LianGuai Morning News | Federal Reserve Launches New Regulatory Program, Banks Participating in Cryptocurrency Face Stricter Scrutiny

LianGuai Morning News | Federal Reserve Introduces New Regulatory Program for Cryptocurrency Banks

Headlines

▌The Federal Reserve launches new supervisory program, banks participating in cryptocurrencies will face stricter scrutiny

The Federal Reserve has announced the launch of a “new supervisory program” that includes cryptocurrencies and other emerging asset classes. It also covers the application of distributed ledger technology that could have significant implications for the financial system, in order to strengthen regulatory oversight of banks participating in digital assets. This is the latest measure by US regulatory agencies to restrict banks’ involvement in cryptocurrencies.

According to the published summary of the program’s objectives, banks that are members of the Federal Reserve System should obtain written supervisory non-objection from the Federal Reserve before issuing, holding, or transacting in US dollar tokens used for facilitating payments (e.g. stablecoins). Such banks must demonstrate that they have taken appropriate measures to mitigate risks, including liquidity, cybersecurity, and illicit financial risks, and indicate that they can continue to monitor these issues. In addition, regulatory agencies will “strengthen supervision of new activities,” such as “cryptocurrency custody, cryptocurrency mortgage loans, facilitating cryptocurrency asset trading, and participating in stablecoin/US dollar token issuance or distribution.” The program will also focus on distributed ledger technology (DLT) and other “technology-driven partnerships with non-bank institutions to provide financial services to customers.”

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The Federal Reserve stated that it is developing a new regulatory program to oversee the activities of its member banks in cryptocurrencies, blockchain technology, and technology-driven non-bank partnerships, aiming to complement its existing regulatory processes and strengthen technology-driven supervision.

▌The US Department of Justice claims that SBF will still face charges of illegal campaign donations

US prosecutor Lewis Kaplan stated in a letter on Tuesday that the US Department of Justice still plans to charge Sam Bankman-Fried with implementing an “illegal campaign donation” scheme when he goes on trial in October. Two weeks ago, prosecutors had indicated that they were unable to bring these charges against the FTX founder due to treaty obligations. However, a letter from the Department of Justice to Judge Lewis Kaplan stated that they still plan to include the campaign donation charges in the wire fraud charges. The Department of Justice stated, “The superseding indictment will make clear that Mr. Bankman-Fried is still charged with implementing an illegal campaign fundraising scheme, which is part of the original charges of fraud and money laundering, and using customer deposits for campaign activities is part of the wire fraud charges alleged in the original indictment.”

It is reported that Bankman-Fried is currently scheduled to stand trial on October 2, 2023, with another trial scheduled for March 2024 involving multiple superseding indictments and additional charges.

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Market

As of the time of writing, according to coinmarketcap data:

BTC recent trading price is $29,768.4, with a daily change of+0.80%;

ETH recently traded at $1856.72, with a daily change of +0.73%;

BNB recently traded at $245.22, with a daily change of +0.22%;

XRP recently traded at $0.6430, with a daily change of +2.26%;

WLD recently traded at $1.9341, with a daily change of +0.20%;

DOGE recently traded at $0.0749, with a daily change of +0.50%;

ADA recently traded at $0.2976, with a daily change of +0.81%;

MATIC recently traded at $0.686, with a daily change of +0.91%.

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Policies

▌Former FTX executive Ryan Salame in plea agreement talks with prosecutors

According to Bloomberg, Ryan Salame, former Co-CEO of FTX Digital Markets, is negotiating a plea agreement with federal prosecutors to admit to criminal charges following the collapse of TFX. The source revealed that this Republican mega-donor may present a defense against crimes including violating campaign donation laws as early as next month. As the discussions have not been made public, the source requested anonymity. It is currently unclear whether he will enter into a cooperation agreement with prosecutors and testify against FTX co-founder Sam Bankman-Fried. Salame has not yet been charged with any allegations related to FTX, and the details of the potential plea agreement have not been finalized.

Reports indicate that Salame’s former colleagues Gary Wang, Caroline Ellison, and Nishad Singh have already admitted to playing a role in the multi-billion dollar fraud case at FTX and will be key witnesses in the government’s case against SBF. If Salame pleads guilty, he will become the fourth former FTX executive to do so.

▌Bavarian data regulatory agency: Worldcoin launched without completing privacy and security assessment

Michael Will, head of the Bavarian data regulatory agency in Germany, stated that the agency had not completed a privacy and security assessment of Worldcoin at the time of its launch. Will said that the agency was still reviewing the project on July 24 when it went live, even though he noted that the company was not legal and had an obligation to notify authorities and obtain approval before launching. Bavaria is a state in Germany, and Worldcoin has established an entity in the state to manage data for its European users, so the local government is leading the investigation.

Meanwhile, the financial aspects of Worldcoin are also under investigation. The German Federal Financial Supervisory Authority (BaFin) is overseeing the project, and a spokesperson for the agency told local newspaper Tagesspiegel that it is currently unclear whether it needs BaFin’s approval like other crypto companies.

▌UK considers granting Bank of England more regulatory powers over stablecoins

The UK Treasury outlined its considerations for stablecoin regulation in a consultation document. The government is considering granting the Bank of England more regulatory powers over stablecoins, allowing it to regulate alongside the Financial Conduct Authority (FCA). The consultation document was released after the government sought feedback from interviewees such as LianGuaiyLianGuail, HSBC, Circle, and Barclays Bank.

The Ministry of Finance has found that the 2009 Banking Act provides the Bank of England with sufficient regulatory scope to supervise stablecoins. However, it points out that this will “further clarify the existing regulatory toolkit of the central bank”. The consultation document explains that the Bank of England can handle prudential matters, while the Financial Conduct Authority can be responsible for supervising conduct.

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Blockchain Applications

▌Shandong Provincial Public Resource Trading Center officially issues the first blockchain bidding notice

The successful bidder of the construction project for the expansion and construction of the Jinan East Line Xiaoxu Jia Hub to Yaoqiang Airport section of the Jinan Ring Expressway received the first blockchain bidding notice from the Shandong Provincial Public Resource Trading Center (Provincial Government Procurement Center). The successful bidder scanned the QR code on the bidding notice with a mobile phone to obtain the key data of the transaction process and store it on the blockchain as evidence. The evidence includes the subject of the deposition, the file name, file size, file format, file hash value, and deposition time, etc., and is sealed with the preservation seal of the subject of the deposition. At the same time, the successful bidder can click to query the attachment of the blockchain storage certificate for the on-chain information and obtain detailed evidence content, including project name, project number, bid opening time, successful bidder name, bid amount, and other specific transaction information, achieving the query and verification of key data of the transaction process. (Shandong Provincial Public Resource Trading Center)

▌Senior Vice President of LianGuaiyLianGuail: Stablecoins are currently the killer application of blockchain

Jose Fernandez da Ponte, Senior Vice President and General Manager of Blockchain, Cryptocurrencies, and Digital Currencies at LianGuaiyLianGuail, stated that stablecoins are currently the killer application of blockchain, and the payment processor is confident in its timing and competitive advantages in this field. It has inherent advantages in terms of cost, programmability, and settlement time.

Da Ponte said that the market is ready for newcomers, and these newcomers have received full support and are fully regulated, unlike Tether. Stablecoins are something we cannot ignore. We are leveraging all the infrastructure we have built over the years in terms of regulation, risk management, and compliance in multiple countries. We consider it a key asset that sets our business apart. This is the approach we are taking.

▌Base and Backdrop launch 100 Builders to help developers build open-source technology on Base

Base announced a partnership with Backdrop to launch 100 Builders, aiming to help more people build open-source technology on Base and create more and better open-source projects. The program is free for builders, and builders can receive over $40,000 in prizes. The application deadline is August 10, 2023, and the program will start on August 21, 2023.

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Cryptocurrencies

▌Musk’s lawyers once again file a motion to dismiss the Dogecoin insider trading class-action lawsuit

Tesla CEO Elon Musk’s lawyer, Alex Shapiro, fiercely criticized the latest appeal filed by Dogecoin investors in the insider trading lawsuit. Alex Shapiro stated that this action is another example of lawyers abusing their power and litigation strategies. It is reported that Evan Spencer, the lead attorney for the collective lawsuit against Musk, made a third amendment to the complaint in June and added more allegations.

The lawsuit was initially filed in June of last year, seeking $258 billion in compensation and accusing Musk of “intentional marketing, market manipulation, and insider trading” regarding Dogecoin. Musk’s lawyer stated in the latest motion that posting supportive statements or interesting pictures about cryptocurrencies on Twitter is not illegal, and he mocked the plaintiffs’ modified complaint as “fantastical, convoluted, and often incomprehensible.”

▌David Rubenstein: Regrets not buying Bitcoin at $100

Billionaire and co-founder of private equity giant Carlyle Group, David Rubenstein, said in an interview with Bloomberg that Bitcoin (BTC) will continue to exist, thanks to the growing institutional interest in Bitcoin ETFs by firms such as BlackRock, as well as the global demand for a form of currency that governments cannot control. He said, “Many people around the world want to be able to transact with a currency that the government cannot know about and they want to be able to transfer it correctly or incorrectly, so I think Bitcoin will not go away and will continue to evolve.”

Rubenstein admitted that he regrets not buying Bitcoin when it was at $100. He stated that given the recent interest from traditional financial giants like BlackRock, those who once mocked cryptocurrencies and the entire industry may be forced to reconsider. Rubenstein previously revealed that he personally invested in companies that facilitate cryptocurrency transactions, although he does not directly own any cryptocurrencies.

▌Marathon Digital Q2 production: 2,926 BTC, a 33% increase QoQ

Executives at Marathon Digital stated during a financial earnings conference call that their mining power increased by 54% in the second quarter, from 11.5 EH/s to 17.7 EH/s. The company produced 2,926 BTC in the second quarter, a 33% increase compared to the 2,195 BTC produced in the first quarter. The total amount of BTC produced in the second quarter accounted for approximately 3.3% of the available Bitcoin network rewards during that period.

In addition, Marathon sold 63% of the BTC produced this quarter to cover operating costs, resulting in total revenue of $23.4 million. The company reported a net loss of $21.3 million in the second quarter, higher than the net loss of approximately $7 million in the previous quarter.

▌Opinion: Stablecoins pose a threat to the decentralization principle of cryptocurrencies

Some builders in the field of encryption believe that LianGuaiyLianGuail’s stablecoin may promote the adoption of cryptocurrencies, but also threaten the “decentralization principle” of the digital asset market. Jane Ma, co-founder of zkLend, said that LianGuaiyLianGuail will indeed enhance people’s awareness and acceptance of cryptocurrencies. She believes that LianGuaiyLianGuail’s reputation in transparency and its experience in regulatory environment will naturally bring a certain level of credibility to the PYUSD stablecoin. However, as part of a well-known financial organization in the United States, PYUSD will essentially have centralized management functions. The preferences of regulatory agencies and institutions for regulated stablecoins may lead to a decrease in the market share of decentralized stablecoins, thereby threatening the decentralized principle that supports the cryptocurrency field.

▌Amberdata Derivatives Director: The correlation between US stocks and Bitcoin is decoupling

Moody’s recently downgraded the ratings of 10 US banks and put some well-known banks such as BNY Mellon, US Bancorp, Deutsche Bank, and Northern Trust on the rating watchlist. Greg Magadini, Derivatives Director of Amberdata, commented that Bitcoin remains strong. The correlation between the US stock market and Bitcoin is decoupling because Bitcoin has proven to be a beneficiary of banking turmoil. For example, earlier this year, the crisis in the US banking industry triggered a significant increase in Bitcoin and became a major driving force for Bitcoin’s rise in 2023.

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Important Economic Trends

▌Liu Qiao: Central government debt can be used to replace local government debt under overall consideration

Liu Qiao, Dean of the Guanghua School of Management at Peking University, said in an interview with The Paper that the fiscal deficit ratio can be appropriately increased. This year’s government work report pointed out that the deficit ratio is planned to be arranged at 3%. If the deficit space is expanded, and fiscal investment equivalent to 5% of GDP is increased, totaling about 6 trillion yuan, many problems can be solved. For example, under overall consideration, central government debt can be used to replace local government debt. (Jin10 Data APP)

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LianGuai Encyclopedia

▌What is Intent Computing

The introduction of Intent computing aims to alleviate the burden on users. Essentially, an Intent is a set of declarative constraints that allow users to delegate transaction creation to specialized third-party participant networks while retaining full control over the process. Simply put, if a transaction specifies “how” to perform an operation, then the Intent defines “what the expected result of that operation is.” This declarative approach brings exciting advances in user experience and efficiency. Through Intent computing, users can easily express their expected results. This is in stark contrast to the current imperative transactions, where every parameter must be explicitly specified by the user.

Disclaimer: LianGuai, as a blockchain information platform, publishes articles for informational reference only and does not constitute actual investment advice. Please establish the correct investment concept and be sure to raise risk awareness.

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