It’s been an eventful two weeks to say the least; I’ll address these in chronological order:
- Kucoin hacked but damage manageable
- SEC drops the hammer on BitMEX and it’s top mgmt
- Trump gets COVID, flip-flops on stimulus discussions
- Square makes a fat purchase of ~4.7k BTC
Seeing how Kucoin and stakeholders handled the hack, we can definitely say the industry has come a long way; 1) good exchanges now have insurance funds, 2) on-chain analytics are making coins easier to track, 3) not only exchanges but stablecoin issuers are playing a part to stop crime. The counterparty risk for top names has to be at an all-time low.
Regulatory risk, on the other hand, is still a big question mark. What we tend to forget is a lot of the crypto infrastructure is thriving only because the US govt allows it to do so. I imagine BitMEX is just first on a long list of potential targets, and it’s not that hard to twist interpretations of existing law to make a case (disclaimer: IANAL). Some are saying DeFi is next, which is possible but I think there are lower hanging fruit; e.g. USDT mkt cap @ >$15b.
How can the SEC go after DeFi? Easy; Uniswap is #1 in TVL. It’s also a centralized entity backed by VCs. For sure, bad actors could’ve used it as a washing machine. Even with forks created by anonymous founders, a move like this would most certainly reverse or at least suppress further innovation.
To be clear, I’m saying the above is a possibility (with low probability).
BTC rallies nicely on the back of Square allocating a small % of treasury into BTC. Worth noting the company’s Cash App supports BTC txs so this news is not nearly as +ve as Microstrategy’s recent investments. Think macro uncertainty will continue to weigh on BTC prices in the short term. BTW, someone tell me why US equities are up with Biden now leading the race.
- UK FCA bans crypto derivatives for retail
- US DoJ releases enforcement framework on crypto
- High interest to short yield plays (e.g. YFI)