The crypto industry got off to a difficult start in the new year, with three federal authorities combining to issue a serious warning on the first working day of 2023.
The Federal Reserve System’s board of governors, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency issued their first coordinated warning to banks about the dangers of the cryptocurrency market. The agencies stated that they were constantly watching financial firms’ crypto activities.
An adjunct professor at New York University Law School, Winston Ma, stated that crypto laws are coming to global markets.
“Crypto is like climate change in that it needs a global approach,” said Ma, author of Blockchain and Web3: Building the Cryptocurrency, Privacy, and Security Foundations of the Metaverse.
Since 2022, the European Union has been tightening restrictions in this field and pushing for a worldwide approach. And as a result, the EU’s Markets in Crypto-Assets regulation is the most comprehensive to date, and it is planned to go into action in early 2023.
Furthermore, he stated that the collapse of trading platform FTX two months ago, which sent shockwaves through the crypto market, may further motivate U.S. regulators to accelerate related regulations and laws.
According to David Lesperance, managing partner of immigration and tax adviser with Lesperance & Associates, U.S. lawsuits against cryptocurrency exchanges, digital wallet providers, and mobile service companies following cyberattacks reached a peak in 2022 as hacking victims seek to recoup their losses.
“Most notably, approximately half are claiming losses over $400,000,” he said.
According to data firm CoinGecko, Bitcoin was up marginally to $16,852.17 on Jan. 5. Ether, the Ethereum blockchain’s native currency, was unchanged at $1,250.21, while Dogecoin fell slightly to $0.072712.
Frank Corva, the senior analyst for digital assets at Finder, said Bitcoin has been trading like a stablecoin since the collapse of FTX about two months ago, typically around the $16,000 to $17,000 zone.
“This likely won’t be the case for much longer, as the price of Bitcoin has a tendency to make significant moves to the upside or downside after consolidating in a tight range for some weeks. We may see the price of BTC violently break up or down by Jan. 8, though,” he added.
Corva stated that Cameron Winklevoss, one of the founders of cryptocurrency exchange Gemini, asked Digital Currency Group CEO Barry Silbert in an open letter to assist Gemini in resolving the issue of nearly $1 billion in halted redemptions for 340,000 customers who were lending digital assets through Gemini’s Earn program by this date.
“Gemini had outsourced the yield generation for its Earn program to Genesis, a crypto market-making company under the DCG umbrella,” he said, “Genesis is rumored to be on the brink of bankruptcy, and Silbert has said very little about whether or not he has the funds to keep Genesis solvent.”
Genesis is also weighing options, including a Chapter 11 bankruptcy petition, according to the Wall Street Journal.
Many in the crypto world are hopeful that the devastation experienced in crypto markets in 2022 will not continue into 2023, but if Silbert does not keep Genesis afloat and make Gemini Earn users whole, BTC will likely finish chopping sideways and break to the downside.