Daily Digest - 29 November 2022

Headlines

▌U.S. House of Representatives Lawmakers Will Hold Their First Hearing on FTX Bankruptcy on December 13

The Financial Services Committee of the U.S. House of Representatives will hold its first FTX-focused hearing on December 13. The hearing, titled "Investigating the Collapse of FTX, Part I", is likely to be part of a series of hearings. The committee did not release a list of witnesses for the hearing. Republican Rep. Patrick McHenry has previously said they want former FTX CEO SBF and related companies including Alameda Research and rival exchange Binance to participate. According to previous news, Senate lawmakers are also paying close attention to the FTX crisis. The Senate Agriculture Committee will hold a hearing on FTX on Thursday.

▌BlockFi Has Officially Filed for Bankruptcy and Reorganization, and Currently Holds $256.9 Million in Cash

The encrypted lending company BlockFi and its eight subsidiaries have officially filed for bankruptcy reorganization in the bankruptcy court of New Jersey. BlockFi will focus on recovering all debt owed to BlockFi by its counterparties, including FTX and related corporate entities. In addition, BlockFi currently still holds $256.9 million in cash, and platform services will continue to be suspended.

▌CFTC Commissioner: Regulating Cryptocurrencies Should Not Be Done by a Single Agency

Mersinger, a member of the U.S. Commodity Futures Trading Commission (CFTC), said when asked about the regulatory impact of the bankruptcy of FTX and BlockFi on cryptocurrencies, "This should not be done by a single agency." Mersinger added that this could mean the independent agency also receives input from congressional committees, including the Agriculture and Banking Finance Committee Services Committee. “This is also an opportunity for the CFTC to start working at the state level with jurisdictions that may be familiar with regulatory oversight”, Mersinger said. Given the scope of the issue, dialogue with global regulators is also likely. Former CFTC Commissioner Timothy Massad has suggested that the agency and the SEC join forces to form a self-regulatory organization (SRO) in an effort to develop clear guidelines on which agency should oversee cryptocurrencies.

Cryptocurrency

▌ECB President Calls for Broader Crypto Regulation After FTX Crash

Christine Lagarde, President of the European Central Bank, responded to policymakers' concerns about the impact of FTX's collapse in parliament, saying that the "stability and reliability" of cryptocurrencies have recently been "exposed in the most obvious way." The MiCA bill, expected to be passed early next year and take effect in 2024, will cover some cryptocurrencies and service providers. According to Lagarde, “there must be a MiCA II, as part of efforts to bring more regulation to cryptocurrencies, Europe aims to be a leader in this regard”. Earlier in June, she suggested that MiCA II would address risks associated with traditional finance, as well as cover crypto activities outside the scope of MiCA, such as decentralized finance (DeFi).

▌Singapore MAS Executive: Banks Must Hold $125 in Capital for Every $100 Worth of Bitcoin

Tharman Shanmugaratnam, Senior Minister and Minister in Charge of the Monetary Authority of Singapore (MAS), said on Monday that banks in Singapore must hold US$125 in capital for exposure to US$100 in high-risk cryptocurrencies such as Bitcoin or Ethereum. Although banks in the Singapore jurisdiction have “negligible” exposure to cryptocurrencies, accounting for less than 0.05% of total risk-weighted assets, these types of crypto assets should be subject to the strictest risk management requirements, the executive said. . He said, “Pending the finalization of the framework, MAS requires Singapore-incorporated banks to apply a risk weight of 1,250% for their exposure to riskier crypto assets such as Bitcoin and Ethereum. The minimum aggregate capital adequacy requirement for systemically important banks is 10%, which means a bank incorporated in Singapore must hold $125 in capital to have exposure to $100 in crypto-assets such as Bitcoin.”

▌Hong Kong Exchange AAX VP BEN Said That He Had Resigned

Ben Caselin has resigned from his post as vice president of global marketing and communications at the crypto exchange platform AAX. Caselin’s departure comes two weeks after the crypto exchange halted operations. AAX reportedly suffered a malicious exploit that saw it unable to verify the account balances of its customers. The Hong Kong-based platform has since liquidated the crypto futures trading positions of all of its customers. AAX said the move was necessary to “protect the rights and interests of users.” Caselin is critical of the steps being taken by AAX. “The way things are handled is without empathy and overly opaque,” said Caselin in a statement on Monday. The former AAX executive said the crypto exchange had broken its trust with customers and that “the damage is done.”

▌Apple Has Threatened Twitter to Remove It From App Store

Elon Musk on Monday went on a tear against Apple, Twitter’s top advertiser, after he said the company threatened to block the social network from its App Store without explanation and mostly had stopped advertising on Twitter. The tirade underscored the immense power that Apple, the world’s most valuable company, wields over the fate of the world’s richest man’s gamble on Twitter. If the company were to block Twitter from its App Store, new users would be unable to download the Twitter app on their iPhones and iPads, and existing users would be unable to access updates. The alleged threat adds to the advertiser pressure, staff departures and regulatory scrutiny confronting Musk as he seeks to overhaul years of Twitter policies and account suspensions in his quest to push a “free speech” agenda.