Daily Digest - 20th October 2022

Headlines

▌4,400 Investors Set up URG to Track Down Do Kwon, Saying He May Be in Dubai

According to the Financial Times, about 4,400 crypto investors formed the UST Restitution Group (URG) to track down Terra founder Do Kwon globally. URG members are already actively following clues. Members of the group share the latest clues via Discord. Recent clues suggest that Kwon may be living in Dubai, Russia, Azerbaijan, Seychelles or Mauritius. Kwon is more likely to be in Dubai due to local crypto-friendly policies.

Policies

▌French Financial Market Authority: The Crypto Company Registration System Will Be Gradually Replaced by the MiCA Framework

A senior official at France’s Financial Markets Authority (AMF) on Wednesday urged crypto companies operating in France to prepare for strict European Union standards. AMF Secretary-General Benoît de Juvigny confirmed that the country will phase out the national registration system for crypto service providers. By 2024, the system will be replaced by the EU Marketplace for Crypto Assets (MiCA) framework, which goes further than the anti-money laundering checks currently in place in France and includes safeguards designed to ensure investor protection, market integrity, and financial stability.

Cryptocurrency

▌Bank of England Policy Committee Member: DeFi Is Not Decentralized

DeFi is not decentralized, said Carolyn Wilkins, a member of the Bank of England’s policy committee, in a speech at the UCL Blockchain Research Centre on Wednesday. Wilkins cited an April 2022 NBER study showing that in a sample of the top 50 proof-of-stake platforms by market cap, the top ten validators hold between 47% and 100% stake. He said: “Proof-of-work and centralization of power in proof-of-stake systems, as well as other flaws in crypto and DeFi governance, have led to familiar problems; most importantly business failure, illegal activity, and investor finances. Losses, if left unchecked, will erode investor trust in cryptocurrencies based on financial services and their customers, and could lead to broader financial stress.”

▌Coinbase Supports Grayscale to File a Lawsuit Against the U.S. SEC Due to the Rejection of a Bitcoin Spot ETF

Crypto exchange Coinbase has backed Grayscale’s lawsuit against the U.S. Securities and Exchange Commission (SEC) over the rejection of a Bitcoin ETF application. The SEC has previously rejected Grayscale’s application to issue a Bitcoin ETF. Grayscale said the SEC "has failed to apply a consistent approach to similar investment vehicles." Although the SEC has approved several bitcoin futures ETFs, it has refused to release bitcoin spot ETFs. The same argument was made in a statement Coinbase filed with the U.S. Court of Appeals for the District of Columbia on Tuesday. Whether it’s a spot or futures ETF, whether it’s pegged to bitcoin or other commodities like gold, platinum or palladium, these investment vehicles offer investors the same exposure, the exchange said. Both Bitcoin futures ETFs and spot ETFs are designed to track the price of Bitcoin. Restricting bitcoin spot ETFs from entering the market “unreasonably limits investor choice.” An ETF is an investment vehicle that allows investors to invest in Bitcoin indirectly.

▌SBF Supports the Use of Blacklists to Supervise the Cryptocurrency Industry

FTX CEO Sam-Bankman Fried (SBF) published a blog post sharing his thought on digital asset industry standards. He fundamentally believe that blocklists are the correct approach to sanctions compliance on blockchain environments, where individuals are free to trade unless expressly approved. This is in stark contrast to whitelisting, or allowlists, where individuals are barred from trading by default unless explicitly permitted. SBF explained that the crypto industry needs fast and reliable lists of addresses related to illicit finance, but that peer-to-peer transfers should generally be free as long as they do not transact with sanctioned participants, which can effectively enforce sanctions compliance at the same time, the blacklist approach can achieve a healthier balance.

▌Tesla Makes No Changes to Its Bitcoin Holdings in Third Quarter

Electric car maker Tesla reported in its latest earnings on Wednesday that the company did not sell any of its bitcoin holdings in the third quarter, nor did it buy any additional bitcoin. The value of its digital assets remained at $218 million, the same as they were at the end of the second quarter. Tesla also reported no impairment losses in the value of its bitcoin holdings, as the cryptocurrency’s price nearly stayed just below $20,000 at the end of the second and third quarters.