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Crypto SWOT: Turkey wants increased regulatory oversight of cryptocurrencies

Commentaries & Views

Strengths

  • Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Sweet SOL, rising 1,027%.

  • Sumitomo Mitsui Trust Holdings is teaming up with a Japanese crypto firm to create a trust company to manage digital assets for institutional investors, writes Bloomberg. The bank has signed a memorandum of understanding with crypto exchange operator bitbank inc. to offer custody services for public blockchain-based crypto assets, including NFTs.  

  • Bitcoin is regaining its dominance in the cryptocurrency universe. It now accounts for 44% of total crypto market value, the most since October 2021. Bitcoin's renewed hegemony reflects how the collapse of the TerraUSD stablecoin earlier this month has ravaged smaller tokens like Avalanche and Solana, writes Bloomberg.

Weaknesses

  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Tifi Token, down 100%.

  • Bitcoin drifted near the $30,000 level that it has been hovering around since the collapse of the TerraUSD algorithmic stablecoin triggered a selloff in cryptocurrencies. Bitcoin has struggled in recent weeks as inflation remains elevated even with central banks in rate-hiking mode, boosting prospects for more monetary tightening, writes Bloomberg.

  • Bitcoin might be registering tepid moves as of late but that doesn't mean investors have become less anxious about the largest cryptocurrency's prospect for further declines. The put-to-call ratio on the coin hit a 12-month high at 0.72, meaning that many traders are loading up on hedges in the event it embarks on another leg lower, and its losses deepen, according to Bloomberg.

Opportunities

  • British regulators intend to amplify the enforcement of cryptocurrencies and make stablecoins a payment method, according to CoinTelegraph. During the annual Queen's Speech, Prince Charles informed the Parliament of two bills that will support "the safe adoption of cryptocurrencies" and "create powers to more quickly and easily seize and recover crypto assets."

  • Sagging crypto prices and the collapse of the TerraUSD stablecoin are no deterrent for venture capitalists who still see a lot of promise in the industry. In the latest example of that commitment, Andreessen Horowitz said Wednesday that it raised a $4.5 billion crypto fund, the industry's largest to date, writes Bloomberg.

  • Binance Holdings has received regulatory approval for a local entity from Italian authorities, three weeks after securing a nod from the French government, writes Bloomberg. The world's largest cryptocurrency exchange by trading volume is one of 14 virtual asset operators to be registered by the Organismo degli Agenti e dei Mediatori (OAM), which supervises crypto operators in Italy.  

Threats

  • The collapse of one of decentralized finance's most ambitious experiments has knocked more than $83 billion off the sector's total value, as investors fled for safer havens, writes Bloomberg. A crash in the prices of stablecoin TerraUSD, or UST, and its sister token Luna in the first half of May sent shock waves through the DeFi sector, the article explains. The total value locked across all major protocols has slumped to $112 billion from $195 billion at the start of the month, data from industry tracker DeFi Llama show.  

  • Turkey is crafting legislation that would establish greater control over the cryptocurrency market and possibly impose a tax on some transactions involving digital assets, writes Bloomberg. The governing AK Party of President Erdogan is expected in the coming week to submit bills to parliament setting out new rules for local cryptocurrency exchange platforms, said Turkish officials familiar with the matter.  

  • Europe's top securities regulator has warned that soaring inflation may drive retail investors into risky crypto assets and called for a formal legal framework to govern the industry across the bloc. Regulators are intensifying their pressure on crypto amid choppy action in the market with Bitcoin down 58% and Ether down 62% from their November highs. The European Central Bank has stepped up calls for tighter regulation after the stablecoin TerraUSD tumbled from its intended dollar peg earlier this month, according to Bloomberg.
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