CoinDesk Crypto

This article is excerpted from Blockchain Bites, a daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here. 

Open dialogue  
FATF says it is open to amending its “Travel Rule” guidance, by speaking with industry stakeholders. The much anticipated set of rules, set down in 2019 but not fully implemented, would see increased reporting requirements for some crypto service providers in an attempt to stem illicit use of crypto. The anti-money laundering watchdog now says it’s looking for input, though is confident the data sharing requirements will roll out by June.

Crypto uncentered
Crypto was not the center of attention at a congressional hearing on terror financing, yesterday. Members of the House Financial Services Committee gathered to discuss data gathering, surveillance and domestic terror statutes for an increasingly digital world. And while crypto came up, no new provisions were suggested to prevent criminal abuse of these tools, CoinDesk’s Nikhilesh De reports.

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Inflows slow
Canadian Bitcoin ETF inflows have slowed amid a recent price slough. Bloomberg had projected the fast-growing Purpose Bitcoin ETF could hit $1 billion by the end of this week, but as of Friday the assets were less than $700 million. The ETF has collected just 1,766 BTC since Tuesday versus 8,288 BTC in the first two trading days, CoinDesk Senior Reporter Omkar Godbole said. (Purpose’s indexes are provided by CoinDesk subsidiary TradeBlock.)

Kraken’s $10B
Kraken is reportedly valued at $10 billion. According to Bloomberg, the exchange is currently in discussions with Fidelity, Tribe Capital and General Atlantic to raise an unknown sum. It was last valued at $4 billion, after crowdsourcing a raise.

Move fast, or break things
The U.K. Treasury has released a new report that highlights the need to launch a new regime for the regulation and administration of crypto assets, lest the nation lose its fintech lead. The report titled “Kalifa Review of U.K. Fintech,” looks to create a “bespoke” and “innovation-driven” set of rules to guide the world in crypto regulation. Perhaps they should watch Wyoming, which introduced a bill to integrate blockchain into certain state functions.

Coinbase’s competition
Coinbase’s filing to go public yesterday was a treasure trove of insight into one of the most significant global cryptocurrency exchanges. According to its S-1, the exchange boasts 43 million verified users, approximately 3 million of whom use the platform on a monthly basis.

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Most notably were details of the competitive arena in which Coinbase sees itself and the exchange’s path to profitability. According to the filing, Coinbase’s business is highly tied to market prices. It pulled in profit of $322 million on $1.3 billion in revenue in 2020 amid a record market rally, but lost $30 million on $533 million in revenue the year before during a slump.

“Our operating results have, and will continue to, fluctuate significantly from quarter to quarter in accordance with market sentiments,” the company said.

Founded in Silicon Valley in 2012 by current CEO Brian Armstrong and former president and current director Fred Ehrsam, Coinbase also sees a growing threat from quick-moving exchanges operating in less-regulated corridors and the nascent decentralized finance (DeFi) field.

As CoinDesk’s Ian Allison reported, the company called out Binance by name, saying it was potentially its “least regulated and most formidable competitor.” It further cited compliance costs and the potential for “administrative sanctions for technical violations” pegged to the U.S. Treasury Department’s coming “travel rule” as a potential risks to growth.

These same regulations could inhibit its ability to compete with decentralized alternatives like Uniswap, CoinDesk’s Brady Dale reported. “Such platforms have low startup and entry costs as market entrants often remain unregulated and have minimal operating and regulatory costs,” the company wrote.

While decentralized alternatives do offer some benefits to users, like the ability to trade without counterparties and relaxed identification requirements, DeFi is still a small market. The total value of all DeFi apps is estimated at $40 billion, less than half of the value of the assets on Coinbase.

“All of our sources of revenue are dependent on crypto assets and the broader cryptoeconomy,” the filing reads. “There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets or the demand for trading crypto assets decline, our business, operating results, and financial condition would be adversely affected.”

Crypto is not just a speculative asset in Latin America, according to Daniel Vogel, chief executive of Bitso, of one the region’s largest exchanges. Appearing on CoinDesk TV, Vogel said crypto and blockchain applications are being used exactly as advertised.

Remittances are increasingly being sent using stablecoins, while an increasing number of people are leveraging decentralized financial apps to earn interest on or safeguard their wealth, he said.

“Suddenly you have this technology that people can access on their cell phones, regardless of where they are, their proximity to a local banking branch. We believe it will completely change the name of the game,” Vogel said.

One notable data point? Bitso would be “Mexico’s seventh-largest bank by number of customers,” Vogel claimed.

Watch the full interview here.

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The non-fungible token (NFT) craze continued to make inroads among pop culture brands this week with Canadian singer Shawn Mendes agreeing to issue digital wearables in partnership with avatar company Genies.

• Mendes’ collection of concert-style collectibles is set to debut on the NFT marketplace OpenSea midday Friday, becoming the digital auction house’s first “digital goods drop.”
• The new OpenSea product puts the platform in competition with the Winklevoss-owned Nifty Gateway, which has cornered the celeb market with a series of high-profile releases.
• The collectibles issued by avatar-maker Genies allow fans to deck their own digital alter-egos out with limited edition and licensed swag in a twist to the NFT sales reshaping card collection and art at breakneck speed.
• For his part, Mendes said proceeds of the sale will benefit a grants program for aspiring digital artists that his charity is backing. Mendes plans to incrementally release more NFTs as his career develops, Genies CEO Akash Nigam told CoinDesk.
• “We really do believe in the long-term longevity of all this,” Nigam said. He argued avatars are among “the best vehicle[s] to get people to comprehend” NFTs.

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Bitcoin (BTC) mostly traded sideways on Friday after a steep drop overnight to as low as $44,181, timed with a steep sell-off in bonds and technology stocks.

At press time, the largest cryptocurrency  was changing hands at $47,921, down 6.2% in the past 24 hours, based on CoinDesk’s Bitcoin Price Index. Since 12:00 a.m. UTC (7 p.m. ET), the price is up 1.6%.

On the hourly chart, bitcoin was trading between its 10-hour and 50-hour moving averages, a sideways signal for market technicians.

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After the No. 1 cryptocurrency failed to reclaim the key psychological threshold of $50,000, prices dropped sharply along with equities markets across the globe as investors fretted over surging yields on U.S. Treasury bonds.

“The recent rise in long-dated U.S. Treasury yields, particularly at the long end of the curve such as the US 10-year Treasury yields, is indicative of higher growth and inflation expectations, which is starting to put pressure on tech valuations,” Kevin Kelly, co-founder of crypto research firm Delphi Digital, said. “Market volatility has also started to pick up again, which historically has coincided with short-term weakness in bitcoin.”

“If we continue to see equities slide, this may be problematic for crypto and result in another pullback,” said Andrew Tu, an executive at quantitative trading firm Efficient Frontier.

As CoinDesk reported, deeper price declines in bitcoin, if any, could be temporary, with blockchain data showing large traders accumulating the cryptocurrency on the dips. The institution-focused Coinbase Pro exchange has logged outflows of 25,000 BTC in the past 24 hours, seen by analysts as a sign of persistent demand from U.S.-based institutional investors, according to South Korea-based blockchain data firm CryptoQuant.

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At the beginning of February, whispers on Discord quickly turned into a parabolic price chart for digital art project Hashmasks – an output of curiously named Zurich-based Suum Cuique Labs.

The headlines soon followed: 

“Latest Ethereum Craze Hashmasks Sells 16,000 NFTs for $9 Million,” Decrypt wrote on Feb. 3.

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“Rare Hashmasks Digital Artwork Sells for $650K in Ether,” one CoinDesk article followed up the next day.

Suum Cuique Labs’ first project is an attempt to bridge the gap among digital communities which have sprung up in the age of lockdowns and high-speed internet access. Its collection of abstract portraits is perhaps the best example of a $350 million industry quickly making its way to the mainstream through celebrity endorsements from people as lofty as Mark Cuban. 

The project falls into a niche of blockchain-based applications called non-fungible tokens (NFTs). These tokens, which mostly reside on the Ethereum network, act similarly to an old stock certificate: You are given a token when you buy a Hashmasks. That token is a public claim of ownership to digital art that resides in private hands.

Yet, Hashmasks and other digital artwork suffers from one nagging quip: Can’t you just screenshot it?

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Yes, you could. But this question misses how digital art came to be, in and of itself. New digital communities like Hashmasks want to relate, build and grow together. And that’s simply not possible in the online world of yesterday’s social media giants. Digital art extends online norms we’ve all become accustomed to by introducing digital ownership. To own a Hashmask is to be part of a new community.

Hashmasks was the creation of a particular community, not a product designed for a community, said “John Doe,” the co-creator of the digital art project, who requested anonymity for this interview with CoinDesk. He and his co-founder, who also asked to remain hidden, are both digital natives, one being a Solidity engineer and the other a researcher at a digital asset manager. 

How did they know what to build?

“We are the exact target audience. We just build what we would like. We didn’t have to do any analysis on people’s preferences because it’s just us,” Doe said. “We hang in the same Discords.”

Doe’s passion work – borderless exchange of value – reflects his upbringing. He explained how he was raised in Berlin, attended high school state-side in Arizona, received his Masters in Economics in London before finally settling in Zurich. While he became interested in cryptocurrencies before the 2017 bull run, he only got into the NFT market this past summer.

“I feel mostly German, I think,” he added.

The duo spared no expense either. Each of the 16,000 plus pieces is unique, the result of 8 months preparation and collaboration with some 70 artists from around Europe, Doe said. The compositions leaned heavily on Jean-Michel Basquiat’s work in New York City during the 1980s, Doe added.

Each portrait has six features: a character, a mask, an eye color, a skin tone, an item and a background. Those features divide into further categories such as a lion or a dragon character, he said.

A few other features separate Hashmasks from other NFTs. First, the community designates rarity to each mask. Second, Hashmasks has a second token, the Name Changing Token (NCT). And third, there are hidden messages left in each Hashmask.

The original purchase of the 16,000 Hashmasks was completely random, even to Doe and his co-founder. Hashmasks could be purchased in tiers with each level costing a different amount of ether (ETH), Doe said. The rarity of a Hashmask then developed organically, Doe said, based on the portrait’s features. The highest grossing Hashmask, for instance, garnered $650,000 even though the original buyer only spent 0.5 ether worth some $750 at press time on the painting.

NCTs also act as a way for collectors to get involved with their work. Each Hashmask has an associated token that allows the artwork to have its name changed within certain limits. The naming tokens allow owners to build art on top of Hashmasks as a complement to the entire project, Doe said.

Lastly, hidden messages are embedded in many Hashmasks.  For example, there’s a royal flush scattered across multiple pieces, Doe said. Puzzles and messages spread across Hashmasks creates community interaction and adds rarity, Doe said.

“We built the first collectable, in my view, where the rarity hierarchy is not solely determined by the creators,” Doe said. “This is not endemic to NFTs.”

Digital art means different things to different people. For art critic Joshua Drake, NFT-based work most likely lends itself to what he called “posing”: collecting art as a method of reputation building.

“I have this work of digital art because it makes me seem a [certain] way in a digital community,” Drake said in a phone interview.

Posing holds value in the flesh-and-blood art world as well. For example, a politician’s collection subtly nudges viewers toward the owner’s authority in all things tasteful, he said.

As a technology, NFTs act as a seal of ownership on a particular creation, assembly of words or even collection of beats at a particular moment in time. That seal is valuable because a community says so, in much the same manner as bitcoin proponents argue the cryptocurrency itself has gained “moneyness.”

That’s not unlike traditional art, ConsenSys CMO Lex Sokolin said in a recent self-published newsletter:

“The ‘Mona Lisa’ is original and valuable. A poster of the Mona Lisa is not valuable, despite being nearly identical in visual information … Therefore, the art is valuable not for its collection of particular atoms in some particular order, but for its historical and social context. Recreating the object does nothing, because it does not contain the same social history.

“With digital NFTs, the same logic is true. Just because you have an identical JPEG to the one anchored to the blockchain, does not mean you have an original worth anything, nor does your ability to look at it suggest anything from a collectible point of view.”

But where does it go from here? Are Hashmasks caught up in the “everything bubble” many crypto-leaning economists worry about? Or are they the beginnings of a way of representing ownership in a digital world? 

A proliferation of online art is not necessarily a disadvantage to the NFT marketplace, Drake said. Rather, NFTs may experience a similar timeline to that of bitcoin and other cryptocurrencies. Shoddy NFT projects will fall apart and winners will eventually appear, he said.

Doe said he expects the NFT market itself to keep growing. But early NFTs and well-thought-out projects like Hashmasks are the ones sure to gain and maintain value overtime, he said.

“In 10 years, no more entities will be emitted anymore and then it will start to solidify the artwork until one day it will all be gone and this artwork will take its final form,” he said.

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The initial flood of assets into North America’s first exchange-traded fund (ETF) tracking bitcoin has slowed to a trickle.

Purpose Investments’ Toronto-listed Bitcoin ETF, launched Feb. 19, held 10,064 BTC on Thursday. While that looks to be an impressive first-week growth, the pace of increase in holdings has slowed in the past three days.

The ETF has collected just 1,766 BTC since Tuesday versus 8,288 BTC in the first two trading days, according to data source Glassnode. In dollar terms, the AUM has increased by just $60 million in the past three days to $624 million compared to $564 million in the first two days.

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Bloomberg Intelligence ETF analyst Eric Balchunas had predicted that the ETF’s AUM would rise to $1 billion by the end of this week. Essentially, the fund needs to collect at least $376 million by Friday’s closing bell. The ETF trades on the Toronto Stock Exchange under the ticker “BTCC” and charges a management fee of 1%. Purpose’s index information is provided by TradeBlock, a CoinDesk subsidiary.

The inflows have slowed in the wake of bitcoin’s price pullback. The cryptocurrency peaked above $58,000 late Sunday and has been falling ever since. At press time, the cryptocurrency is down nearly 20% for the week at $46,300.

Also read: Canada’s CI Global Files for What Would Be World’s First Ether ETF

Nevertheless, inflows registered in the first week in BTC terms are significantly higher than bitcoin’s average daily issuance (miner supply) of 900 seen over the past seven days.

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Baked goods and tea. Emergency rescue. Online lotteries. These are some of the products and services offered by U.S.-listed Chinese companies that have pivoted to bitcoin mining in recent months, trying to capitalize on the current bull run. 

This is not just short-term opportunism. Access to Chinese miners, state-owned energy providers and the U.S. capital markets make these companies well-positioned to swiftly expand mining operations. They can also earn high premiums in the stock market, according to industry pros. 

These companies’ connections to Chinese bitcoin miner makers, local hosting mining sites and state-run electricity companies give them an edge over their competitors in the west, said Ethan Vera, CEO of Seattle-based crypto mining company Luxor. 

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“Some of the companies are partially owned by the Chinese government. They could get permits to operate in hydro power-rich areas or great deals with state-run electricity companies,” Vera said. 

For example, Shenzhen-based lottery firm 500.com, which used to profit from helping China’s state-run lottery centers sell tickets, has signed contracts with the State Grid Corporation of China,  a state-owned energy company, to enjoy discounted electricity for its data centers. The company’s subsidiary, Loto Interactive, also has permits to run data centers in the “excessive hydro power” areas designated by the local government in Sichuan and the Tibetan autonomous region.  

Adding bitcoin mining to these companies’ businesses can significantly boost their valuation multiples, said Yulong Liu, managing director at Babel Finance, which is one of the largest Chinese crypto lenders. 

“These stocks are trading at a very high premium,” Liu said. 

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Shares of Nasdaq-listed Chinese online gaming company The9, which had the exclusive license to distribute World of Warcraft in China, rose by over 750% year to date after it announced plans to make investments in crypto in January. Sino-Global Shipping, an international shipping company that said it would invest in bitcoin mining, gained over 300% on its stock price on Feb. 3. SOS, a Chinese emergency services provider, had an over 300% year-to-date gain on its stock price. The stock price of Urban Tea, a Chinese bakery and specialty retailer, increased by over 200% year to date after its pivot to bitcoin mining. 

Given some of the companies’ current investments in bitcoin mining versus their valuation, these stocks might have been traded at a very expensive price, Liu said.  

Being listed on the U.S. stock exchanges also helps these companies expand their mining operations quickly, said Lingxiao Yang, COO of crypto hedge fund Trade Terminal.

However, the largest mining companies, such as f2pool and Poolin, have not gone public yet, which means they can not just issue shares to raise money for expansion.

If miners in China want to expand their operations or maintain cash flow, they would need to sell mined bitcoin through the over-the-counter (OTC) desks or collateralize their bitcoin to take out a fiat loan. Further, there are growing risks for them to do so because China continues to crack down on OTC trading and make financial transactions related to bitcoin in Chinese banks even more difficult. 

The sustained bitcoin bull run appears to have emboldened these companies to make hefty investments in bitcoin mining. 

Loto Interactive, which is majority-owned by 500.com, set up data centers in China’s bitcoin mining hub, Sichuan province, in early 2019. The firm now has at least three data centers in Sichuan, which contributed 96.7% of its total revenue in 2019. The data centers combined could generate up to 6.27% of the hash rate on the bitcoin network, which would make it the sixth-largest mining pool in the world.

“500.com has been quietly developing its bitcoin mining businesses for a few years,” Liu said. Now, “the lottery firm seems to be doubling down on bitcoin mining as bitcoin is seeing the biggest bull run in history.”  

500.com’s stock price soared in December 2020 after its chief executive announced the firm would focus on bitcoin mining, and saw a few more spikes when the company announced that it would to buy $8.5 million mining machines, purchase more shares of Loto Interactive and acquire the mining pool services of Bitmain spinoff Bitdeer. 

One reason the companies are going all in on cryptocurrency is the sustained bull run. 

“We are currently around $50,000 per bitcoin, which makes it extremely profitable for the miners,” he said. “Even if the price drops to $30,000, the miners are still going to make money.” 

It’s not only bitcoin pushing these stocks up. Historic gains on ether, the native asset to the Ethereum network, which is the second-largest cryptocurrency, is another driving force. The9 plans to invest in ether mining, which has been highly profitable thanks to increasing gas fees and its staking services. 

A continued rise in bitcoin may push mining companies’ stocks higher but a decline could hit many of these firms when they may not be financially sound otherwise. These companies are searching for a strong revenue stream while they are struggling with their non-crypto businesses. For example, 500.com has posted continuous losses since it suspended all of its online lottery ticket sales due to China’s nationwide inspection on the industry in 2015. 

The risks know no boundaries. In the U.S. Riot was a biotech company that made diagnostic machines before rebranding as Riot Blockchain in October 2017. Its penny stock doubled in price after the shift.   

But what rises can fall. Shares of Riot Blockchain as well as Marathon and Hive fell dramatically when bitcoin’s price dropped this week, with the companies losing over $1 billion combined. In the meanwhile, 500.com suffered a 16% decrease. 

Riot is a success story, at least for now, but another firm pivoting to blockchain at about the same time as Riot, Long Blockchain Corp, is a cautionary tale for many non-crypto-turn-bitcoin public companies. 

Long Island Tea Corp, a lemonade and iced tea company, announced plans to invest in blockchain and crypto amid bitcoin’s 2017 bull run. It changed its name to Long Blockchain Corp. 

The move came at a time when the tea company was desperately trying to stay listed on Nasdaq. However, it aborted its plan when the bitcoin price crashed in 2018. The company later faced an investigation by the U.S. Securities and Exchange Commission (SEC) and wound up losing its Nasdaq listing anyway. 

The boom in Chinese blockchain-related stocks in late 2019 is another lesson for companies that make opportunistic investments in this emerging technology. Shortly after Chinese President Xi Jinping called the nation to seize the opportunity on blockchain, a slew of companies that were unrelated to blockchain claimed they had launched ambitious blockchain projects. Their stocks soared. 

Some of the companies, including one obscure porcelain manufacturer, were accused by Chinese financial regulators of misleading investors by saying they are involved in blockchain whereas no financial disclosures had shown they were. The stocks have steadily dropped to their previous levels since the gold rush in blockchain cooled off in the country.  

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Singapore has used blockchain technology to develop a global standard for verifying COVID-19 test results to speed up clearing local and foreign immigration checkpoints when travelling.

• The city state’s Government Technology Agency (GovTech) and Ministry of Health (MOH) have developed a set of digital standards used to issue COVID-19 test results, known as HealthCerts.
• HealthCerts uses blockchain technology to issue trustworthy documents that can be verified independently in an open-source framework, news network CNA reports.
• The test results will be available on the government’s digital identity mobile app SingPass.
• Only the individuals’ hash – or digital finger print – will be published to the blockchain upon issuance to keep data private, claims the Smart Nation and Digital Government Group (SNDGG).
• The Singaporean government will also look into also using HealthCerts for vaccine certificates.

See also: Singapore’s SDAX Gets In-Principle Approval to Launch Digital Asset Exchange

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The U.K. Treasury has released a report calling for a new regime for the regulation and administration of crypto assets.

An independent review initiated by U.K. Chancellor Rishi Sunak and led by Ron Kalifa shows the U.K. Treasury has set out a plan to retain what the report called the U.K.’s leadership position in fintech.

The report, titled the “Kalifa Review of U.K. Fintech” states the country has the potential to be the global center for the issuance, clearing, settlement, trading, and exchange of crypto and digital assets.

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Kalifa highlights the European Union’s Markets in Crypto Assets (MiCA) proposal has been developing its propositions and the U.K. needs to “act quickly” to preserve and maintain its position as a hub for fintech firms.

“The U.K. should aim to be at least as broad in ambition as MiCA – but should also consider whether it can develop a bespoke regime that is more innovation-driven. A bespoke regime for crypto assets should adopt a functional and technology-neutral approach, in line with the principles of the current regulatory framework, as well as the concept of ‘same risk, same regulation’, while being tailored to the risks arising from crypto asset-related activities.”

There is the need to be “flexible” to deal with future challenges – such as how Decentralized Finance (DeFi) should be regulated, said the report.

The review concludes the U.K. must continue participating in the international financial regulatory group, the Global Financial Innovation Network (GFIN), and lead the development of policy and regulation in the areas of crypto and digital assets.

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Read more: UK Treasury Calls for Feedback on Approach to Cryptocurrency and Stablecoin Regulation

In January, the U.K. Treasury released a consultation paper to gather feedback from stakeholders concerning the government’s regulatory approach to cryptocurrencies and stablecoins. The responses to the consultation paper are being accepted until March 21.

So far, the U.K. has been taking a cautious approach to investing in crypto assets. On Jan. 6, the country’s chief financial regulatory authority banned the sale of derivatives and exchange-traded notes, saying it considers the products to be ill-suited for retail consumers due to the potential harm they pose.

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Like a closely monitored child complaining about a sibling who seems to get away with everything, Coinbase called out rival crypto exchange Binance in a filing with the U.S. Securities and Exchange Commission.

Staying compliant with a changing regulatory landscape in crypto was highlighted as a risk to its business by the leading crypto exchange in its S-1 form filed in the run-up before it becomes a publicly traded company. That compliance is particularly burdensome as the company has to compete with unregulated companies in other jurisdictions who seemingly escape enforcement, Coinbase said.

The company went as far as to single out by name Binance, perhaps Coinbase’s least-regulated and most formidable competitor.

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“We also compete with a number of companies that solely focus on the crypto market and have varying degrees of regulatory adherence, such as Binance,” said Coinbase.

The soon-to-be-listed cryptocurrency exchange pointed out competitors that choose to operate in jurisdictions with less-stringent local rules are “potentially able to more quickly adapt to trends, support a greater number of crypto assets and develop new crypto-based products.” 

Due to limited enforcement by U.S. and foreign regulators, Coinbase continued, such companies are able to operate from offshore, while selling crypto exchange services and products to consumers in the U.S. and Europe, ignoring licensing requirements “seemingly without penalty.”

The Coinbase public filing also seemed to allude to the recent scrutiny of Tether, creator of the widely used stablecoin USDT. Coinbase mentioned its own role as a founding member of the Centre Consortium and the principal reseller of USDC, a stablecoin issued by Circle. Coinbase then highlighted that it is “periodically subject to audits and examinations by regulatory authorities,” a measure that will only now also be imposed on Tether and USDT.

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Coinbase also cited anti-money laundering (AML) rules being imposed on crypto exchanges by the Financial Action Task Force, namely the so-called “travel rule” that is being skirted by certain firms in far-flung jurisdictions. 

“We may face substantial compliance costs to operationalize and comply with the Travel Rule and may be further subject to administrative sanctions for technical violations or customer attrition if the user experience suffers as a result,” Coinbase said. 

With regard to the creep of AML rules and user privacy, Coinbase specifically mentioned the Financial Crimes Enforcement Network (FinCEN’s) proposal in December 2020, that would require regulated exchanges to collect personal information from the owners of private self-custodied wallets, and report certain transactions to the federal government. 

“There are substantial uncertainties on how these requirements would apply in practice, and we may face substantial compliance costs to operationalize and comply with these rules,” Coinbase said.

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U.K.-listed Argo Blockchain (LON: ARB) said it has installed 4,500 cryptocurrency mining machines from Celsius Network.

• Announced in a news release by the London Stock Exchange Friday, the cryptocurrency mining firm said the Bitmain Antminer S19 and S19 pro miners have been installed and are now operational. 
• The installation has added 430 petahash to the company’s installed computing power and is consuming approximately 15 megawatts of electricity, said the firm.
• “We are delighted with the addition of these machines and believe that this installation will help Argo maintain its position at the forefront of mining efficiency,” said Peter Wall, chief executive of Argo Blockchain.
• This is the final delivery of Antminers under Argo’s lease with Celsius Network.

Read more: Argo Blockchain Gets Priority Access to ePIC’s Bitcoin Miner Production, Starts With $8M Buy

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Online brokerage platform Robinhood has experienced a flood of cryptocurrency user sign-ups since the new year began.

In each of the first two months of 2021, the platform says it has experienced a jump from an average of around 200,000 per month in 2020 to an average of around three million, according to a company blog post.

Google search trends, a metric that looks at search term data by region, reveals overall interest in cryptocurrencies has increased four times as much as compared to the end of last year. Meanwhile, Glassnode, an on-chain market intelligence platform, shows the number of new bitcoin addresses also rose sharply during the same period.

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The total yearly sign-ups for cryptocurrency users on the Robinhood platform now stands above six million, data shows.

The new sign-ups have come as the platform faced accusations for deliberately limiting trading on stocks like GameStop (GME) and other securities last month after a group of retail investors on a Reddit forum kicked off a buying frenzy.

The accusations leveled against the platform were based on the belief the brokerage halted buy orders to stem the bleeding from Wall Street hedge funds. The funds at the time were overleveraged on their positions and were required to cover their shorts when the price of GME pumped, costing the big funds billions.

Robinhood CEO Vlad Tenev later described the decision over the incident as being based on a technical and operational one and not from outside sources such as those on Wall Street.

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U.S. congressional hearings later summoned Tenev to appear before a committee where little detail was gleaned over the saga. Tenev reiterated points about how Robinhood halted buying of GME stock because of the margin requirements of clearinghouses.

See also: Jim Cramer Tells GameStop to Buy Bitcoin Amid Latest Stock Surge

The platform has begun allowing retail traders the ability to transfer their cryptocurrency holdings on and off the platform where previously it had only allowed users to buy and sell their digital assets.

Nevertheless, cryptocurrency investors have continued to pour money into the platform averaging monthly deposits of around $400-$500, up from the previous year’s $250 average, according to the platform’s data.

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Bitcoin briefly dropped below $45,000 shortly before press time Friday, with the risk jitters felt on Wall Street the day before reverberating across the globe.

The cryptocurrency fell to $44,279 at 7:40 UTC (2:40 a.m. ET) – the lowest level since Feb. 11 – after it failed to keep gains above $50,000 for the second straight day on Thursday, according to CoinDesk 20 data.

The latest bout of weakness may mostly be attributed to rising bond yields and losses in the global stock markets. The U.S. 10-year Treasury yield rose to a one-year high of 1.61% on Thursday, taking the year-to-date gain to over 50 basis points and triggering fears of an early unwinding of stimulus by the U.S. Federal Reserve that pushed stocks, bitcoin and gold lower. These assets have benefitted greatly from the massive monetary stimulus delivered by the Fed over the past 11 months.

Related: YouTube Suspends CoinDesk’s Channel Over Unspecified Violations

The S&P 500 fell by over 2% on Thursday, setting the stage for sharp losses in the Asian and European shares. While Asian stocks took a beating early Friday, the European indices are showing some resilience. Germany’s DAX and U.K.’s FTSE are now nursing marginal losses, after they dropped more than 1% at the opening bell. Comments by European Central Bank officials seem to have calmed market nerves for now.

Right before press time, bitcoin regained some ground to trade close to $46,629. However, the cryptocurrency is still down more than 6% on the day and almost 20% for the week. If those losses are held through Sunday’s UTC close, the resulting weekly drop would be the biggest since the second week of March 2020 when prices tumbled by 33%.

Bitcoin has suffered only two double-digit weekly losses and just eight weekly declines in the past 11 months. The data shows the bulls have pretty much dominated the price action since the crash of March 2020 and more so since early October. The cryptocurrency had rallied from $10,000 to above $58,000 in the past 4.5 months.

Looking ahead, the relief for both stocks and bitcoin could be short-lived, as the rising copper-gold ratio, a barometer of global growth, indicates that bond yields have plenty room to rise, as noted by Jeroen Blokland, portfolio manager for the Robeco Multi Asset funds.

Related: Digital Assets Under Management in ETPs Rose 50% to $43.9B in February: Report

Also read: Bitcoin Outflows From Coinbase Suggest Institutions Are Buying the Dip

However, deeper declines, if any, could be short-lived, as blockchain data shows large traders are accumulating the cryptocurrency on the dips. The institution-focused Coinbase Pro exchange has registered outflows of 25,000 BTC in the past 24 hours in a sign of persistent demand from U.S.-based institutional investors, according to Ki Young Ju, CEO of blockchain analytics firm CryptoQuant.

Both bitcoin and stock markets had been showing signs of weakness since the beginning of the week. Bitcoin fell 15% on Monday and Tuesday, the biggest two-day decline in 11 months, after reaching record highs above $58,000 late Sunday. The cryptocurrency looked overheated at record highs and due for a correction.

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• Crypto Tax 2021: A Complete U.S. Guide

Scientists at the U.S. Department of Energy (DOE) are asking the private sector for help in commercializing a super-powerful cryptojacking detection algorithm that government officials believe can help datacenters overcome crypto-mining malware.

Disclosed but sparsely described in a Feb. 23 contract opportunity, the technology can sniff out illicit mining software, which harness hosts’ spare computing power to mine cryptocurrencies with extreme accuracy. This detection software combats the “increasing threat” of burrowed cryptojacking malware, an expensive specter DOE said menaces data centers globally.

Indeed, cryptojackers have been caught hijacking data farms, government computers, major banks, medical research supercomputers, and hundreds of websites to mine crypto, netting their developers millions of dollars – often in privacy coins like monero. They cost their developers nothing but can drain electricity and computing resources from unwitting victim hosts.

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DOE officials at the Idaho National Laboratory are now keen to head off cryptojackers by offering their detection technology to private sector partners.

Here’s how the tech works in (relatively) simple terms: DOE’s invention scans legitimate-seeming data processing applications for hidden cryptojackers that otherwise turn entire datacenters into zombie cryptocurrency mining farms. It spots these exploits reliably using a deep learning mechanism that researchers say is far more accurate than up/down vetting known as binary classification.

Here’s how it actually works: “This invention is a rapid test based on machine translation to verify a binary submitted for execution on a datacenter system is free of cryptocurrency mining malware. It uses the attention mechanism in deep learning to accurately and reliably detect cryptocurrency malware surreptitiously deployed on high performance computing (HPC) systems. This approach is via machine translation rather than binary classification,” the contract opportunity read.

Last August, scientists at DOE’s Los Alamos National Laboratory unveiled a neural network that they said could detect cryptojackers faster and more reliably than non-AI methods.

Related: Crypto Is Spared Scapegoat Treatment in US Hearing on Terror Financing

Read more: Los Alamos Scientists Develop AI to Fight Cryptojacking

“This type of software watchdog will soon be crucial to prevent cryptocurrency miners from hacking into high-performance computing facilities and stealing precious computing resources,” government researcher Gopinath Chennupati said at the time.

It was not immediately clear if the technology DOE now hopes to license out is related to the Los Alamos invention. DOE representatives did not immediately respond to CoinDesk queries.

The juicy details underlying DOE’s invention rest behind a firewall that only prospective partners can access. But it is those corporate peers that DOE hopes to woo in an effort to develop and ultimately commercialize the early-stage cryptojacking detection algorithm.

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Kraken is reportedly in talks to raise new capital in a move that could see the company’s valuation soar to new heights.

The U.S.-based cryptocurrency exchange is currently in discussions with Fidelity, Tribe Capital and General Atlantic to raise an unknown sum, according to a report by Bloomberg on Thursday.

If approved and agreed upon, the new funding could more than double the company’s $4 billion valuation to around $10 billion, according to figures cited in the report.

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The report cites people close to the matter who have requested anonymity due to concerns about the deal’s secrecy.

In 2019, Kraken raised $13.5 million in a financing round that saw over 2,000 participants buying in. The move pushed the exchange’s valuation above the $4 billion mark.

CoinDesk attempted to contact Kraken but has yet to receive a response.

See also: Coinbase’s Financials Are Now Public Ahead of Stock Market Listing

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• FATF Says It Is Open to Amending Crypto Travel Rule Guidance

The U.S. government already has the authority it needs to monitor or regulate potential terrorist financing using cryptocurrencies and other crowdfunding or alternative financing tools.

This was one of the conclusions reached by witnesses at a Congressional hearing Thursday. During the “Dollars against Democracy: Domestic Terrorist Financing in the Aftermath of Insurrection” hearing, held by members of the House Financial Services Committee, witnesses called for better online moderation and data gathering, but not new surveillance or domestic terror statutes. 

“To effectively disrupt domestic extremist groups, we need to better understand their financing,” said Rep. James Himes (D-Conn.), the chair of the National Security, International Development, and Monetary Policy Subcommittee which hosted the hearing.  “Some extremist groups are eschewing the traditional banking sector in favor of cryptocurrency, avoiding our traditional methods of disrupting extremist finance.”

Related: US Energy Department Floats Solution to Illicit Crypto Mining Malware

For the most part, cryptocurrencies were treated as just another payment method alongside more traditional payment rails like PayPal and GoFundMe. Lawmakers largely did not single out cryptocurrencies in particular as a criminal tool.

While cryptocurrencies can be used to transfer funds outside the view of financial regulators, fiat on- and offramps allow regulators the ability to monitor these transactions, said Daniel Glaser, global head of jurisdictional services at K2 Integrity and a former assistant secretary for Terrorist Financing and Financial Crimes at the U.S. Treasury Department.

“If you want to be able to use a cryptocurrency in the real economy to any scale, at some point [the cryptocurrency] does need to be converted into actual fiat currency, into dollars,” he said. “That’s the place where the Treasury Department does regulate cryptocurrencies and cryptocurrency exchanges are regarded as money service businesses, they have full customer due diligence requirements, they have full money laundering requirements, they have reporting requirements.”

Glaser also noted that cryptocurrencies are largely pseudonymous, not anonymous, later telling Rep. Stephen Lynch (D-Mass.) that cryptocurrencies make it easier for law enforcement agencies to track transactions. 

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Daniel Rogers, the co-founder and chief technical officer of the Global Disinformation Index, told Rep. Madeleine Dean (D-Penn.) that alternative financing platforms are helping contribute to recruitment and radicalization efforts by domestic terror groups. 

Still, at no point during the hearing did any of the witnesses call for new statues to more closely surveil the financial or cryptocurrency sectors. Indeed, Iman Boukadoum, senior manager at The Leadership Conference on Civil and Human Rights, said new statutes run the risk of being abused. 

However, Glaser did point to a proposed Financial Crimes Enforcement Network (FinCEN) rule on unhosted wallets as a possible regulation that could be implemented by the Treasury Department to combat potential terrorist financing. 

The proposed rule, which would require exchanges to collect counterparty information on transactions to unhosted, or private, wallets as well as add currency transaction report (CTR) requirements for large transactions, has been controversial within the crypto industry.

While the CTR component would simply bring traditional fiat reporting rules to large crypto transactions, the counterparty component could have unintended consequences, including preventing U.S.-based individuals or entities from using smart contracts and decentralized finance tools.

• Musk Says He Hopes Rumors That He’s in the SEC’s DOGE House Are True
• FATF Says It Is Open to Amending Crypto Travel Rule Guidance

Tesla CEO Elon Musk tweeted that he hopes rumors that the U.S. Securities and Exchange Commission is investigating his frequent tweeting about dogecoin (DOGE) are indeed accurate, saying, “It would be awesome.”

• The CEO of the electric vehicle maker, who has a hate-hate relationship with the SEC, seems to relish the idea of another go-round with the regulatory body. In 2018, Musk famously said “I do not respect the SEC.”
• Since the SEC doesn’t consider the meme-based cryptocurrency a security, an investigation by that body into market manipulation of DOGE would seem unlikely. However, as the SEC is known to be monitoring Musk’s tweets as part of a settlement of charges that he’d committed securities fraud for misleading tweets it’s not out of the question.
• Should the SEC start looking for evidence that the CEO has been a vocal booster of DOGE, which is represented by a Shiba Inu dog, it wouldn’t be hard to find. At one point describing himself as the “dogecoin CEO,” Musk has been a frequent tweeter of memes boosting DOGE, and while other parents might buy their child a puppy, Musk tweeted earlier this month that he bought his nine-month-old son a DOGE.
• Musk’s most recent DOGE tweet was Thursday morning:

• And per usual, the price of the cryptocurrency rose in response to Musk’s tweet. Pavlov’s DOGE, if you will.
• It wasn’t immediately clear where the speculation that the SEC is investigating Musk started from. It’s possible it is a false rumor and is itself an attempt to manipulate the market. If that proves to be the case the Tesla CEO is likely to be let down, having been denied the pleasure of his anticipated DOGE fight with the SEC.

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• FATF Says It Is Open to Amending Crypto Travel Rule Guidance

The Financial Action Task Force (FATF) is open to amending the “travel rule,” its guidance for cryptocurrencies and companies providing services within the space.

The anti-money laundering watchdog said Thursday it is confident the crypto industry will be able to implement complex data sharing requirements, known colloquially as the “Travel Rule,” by time its 12-month review comes around in June of this year.

However, a U.S. Treasury Department statement nonetheless said FATF “agreed to seek public consultation on amendments to” the June 2019 guidance. 

Related: US Energy Department Floats Solution to Illicit Crypto Mining Malware

“The updated guidance will help countries and VASPs understand their [anti-money laundering/countering the financing of terrorism] obligations and effectively implement the FATF’s requirements in key areas, including how the FATF Standards should be applied to stablecoins, travel rule implementation, and how to address the risks of peer-to-peer transactions,” the Treasury Department said. 

Thursday’s announcements came following a virtual plenary meeting, where officials from FATF member nations met to discuss ongoing efforts to monitor or mitigate money laundering concerns and evaluate whether any nations were failing to meet the standard-setters’ guidance.

The FATF has said previously that there had been progress from the virtual asset industry, but also “revealed a need for greater guidance to implement the revised requirements, including for low-capacity countries,” according to a statement accompanying this week’s plenary meeting.

During a post-Plenary press briefing FATF President Dr. Marcus Pleyer was asked if any leniency will be shown to countries who might be slow to implement the recommendations for virtual asset service providers (VASPs) in those jurisdictions. (This expected disparity in regulatory compliance from one jurisdiction to the next is referred to as the “sunrise problem”.)

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“We are now consulting on updated guidance on progress within the virtual assets sector, including the travel rule,” Player said. “We hope to get feedback from the key industry players […] and I’m confident that we will approve it in June so that it can then be handed out to the industry after that.”

The FATF has now updated its guidance to address specific areas, including on how to apply the FATF Standards to so-called stablecoins, how public and private sectors can implement the travel rule, and how to address the risks of disintermediated peer-to-peer transactions, said the statement. 

The FATF will publish the public consultation draft in March, it said. Feedback from the consultation will inform the final guidance which the FATF expects to approve in June 2021.

Nikhilesh De contributed reporting.

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The top U.S.-based cryptocurrency exchange, Coinbase, is cautioning investors that U.S. regulators may inhibit its ability to compete with rivals in decentralized finance (DeFi).

“Economic freedom is a necessary, if not sufficient, condition for human progress,” CEO Brian Armstrong notes in a letter embedded within a new prospectus filed Thursday with the U.S. Securities and Exchange Commission (SEC).

One entity that could benefit from a little more freedom, the document implies, is Coinbase itself.

Related: US Energy Department Floats Solution to Illicit Crypto Mining Malware

The company dropped its Form S-1 to much fanfare Thursday morning. The prospectus portion of the document is meant to give investors all the information they will need when Coinbase shares begin trading on Nasdaq, likely under the COIN ticker.

As a leading centralized exchange, Coinbase is understandably ambivalent about DeFi and the growth of decentralized exchanges (DEXs), writing:

“By combining the best of crypto and traditional finance, we believe that we are well-positioned to execute on our growth strategy, enable the cryptoeconomy, and achieve our mission of creating an open financial system for the world. However, we do face significant competition from parties ranging from large, established financial incumbents to smaller, early stage financial technology providers and companies native to the cryptoeconomy, such as decentralized exchanges.”

The prospectus doesn’t attempt to quantify how much buying of assets useful in DeFi (such as ETH, DAI and USDC) the DeFi boom drove on the platform; however, its overall revenues more than doubled from 2019 to 2020. Doubtlessly, DeFi’s bonanza must have played a part as retail investors converted fiat to crypto in order to participate.

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“We are the default starting place for new user journeys into the cryptoeconomy,” the prospectus states. The product has nearly 3 million monthly users and over 40 million verified users.

Those are numbers any DeFi product would envy.

Indeed, FTX founder Sam Bankman-Fried thinks Coinbase is waving DeFi around as a competitor only because it needs to have one.

“My honest best guess is that it’s intentional misdirection,” Bankman-Fried told CoinDesk via email. “If you say you don’t have any competitors and also just reported $1.1B of revenue, no one will believe you. So they have to list someone. And so I don’t think they listed DeFi as a competitive risk because they were scared of DeFi. I think they listed it because they weren’t scared of it.”

That said, Coinbase is watching DeFi carefully.

It sees developers like exchange offerings, yield farming, token wrapping and so on as exciting and important, but also reasonably worries about its ability to keep up.

“We expect new services and technologies to continue to emerge and evolve, which may be superior to, or render obsolete, the products and services that we currently provide,” the prospectus states.

Like any smart market leader, Coinbase has invested in the protocols that could disrupt it. 

For example, Coinbase invested in the DeFi money market Compound, hooked it up with a bunch of USDC for one of its key liquidity pools and then helped get its COMP governance token out the door.

“We hold investments in various DeFi protocols. These protocols achieve their investment purposes through self-executing smart contracts that allow users to invest crypto assets in a pool from which other users can borrow without requiring an intermediate party to facilitate these transactions,” the prospectus notes.

But still Coinbase remains wary.

“We do face significant competition from parties ranging from large, established financial incumbents to smaller, early stage financial technology providers and companies native to the cryptoeconomy, such as decentralized exchanges,” the exchange wrote.

As just one example: Uniswap has appeared at times to have more activity than Coinbase, but Uniswap is just one DEX. There are lots of them, such as Kyber, Loopring, Curve, SushiSwap and PancakeSwap, to name a few.

Coinbase is well aware. 

“We compete against a growing number of decentralized and noncustodial platforms and our business may be adversely affected if we fail to compete effectively against them,” the firm writes. “Such platforms have low startup and entry costs as market entrants often remain unregulated and have minimal operating and regulatory costs.”

Coinbase specifically mentions offerings on blockchains such as Polkadot and Solana.

Matthew Finestone, on the Loopring business operations team, argues that the DEXs built on layers above networks like Ethereum could be a threat. He notes that Loopring’s Layer 2 is seeing $25 million in volume per day. Tiny compared to Coinbase but its users “have an experience which emulates Coinbase, but with the non-custodial benefits,” he wrote.

Decentralized exchanges have some significant advantages, not least of which is the ability to trade without counterparties or platforms needing to know the trader’s identity.

To crypto natives, this is and always was how crypto should be. To regulators, this – one would suspect – is exactly the problem.

Users are leaving Coinbase because it plays by the rules.

“We operate in a highly competitive industry and we compete against unregulated or less regulated companies,” the prospectus notes. “In recent years, our commitment to compliance and the attendant customer-facing requirements, including customer due diligence requirements, have resulted in our customers transferring significant funds and crypto assets to these unregulated or less regulated competitors.”

Those entities don’t have to worry about a shortsighted regulation steamrolling them worldwide, but Coinbase does. It writes:

“Regulators worldwide frequently study each other’s approaches to the regulation of the cryptoeconomy. … As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated.”

If regulators don’t stymie its mojo, Coinbase appears to believe it can be very big. Even now, it’s worth noting, all the DeFi products tracked by DeFi Pulse have a total of about $40 billion under their control. Coinbase says it has $90 billion in assets on its platform.

DeFi still has a ways to go, but Coinbase seems to be betting it can hold its lead and become a true giant.

“Coinbase isn’t, at its heart, basically Uniswap but with KYC. Coinbase’s core userbase and revenue base isn’t the same as Uniswap’s; in fact it has fairly little overlap,” Bankman-Fried wrote. He sees Coinbase’s users – the very casual retail investor and the very big institutional investor – as completely different from those deep in DeFi.

In short, Coinbase users may never go anywhere near PancakeSwap.

Crypto is hard. So far, Coinbase has made it easier. 

“As Coinbase clearly recognizes, decentralized or non-custodial platforms represent a strong competitive threat, but up until now, Coinbase has had an important moat which mostly neutered the up and comers: UX,” Finestone admits, but he believes platforms like his are catching up fast. 

Still, Coinbase has bet that its users don’t mind being subject to lots of state-mandated rules that come in from outside the blockchain. So far that bet has worked out. If it continues to, Coinbase seems to believe it can be very large.

Armstrong noted this in his letter: 

“Trust and ease of use will be as relevant in ten years as they are today, and our work here will never be done. We may not always move the fastest, or offer the lowest prices, but we accomplish our goal of being the most trusted and easiest to use, customers will continue to choose our products and services now and in the future.”

This is obviously modeled on an observation from Amazon founder Jeff Bezos, who famously said that his business is built on things that never change, like fast delivery and low prices. 

It’s one of the ways that Coinbase appears to signal in the prospectus that it believes it could join the current tech giants of Amazon, Microsoft, Facebook, Netflix and Google. For another example, the prospectus states:

“In the early days of the internet, Google democratized access to information through its user-friendly search engine, enabling virtually any user with an internet connection to discover the world’s information. Similarly, Coinbase is democratizing access to the cryptoeconomy by enabling anyone with an internet connection to easily and securely invest in and use crypto assets.”

But that potential makes it a target of, well, everybody.

Coinbase is in an interesting spot. From the perspective of crypto natives, it’s the incumbent, the suit-and-tie, the monolith. To the broader world, and especially that of finance, it’s still an upstart.

Caught between the megabanks and the food-branded DEXs, Coinbase is a Goliath with multiple Godzillas on one side of it and a growing army of robot Davids on the other. 

As if that’s not bad enough, there’s some chance U.S. regulators will leave it fighting both while standing in quicksand. 

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Banking services were so hard for cryptocurrency businesses to come by early on that as a fledgling startup Coinbase apparently had to throw in a sweetener to seal the deal.

In 2014, the crypto exchange gave Silicon Valley Bank (SVB) stock warrants as part of an agreement allowing Coinbase to send and receive U.S. dollars through the banking system, an exhibit in the company’s prospectus shows.  

The warrant “is issued in connection with … certain ACH Origination Services,” according to the exhibit. ACH is the automated clearing house, the system for sending domestic, low-value payments between bank accounts in the U.S.; a business that pays or is paid through ACH is an “originator” in banking parlance.

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The disclosure in Coinbase’s long-awaited S-1 filing Thursday offers a rare window onto the often murky relationships between cryptocurrency businesses and the limited number of financial institutions willing to bank them.

The warrant gives SVB, a bank that caters to tech startups, the right to buy more than 400,000 shares of Class B common stock at a little over $1 per share. 

Class B shares have 20 times the voting power of the class A shares that Coinbase is seeking to list on the Nasdaq, according to the prospectus. However, the Class B shares are convertible at any time, on a one-for-one basis, to class A shares, which presumably would be more liquid once publicly traded. 

In 2014, bank accounts for cryptocurrency firms were even more difficult to find than they are today. Most banks lumped bitcoin-related services into the same high-risk bucket as marijuana-related businesses and refused to work with them, fearing regulators would frown on the relationships. 

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Coinbase, which had an account and a line of credit with SVB, would later lose that relationship in 2015 after SVB gave it six months to find another bank, as detailed in the book Kings of Crypto by Jeff John Roberts. 

“SVB is built for the needs of the Valley, taking on risky startups other banks wouldn’t touch and operating within a tight clique of founders, venture capitalists, and tech incubators,” Roberts wrote. “Still, even with its Valley-centric worldview, SVB wasn’t particularly enamoured of Coinbase of its promise. It had taken a special nudge from Fred Wilson of Union Square Ventures [an early investor in Coinbase] to get SVB to take its business.”  

Much has changed since those scrappy days; last year, Coinbase secured a banking relationship with JPMorgan Chase, which is also one of Coinbase’s advisors on the direct stock listing.

Coinbase declined to comment, and SVB did not return requests for comment by press time.

UPDATE (Feb. 25, 23:40 UTC): Added background, links.

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Bitcoin was trading within a narrowed range on Thursday, as investors and traders were cautiously optimistic after the latest pullback, which took bitcoin’s price down close to $45,000 earlier this week.

• Bitcoin (BTC) trading around $49,194.33 as of 21:00 UTC (4 p.m. ET). Slipping 0.13% over the previous 24 hours.
• Bitcoin’s 24-hour range: $48,091.13-$52,076.32 (CoinDesk 20)
• BTC trades below its 10-hour and 50-hour averages on the hourly chart, a bearish signal for market technicians.

Trading volumes were far lower than earlier in the week when traders scrambled to adjust positions as the market fell 15% in two days, the biggest such decline since the coronavirus-driven sell-off of March 2020. The eight exchanges tracked by CoinDesk had a combined spot-trading volume of less than $4 billion on Thursday as of press time. The figure had surged above $10 billion on Monday and Tuesday and was slightly above $5 billion on Wednesday.

In the derivatives market, bitcoin’s options open interest is slowly returning after it dropped Tuesday slightly from an all-time peak of about $13 billion on Sunday.

Related: Coinbase Gave Silicon Valley Bank Stock Warrants for Access to USD Payments

“Bitcoin’s market is rather quiet today,” Yves Renno, head of trading at crypto payment platform Wirex, said. “Its derivatives market is going back to normal after the severe contract liquidations suffered a few days ago. Close to $6 billion worth of long future contracts were liquidated. The market is now trying to consolidate above the $50,000 level.”

“Traders are still cautious today,” Renno added. “It’s ‘wait and see.’”

As CoinDesk reported earlier, traders are also watching closely for any potential impact of surging bond yields on bitcoin. U.S. stocks opened lower on Thursday on investors’ rising concerns about the sharply growing 10-year U.S. Treasury yields. Some analysts in traditional markets have predicted that rising yields, often a precursor of inflation, might prompt the Federal Reserve to tighten monetary policy, which could send stocks lower.

Surging bond yields seemed to have less of an impact on bitcoin’s price on Thursday. The No. 1 cryptocurrency briefly surpassed $52,000 during early trading hours, moving in the opposite direction of equities.

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“Every time bitcoin goes below $50,000 there are players accumulating, thus bringing the price back around $50,000,” Andrew Tu, an executive at quantitative trading firm Efficient Frontier, said.

Several market indicators suggest that traders and investors remain largely bullish after a volatile price run earlier this week.

Large outflows from institution-driven exchange Coinbase Pro to custody wallets imply that institutional investors are confident about bitcoin’s long-term value.

On the options market, the put-call open interest ratio, which measures the number of put options open relative to call options, remains below 1, meaning that there are still more traders buying calls (bullish bets) than puts (bearish bets) despite the latest sell-off.

Ether (ETH), the second-largest cryptocurrency by market capitalization, was lower on Thursday, trading around $1,575.65 and sliding 2.12% in 24 hours as of 21:00 UTC (4:00 p.m. ET).

The  market for ether was largely quiet on Thursday, mirroring the activity in the bitcoin market and moving in a narrowed range of $1,556.38-$1,672.60 at press time.

“It’s notable that most of ether’s price action is actually driven by bitcoin, as it’s still stuck in the range that it has had versus bitcoin since late 2018,” said Jason Lau, chief operating officer at San Francisco-based exchange OKCoin. “I would continue to look at the ETH/BTC pair.”

Digital assets on the CoinDesk 20 were mostly in green Thursday. Notable winners as of 21:00 UTC (4:00 p.m. ET):

• cardano (ADA) + 9.22%
• kyber network (KNC) + 9.12%
• litecoin (LTC) + 7.8%
• tezos (XTZ) + 3.37%

Notable losers:

• cosmos (ATOM) – 3.36%
• chainlink (LINK) – 3.25%
• ethereum classic (ETC) – 1.01%

Equities:

• Asia’s Nikkei 225 closed up by 1.67% amid gains from Wall Street overnight.
• The FTSE 100 in Europe closed in the red 0.11% after investors became worried about the rising bond yields in the U.S.
• The S&P 500 in the United States closed down 2.45% as investors were spooked by the surging bond yields.

Commodities:

• Oil was up 0.28%. Price per barrel of West Texas Intermediate crude: $63.40.
• Gold was in the red 1.84% and at $1771.46 as of press time.

Treasurys:

• The 10-year U.S. Treasury bond yield climbed Thursday to 1.525%.

• Investment Giant BlackRock Has “Started to Dabble” in Bitcoin
• Are BTC and U.S. Stock Indices Decoupling?