28 January

Bitcoin (BTC) is having its best start to the year since 2013. The price of the largest cryptocurrency by market capitalization has jumped 40% this month amid weakness in the U.S. dollar. Bitcoin surged 51% in January 2013.

Bitcoin is up +40% year to date with +35% of those returns occurring during U.S. trading hours. That’s an 85% contribution of the rally associated with U.S.-based investors. We interpret this as a clear signal that U.S. institutions are buyers of bitcoin right now.

Institutions’ bullish positioning is also evident from the renewed premium in bitcoin futures listed on the Chicago Mercantile Exchange.

Bitcoin’s institution-led bullish turnaround might be a good sign for the U.S. equity market, considering the cryptocurrency’s record of bottoming out weeks ahead of the S&P 500.”

See Also: Cryptos Shrug Off Latest US Productivity, Jobs Data
See Also: Bitcoin will hit $200K before $70K ‘bear market’ next cycle — Forecast

Four senior U.S. officials in the Biden administration published a statement on Friday urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market. The officials wrote that Congress ‘should expand regulators’ powers to prevent misuses of customers’ assets … and to mitigate conflicts of interest.’

Other suggestions for Congress in the statement included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners.

The officials also made suggestions about what Congress should not do in terms of crafting new crypto regulation, including ‘greenlight[ing] mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets.’

Some cryptocurrency entities ignore applicable financial regulations and basic risk controls … In addition, cryptocurrency platforms often mislead consumers, have conflicts of interest, fail to make adequate disclosures, or commit outright fraud.

The White House’s concerns – as well as its recommendations – echo similar remarks made by U.S. regulators, including Commodity Futures Trading Commission (CFTC) Commissioner Kristin Johnson, who called on Congress earlier this week to expand the CFTC’s authority to conduct due diligence on crypto acquisitions.”

See Also: SEC Probing Investment Advisers Over Crypto Custody: Report

“The new policy will limit the activities of state banks by not allowing them to engage in activities not permitted by national banks unless state legislation allows it. In the Federal Register notice, the statement specifically discusses crypto at length:

The Board has not identified any authority permitting national banks to hold most crypto-assets […] As principal in any amount, and there is no federal statute or rule expressly permitting state banks to hold crypto-assets as principal. Therefore, the Board would presumptively prohibit state member banks from engaging in such activity under section 9(13) of the [Federal Reserve] Act.

The notice also said that state banks have proposed issuing “dollar tokens” — that is, stablecoins — and those banks now will be subject to OCC interpretative letters 1174 and 1179, as are national banks.

The Board generally believes that issuing tokens on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices.

The statement was issued on the same day that the Fed rejected the application of Wyoming’s Custodia Bank for Federal Reserve System membership. The Fed beefed up scrutiny on banks engaging in crypto activities in August 2022, when it issued a letter requiring the banks it oversees to disclose plans that include crypto, with a reminder to ensure adequate risk management.”

See Also: Custodia Bank Denied Federal Reserve System Membership

“The Aave v3 upgrade will focus on mitigating user risk and improving capital efficiency (High Efficiency Mode) when staking or borrowing correlated assets like stablecoins and liquid staking derivates (LSDs). The upgrade is also focused on gas optimization, with Aave stating that it will reduce gas costs across all functions by 20%-25%.

High Efficiency Mode, also called eMode, allows users to capitalize on the highest borrowing power out of their collateral for correlated assets. Users can now leverage larger amounts of assets like wstETH (wrapped staked ether) and stake it on the Ethereum blockchain for rewards.

The Aave protocol has $4.56 billion in total value locked (TVL), an increase of 23.37% over the past 30 days.”

See Also: Polygon Derivatives DEX Gains Network Crosses $1.5B in Trading Volume on Arbitrum

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