Guest Blog

Maven 11 Monthly Insight April 2023

The month of april in the crypto industry was shaped by a number of significant events. One major event was the successful implementation of the long-awaited shapella upgrade on april 12th, which marked the completion of ethereum’s transition to proof-of-stake (pos). This allowed validators to withdraw their staked ethereum for the first time, leading to concerns among some eth holders about a potential flood of selling on the markets. However, staking deposits have matched withdrawals in recent weeks, indicating continued high demand for staking now that smart contract risk has cleared. The increased on-chain activity has resulted in a significant rise in the burning of eth, with the total amount burned since ‘the merge’ crossing the 100,000 mark this month.

As discussed in previous editions of this newsletter, the U.S. government’s stance towards crypto providers seems to be increasingly hostile. In the latest development, the SEC charged Bittrex with operating unregistered securities exchanges, following the exchange’s decision to move out of the U.S. a month prior. This move also forced BinanceUS to cancel its planned $1.3 billion assets purchase of bankrupt crypto lender Voyager digital due to the uncertain regulatory climate in the United States, which has created an unpredictable operating environment. Furthermore, Coinbase is exploring crypto-friendly jurisdictions outside the U.S. to offer regulated crypto services. Compared to many offshore rivals, Coinbase is subjected to higher regulatory oversight standards. In response, Coinbase has announced that it has obtained a license from the Bermuda Monetary Authority to potentially launch a non-U.S. derivatives exchange.

Meanwhile, we’ve seen several jurisdictions take a more positive approach towards facilitating crypto providers by providing regulatory guidance to build their businesses. Firstly, the European Union has officially passed its Markets in Crypto Assets (MiCA) regulation after receiving approval from lawmakers in the European Parliament. Policymakers hope that this crypto regulation will serve as a “global standard-setter” and attract digital asset businesses to the region. In addition, the ECB is considering issuing a retail central bank digital currency (CBDC) for use by ordinary traders and citizens while also seeking to engage with innovations in wholesale financial markets to keep pace with technological advancements. Moreover, Hong Kong’s Securities and Futures Commission intends to release guidelines on its licensing regime for crypto exchanges in the coming month. The Hong Kong Monetary Authority has also recently expressed its expectation that banks will work with licensed crypto firms to help them open bank accounts.

Increased regulatory clarity paves the way for institutions to double down their crypto efforts. For instance, Visa announced that they’re hiring engineers for an ‘ambitious’ crypto product roadmap, while Mastercard is working on a set of common standards and infrastructure for trusted consumer-business interactions. Société Générale’s crypto arm, Forge, announced plans to launch a euro stablecoin, CoinVertible. The investment bank plans to “bridge the gap between traditional capital markets and the digital assets ecosystem”. It is good to see institutions doubling down on their crypto ambitions and we expect that more regulatory clarity will continue to allow them to do so in the European Union.

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