In this week’s “Crypto Long & Short,” Todd Groth investigates the interplay between TradFi and DeFi yields and why comparisons across markets are often overly simplified apples vs oranges.
Tornado Cash indictment fails to show ‘clear violation’ of certain laws: Coin Center
Coin Center research director Peter Van Valkenburgh argued that crypto mixer Tornado Cash is an anonymizing software provider, not a money transmitter.
U.S. Treasury Examining How Using Digital Dollars Could Be Kept Private
As the Treasury Department studies a possible central bank digital currency, senior official Graham Steele says the effort is looking at privacy, but is also wary of CBDC run risks.
Blockchain Association Files Amicus Brief in Coin Center Lawsuit Against U.S. Treasury Over Tornado Cash Sanctions
In a statement, the trade group’s CEO Kristin Smith, said that regulatory actions should only target bad actors.
Bitcoin, Crypto Prices Brace for Downturn in Coming Liquidity Shock, Observers Say
Improving liquidity conditions so far this year has lifted risk assets such as cryptocurrencies, but the trend is poised to turn once the U.S. debt ceiling is lifted and the Treasury along with the Fed resumes tightening, analysts said.
Binance helped US authorities freeze $4.4M linked to DPRK cybercrime orgs
Following “lawfully served warrants,” Binance worked to flag the accounts and tie up the funds.
USDC Issuer Circle Moves $8.7B to Repo Agreements to Protect Reserves From U.S. Government Default
Circle’s reserve fund has ditched Treasury bills that mature beyond May 31, rotating assets to cash and overnight repurchase agreements instead, a company spokesperson said.
Coinbase supports new court action to remove Tornado Cash ban
The motion is part of a broader effort to restore internet privacy rights for U.S. citizens.
Fed balance sheet adds $393B in two weeks — Will this send Bitcoin price to $40K?
The U.S. central bank’s liabilities may increase if more regional banks fail, creating an upside scenario for the price of Bitcoin.
Over $5 Billion In BTC Paid In Top 10 Ransomware Variants, Says U.S. Treasury
Ransomware attacks in the U.S. have been on a rise since late 2020, but it is particularly booming in 2021. This year, hackers have hit numerous U.S. companies in large-scale hacks. One such attack on pipeline operator Colonial Pipeline led to temporary fuel supply shortages on the U.S. East Coast. Hackers also targeted an Iowa-based agricultural company, sparking fears of disruptions to grain harvesting in the Midwest. Schools, insurance companies, and police departments have also suffered from these attacks.
Related Reading | Questions Linger As FBI Recovers Colonial Pipeline Ransomware Crypto Funds
In response to this, the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), charged with safeguarding the financial system from illicit use, released a Financial Trend Analysis. FinCEN published the report on Friday, October 15, 2021.
The report analyzed the considerable growth in ransomware payments in the first six months of 2021 and the relative difference from last year.
Ransomware Attacks In The U.S.
U.S. Treasury Secretary Janet L. Yellen recently noted, “Ransomware and cyber-attacks are victimizing businesses large and small across America and are a direct threat to our economy.” According to the report, FinCEN analysis of Suspicious Activity Reports (SARs) filed during the first half of 2021 indicates that it is an increasing threat to the U.S.
Between January 1 and June 30, 2021, 635 SARs were filed, and 458 transactions were reported. This was 30% more than the total of 487 SARs filed for the entire 2020. The total value of suspected ransomware payments during the first half of 2021 was $590 million, more than the $416 million reported for the whole of 2020.
Source: FinCEN Financial Trend Analysis
The U.S. Treasury Department said the average amount of reported ransomware transactions per month in 2021 was $102.3 million. FinCEN identified bitcoin (BTC) as the most common payment method in reported transactions. Approximately $5.2 billion in outgoing BTC payments tied to the top 10 variants over the past three years. It noted that USD figures cited in this analysis are based on the value of BTC when the transactions occurred.
BTC trading at over $60.7K | Source: BTCUSD on TradingView.com
If the trends keep up, hackers could make more from ransomware this year than they did in the previous ten years combined.
The U.S. Government’s Response
The U.S. government has been working to clamp down on attacks from hackers. The Biden administration has made the government’s cybersecurity response a top priority following a series of attacks this year that threatened the U.S. energy and food supplies.
Earlier this month, the Justice Department announced the launch of a National Cryptocurrency Enforcement Team to go after the exchanges that expedite crime-related transactions, like ransomware demands.
Related Reading | U.S. Recovers Millions Paid In Bitcoin For Pipeline Ransomware
In September, Wall Street Journal reported that the Biden administration was “preparing an array of actions, including sanctions, to make it harder for hackers to use digital currency.”
Also last month, the Department of the Treasury’s Office of Foreign Assets Control sanctioned crypto exchange SUEX OTC, S.R.O. (SUEX) for facilitating financial transactions for ransomware actors. This action was the department’s first such move against a virtual currency exchange over ransomware activity.
Coinciding with the release of the report, the Treasury Department released virtual currency guidance. The guidance said, “the virtual currency industry, including technology companies, exchangers, administrators, miners, wallet providers, and users, plays an increasingly critical role in preventing sanctioned persons from exploiting virtual currencies to evade sanctions and undermine U.S. foreign policy and national security interests.”
Featured image by Bitcoin News, Chart from TradingView.com
Crypto Company Circle Seeks To Become Global Digital Currency Bank
The company behind the increasingly popular USDC stablecoin dreams big. Circle wants to leverage its know-how and good reputation to become “a global digital currency bank.” That means it’s also looking into becoming a digital currency bank in the US. Their plan’s announcement focused on that region of the planet, but the wording makes it clear that they’re ultimately looking for worldwide domination.
Related Reading | Is USDC’s Billion Dollar Growth A Sign Crypto Smart Money Is Ditching Tether?
According to Coindesk, “this would be an industry first, with a scope far beyond the OCC banking charter already conditionally issued to Anchorage, Paxos and other crypto-native financial services firms.” The company’s aim is to provide “frictionless, instant and nearly free payments that combined fiat reserve currencies with open, permissionless blockchains, and eventually building on these open networks to support new forms of capital formation and intermediation.”
It’s the project ready for prime time or in its infancy? Did they file the documents already? Will they be able to pull this off? Keep reading for extra clues and info.
USDC price chart for 08/10/2021 on Bitbay | Source: USDC/USD on TradingView.com
Circle Played Nice With Governments From The Get-Go
The USDC stablecoin is issued by CENTRE, a joint venture between Circle and Coinbase. Their aim is “to conform with stringent U.S. money transmission supervisory and regulatory standards.” In contrast Tether, their main competition, is famous for the probe that the US Department Of Justice launched against them.
The main point of contention against Tether is the reserves they hold to back up their USDT. Attacking their competition’s weak spot, Circle claims, “Establishing national regulatory standards for dollar digital currencies is crucial to enabling the potential of digital currencies in the real economy, including standards for reserve management and composition.”
Since regulatory compliance is their forte, Circle spends half of their announcement praising their own transparency and USDC’s liquidity even “in times of intense demand to redeem USDC”. To prove that, they provide an independent accountant report that highlights the “composition of USDC reserves, including the credit quality of the underlying assets.”
Related Reading | Tether (USDT) To Face Do or Die Situation in 2021: Messari Report
Why does all of that have to do with their plans to become a national digital currency bank? It proves that they’re in tune with the US Government.
Now, with USDC at more than $27.5 billion in circulation, and building on our long-standing commitment to trust, transparency and accountability in the dollar-denominated reserves backing USDC, we are setting out to become a U.S. Federally-chartered national commercial bank.
Circle intends to become a full-reserve national commercial bank, operating under the supervision and risk management requirements of the Federal Reserve, U.S. Treasury, OCC, and the FDIC.
Other Big Plans For The Crypto Company
Recently, Circle announced its intention to go public before the end of the year. According to Coindesk, the company “partnered with a special purpose acquisition company (SPAC) to go public later this year. The deal valued Circle at $4.5 billion.” Also, their USDC project will soon go live in multiple blockchains. As NewsBTC informed:
It will soon be available in, “Avalanche, Celo, Flow, Hedera, Kava, Nervos, Polkadot, Stacks, Tezos, and Tron.” That will bring the total to 14; since USDC is already functional in Ethereum, Algorand, Stellar, and Solana.
In related news, NewsBTC recently highlighted a Messari report that shows USDC is the most used stablecoin in DeFi.
From what Ryan Watkins, a credible researcher, predicted, the stablecoin share for Tether on Ethereum could dip below 50%. In addition, Watkins revealed that more than half of USDC’s total supply is now in smart contracts.
The equivalent value for this USD Coin supply is about $12.5 billion. According to Messari, CoinMetrics data estimates show that USDC’s stablecoin supply is over 40% on Ethereum.
However, none of that guarantees that their plans to become a global digital currency bank will come true. Keep the NewsBTC tab open for further information on this developing story.
Featured Image by Chaitanya Tvs on Unsplash – Charts by TradingView
