Block 1 : The essential news
 
  • KuCoin in New York's crosshairs
New York Attorney General Letitia James has filed a lawsuit against KuCoin, the world's fourth-largest platform by trading volume, alleging that it has violated state laws governing trading in securities and commodities. The lawsuit names ether and other tokens as unregistered securities that KuCoin listed in the state. The lawsuit claims that KuCoin traded in cryptocurrencies that were commodities and securities without being registered as a commodity broker or securities dealer in New York. The lawsuit cites the Ethereum Foundation's Initial Coin Offering (ICO) as evidence of a securities offering. The lawsuit seeks to prohibit KuCoin from doing business in the state and force the platform to refund the money it earned in the state.
  • Kraken platform launches its own bank

Despite recent difficulties with the U.S. SEC, cryptocurrency exchange Kraken is planning to launch its own crypto-bank, dubbed Kraken Bank, offering a host of financial services for individuals, professionals and businesses. The subsidiary had already received an SPDI license - a banking charter: special purpose depository institution - in 2020 to begin operations, but its launch was on hold until now. Kraken Bank is expected to offer traditional banking services alongside crypto services, operating from offices in Cheyenne, Wyoming. Services offered include digital asset custody, wire transfers, staking, a suite of comprehensive banking offerings, a debit card, as well as services for professionals and businesses.

  • AXA registers as PSAN with the AMF

AXA Investment Managers, a subsidiary of the AXA Group, has been registered as a digital asset service provider (PSAN) by the French financial markets authority (AMF). This decision allows the company to offer services such as the storage, purchase, sale and exchange of digital assets. The company is now one of 67 PSAN-registered companies in France. With more and more institutional investors like AXA entering the cryptosphere, the adoption of crypto-assets by retail investors could potentially increase.

  • 50,000 bitcoins moved by US authorities

An address associated with the U.S. government's Department of Justice moved more than 49,000 bitcoins this week, amounting to about $1 billion from seizures in the Silk Road case - an online drug selling site. Glassnode noted that 9,861 of these BTCs were redirected to Coinbase, which could put selling pressure on the price. However, if the U.S. government decides to sell these assets, it doesn't necessarily have to be in one transaction, and over-the-counter means of exchange or auctions could be employed.

Block 2 : Crypto Analysis of the week

Silvergate Bank, a pioneer in the crypto finance industry, has collapsed like a house of cards after a catastrophic series of withdrawals and a failed bailout by federal authorities. In retrospect, their latest attempt to talk to the FDIC (Federal Deposit Insurance Corporation) to shore up their liquidity looks more like a last gasp than a lifeline.
 
Silvergate was a forerunner in the savings and loan era, the first to recognize the potential of cryptocurrencies. However, the bank ended up looking like a financial zombie that had taken over a volatile industry. It accumulated a huge amount of cryptocurrency deposits, worth more than $13 billion at the end of September. Like any other bank, it invested these deposits in high-yielding "safe assets" such as U.S. Treasuries and other bonds. As a reminder, however, Treasuries lost more than 12% last year and agency securities fell nearly 8%, the worst year on record for both types of debt. 
 
But the collapse of FTX, coupled with a wave of customer withdrawals and the need to repay a Federal Home Loan Bank loan, forced Silvergate to sell assets before they matured. The result was an imbalance that caused the bank to lose more than $1 billion in the fourth quarter of 2022.
 
The cryptosphere is undoubtedly going through a rough patch. The value of bitcoin has dropped significantly in the wake of this news, and there may be deadly ramifications yet unknown. However, there is always an opportunity in every situation. So, aside from the short sellers who have already cashed in - cuckoo George Soros - who could benefit from the fall of Silvergate?
 
Other banks could benefit, of course. As soon as they saw the first signs of blood in the water, several cryptocurrency companies such as Coinbase, Paxos and Galaxy jumped ship to Silvergate's biggest competitor, New York-based Signature Bank. Although it reduced its exposure to the cryptocurrency industry a few months ago, Signature Bank could still come out on top. But it's not the only one that could benefit from Silvergate's demise. Even though banking regulators are warning traditional financial firms to stay away from relationships with cryptocurrency companies, some are still well capitalized and need a place to put their cash. 
 
The European Union may be ready to take advantage of this situation. Unlike the U.S., the EU has taken a more proactive stance on regulating the cryptocurrency economy. The Markets in Crypto-Assets Act (MiCA), a set of rules expected to be implemented in the coming months, could provide needed clarity for cryptocurrency companies and financial institutions. The current banking crisis in the U.S. may encourage even more companies to move offshore.
 
Finally, to some extent, stablecoins could also benefit from this mess. According to Kaiko analysts, stablecoins are likely to become even more popular among traders now that Silvergate's internal system, the Silvergate Exchange Network (SEN), has been shut down. On centralized exchanges, stablecoin trading volume has increased from 79 percent last year to 90 percent, notably replacing dollar-based trading pairs. However, U.S. stablecoin-issuing companies are also struggling to achieve bank status, and many of them could be affected by the collapse of Silvergate.
 
While Silvergate's demise is certainly a blow to those dabbling in cryptocurrencies, there are many potential winners. It's just a matter of who will be able to grab the opportunity with both hands.

Block 3 : Gainers & Losers

 

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