the tech-heavy Nasdaq 100. In June, Deutsche Bank analysts published a note that said bitcoin could end the year with a price of approximately $27,000. At the time of the note, bitcoin was trading at just over $20,000.



It was based on the belief from Deutsche Bank’s equity analysts that the S&amp;P 500 would jump to $4,750 by year-end.



But that call is unlikely to materialize.



Marion Laboure, one of the authors of Deutsche Bank’s initial report on crypto in June, said the bank now expects bitcoin to end the year around $21,000.



“High inflation, monetary tightening, and slow economic growth have likely put additional downward pressure on the crypto ecosystem,” Laboure told CNBC, adding that more traditional assets such as bonds may begin to look more attractive to investors than bitcoin.



Laboure also said high-profile collapses continue to hit sentiment.



“Every time a major player in the crypto industry fails, the ecosystem suffers a confidence crisis,” she said.



“In addition to the lack of regulation, crypto’s biggest hurdles are transparency, conflicts of interest, liquidity, and the lack of reliable available data. The FTX collapse is a reminder that these problems continue to be unresolved.”



<h2 class="wp-block-heading"><a></a>JPMorgan: $13,000&nbsp;</h2>



In a Nov. 9 research note, JPMorgan analyst Nikolaos Panigirtzoglou and his team predicted the price of bitcoin would slump to $13,000 “in the coming weeks.” They had the benefit of hindsight after the FTX liquidity crisis, which they said would cause a “new phase of crypto deleveraging,” putting downside pressure on prices.



The cost it takes miners to produce new bitcoins historically acts as a “floor” for bitcoin’s price and is likely to revisit a $13,000 low as seen over the summer months, the analysts said. That’s not as far off bitcoin’s current price as some other predictions, but it’s still much lower than Friday’s price of just under $17,000.



A JPMorgan spokesperson said Panigirtzoglou “isn’t available to comment further” on his research team’s forecast.



<h2 class="wp-block-heading"><a></a>Absolute Strategy Research: $13,000&nbsp;</h2>



Ian Harnett, co-founder and chief investment officer at macro research firm Absolute Strategy Research,&nbsp;warned in June&nbsp;that the world’s top digital currency was likely to tank as low as $13,000.



Explaining his bearish call at the time, Harnett said that, in crypto rallies past, bitcoin had subsequently tended to fall roughly 80% from all-time highs. In 2018, for instance, the token plummeted close to $3,000 after hitting a peak of nearly $20,000 in late 2017.



Harnett’s target is closer than most, but bitcoin would need to fall another 22% for it to reach that level.



When asked about how he felt about the call today, Harnett said he is “very happy to suggest that we are still in the process of the bitcoin bubble deflating” and that a drop close to $13,000 is still on the cards.



“Bubbles usually see an 80% reversal,” he said in response to emailed questions.



With the U.S. Federal Reserve likely set to raise interest rates further next year, an extended drop below $13,000 to $12,000 or even $10,000 next can’t be ruled out, according to Harnett.



“Sadly, there is no intrinsic valuation model for this asset — indeed, there is no agreement whether it is a commodity or a currency — which means that there is every possibility that this could trade lower if we see tight liquidity conditions and/or a failure of other digital entities / exchanges,” he said.



<h2 class="wp-block-heading"><a></a>Mark Mobius: $20,000 then $10,000</h2>



Veteran investor Mark Mobius has probably been one of the more accurate predictors of bitcoin.



In May, when the price of bitcoin was above $28,000, he told Financial News that bitcoin would likely fall to $20,000, then bounce, but ultimately move down to $10,000.



Bitcoin did fall below $20,000 in June, and then bounce in August before falling again through the rest of the year.



However, the $10,000 mark was not reached.



Mobius told CNBC&nbsp;he forecasts bitcoin to hit $10,000 in 2023.



<h2 class="wp-block-heading"><a></a>Carol Alexander: $10,000&nbsp;&nbsp;</h2>



In December 2021, a month on from bitcoin’s all-time high, Carol Alexander, professor of finance at Sussex University, said she expected bitcoin to drop down to $10,000 “or even more” in 2022.



Bitcoin at the time had fallen about 30% from its near $69,000 record. Still, many crypto talking heads at the time were predicting further gains. Alexander was one of the rare voices going against the tide.



“If I were an investor now I would think about coming out of bitcoin soon because its price will probably crash next year,” she said at the time. Her bearish call rested on the idea that bitcoin has little intrinsic value and is mostly used for “speculation.”



Bitcoin didn’t quite slump as low as $10,000 — but Alexander is feeling good about her prediction. “Compared with others’ predictions, mine was by far the closest,” she said in emailed comments to CNBC.

107105674-1660812664654-gettyimages-1292707878-yn_crypto_ethereum_002-1

From $250,000 to $10,000 price calls: How market watchers got it wrong with bitcoin in 2022

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Binance’s books are a black box, filings show, as crypto giant tries to rally confidence

<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="728" height="485" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI.jpg" alt="" class="wp-image-419501" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI.jpg 728w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/08/VWGGGHRVGFNNBKICEKKB2G2CXI-135x90.jpg 135w" sizes="auto, (max-width: 728px) 100vw, 728px" /><figcaption>A bitcoin representation is seen in a file photo, in Paris, France, June 23, 2017. REUTERS/Benoit Tessier/File Photo</figcaption></figure>



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> on Wednesday rose to a two-week high as investors continue to weigh up the fallout from the collapse of cryptocurrency exchange FTX.



But one analyst warned that the bounce is likely just a bear market rally and would not be sustained.



Bitcoin topped $17,000 trading at its highest level since Nov. 15 before paring gains. The world’s largest cryptocurrency was trading 2% higher at $16,879.50 at around 2:37 a.m. ET.



Other digital coins were also up, including <a href="https://www.cnbcafrica.com/quotes/eth=x/">ether</a>, which rose 5% to $1,271.72.



Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno, said the move higher was likely a result of “over leveraged shorts covering.”



Someone who shorts an asset borrows some of that asset, sells it at a higher price then buys it back at a lower price and banks the profit from that. A short covering is when a trader buys the asset back at the lower price. That can cause the price of that asset to move higher.



Ayyar said the price of bitcoin has “hit resistance” at $17,000 and is likely to go lower from there.



“This is just a bearish retest,” Ayyar said.



Investor confidence in cryptocurrencies has been hammered after Sam Bankman-Fried’s exchange FTX collapsed and filed for bankruptcy this month, sending shockwaves through the entire industry.



Contagion from the fallout is spreading. Crypto lender and exchange BlockFi filed for bankruptcy as a result of exposure to FTX.



More than $1.3 trillion of value has been wiped off the cryptocurrency market this year, sparked by the failure of the algorithmic stablecoin terraUSD in May and implosion of hedge fund Three Arrows Capital. The FTX collapse has worsened the situation.



Traders will also be closely watching the contents of a speech by U.S. Federal Reserve Chair Jay Powell at the Brookings Institution on Wednesday for clues about the central bank’s interest rate plans. If the market thinks the Fed will slow the pace of rate hikes, it could give a boost to risk assets such as stocks and bitcoin.

FILE PHOTO: Bitcoin representation is seen in an illustration picture taken at La Maison du Bitcoin in Paris

Bitcoin tops $17,000 for the first time in two weeks but analysts don’t expect the bounce to stick

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="551" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/02/GettyImages-1301210664-820x551.jpeg" alt="" class="wp-image-397334" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/02/GettyImages-1301210664-820x551.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/02/GettyImages-1301210664-300x202.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/02/GettyImages-1301210664-768x516.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/02/GettyImages-1301210664-1536x1032.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/02/GettyImages-1301210664-scaled.jpeg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>PARIS, FRANCE &#8211; FEBRUARY 09: In this photo illustration, a visual representation of the digital Cryptocurrency, Bitcoin is on display in front of the Bitcoin course&#8217;s graph on February 09, 2021 in Paris, France. The value of Bitcoin (BTC) has exceeded the threshold of 48,000 dollars for the first time in history. Electric vehicle maker Tesla has invested $ 1.5 billion in the virtual currency and will begin accepting it as payment for the purchase of its cars, the group said. The move comes days after Elon Musk temporarily changed his Twitter mini-description to simply #bitcoin. (Photo illustration by Chesnot/Getty Images)</figcaption></figure>



The collapse of the world’s third largest crypto exchange&nbsp;<a href="https://nam10.safelinks.protection.outlook.com/?data=05%7C01%7CSALAVI%40imf.org%7Ce4707283914e4532e91108dac9b31d19%7C8085fa43302e45bdb171a6648c3b6be7%7C0%7C0%7C638044068398880592%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&amp;reserved=0&amp;sdata=d9aldIV1zhwvNhuKQaePamyZGWufDy3hNlFshw%2BNTIU%3D&amp;url=https%3A%2F%2Fwww.wsj.com%2Farticles%2Fftx-tapped-into-customer-accounts-to-fund-risky-bets-setting-up-its-downfall-11668093732%3Futm_medium%3Demail%26utm_source%3Dgovdelivery&amp;utm_medium=email&amp;utm_source=govdelivery">FTX</a>, and subsequent plunge in the prices of Bitcoin, Ethereum, and other major crypto assets, is prompting renewed calls for greater consumer protection and&nbsp;<a href="https://www.imf.org/en/Publications/fandd/issues/2022/09/Regulating-crypto-Narain-Moretti?utm_medium=email&amp;utm_source=govdelivery">regulation</a>&nbsp;of the crypto industry.



Regulating a highly volatile and decentralized system remains a challenge for most governments, requiring a balance between minimizing risk and maximizing innovation. Only one-quarter of countries in <a href="https://www.imf.org/en/Publications/REO/SSA/Issues/2022/10/14/regional-economic-outlook-for-sub-saharan-africa-october-2022?utm_medium=email&amp;utm_source=govdelivery#Digital-Currency-Innovations-in-Sub-Saharan-Africa">sub-Saharan Africa</a> formally regulate crypto. However, as our <a href="https://www.imf.org/en/Blogs/chart-of-the-week?utm_medium=email&amp;utm_source=govdelivery">Chart of the Week</a> shows, two-thirds have implemented some restrictions and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto. Zimbabwe has ordered all banks to stop processing transactions and Liberia directed a local crypto startup to cease operations (implicit bans).



<figure class="wp-block-image size-full"><img loading="lazy" decoding="async" width="538" height="538" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/crypto-map-africa-for-translation_crop.jpg" alt="" class="wp-image-421543" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/crypto-map-africa-for-translation_crop.jpg 538w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/crypto-map-africa-for-translation_crop-300x300.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/crypto-map-africa-for-translation_crop-90x90.jpg 90w" sizes="auto, (max-width: 538px) 100vw, 538px" /></figure>



<h2 class="wp-block-heading" id="h-view-the-interactive-version-here"><a href="https://www.imf.org/en/Blogs/Articles/2022/11/22/africas-growing-crypto-market-needs-better-regulations?utm_medium=email&amp;utm_source=govdelivery" target="_blank" rel="noreferrer noopener">View the interactive version here.</a></h2>



Africa is one of the fastest-growing crypto markets in the world, according to Chainalysis, but remains the smallest, with crypto transactions peaking at $20 billion per month in mid-2021. Kenya, Nigeria, and South Africa have the highest number of users in the region. Many people use crypto assets for commercial payments, but their volatility makes them unsuitable as a store of value.



Policymakers are also worried that cryptocurrencies can be used to transfer funds illegally out of the region and to circumvent local rules to prevent capital outflows. Widespread use of crypto could also undermine the effectiveness of monetary policy, creating risks for financial and macroeconomic stability.



The risks are that much greater if crypto is adopted as legal tender—as the Central African Republic recently did. If crypto assets are held or accepted by the government as means of payment, it could put public finances at risk.



The Central African Republic is the first country in Africa, and the second in the world after&nbsp;<a href="https://www.imf.org/en/News/Articles/2022/02/15/cf-el-salvadors-comeback-constrained-by-increased-risks?utm_medium=email&amp;utm_source=govdelivery">El Salvador</a>&nbsp;to designate Bitcoin as a legal tender. The measure has put the country at odds with the Bank of Central African States (BEAC)—the regional central bank that serves the Economic and Monetary Community of Central Africa (CEMAC), which the Central African Republic is a member of—and violates the CEMAC Treaty. BEAC’s banking sector supervisory body—Central Africa&#8217;s Banking Commission—has banned the use of crypto for financial transactions in the CEMAC region.



—This blog is based on the October 2022&nbsp;<a href="https://www.imf.org/en/Publications/REO/SSA/Issues/2022/10/14/regional-economic-outlook-for-sub-saharan-africa-october-2022?utm_medium=email&amp;utm_source=govdelivery">Regional Economic Outlook&nbsp;</a>for sub-Saharan Africa

Novelty Coins Representing The Bitcoin Cryptocurrency : Illustration

Africa’s Growing Crypto Market Needs Better Regulations

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="431" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/AA14oQ0m-820x431.jpg" alt="" class="wp-image-421512" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/AA14oQ0m-820x431.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/AA14oQ0m-300x158.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/AA14oQ0m-160x84.jpg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/AA14oQ0m-768x403.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/AA14oQ0m.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>The crypto market has been battered this year, with more than $2 trillion wiped off its value since its peak in Nov. 2021. Cryptocurrencies have been under pressure after the collapse of major exchange FTX. Jonathan Raa | Nurphoto | Getty Images</figcaption></figure>



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> on Tuesday hit a two-year low as the cryptocurrency market takes a bruising following the collapse of major exchange FTX.



Bitcoin hit $15,480, its lowest level since Nov. 11, 2020, according to CoinDesk data. The digital coin has since bounced from that low and was trading at around $15,728.33 at 4:08 a.m. ET.



The entire cryptocurrency market has lost more than $1.4 trillion in value this year as the industry has been plagued with problems from failed projects to a liquidity crunch, exacerbated by the fall of FTX, once one of the world’s largest exchanges.



Crypto’s latest issues began after Changpeng Zhao, the CEO of Binance, said his exchange would sell its FTT tokens. FTT is the native digital currency of FTX’s crypto exchange. Binance’s move sparked the collapse of FTX, a company once valued at $32 billion. FTX has since filed for bankruptcy.



To make matters worse, hackers stole around $477 million of cryptocurrency from FTX, the bulk of which has been converted into the digital coin ether. But the hackers have begun to launder that money into bitcoin. Because they are selling ether, the price of ether has also been under pressure.



<a href="https://www.cnbcafrica.com/quotes/eth=x/">Ether</a> was trading down around 3.5% at $1,089.42 at 4:08 a.m. ET.



FTX may have more than 1 million creditors. It owes more than $3 billion to its top 50 unsecured creditors alone.



Disgraced FTX founder Sam Bankman-Fried stepped down as CEO earlier this month and was replaced by John Ray III.



Ray is looking to sell or restructure FTX’s global empire.



Meanwhile, Bankman-Fried is still holding out hope that he can broker some sort of deal to bail out FTX, CNBC reported.



But crypto prices remain under pressure as investors fear the FTX collapse could cause contagion across the industry.



Earlier this year, the collapse of a so-called algorithmic stablecoin terraUSD sent shockwaves across the crypto world and contributed to the fall of other entities such as hedge fund Three Arrows Capital.



Investors are concerned about similar ripple effects from FTX’s failure.

AA14oQ0m

Bitcoin hits 2-year low as $1.4 trillion wiped off crypto market this year after FTX collapse

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107088919-1657818278630-gettyimages-1241445259-RAFAPRESS_20062022-01298-820x461.jpeg" alt="" class="wp-image-421235" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107088919-1657818278630-gettyimages-1241445259-RAFAPRESS_20062022-01298-820x461.jpeg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107088919-1657818278630-gettyimages-1241445259-RAFAPRESS_20062022-01298-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107088919-1657818278630-gettyimages-1241445259-RAFAPRESS_20062022-01298-160x90.jpeg 160w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107088919-1657818278630-gettyimages-1241445259-RAFAPRESS_20062022-01298-768x432.jpeg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107088919-1657818278630-gettyimages-1241445259-RAFAPRESS_20062022-01298-1536x864.jpeg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/11/107088919-1657818278630-gettyimages-1241445259-RAFAPRESS_20062022-01298.jpeg 1600w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via CNBC</figcaption></figure>



Cryptocurrencies extended their slide for a second day Wednesday as the market absorbed the potential collapse of popular crypto exchange FTX.



Prices were pressured to start the day and plunged by late afternoon as Binance, the largest global exchange by volume, abandoned plans to acquire Sam Bankman-Fried’s FTX after a due diligence exam and recent reports of mishandled customer funds and alleged U.S. agency investigations of FTX.



<a href="https://www.cnbcafrica.com/quotes/btc=x/">Bitcoin</a> fell 12% before 4:30 p.m. ET to just under $16,000, hitting a low not seen since November 2020, according to Coin Metrics. It reached its all-time high of $68,982.20 one year ago Thursday. Meanwhile, <a href="https://www.cnbcafrica.com/quotes/eth=x/">ether </a>tumbled 14%, to $1,128.87.



The Bankman-Fried empire quickly unraveled after a report last week showed a large part of the balance sheet at Alameda Research, the trading company where Bankman-Fried was also CEO, had been concentrated in FTX Token (FTT), the native token of the FTX trading platform.



After some light sparring on Twitter with Bankman-Fried, Binance CEO Changpeng Zhao announced his company was offloading the FTT on its books, leading to a run on the popular FTX exchange and a liquidity crisis.



FTX counts some of the biggest names in finance — including SoftBank, BlackRock, Tiger Global, Thoma Bravo, Sequoia and Paradigm — among its investors.



FTT slumped another 63% Wednesday, after plunging more than 75% the day before.



The Solana token also continued to fall. It was last down 45%, after dropping more than 26% Tuesday. Alameda Research, the trading firm owned by Sam Bankman-Fried, who also runs FTX, was an early backer of the Solana project.



“Market factors such as providing SOL token liquidity as well as support for Solana ecosystem projects on FTX exchange has been an important driver for Solana’s success,” Bernstein’s Gautam Chhugani said in a note Wednesday. “This is an adverse event for the Solana ecosystem in the short run. Further, given FTX/Alameda’s balance sheet situation, there may be near term pressure on its Solana holdings, as the situation resolves.”



The bombshell will set the crypto industry back. Analysts foresee further regulatory scrutiny of offshore exchanges, where the majority of crypto derivatives trading takes place. It’s also unclear how much financial contagion will spill into the rest of the market.



Additionally, Bankman-Fried, known as SBF, had recently been praised as a “white knight” in the industry, coming to the rescue of crypto service firms such as BlockFi and Voyager that succumbed to the crypto contagion last spring.



For newcomers to the crypto market, SBF and FTX became the faces of the industry, securing the naming rights to the Miami Heat basketball team’s stadium last year, bringing on Tom Brady and Giselle Bündchen&nbsp;as company ambassadors, and becoming a megadonor to Democratic politics.



“Given the public-facing nature of FTX CEO Sam Bankman-Fried and the size of FTX, we believe that the week’s events could cause some loss of consumer confidence in the crypto industry, beyond that seen in the aftermath of the 3AC, Celsius, and Voyager events that took place earlier this year,” especially if panic spreads and crypto prices keep dropping, KBW analysts said in a note Tuesday. “It may take time for customers to regain trust in the industry, broadly speaking (and we think regulation could help this).”

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Bitcoin falls to its lowest level in nearly two years as Binance abandons FTX deal

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="555" src="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-820x555.jpg" alt="" class="wp-image-420644" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-820x555.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-300x203.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-133x90.jpg 133w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-768x519.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-1536x1039.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2022/10/HJDYMEREYFLQFPCH6PHBFH2UTA-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>FILE PHOTO: Representations of cryptocurrencies are seen in this illustration, August 10, 2022. REUTERS/Dado Ruvic/Illustration</figcaption></figure>



JOHANNESBURG, Oct 19 (Reuters)&nbsp;&#8211;&nbsp;South Africa&#8217;s financial watchdog has classified cryptocurrency assets as financial products, a notice in the government gazette said on Wednesday, enabling them to be regulated.



In the brief notice, the Financial Sector Conduct Authority (FSCA) said a crypto asset, which it referred to as &#8220;a digital representation of value&#8221;, must be regulated in South Africa from the date of publication.



Regulations that the authorities have said they planned to introduce include applying foreign exchange controls and licensing crypto trading companies.



Financial watchdogs across the globe have been grappling with how to regulate new digital currencies and tokens, the prices of which have fallen since November last year.



Crypto assets are not issued by a central bank, but are capable of being traded, transferred or stored electronically.



South African Reserve Bank (SARB) Deputy Governor Kuben Naidoo&nbsp;<a href="https://www.reutersconnect.com/all?search=all%3AL5N2XA2CZ&amp;linkedFromStory=true" target="_blank" rel="noreferrer noopener">told Reuters in May</a>&nbsp;that regulation of crypto assets was in the offing and might come into force within nine to 15 months, after regulators said they intended to do so in November 2020.



He added the SARB wanted regulation of crypto assets to prevent theft, money laundering and undermining of monetary policy because an ubiquitous cryptocurrency could weaken the authority of the central bank.



&#8220;This was the first legal step that was required to bring the crypto asset industry within the South African legal framework,&#8221; Brent Petersen from Easy Crypto, a crypto buying and selling platform, said in a note.



He added the declaration would apply to crypto trading platforms, as well as those that provide advice or intermediary services for the buyers and sellers of digital financial assets.



(Reporting by Rachel Savage; Writing by Anait Miridzhanian; Editing by Mark Potter)

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Crypto

SEC sues Binance and CEO Changpeng Zhao for U.S. securities violations

Crypto companies are playing poker with the SEC as agency cracks down on the industry

Bitcoin dips below $30,000 to start the week as crypto investors refocus on economic concerns

Bitcoin is one year away from a major technical event. History suggests the start of another bull run

Bitcoin tops $30,000 for the first time since June ahead of key inflation data; ether nears $2,000

Bitcoin climbs 5% above $28,000 as investors shrug off regulatory crackdowns

Bitcoin is poised to blow up Africa’s $86 billion banking system

New York sues KuCoin, expands cryptocurrency crackdown

IMF lays out crypto action plan, recommends against legal tender status

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Bitcoin tops $17,000 for the first time in two weeks but analysts don’t expect the bounce to stick

Africa’s Growing Crypto Market Needs Better Regulations

Bitcoin hits 2-year low as $1.4 trillion wiped off crypto market this year after FTX collapse

Bitcoin falls to its lowest level in nearly two years as Binance abandons FTX deal

South Africa moves to regulate crypto assets￼

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Advertise With Us

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South Africa moves to regulate crypto assets