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We Don’t Need a New Regulator to Have Better Crypto Regulation

Contrary to popular wisdom, the U.S.’ distributed regulatory structure is good for digital assets in the long run.

Republished by Plato

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Most crypto firms complain there are too many regulatory bodies globally and particularly in the U.S., and protest that this overlapping and even contradictory regulation stymies growth and innovation. The “alphabet soup” of U.S. federal regulatory bodies – the SEC, CFTC, DOJ, FDIC, FTC and IRS, to name a few – is just the beginning.

At the state level, there are 50 attorneys general to contend with, not to mention the various state agencies and regulators that enforce the myriad of laws passed by state legislatures and applied by the courts. Digital currency has no borders, and while regulators do, they can extend their regulatory reach if markets, consumers and institutions in their jurisdictions are impacted.

Donna Parisi is the Global Head of Financial Services and FinTech at law firm Shearman & Sterling. Sandra Ro is a former derivatives banker and market infrastructure executive and the CEO of the Global Blockchain Business Council, a Swiss industry non-profit building the next multi-trillion dollar industry through partnership, education, and advocacy.

Some crypto startups and fintech leaders have advocated for a new regulatory body that would supersede these myriad of regulators, as a way to streamline regulatory compliance and reduce overlap between competing agencies. The Financial Conduct Authority (FCA), in the U.K., is frequently cited as an example of a central superseding agency that recognizes and promotes innovation through its policies, and many have advocated for a parallel agency in the U.S. Some fintech leaders have even threatened to leave the U.S. entirely, and relocate to friendlier regulatory regimes in the U.K. or elsewhere.

No question, it is painful and costly today for young crypto startups and even mature fintechs to navigate the matrix of federal and state regulations. But despite the seemingly chaotic and burdensome regulatory structure, the U.S. system provides confidence to both investors and consumers.

This approach to regulation of digital assets allows innovation to flourish by preventing fraud, unhealthy speculation and asset bubbles. To spark innovation and stay competitive with other international markets, U.S. regulators need to reduce “grey areas” so more fintechs and entrepreneurs can clearly navigate the rules of the road. The problem is not the many regulators in the U.S. but rather this lack of clarity and overlapping regulations.

The many U.S. regulatory bodies are creatures of different laws that were passed in response to different national crises – the Office of the Comptroller of the Currency (OCC) was integral to the development of a national banking system to finance the Civil War, the Securities and Exchange Commission (SEC) and Federal Deposit Insurance Commission (FDIC) were established in the wake of the Great Depression, and the Financial Stability Oversight Council was part of the reforms under the Dodd-Frank Act. What has been inherited is a complex regulatory landscape with many different regulators and statutory mandates. For example, whereas the SEC and Consumer Financial Protection Bureau (CFPB) are principally charged with investor and consumer protection, the U.S. federal banking agencies are focused on the safety and soundness of banking institutions and the stability of the financial system itself.

Despite the seemingly chaotic and burdensome regulatory structure, the U.S. system provides confidence to both investors and consumers.

Having one monolith of a regulator may be an easier, one-stop shop in the short run, but that model also can pose significant challenges and risks if that regulator gets things wrong. While it may be more complex, the U.S. regulatory system breeds lasting investor and market confidence.

Given the wide latitude of regulators, particularly in the regulation of fintech and financial innovation, the result are regulations that can be flexible and elastic as technology evolves. The existence of several federal financial regulators means that no single regulator will set the standard for “all things crypto.” The diversity of state-level regulation also can help inform which regulatory approaches work and which do not. In some sense, regulatory agencies may compete with one another in striking the right balance between innovation and safety and soundness. At the state level, New York and Wyoming are examples of states that have led the way (albeit in different ways) on the regulation of digital assets. Time will tell which approach is more effective in the long run.

These tensions between regulators are frustrating at times. For instance, it has meant the U.S. has lagged in the development of coordinated, comprehensive “regulatory sandboxes” that other jurisdictions, with much slimmer regulatory systems, have fostered. But ultimately this uniquely American regulatory landscape may result in a more stable market that can solidly mature in a stable fashion. Regulators in the U.S. take pride that they have cultivated a highly stable financial system that is an envy to the world. Innovation, however, prods them to not be left behind on the global stage.

Regulatory complexity is not new. While it might make life more complicated for some crypto businesses, it is consistent with the way that financial regulators in the U.S. approach regulation generally. There is nothing magical about digital assets.

For any new product or service, regulators still need to ask and answer these questions: what is the activity, who does it touch, how could this activity damage the financial system or harm users, how could the markets and consumers benefit for example by increased access, lower fees and more transparency? While these questions are clear, the answers are complex and often intersecting.

But why not do away with all of this regulatory overlap, and create a single agency to oversee crypto and digital assets at least at the federal level?

First and foremost, this would take an act of Congress. Given the low probability for bipartisan agreement on new legislation in a divided Washington, the responsibility falls to the regulators to leverage their powers and elastic regulations in a creative way. Coordination and communication, however, is key and very achievable.

To this end, a council should be formed to share knowledge and experience and to avoid redundancies and enhance communication between regulatory bodies and all participants in the system. The council could be modeled, at least in part, on the President’s Working Group on Financial Markets, which seeks to enhance the integrity, efficiency, orderliness and competitiveness of U.S. financial markets while maintaining investor confidence. The work of any such council could benefit significantly by having a broadened membership to include not only regulators but thought leaders from academia, the non-profit sector and the start-up community.

In September, bank regulators from 49 states released a plan to streamline compliance examinations for money service businesses (MSB). This will save time and money for both the companies and the regulators, and makes it easier for MSBs to do business across the U.S. This model of a collaborative approach gives us a roadmap to achieve better and more efficient regulation across the U.S.. Applying this same spirit of collaboration to other areas like KYC processes, capital raising and passporting licenses would similarly reduce frictions and allow for compliant, seamless and less costly ways for startups to do business. A collaborative approach is also more likely to weather shifting political winds, avoiding partisan squabbling that has hobbled the work of the CFPB, for example.

We do not need a new super-regulator for digital currency. Instead, we need to improve communication and collaboration among regulators, entrepreneurs, investors and banks. Doing so will strengthen oversight, protect consumers, maintain market integrity and, perhaps most important, lead to a financial system that is better equipped to meet the challenges of the future.

Disclosure

Source: https://www.coindesk.com/no-new-regulator-crypto-bitcoin

Blockchain

The Battle of The DEX Heats up as Uniswap (UNI) Hits All-Time High

Republished by Plato

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UNI prices reached their highest ever levels of $15.50 a few hours ago according to Coingecko. The move has added 5% on the day while most other high cap crypto assets are retreating in the shadow of their big brother.

UNI has now made a whopping 60% over the past seven days and almost 300% since the same time last month when it was priced at just $3.60. Its rival and former fork SushiSwap has retreated a little as its token falls by 5% on the day back to $7.30.

Both decentralized exchanges are doing very well in terms of liquidity lockup and trading volumes, however, as observed by researcher Lucas Campbell in the latest Bankless newsletter.

Uniswap Takes The Lead

The rivalry between these two DeFi titans has been heating up in recent weeks and it is no surprise considering their history. One was spawned from the other but has made it in its own right and is now vying for the title of top DEX.

Diving into the on-chain metrics, the Bankless newsletter has broken the competition down into several rounds, giving Uniswap the first one for trading volume. Over the past three weeks, Uniswap has averaged almost $6 billion in weekly volume whereas SushiSwap processed around $2.8 billion it noted.

The next round was liquidity which also went Uniswap’s way with just over $3 billion versus just under $2 billion. The total value locked across both decentralized exchanges is currently higher than it was for the entire DeFi ecosystem back in mid-August, 2020.

In terms of daily revenue, Uniswap also comes out ahead with the DEX averaging over $2.3 million in fees to liquidity providers per day in January 2021.

SushiSwap Fights Back

SushiSwap starts to win a couple of rounds back in terms of price to sales ratio which compares a token’s market cap to the protocol’s revenue. SushiSwap has been holding steady with a P/S ratio of ~5 while Uniswap recently touched ~15, it added,

“With the above in mind, the market is currently overvaluing Uniswap relative to SushiSwap strictly in terms of the cash flows it generates today.”

The price to volume ratio, which is similar to the above, also comes out in SushiSwap’s favor with the market is currently valuing SushiSwap at around $4 for every $1 in volume that it facilitates on a daily basis, while this ratio is higher for Uniswap at around $11 for every $1 in volume it processes.

The final metric was price performance and both tokens have had a massive run-up recently. This one can be measured in different ways, but Bankless gives it to SushiSwap measuring percentage price increase since the beginning of Q4, 2020.

Overall, Uniswap still has the upper hand, but its rival is catching up. The launch of Uniswap v3 is likely to give it even more momentum to retain its accolade as the world’s leading DEX.

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Source: https://cryptopotato.com/the-battle-of-the-dex-heats-up-as-uniswap-uni-hits-all-time-high/

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Blockchain

Charted: Chainlink (LINK) Holding Key Support, Bulls Aim Fresh Test of $25

Republished by Plato

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Chainlink (LINK) dipped below $22.00, but it stayed above $20.00, whereas bitcoin and Ethereum struggled. The price is now rising and it is likely to rise towards $24.00 and $25.00.

  • Chainlink token price started a downside correction from the $25.89 high against the US dollar.
  • The price is well bid above the $20.00 level and the 100 simple moving average (4-hours).
  • There is a crucial rising channel forming with support near $20.50 on the 4-hours chart of the LINK/USD pair (data source from Kraken).
  • The price is rising and it seems like it may soon revisit the $24.00 and $25.00 resistance levels.

Chainlink (LINK) is Gaining Momentum

Recently, chainlink (LINK) started a downside correction from the $25.89 high against the US Dollar, similar to bitcoin and Ethereum. There was a downside break below the $22.50 and $22.00 support levels.

The bears were able to push the price below the 50% Fib retracement level of the upward move from the $17.20 swing low to $25.89 high. However, the bulls were active above the $20.00 support zone and the 100 simple moving average (4-hours).

Chainlink (LINK)

Source: LINKUSD on TradingView.com

The price tested the 61.8% Fib retracement level of the upward move from the $17.20 swing low to $25.89 high. There is also a crucial rising channel forming with support near $20.50 on the 4-hours chart of the LINK/USD pair.

LINK is currently rising from the channel support and trading above $22.00. It even surpassed the $23.00 level and it seems like the bulls are aiming a fresh test of the $25.00 level. Any more gains could open the doors for a move towards the $26.50 level.

Fresh Drop?

If chainlink’s price fails to climb above the $24.00 level, there could be a fresh decline. An initial support on the downside is near the $22.50 level.

Any more losses below the $22.50 level may possibly lead the price towards the channel support. A break below the channel support might put the $20.00 support at risk in the near term.

Technical Indicators

4-hours MACD – The MACD for LINK/USD is gaining momentum in the bullish zone.

4-hours RSI (Relative Strength Index) – The RSI for LINK/USD is currently just above the 50 level.

Major Support Levels – $22.50, $21.20 and $20.60.

Major Resistance Levels – $24.00, $25.00 and $26.50.

Source: https://www.newsbtc.com/analysis/eth/chainlink-link-holding-key-support-20/

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Blockchain

Dogecoin pumps by 90% amid WallStreetBets drama

Republished by Plato

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The Reddit community WallStreetBets’ drama with main street hedge funds has now permeated the cryptocurrency sector with Dogecoin’s price pumping by 90% in a matter of hours. This surge has contributed to DOGE nearing its old ATH on the charts.

Dogecoin has been in mainstream media due to a host of reasons, some of which include viral TikTok videos or tweets from Elon Musk. In fact, the aforementioned surge might continue if Elon Musk decides to join the party as is customary.

WallStreetBets & Dogecoin

WallStreeBets’ name has been popping up all over the mainstream media lately as a bunch of “memers” who have all longed the most-shorted stock GME [GameStop]. This has sent the stock prices of GME hurtling, with the same up by over 880% in one week, at the time of writing.

What’s interesting about the surge in GME’s stock is that Melvin Capital, a hedge fund reportedly at the center of all the GME shorts, has covered its short position. Not only has this contributed to losses in the billions, but this has led to main street traders/hedge funds crying foul too.

With the drama over GME stocks unfolding before our eyes, a Twitter user with the screen name “WSB Chairman” tweeted,

This tweet was met with replies from many of the market’s cryptocurrency enthusiasts, many of whom were left out of the WSB drama. Accordingly, many started spamming different altcoins. However, among these altcoins, Dogecoin has been the one to rise to the surface and grab the most attention of the lot.

The result? Well, Dogecoin had pumped 85% in 90 minutes, at the time of writing.

Source: DOGEUSDT TradingView

A look at DOGE’s charts would suggest that perhaps, a few whales caught the scent of what was about to happen and jumped on the bandwagon too. In fact, two pseudonymous traders RookieXBT and CoinMamba posted long positions, well before the pump actually began.

What next for Dogecoin?

With Elon Musk already on the WSB bandwagon, it wouldn’t be surprising if he tweets about the current Dogecoin pump. If this takes place, then there will be no holding Dogecoin back. Levels to keep an eye out for include – $0.0159 and $0.0183, both price-points that stand at the 78.6% and 100% Fibonacci levels, respectively.

Source: https://ambcrypto.com/dogecoin-pumps-by-90-amid-wallstreetbets-drama

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