Weekly Report: Crypto markets suffer mid-week blow as SEC bins another Bitcoin ETF proposal

  • The SEC rejected yet another crypto ETF proposal and punted on two others
  • Reddit follows Twitter in introducing NFT avatar support
  • Thailand regulators are looking to curtail the use of crypto in settling payments
  • US financial markets watchdog is probing top crypto platforms over high-yield crypto products

The cryptocurrency sector is reeling from a broad mid-week sell-off triggered by remarks from Fed Chair Jerome Powell on the US monetary policy. Bitcoin lost grip on the $37,000 level earlier today and is currently trading at $36,250. Ethereum has lost 3.15% in the last 24 hours and is swinging around $2,370.

Cardano, Solana and Terra native tokens are also down on the day with double-digit losses over the last seven days. Terra’s LUNA has the biggest slump, dipping almost 35% since last Friday.

Here is a look at other top headlines you might have missed on the last week of January:

Crypto payments to be regulated in Thailand, authorities say

On Tuesday, the Thai Securities and Exchange Commission (SEC), the Bank of Thailand (BOT), and the Ministry of Finance (MOF) delivered a joint press release revealing that the government would soon regulate the use of crypto as a means of payment for goods and services.

The authorities noted that businesses and merchants have expanded their mandate in using crypto and are now accepting payments via digital assets. As such, the country’s financial stability is at risk, hence the need for “exercising power” to rein in the increased adoption of the tokens and avoid any potential impacts.

The regulators plan to release a set of new guidelines for specified digital assets to ensure that while financial innovation is supported, it does not mean systemic risks. The guidelines will take into consideration input from the public and relevant stakeholders.

The announcement comes when the Thai SEC is seeking feedback on a consultation paper proposing barring merchants from publicising the use of digital assets to complete payments. The proposal would also establish limits to the transfer of crypto assets.

SEC is probing lenders Celsius, Gemini, and Voyager Digital over high-yield crypto products

The SEC is pursuing lending platforms Celsius, Gemini, and Voyager Digital for the high return products that the firms are offering users on their token deposits.

According to a report published by Bloomberg on Wednesday, the SEC is concerned with finding out if these products qualify to require registration with them as securities. Citing people in the know, Bloomberg noted that these firms had not been accused of any misdeeds; rather, the SEC is only investigating.

Traditional financial organizations offer significantly lower interest rates than these products. With interest rates predominantly above 5%, the yield products’ offers are incomparable to the less than 0.1% rate that banks offer.

There is one catch, though. Funds held in banks are insured by the Federal Deposit Insurance Corporation, unlike the yield products, which explains the investor protection concerns the SEC harbours.

SEC exploratory action could mean possible legal action or intervention. Last year, Coinbase was coerced into shelving its Lend product following SEC intervention. The commission warned the exchange that a legal suit would follow were it not to forgo the product.

NFT profile pictures are coming to Reddit

Social media platform Reddit is on the path to delivering an NFT profile picture feature. The news came about after Twitter debuted limited support for a similar feature last Thursday.

Reddit spokesperson  Tim Rathschmidt, who confirmed that the social media firm is actively exploring this initiative, told TechCrunch that the feature was “a small, internal test” and was yet to be made available to the general public. No decision on either how the NFT support would work or the capability to roll out has yet been reached.

Nima Owji, an app developer, was the first to spot the NFT test and posted it on Twitter last Friday. The post had a banner that read, “you can now use digital collectibles as your Reddit avatar.”

This will not be the first time Reddit is crossing into the world of NFTs. Last year, it launched a limited series of NFTs, CryptoSnoos avatars based on Reddit’s alien mascot Snoos. However, the company left it at just that, explaining that it had no plans to expand the collection as it was just an initial test.

SEC rejects Fidelity Investments’ Bitcoin spot ETF

It is looking more likely by the day that the US Securities and Exchange Commission is still not keen on approving Bitcoin exchange-traded funds. The regulator has maintained its argument i.e. it is protecting traders from risky investments hence the reluctance to allow direct exposure to crypto.

Yesterday, the US regulator rejected an application to allow the Chicago Board Options Exchange (Cboe) BZX list and trade shares of Fidelity Investments’ Wise Origin Bitcoin Trust.

According to the newly released filing, the SEC is concerned about the risk of fraud and manipulation, citing its responsibility to assure investor protection. The Cboe BZX exchange had failed to show a “surveillance-sharing agreement” with the Trust to establish mechanisms to detect, investigate, and prevent fraud and manipulation.

Fidelity’s proposal got rejected after two previous extensions on a decision on the matter by the regulator. The investment firm has accepted yesterday’s decision and reaffirmed that it would continue talks with the SEC toward an ETP.

Also, earlier this week, via two separate filings, the financial watchdog stated it would delay a verdict on Bitcoin ETF applications by ARKShares21 and agriculture-focused fund provider Teucrium to trade on the Cboe BZX Exchange and NYSE, respectively.

This is not the first sixty-day extension the two applications have seen since their submission on July 20 and 23. However, being the last extension period for the SEC, the two will likely know their fate before the end of April.

Thus far, the SEC has only been kind to Bitcoin futures ETFs. When approval first came for ProShares’ ETF last November, analysts and industry experts were confident a spot ETF would soon follow. As things stand, it seems investors and crypto enthusiasts will have to wait a little bit longer for one.

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